CONVERGENCE AND AUDIT Gonzalo Ramos Secretary General Public Interest Oversight Board PIOB XVIII Con

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CONVERGENCE AND AUDIT Gonzalo
RamosSecretary GeneralPublic Interest Oversight
Board (PIOB)XVIII Congreso Nacional de
AuditoríaSevilla, Noviembre 25-27, 2009
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Outline

• Some propositions on convergence
• The crisis and Audit
• The PIOB
• The Road Ahead

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Some propositions on Convergence

• Convergence is the process of aligning national
  standards with international standards.
  Convergence is not about harmonization or
  uniformity.
• Convergence is a voluntary process. Decisions
  about the application of standards pertain to
  sovereign national authorities.
• A necessary condition for convergence is that
  international standards are of high quality
  regarding not only their technical content but
  also their process of development .
• Global convergence is good. The adherence of
  Auditors to common high quality standards ensures
  comparability and consistency , increasing market
  confidence.
• Convergence is a complex process Development,
  adoption, implementation.

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The crisis and Audit

• The current financial crisis represents a massive
  failure of financial markets to price risk.
• Booming markets went hand in hand with the
  relaxation of prudential vigilance under the
  perceived good functioning of markets.
• The response to the crisis has meant a radical
  change of approach towards more regulation. In so
  far as the process of Audit also fulfills a
  regulatory function, auditing will probably be
  subject to similar pressures and expectations as
  other regulatory area
• The current crisis provides an opportunity to
  converge towards global standards.

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The Public Interest Oversight Board

• The PIOB was created in 2005, as a body
  independent of the audit profession, to provide
  independent oversight to the 3 standard setting
  bodies
• The International Auditing and Assurance
  Standards Board (IAASB)
• The International Ethics Standards Board for
  Accountants (IESBA), and
• The International Accounting Education Standards
  Board (IAESB)
• as well as their Consultative Advisory Groups
  (CAGs) and the Compliance Advisory Panel (CAP).
• Major goals have been achieved, including the
  standard-setting Boards have undergone big
  changes in composition, diversity and due process
  applied their CAGs have been substantially
  strengthened and IFAC has worked to enhance its
  public interest agenda.
• The body of International Standards on Auditing
  (ISAs) has undergone a major Clarity project,
  completed in February 2009, and the Code of
  Ethics for Professional Accountants, including
  requirements for auditors independence, has
  been revised and completed in June 2009

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The Road Ahead

• After standard development, the challenge for
  effective convergence is now adoption and
  implementation of standards.
• The true gain from successful standard setting
  will come from the application of the new
  standards.
• The realization of public benefits will emerge
  slowly and much later than standard development
  and publication, as implementation takes root and
  modifies actual practice.
• This means that the road to the achievement of
  higher quality financial reporting and higher
  quality audits is still ahead.

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• Thank you