Independent study highlights closeness of international convergence of auditing standards
The case for global convergence of auditing standards is strengthened, says ACCA as EC study is published
21 Aug 2009
ACCA believes the case for the global convergence of auditing standards has been strengthened following the publication of an European Commission report comparing future EU and US standards.
The report, prepared independently by the Maastricht Accounting, Auditing and Information Management Research Center (MARC), evaluates the differences between International Standards in Auditing (ISAs) and the standards of the US Public Company Accounting Oversight Board (PCAOB).
The ISAs have been clarified by a recently-concluded modernisation and are currently the subject of an EC public consultation on their adoption in EU member states.
'This is an important study, and its independence is a key factor,' said David York, ACCA's head of auditing practice. 'Comparing the US system with that proposed for Europe is a timely exercise that also holds lessons for governments, regulators and investors.
'This is a valuable identification and understanding of the similarities and differences between the two systems. In the main, MARC concludes that there is little or no difference between audits under the clarified ISAs and PCAOB standards; this will increasingly be the case in future as the PCAOB is proposing to change its standards on the auditor's assessment of and response to risk, essentially to catch up with the risk-driven principles-based ISAs. There will remain significant differences because of the Sarbanes-Oxley need for separate reporting by auditors on internal control over financial reporting.
'The report confirms that investors are in favour of one set of auditing standards that are followed on a global basis; so it will be interesting to see the reaction to the study in the US. The report also makes the significant point that auditing standards are just one element. Audit quality depends on how they are applied by firms and enforced by regulators. By extension, investors should be in favour of consistent global standards of audit firm governance and transparency and consistent regimes of inspection and oversight.'