overseeing international audit, ethics and education standards for the accounting profession
History
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The last decade of the 20th Century and the first few years of the 21st were marked by regional financial instability, high profile accounting scandals and corporate failures that resulted in significant losses of shareholder value in the United States, Europe and Asia. The public's confidence in capital markets was undermined, and those assessing the situation called for improved corporate governance, increased transparency in the corporate financial reporting process and more dependable audits.
The International Federation of Accountants (IFAC) responded to these events by seeking to initiate reforms (the 2003 IFAC Reform) that could restore public confidence in both the process of auditing financial statements and the audit profession itself. The unifying element within such IFAC reform was to be that every policy adopted, process implemented, and procedure established must serve the public interest.
The Public Interest Oversight Board (PIOB) was conceived as a response to that crisis of confidence. Under the current financial crisis, the role of the PIOB in providing assurance to investors over the Public Interest robustness of financial reporting standards continues to be highly relevant.
The PIOB was formally established in February 2005 to oversee IFAC's auditing and assurance, ethics, and education standard-setting activities as well as its Member Body Compliance Program. This last activity is designed to encourage member bodies to adopt international standards and to implement quality assurance and investigation and discipline programs.
The establishment of the PIOB is the result of a collaborative effort by the international financial regulatory community and other public sector stakeholders, working with IFAC, to ensure that auditing and assurance, ethics and educational standards for the accounting profession are set in a transparent manner that reflects the public interest. It was mutually recognized that high quality, transparent standard-setting processes with public and regulatory input, together with regulatory monitoring and an independent public interest oversight, are necessary to enhance the quality of external audits of entities.
For this reason, the PIOB also maintains active liaison with both The Monitoring Group –the forum of international regulatory and public sector organizations that appoints the PIOB members and monitors the PIOB and the progress of the 2003 IFAC Reform- and independent audit regulators around the world.