PIOB overseeing international audit, ethics and education standards for the accounting profession

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The 2003 IFAC reform rested upon two basic pillars:

• The IFAC would continue to assume responsibility for promulgating standards for auditing and assurance engagements and for the education and ethical conduct of accounting professionals. This role would be conditional on the reform of the governance, composition and operation of the IFAC standard-setting boards for these three activities.
• A new body, independent of the audit profession, would be created (the PIOB), to oversee the governance and activities of each standard-setting body.

The PIOB is accountable to the Monitoring Group-- the regulators involved in the drafting of the IFAC reform, plus the Financial Stability Board. It is entrusted with the following responsibilities:

• Direct observation of the three standard-setting boards or Public Interest Activity Committees (PIACs) and their Consultative Advisory Groups (CAGs).
• Review and approval of the Terms of Reference for these entities.
• Membership approvals, including the chairs of the PIACs and their CAGs.
• Specification and monitoring of due process
• Approval of work programs and strategies of the IFAC bodies it oversees
• Outreach to regulators, national standard setters, and other interested parties.

Overseeing the process of standard setting:

The PIOB serves the international public interest by ensuring that the processes it oversees are transparent and broadly inclusive. Its oversight of standard setting relies on information gathered from direct and comprehensive monitoring; reports from, and dialogue with, the chairs of the PIACs and their CAGs; and independent staff reviews.

Direct observation of the PIAC and CAG activities enables the PIOB to evaluate the quality and effectiveness of the deliberation process. PIOB members assess the professionalism, engagement, efficiency, transparency, inclusiveness, and public interest focus of the PIACs and their CAGs. Based on this information, the PIOB forms an opinion on the appropriateness of each stage of the process used to develop individual standards.

The standard-setting boards are required to deliberate in public, and all documents, including minutes, meeting summaries, exposure drafts and consultation papers, are posted on the IFAC website (www.IFAC.org).

Overseeing nominations and membership approvals:

This same oversight model is used by the PIOB in its assessment of the due process used for the search and selection of nominations for PIAC members, chairs and deputy chairs, and by the PIACs to update their strategies and work programs.

To prevent the profession’s self-interest from dominating standard setting, the PIOB has worked to achieve parity between practitioners and non-practitioners on the PIAC and CAG boards, which is a reality today. It also works towards improving board diversity, including a better balance among geographic regions, types of professional experience, and gender. At the same time, it seeks to maintain technical expertise to ensure that the quality of final standards is not compromised.

Overseeing the Compliance Advisory Panel:

The aim of the Compliance Advisory Panel (CAP) is to increase the level of compliance with the IFAC’s membership obligations. The PIOB directly observes the deliberations in which the CAP studies and approves the action plans of member countries for meeting these obligations, including efforts to adopt and implement standards developed by the PIACs, the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB). The compliance program is an important platform for promoting convergence to international standards.