EBA欧洲银行-Letter-to-Gerben-Everts-IOSCO-re-consultation-Monitoring-Group_13页_278kb

EBA Summary of Monitoring Group Consultation on Audit-Related Standard-Setting Reform

Core Content

The European Banking Authority (EBA) has responded to the Monitoring Group (MG) consultation on reforming the governance and oversight of international audit-related standard-setting boards. The EBA supports the reform but emphasizes the need for further clarity and detail in the proposal, particularly regarding funding, membership, and the concept of public interest. The EBA also highlights the importance of ensuring independence from the auditing and accounting professions.

Main Views and Key Points

Support for Reform

• The EBA welcomes the MG's proposal to improve the governance, effectiveness, and relevance of the current international audit standard-setting process.
• It supports the idea of increasing independence and public accountability of standard-setting bodies.

Public Interest Framework

• The EBA stresses the need to clearly define and specify the concept of public interest, including how it is best served in practice and what constitutes a breach.
• It argues that the public interest framework should not be developed solely by the PIOB due to potential conflicts of interest and recommends that the PIOB be accountable to the MG.

Single Independent Board

• The EBA supports the establishment of a single independent board to develop and adopt auditing, assurance, and ethical standards for auditors.
• Reasons include:
  • Enhancing the integration of ethics into auditing standards.
  • Avoiding conflicts of competence and ensuring coordination.
  • Ensuring equal consideration from external stakeholders.
  • Promoting economies of scale and avoiding redundancy.

Board Structure and Composition

• The EBA does not have a strong opinion on the optimal board size but suggests it should be large enough to ensure diversity and expertise, yet small enough to maintain effective communication.
• The chairperson should be a full-time member, while other members may be part-time.
• The EBA emphasizes the need to define "non-practitioner" roles and implement a cooling-off period for former practitioners to ensure independence.

Board Members' Skills and Attributes

• The EBA advocates for an appropriate balance of technical and strategic skills in board members, particularly in auditing and ethics.
• It supports the development of a skill matrix to identify required competencies.

PIOB Role and Responsibilities

• The EBA believes the PIOB should maintain its role as a consultative advisory group but not be granted veto power over standard adoption unless there is a proven severe breach of public interest.
• The PIOB should be accountable to the MG and focus on monitoring the due process and content of standards rather than being involved in detailed standard-setting.
• The EBA suggests that IFAC representation should be removed from the PIOB to avoid undue influence from the accounting profession.

Funding and Independence

• The EBA supports the separation of funders and appointers to preserve board independence.
• It encourages the MG to explore alternative funding mechanisms, including a jurisdiction-based levy, but cautions against voluntary contributions from the audit and accounting professions, as they may compromise independence.
• The EBA emphasizes the need for full transparency in funding and remuneration arrangements.

Permanent Staff

• The EBA supports the idea of a permanent administrative and technical staff to assist the board with operational and procedural tasks.
• This staff should be directly employed and managed by the board, not by audit firms or professional bodies.
• The staff should be highly qualified and full-time to ensure the board can focus on strategic and technical matters.

Key Recommendations

• Finalize the proposal by clarifying open aspects such as funding, membership, and public interest.
• Develop a transition plan for implementing the reforms in steps.
• Ensure the public interest framework is clearly defined and includes practical measures to address breaches.
• Maintain the PIOB's advisory role without granting veto power unless a serious breach is identified.
• Remove IFAC representation from the PIOB to avoid conflicts of interest.
• Explore alternative funding mechanisms, including a jurisdiction-based levy.
• Provide full disclosure of remuneration and funding policies.
• Establish a skill matrix to define the competencies required for PIOB members.
• Ensure independence of the board from the audit profession by employing permanent staff directly.

Conclusion

The EBA sees the reform as a positive step but underscores the necessity of a comprehensive, transparent, and independent framework for the future of international audit-related standard-setting. It encourages the MG to proceed with a detailed proposal, including a transition plan, funding mechanism, and impact assessment, to ensure the reform is both feasible and effective in the public interest.