The board of the International Organisation of Securities Commissions (IOSCO) published the final report Transparency of Firms that Audit Public Companies.
The report addresses “audit firm transparency reporting”, which considers the practices employed by audit firms to be transparent in their own reporting to investors and other stakeholders about the firm itself, notably, with respect to firm governance and elements of their system of quality control for their financial statement audits.
Transparency reporting can foster internal introspection and discipline within audit firms and may encourage audit firms to sharpen their focus on audit quality, which would be of benefit to investors and other stakeholders. In comparing audit firms competing for an audit engagement, audit firm transparency reporting can aid those responsible for selecting a public company’s auditor in their decision making process by providing information on a firm’s audit quality.
The report includes an IOSCO Statement on, as well as a Guide for, audit firm transparency reporting. The Guide is intended to serve as a frame of reference for promoting good practice and contributing to high quality audit firm transparency reports.
To inform the report, IOSCO studied this area by: sponsoring a Roundtable on the Quality of Public Company Audits from a Regulatory Perspective; issuing a public Consultation Paper and analysed the 21 comment letters received; obtaining input from several oversight bodies and others involved in audit work; conducting research on current audit firm reporting practices and related regulatory reporting requirements within certain IOSCO member jurisdictions.
