The International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants are moving to a new oversight body called the International Foundation for Ethics and Audit to give them more independence from the International Federation of Accountants.
The move comes after the Monitoring Group, an international group of financial regulators and institutions that includes the Securities and Exchange Commission and International Organization of Securities Commissions, issued a
However, IFAC will still be involved in oversight of the boards by picking two of the trustees. In addition, the two current chairs of the standard-setting boards, IESBA chair Gabriela Figueiredo Dias and IAASB chair Tom Seidenstein will now be co-CEOs of IFEA.
"We are delighted with the modernization of the standard-setting system and the progress already achieved under the new Foundation, including transferring board personnel from IFAC to IFEA, the approval of our 2023 budget, and the process to strengthen our technical staff, which is well underway," Figueiredo Dias and Seidenstein said in a joint statement. "We welcome the myriad opportunities created by the Foundation's establishment. As always, we are committed to the delivery of high-quality standards in service of the public interest, and to the faithful implementation of the reforms. We would like to thank IFAC for all its support to date, and for its continued involvement as the Foundation's service provider."
Nevertheless, the main objective in establishing the foundation is to move IESBA and the IAASB to a new entity that is independent of IFAC. The Public Interest Oversight Board, an international body that oversees IFAC, will also continue its role as an independent oversight board to support the public interest responsiveness of the international standards and the effective delivery of the boards' strategies.
"Establishing the foundation as an independent legal entity to house the IESBA and IAASB, which were previously within the IFAC structure, is an important step in strengthening the independence of the international standard-setting system for ethics, audit and assurance," said Robert Buchanan, chair trustee of the foundation, in a statement Monday.
The foundation's board of trustees are appointed by the members of the foundation, comprising the Monitoring Group, PIOB and IFAC. The board of trustees includes six people, four of whom are nominated by the PIOB and two by IFAC. IAASB and IESBA will receive operational support from IFAC in accordance with a service level agreement between IFAC and the foundation. The Monitoring Group and PIOB will continue to work to secure sustainable, long-term, multistakeholder funding to provide financial support for the foundation and all the other Monitoring Group reforms.
"We are confident that the revised structure — with IFEA as the home of the standard-setting boards governed by a board of trustees that includes both PIOB and IFAC appointed trustees — is an important mechanism created by the Monitoring Group to reform with the profession and simultaneously enhance the independence of the standard-setting boards," stated Linda de Beer, chair of the PIOB. "This, in conjunction with an independent nominations process housed within the PIOB through the PIOB Standard Setting Boards Nominations Committee, will continue to enhance the trust and confidence in the standard-setting process."
SEC chief accountant Paul Munter, who co-chairs the Monitoring Group, sees benefits in the new oversight structure. "The objectives of the Monitoring Group's recommendations included achieving an independent and inclusive, multistakeholder standard-setting system, and fostering the development of timely, high-quality standards that are responsive to the rapidly changing environment while still being responsive to the public interest," he said in a press release. "We are confident that the new structure advances both objectives. We are pleased the recommended reforms are on track for full implementation through diligent, collective efforts, and the focus is now on the implementation of the resource and costing plans."
In conjunction with the announcement Monday, the foundation launched a new website at
