Boosting audit quality is vital to global economic progress, according to Wesley Bricker, chief accountant at the US’s financial watchdog, the Securities and Exchange Commission.
But, for today’s Daily Insight and because the Big Four auditing firms are very topical what with Carllion etc, I thought I’d take a look at what the SEC man had to say.
Ultra-connected world economy
In today’s ultra-connected world economy, Wesley sees information sharing as vital to ensure credible financial reporting.
“The involvement of everyone in the financial reporting structure in supporting the work of the accounting and audit standard-setters is critical,” he says.
“In doing so, standard-setters can maintain a long-range vision, mission, and strategic goals that are consistent with continued advancement of general purpose financial reporting.
“Additionally, the collaboration of everyone involved in the financial reporting structure should transcend geographies.
“It is essential to continue a policy of ongoing coordination and collaboration on national and international standards, practices, and needs so that the best thinking is identified, shared with each other, and can prompt action.
“We also should redouble our efforts for coordination within and across each phase of the financial reporting system – preparation, audit, delivery, and use.
On auditing, he adds: “When it comes to advancing audit quality and related expectations, prevention (as a complement to detection) is a worthy investment so that investors receive reliable financial information the first time. It is critical that all key stakeholders, including the audit standard-setters and audit regulators, assist in the advancement of audit quality.
Role of decision making
“One crucial preventive measure is the development of high-quality audit standards, which aid, but can never wholly replace, the role of decision making and judgment by auditors. Both local and international audit, assurance, ethics, and education standards (“audit-related standards”) are relevant to the US and its capital markets participants.
“Many US accounting firms are members of various global networks that incorporate international audit-related standards as part of a common audit methodology, training, and governance, with an aim to increase the consistency of audit execution and reduce the risk of audit failure.
Wesley concludes: “High-quality audit standards make audits—and the work of audit committees and others that oversee the audits of companies on behalf of investors—considerably more effective. And so, we all have an interest in the accountability and inclusiveness of the international audit-related standard-setters.”