IFAC reforms – good, but could be better

The International Federation of Accounts issues reforms for the professions of accountancy and audit back in 2003, when the wounds from the Enron and WorldCom collapses were still hurting. After another governance crisis, the its Monitoring Group, made up of the International Organization of Securities Commissions, the Basel Committee on Banking Supervision, the European Union and three other public interest bodies, examined how well the IFAC reforms were working. The report suggests that most of its proposals have been enacted, but there's room for improvement and two issues to consider for the longer term.

• International competence: "Whether standard-setting Boards that operate within an accountant's professional membership organization can carry out the responsibilities that ultimately come with international standard-setting in the public interest."
  
• Monitoring synergies: "Whether there could be potential synergies associated with the two accountability functions now present for international standards; namely, the Monitoring Group for international audit-related standards and the Monitoring Board for international financial reporting standards."

Among the Monitoring Group's recommendations are that IFAC should stop having 15 of the 18 seats on its Audit and Ethics Boards reserved for people nominated by the professions themselves. The Ethics Board should have an independent chairman "in view of the inherent conflicts of interest that particularly relate to the work of this Board", it said.

Source document: The IOSCO report is a 22-page pdf file.