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WHAT THE PIOB HAS DONE

The PIOB has made considerable progress regarding public interest protection and independent oversight.

In 2010, the Monitoring Group completed the first five-year review of the progress of the 2003 IFAC reform, which included input from the PIOB’s own self-assessment report. The final MG report found that virtually all of the changes called for by the reforms had been implemented, though it acknowledged that the process of improvement is continuous (see the PIOB’s Sixth Public Report, chapter four).

The PIOB’s self-assessment exercise concluded that the reforms implemented since 2005 had produced improvements to the governance of the IFAC and its standards-setting bodies, and to the process by which standards are set and implemented. It also underscored the degree to which the public interest had become embedded throughout the processes of standard-setting that the PIOB oversees. These improvements were achieved through the development and refinement of two of the essential elements of reform: the continuation of the IFAC's responsibility for assembling teams of highly qualified professionals to develop auditing, education and ethics standards, and the management of the potential conflict between professional and public interests through the oversight of the PIOB

The PIOB has since developed and implemented several innovations directed at improving its oversight, its transparency, the perception and reality of its independence, its capacity to contribute to the public interest, and its own governance.

In 2011, we reviewed our process of oversight and introduced the Oversight Assurance Methodology (OAM) through which, every year, the PIOB determines the most appropriate oversight model for each Public Interest Activity Committee (PIAC)  after an assessment of risks. New oversight techniques have been added to direct observation (DO), namely remote observation (RO) and monitoring and reporting (M&R). This methodology,  which was implemented in 2012, is still under trial. The PIOB recently increased its oversight capacity by reallocating its resources and hiring an additional oversight adviser. It also enhanced its communications policy with a view to improving its understanding of stakeholder concerns and explaining the PIOB’s role more effectively.

The PIOB has increased its efforts to communicate and make transparent all of its activities: website has been enhanced to communicate its activities more effectively, especially its role, mandate, accountability, responsibilities, self assessment capacity and its perspectives on the protection of the public interest  (www.ipiob.org);  since 2012, the PIOB issues a quarterly update, which includes timely disclosure of meeting agendas, content of deliberations, and decisions taken, as well as past and future quarterly activities.

Together with the MG and IFAC, an initiative was launched to diversify the PIOB’s funding sources by contacting the main stakeholders and seeking their support. We believe that global auditing and assurance, ethics, and education standards are global public goods that deserve wider support from users, stakeholders, and international financial organizations and that the perception of independence of the PIOB will benefit from having a diversified source of funding. Despite the current difficult economic conditions, this initiative has produced promising results. In 2013, the PIOB expects that 47 percent of its budget will come from sources other than IFAC.

In contributing to the public interest, the PIOB has sought over the last few years to further the debate on the need for a better governance structure and independent oversight of the International Public Sector Accounting Standards Board (IPSASB), the only standard setter supported by IFAC not currently subject to any form of independent oversight. The international financial crisis has made it clear  that the current debt crisis could only have been alleviated if public accounts had been based on more appropriate, accrual-based accounting standards. International Public Sector Accounting Standards (IPSAS) are the only global public sector accounting standards based on accrual accounting that could, through wider adoption, improve global financial stability.

Following the debate held in 2012 regarding how best to improve the governance structure and public interest focus of the IPSASB through independent oversight, the Monitoring Group held a roundtable in New York in February 2013 to discuss stakeholders’ views and insights. After the roundtable discussion, the Monitoring Group concluded that the composition of the MG and the PIOB was not well suited for IPSASB governance. Importantly, following the 2013 Moscow statement by the G-20 finance ministers, the International Monetary Fund (IMF) and the World Bank were asked to update the G-20 on the transparency and comparability of public sector accounting, so progress is expected in this area.

As part of the efforts to strengthen its governance, in February 2012 the PIOB discussed and approved its internal Code of Conduct, which applies to both PIOB members and staff. The document sets and elaborates on the principles that board and staff members are required to apply so that they conduct themselves at all times in a manner coherent with their status as members of an international organization focused on protecting the public interest.

Progress has been made in the standard-setting activities of the PIACs and IFAC’s Nominating Committee: in 2012, the first independent chair of the International Ethics Standards Board for Accountants (IESBA) was appointed; the International Auditing and Assurance Standards Board (IAASB) continued to improve its inclusiveness and transparency by encouraging stakeholders to actively provide input in its standard-setting activities in the public interest; the chairs of the International Accounting Education Standards Board (IAESB) and its Consultative Advisory Group (CAG) were appointed as the incumbents met their statutory time limits; and the Compliance Advisory Panel (CAP) reviewed and strengthened the Statements of Membership Obligations (SMOs) and its own terms of reference (ToR). Significant progress was also made in the nomination processes: First, IFAC reviewed the definition of non-practitioners in 2012. Secondly, the 2014 call for nominations (CFN) clearly states that nominations are open to the general public, including self-nominations, not only for public members, but also for practitioners and non-practitioners. The Nominating Committee continues to discuss PIOB suggestions, which may lead to greater diversity in the sources of nominations and greater independence of the boards from IFAC member bodies.