Monday 30 March 2020

ORIGINS OF THE PIOB

The PIOB was created in 2005 after a series of high-profile corporate scandals, including the Enron and WorldCom episodes in the US, and the collapse of Parlamat in Europe, undermined the public's confidence in the credibility of independent audit opinions. These audit failures brought about a lack of trust in the information underpinning the workings of stock exchanges around the world, and contributed to the financial instability of the early 2000s. The quality and integrity of financial information was proven key to market confidence and financial stability, and the crisis underscored the need for high-quality and broadly applicable international accounting and audit standards that would work towards strengthening and bringing consistency to financial reporting around the world.

International regulators (including the International Organization of Securities Commissions, the World Bank, the Basel Committee on Banking Supervision, and the International Association of Insurance Supervisors at first and later joined by the European Commission and the International Forum of Independent Audit Regulators joined the MG as permanent members at a later stage) together with the International Federation of Accountants, responded to the crisis and agreed in 2003 on a blueprint for reform of the IFAC's standard-setting and compliance activities that was designed to manage the inherent conflict of interest caused by the profession setting its own rules.

The objective of this tripartite effort was to find measures that would effectively address concerns about the audit process and the conduct and competence of audit practitioners. The accuracy, integrity, comparability and public interest focus of financial accounts were seen as key to reestablishing a stable and international financial system.

The standards that emerged from this collaborative process would enhance the quality of the independent audit and improve the competence of audit practitioners.

Under the reform program, the standard-setting boards operating with the support of the IFAC underwent sweeping changes in composition and due process, the Consultative Advisory Groups were strengthened, and the IFAC enhanced its public interest agenda. The body of international standards of audit (ISAs) also underwent renovation; in February 2009, the IAASB completed the Clarity project for audit standards aimed at clarifying their intent, improving their comprehensibility, and facilitating their translation.

The International Code of Ethics for Professional Accountants (including International Independence Standards) is effective as of June 15, 2019.
It is also available in digital format: IESBA E-Code https://www.iesbaecode.org/