Firms that audit public companies should be transparent about their own governance and operations, according to a report released Friday by the International Organization of Securities Commissions (IOSCO).
This sort of transparency “can foster internal introspection and discipline within audit firms and may encourage audit firms to sharpen their focus on audit quality, which would be of benefit to investors and other stakeholders,” IOSCO says in a statement.
In additional, transparency can help companies compare audit firms that are competing for an audit engagement, IOSCO says.
The report includes guidance for audit firm reporting, which aims to promote best practices, and contribute to high quality transparency reports.
The guidance sets out the elements that IOSCO considers necessary for audit firms to be properly transparent, including that they detail the firm’s legal and governance structure, its measures to foster audit quality, its internal indicators of audit quality, and the indicators generated by external bodies.