Citing recent concerns about the quality of auditing and its potential impact on investor confidence, the International Organization of Securities Commissions (IOSCO) issued a report on Thursday that aims to improve audit quality by setting out a series of best practices for audit committees.
The IOSCO report covers issues such as recommending and assessing auditors; setting audit fees; evaluating auditor independence; and examining audit quality. The report also provides guidance on the composition of audit committees to enable them to be more effective, covering issues such as the qualifications and experience of audit committee members.
“The quality of a company’s financial report, supported by an independent external audit, is key to market confidence and informed investors, and to the effective functioning of capital markets,” IOSCO says, noting that audit committees should contribute to investor confidence by helping to ensure high-quality audit work.
Yet, IOSCO reports that global audit regulators have found that there’s a need to “improve audit quality and the consistency of audit execution.” Furthermore, it says that there’s currently “a lack of consistency in the way audit committees carry out their responsibilities.”