LONDON (Reuters) - Global financial regulators will press ahead with reforming how company auditing rules are written to create a more independent standard setting system and curb the influence of accountants.
Audit rules are currently written under the umbrella of the International Federation of Accountants (IFAC), a global body that represents a profession dominated by the “Big Four” - PwC, Deloitte, KPMG and EY - which also check the books of nearly all blue chip companies globally.
Regulators from across the world who form a “Monitoring Group” that oversees IFAC, held a public consultation last November on creating a new audit rulemaking body that would be independent of the accounting industry.
They published on Monday feedback from the consultation.
“The broad support received for the objectives set out in the consultation is a clear indication that reform of audit-related standard setting globally is needed,” Gerben Everts, a Dutch regulator and chair of the Monitoring Group, said in a statement.
The Group said it will publish a fleshed out reform proposal by the end of the year which includes how a new body would be funded, an impact assessment and a transition plan.
“This timeline responds to stakeholders’ concerns that the development of the next set of proposals should not be rushed in a way that would undermine confidence in the existing standards,” the Group’s feedback statement said.
The aim is to replicate a similar change made to accounting rules two decades ago that is now the benchmark for book-keeping in over 100 countries.
IFAC said last year that the current system already has many of the elements the regulators want and there was not enough evidence that such radical change is needed.
The Group said investors and public authorities have endorsed steps to make the standard setting process demonstrably and fully independent of the accounting and audit professions.
“IFAC member bodies also agreed with the high-level objectives of the review but did not support many of the substantive options proposed,” it added.
Reporting by Huw Jones; editing by David Evans