21 October 2019

IAASB Chair Tom Seidenstein speech on the future of international standard setting

Seidenstein said that the IAASB will help to innovate the processes to make standard-setting much more agile and it will play its part to increase the level of engagement among the various components in the financial reporting ecosystem.

Mr Seedenstein said: „We need to get the right balance in our technical work program to be more responsive to the challenges. We need to be more willing to innovate in the standard setting process. And finally, we must tighten our engagement with audit and accounting standard-setters, regulators, and others charged with serving the public interest.“ Then he turned to the innovation and engagements points.

Mr Seedenstein asked, “What could a more innovative way of standard-setting look like?” Let me begin by saying I believe in formal due process as it exists today. However, the due process of standard-setting has not evolved much in the last several decades. In my mind, standard-setting is marked by long duration projects and highly formalized procedures. This formality favours those with the time and resources to participate in the process—and likely means the barriers for entry for participation are high. What I envision, to borrow a term from the technology world, is a much more agile standards-development process.

Standard-setters should be adopting new technology collaboration tools to engage stakeholders through all parts of the process. We need to meet people where they want to meet us—not where we want them to meet. In a more innovative world, we should move from paper and .pdf-based standards, to digital forms where we could track how practitioners are using them. At the IAASB, we should be willing to adopt more quick response mechanisms to address practice issues in shorter time periods. Our proposed Framework of Activities is meant to do this. This agile approach will require experimentation and a willingness to fail. However, success could be measured in greater participation and trust in the process and more rapid standards development.

Turning to engagement, this is also closely connected to our agility as standard-setters. We are part of a broader ecosystem—including securities regulators, independent audit inspection regimes, accounting standard-setters, and national audit standard-setters. Our reporting system will work better when the different parts of the system speak together. I recognize that this occurs today, but particularly when it comes to taking feedback from inspection regimes and partnership with national standard-setters, I want the IAASB to enhance our activity in this area.“

Finally, he turned to the IAASB’s work program and IAASB´s strategy going forward. The IAASB is in the process of completing a significant phase in its technical work. The IAASB´s current and most recent work comprise major standard-setting projects, aimed at improving the fundamentals of audit quality.

Full speech

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