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IOSCO released a contingency planning paper to assist IOSCO members in considering and preparing for potential contingencies involving audit firms that may affect the delivery of audit services in the global capital markets.
“A crisis involving a major audit firm in one jurisdiction may quickly create repercussions throughout the global marketplace” Christopher Cox said. “As a result, regulators that have been given authority to oversee auditors must anticipate and prepare for events and conditions that may affect the delivery of audit services in the capital markets.”
The paper presents a collection of information about issues and experiences encountered in past events and conditions that affected the auditing of financial statements of public companies. It does not intend to make suggestions on the allocation of auditor oversight responsibilities on the national level; rather, it addresses securities regulators only so far as they have a role in auditor oversight.
The paper proceeds from the premise that while the individual facts and circumstances of each contingency situation will be unique and will necessitate a plan tailored to that event or condition, the use of preplanning and preventive measures can help reduce the risk of a crisis and can also facilitate speed and effectiveness in response if a crisis arises.
Key topics discussed in this paper and its appendices include:
• The Need for Contingency Planning
• Planning and Preventive Measures
• Crisis Management
• Communications and Confidentiality
The Audit Services Task Force of the IOSCO Technical Committee also announced its agenda for the coming months. It will focus on the following audit related issues:
• Transparency and governance of audit firms, including the intersection of governance with both firm viability and audit quality;
• The scope of audit reports, including varying levels of assurance in different circumstances, the possibility of enhanced disclosure of the bases for different levels of assurance, and the potential role of joint audits; and
• Potential expansion of allowable organizational structures and forms to allow for greater firm viability and industry competition.