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DECEmbEr 2008
IFAC P o l IC y P osI t Io n 3
InternatIonal Standard SettIng In the PublIc IntereSt
IntroductIon
This paper outlines the rationale for the regulatory arrangements put in place for setting international standards for auditing and assurance, ethics and accounting education; arrangements in which responsibility is shared between the public sector and the private sector. While the previous IFAC policy position paper on regulation of the accounting profession1 addressed regulatory issues at the national level, the focus of this paper is on standard setting arrangements at the international level. The paper describes the manner in which the current arrangements, a combination of public and private sector roles ,2 provide a standard setting structure and process that operate and are seen to operate in the public interest, in a context in which there are needs for legitimacy, independence, transparency, performance (encompassing technical competence, responsiveness and efficiency) and accountability. It seeks to recognize and address the need for balance in these areas, given that there may be trade-offs that need to be made. It also recognizes the need for the standard setting structures and processes, and the resultant standards, to create the right incentives for effective implementation of the spirit as well as the letter of the standards.
level from regulatory systems in which private sector professional accounting institutions played a dominant role to one in which public sector regulatory organizations played a greater role in both standard setting and oversight. At a national level, the shift from essentially self-regulatory arrangements to arrangements with a significant public sector role was a matter of degree in that, in most jurisdictions, the public sector had played some role prior to the Sarbanes-Oxley Act. Professional institutes in many countries regulated their members under powers conferred by statute and monitored by
IFAC P o l IC y P osI t Io n 3
InternatIonal Standard SettIng In the PublIc IntereSt
IntroductIon
This paper outlines the rationale for the regulatory arrangements put in place for setting international standards for auditing and assurance, ethics and accounting education; arrangements in which responsibility is shared between the public sector and the private sector. While the previous IFAC policy position paper on regulation of the accounting profession1 addressed regulatory issues at the national level, the focus of this paper is on standard setting arrangements at the international level. The paper describes the manner in which the current arrangements, a combination of public and private sector roles ,2 provide a standard setting structure and process that operate and are seen to operate in the public interest, in a context in which there are needs for legitimacy, independence, transparency, performance (encompassing technical competence, responsiveness and efficiency) and accountability. It seeks to recognize and address the need for balance in these areas, given that there may be trade-offs that need to be made. It also recognizes the need for the standard setting structures and processes, and the resultant standards, to create the right incentives for effective implementation of the spirit as well as the letter of the standards.
level from regulatory systems in which private sector professional accounting institutions played a dominant role to one in which public sector regulatory organizations played a greater role in both standard setting and oversight. At a national level, the shift from essentially self-regulatory arrangements to arrangements with a significant public sector role was a matter of degree in that, in most jurisdictions, the public sector had played some role prior to the Sarbanes-Oxley Act. Professional institutes in many countries regulated their members under powers conferred by statute and monitored by