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Initiative to raise standards of financial reporting, auditing globally

KARACHI: The International Federation of Accountants (IFAC) and the large international firms launched a major new initiative, which is designed to raise standards of financial reporting and auditing globally, thereby protecting the interests of cross-border investors and promoting international flows of capital.

A message reaching here on Thursday said that a meeting in this respect was held in London on January 10.

It said that a key component of this initiative is the establishment of a new IFAC-sponsored grouping of firms which will work closely with IFAC in developing and encouraging implementation of international accounting and auditing standards.

The proposal also provide for independent oversight of IFAC's public interest activities.

It was further stated that participation in the new IFAC grouping of firms will be open to any firm having transnational clients and undertaking to comply with rigorous quality obligations.

These include having policies and practices in compliance with international standards on auditing (ISAs) and the IFAC code of ethics. Maintenance of appropriate internal control procedures including intrafirm practice review. Agreement to implement training on international accounting and auditing standards including code of ethics. Agreement to subject assurance work to periodic external quality assurance. Agreement to support the development of the professional bodies and implementation of international standards of accounting and auditing in developing countries.

The IFAC President, Frank Harding commented that this initiative represents a significant step towards the achievement of harmonisation of financial reporting and auditing at a global level.

He said that the commitment by the international firms to work with IFAC in ensuring compliance with international standards and consistent quality of internal procedures in all their countries of operation will promote transparency, reliability and comparability of financial information across national borders, facilitate the international transfer of public and private capital, strengthen business transactions and ultimately contribute to the broader public interest through wealth creation and strengthening of civil societies.

The greater part of the funding for the IFAC grouping of firms will be provided by participating firms who will also contribute additional resources to strengthen IFAC's audit standards setting and monitoring work. APP