Paul Boyle Chief Executive INTERNATIONAL CONVERGENCE OF ACCOUNTING & AUDITING STANDARDS & REGULATION WORLD BANK ADVANCED PROGRAM in ACCOUNTING and AUDITING REGULATION MODULE 10 17 October 2005 Paul Boyle Chief Executive

Agenda Forces affecting corporate behaviour The corporate reporting process Corporate reporting & governance – a joined-up approach International standards implementation International audit regulation Completing the international architecture

Forces affecting corporate behaviour

The corporate reporting process

Corporate reporting & governance – a joined-up approach Links between issues Accounting Auditing Professionalism of accountants Corporate governance The ability to cover all of these issues increases effectiveness

… is to promote confidence in corporate reporting and governance The FRC’s aim … is to promote confidence in corporate reporting and governance

Our objectives To promote: high quality corporate reporting high quality auditing high standards of corporate governance the integrity, competence and transparency of the accountancy profession the FRC’s effectiveness as an independent regulator

Our regulatory philosophy A well-informed market is the best regulator Targeted use of powers (proactive, risk-based) Principles and clarity in standards and codes Consultative, practitioner decision-making … but independent Promote appropriate international approaches Transparency, accountability and awareness

International standards implementation Keep in mind all stages of the process The process as a whole needs to add value Small & medium-sized companies have special considerations Independence & accountability of regulators are both important

International audit regulation 100% self-regulation is no longer politically acceptable Independent audit regulators emerging in various countries Benefits of convergence of auditing standards “ISA-plus” model Independent monitoring and enforcement

Completing the international architecture International capital markets, international audit firms … an international regulatory response is required Globally/regionally Pressure on firms to improve international quality delivery … International regulatory convergence is a reasonable request “Global” regulation is not feasible … but agreement on common principles and co-operation is more realistic

Completing the international architecture Global European Banking Basel Committee CEBS Securities IOSCO CESR Insurance IAIS CEIOPS

Completing the international architecture Global European Banking Basel Committee CEBS Securities IOSCO CESR Insurance IAIS CEIOPS Audit ??

Completing the international architecture Global European Banking Basel Committee CEBS Securities IOSCO CESR Insurance IAIS CEIOPS Audit “IAIAR” “CEAR”

Promoting confidence in corporate reporting and governance