Monitoring Group highlights value of high-quality audit and need to fund independent standards
The Monitoring Group (MG) has published a paper drawing attention to the importance of high-quality audits to investors, issuers, national standard-setters, regulators and others. These must be conducted in accordance with standards developed by an independent and inclusive international audit and ethics standard-setting structure.
Without question, audit plays an important role in quality assurance and in building trust in financial data. “Academic research demonstrates that the benefits received by stakeholders in terms of reductions in cost of debt and equity for issuers with financial reporting subject to high-quality independent audits far outweigh the costs of operating the independent standard-setting structure,” states the Group.
The MG is a group of international financial institutions and regulatory bodies responsible for the overall governance of the international audit and ethics standard-setting system, including periodic effectiveness reviews. In July 2020, it issued recommendations on strengthening this system, and notes that many important steps have already been taken to implement these. The MG now emphasises that a sustainable long-term multistakeholder funding mechanism that supports the independence of the standard-setting structure is crucial in maintaining these improvements.
“It is in the public interest that all stakeholders in the financial reporting ecosystem who benefit from a single set of high-quality international auditing and ethics standards contribute to support long-term financial stability of the standard-setting system,” says the MG.