Committing to the Public Interest

[News]

Congratulations to the PIOB for the organization’s 15^th anniversary. The PIOB has fulfilled successfully a demanding mandate: to build and operate an oversight framework, to ensure that standards for Audit and Ethics embody clear Public Interest objectives and to respond to the needs of global users, while maintaining clarity and high quality.

The content and influence of the standards have extended considerably over the period. The PIOB deserves a good share of credit for this achievement. It has followed proactively the planning and execution of standard setting, the due process, the sharpening of public interest language, and objectives. It has been alert and communicative, but at arms-length from the technical work of standard setting.

Looking at the whole system since 2005, I would certainly assess its performance as an overall success. A success premised on a collaborative stance of the PIOB and the Standard Setting Boards (SSBs) in their respective roles.   A success we should now build on, as we move onto a new phase with the recommendations for reform the Monitoring Group has issued, and which we welcome.  This seminar is a unique opportunity to discuss ideas and directions for the future. I thank the PIOB for the opportunity.

The deeper challenge underlying the PIOB’s and the Boards’ missions has been to keep abreast of a dynamic Public Interest, a set of concepts and values varying across space and changing across time. This dynamic has taught both the SSBs and the PIOB to remain open to new needs and perceptions. Corporate failures, financial turbulences, technological disruptions, looming crises such as climate change and the Covid pandemic, have spearheaded new and broader perceptions of the Public Interest.

The Environmental, Social, and Corporate Governance (ESG) agenda defines clear objectives underpinning the global Public Interest. This is a program that informs also our more particular notions of Public Interest. It is all the more critical as we observe new forces towards economic nationalism. These developments create repercussions for global standards, which we need to reflect and strategize on, both Standard Setters and Overseers.

My thinking, taking especially into account the technological disruptions, is that all of us should work to ensure broader adoption and more comprehensive use of the standards. For that to happen, standards must be applicable. Applicability is an overarching desideratum. Standards must respond to emerging objectives but also push for tangible improvement in practical outcomes. It is important to see the actual positive effects of the standards in real time. In my conversations with many stakeholders I have realized how pressing and precious this is.

Here are some examples of actions for higher focus on applicability: 

• A closer link of our Boards with National Standard Setters
• Systematic adoption of post-implementation reviews for impactful standards.
• Coordinated initiatives ( SSBs, IFAC, and the PIOB) for awareness raising, facilitation of Adoption, and clarity in Implementation.
• Widening use of surveys of “users and beneficiaries” of the standards as a global public good.

In closing, I want to share thoughts on coordination between the SSBs.

From occasional collaboration, we have moved over the last 4 years to systematic coordination of work. Collaboration at the level of leadership, task forces, staff, and joint meetings of the two Boards, already initiated with Arnold Schilder as chairman of the IAASB, is now actively pursued with Tom Seidenstein.

In substantive terms, we are moving from seeking “consistency” to building “synergy” of the standards. Our ambition is that our respective standards are not just consistent and non-conflicting, but that they are increasingly becoming mutually reinforcing. This is real progress and creates a strong incentive for users to adopt both sets of standards. This also has implications on future practice. 

(a) on how strategies of Standard setting are crafted

(b) how oversight is practiced

In sum, we have to reflect on achieving Public Interest contributions not of independent parts, as if they were unrelated, but of autonomous parts that are consciously coordinated.

Thank you.

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