LONDON (Reuters) - Global regulators are reviewing the auditing sector after policymakers questioned the quality of book-keeping at banks in the run up to the financial crisis.
David Wright, secretary-general of the International Organisation of Securities Commissions (IOSCO), a global body of regulators, said a task force would look at inconsistency in financial reporting.
Banks were given a clean bill of health by auditors just before taxpayers had to shore them up during the financial crisis of 2007 and 2008.
Wright told a conference organised by the ICAEW, a London-based accounting body, the task force will look at how audit committees at companies function.
Audit committees are responsible for selecting outside auditors to check a company’s books and they have been criticised for sticking with the same book-keeper for too long.
Wright said the review, which will report in 2015, will also look at how the International Forum of Independent Audit Regulators (IFIAR) could be strengthened as a global network of watchdogs.
The review will in addition look at how the International Federation of Accountants (IFAC), which groups professional accounting bodies, is run. “We are looking prospectively at the governance of IFAC, which many people still feel is not fully appropriate,” Wright said.
Moves by IOSCO are the latest among regulators to shake up auditing, a sector dominated globally by the “Big Four” of KPMG [KPMG.UL], EY [ERNY.UL], Deloitte [DLTE.UL] and PwC [PWC.UL].
The European Union has approved a law forcing listed companies to switch accountants on a regular basis but it will take several years to be phased in.
Britain has pre-empted the law, but so far nearly all switching of auditors at top listed companies has been between the Big Four, as smaller accountants still find it hard to pick up many blue chip clients.
IOSCO has no power to impose binding rules but makes recommendations which its members apply in their own national rules.
Editing by David Holmes