Annual Report 2016

International | FAOA 2016
33
Relations with the
European Union
EU audit reform
The new EU audit reform regulations
came into force on 17 June 2016. The
European Directive 44 on the statutory
audit of annual accounts in general
and Regulation No. 537/2014 45 on
the statutory audit of the annual accounts
of PIE must be implemented
within the respective national law.
The reform should primarily improve
the transparency of company financial
statements, strengthen statutory
auditor independence, promote
market diversity and unify audit oversight
within the EU.
The reform does not affect the
FAOA’s ability to conclude cooperation
agreements with EU member
states but does impact international
administrative assistance. Many
oversight authorities have reorganised
or restructured in implementing
the reform. The FAOA may have to
revise its agreements with them as a
consequence.
Joint inspections
Based on its 2014 memorandum of
understanding (MoU) with the Financial
Reporting Council (FRC) and for
the first time, the FAOA performed
a joint inspection with its UK partner
authority at an audit firm subject to
UK oversight. Although cooperation
is governed the principle of home
state supervision, the MoU provides
for the possibility of extra-territorial
inspections in exceptional cases.
Memorandum of Understanding on
cooperation
The FAOA and the Irish oversight authority,
the Irish Auditing & Accounting
Supervisory Authority (IAASA),
signed an MoU on cooperation in the
oversight of audit firms on 15 February
2016. This further strengthens
investor protection as regards public
companies. The MoU creates, at
the same time, greater legal security
for Swiss audit firms registered with
IAASA for the purpose of auditing
Irish-quoted Swiss companies. The
agreement governs the exchange of
information and confirms mutual recognition
of respective oversight activities.
Cross-border inspections are not
foreseen. The contents of the MoU
are comparable with those made
with many other European oversight
authorities. The MoU was published
on the FAOA website.
Cooperation with the USA
Joint Inspections
The last phase of the second cross-border
joint inspection cycle (2014–2016)
of the FAOA and the Public Company
Accounting Oversight Board (PCAOB)
ended with the inspection of one of
the five largest Swiss audit firms. Cooperation
is based on the Statement of
Protocol (SoP; equivalent to an MoU),
that the FAOA and PCAOB completed
in 2011 and extended in 2014.
Cooperation between the FAOA and
the PCAOB continues to develop positively
and prove effective. The third
inspection cycle begins in 2017. Cooperation
will be further developed
to achieve an even closer relationship.
PCAOB Regulatory Institute
The PCAOB International Institute on
Audit Regulation celebrated its tenth
anniversary in December 2016. Current
investor protection issues and
the condition and stability of the international
financial markets were
discussed at a conference. The Institute
brings together representatives
from oversight authorities and international
organisations to promote
international cooperation and the
exchange of ideas and strategies to
improve audit oversight.
Relations with other states and
organisations
The FAOA took part in the conference
of German-speaking oversight
authorities in May 2016. Due to their
geographical closeness and legal similarities,
representatives from Germany,
Austria, Liechtenstein and Switzerland
meet at this regular event to
discuss the audit oversight issues that
face the authorities in their countries.
The FAOA also took part in the International
Organization of Securities
Commissions` (IOSCO) «Survey on audit
committee oversight of auditors».
Amongst other things, the FAOA
described the Swiss legal and regulatory
requirements that apply to auditor
oversight by the audit committee.
The survey results were published in a
report in May 2016.
Multilateral organisations
International Forum of Independent
Audit Regulators (IFIAR)
Tenth anniversary of IFIAR
IFIAR celebrated its tenth anniversary
on 15 September 2016. Founded by
independent audit oversight authorities
in 2006, IFIAR now has 52 members,
the FAOA having joined in 2007.
The last decade was marked by various
milestones. Of particular note are:
− The ratification of the IFIAR Charter
in 2008;
− The development of 11 basic principles
for independent audit oversight
authorities in 2011 and
− The publication of the first IFIAR
Annual Report in 2012.
IFIAR members approved the
Multilateral Memorandum of Understanding
Concerning the Co-operation
in the Exchange of Information
for Audit Oversight (MMoU) in 2015
(see below).
44 Directive 2014/56/EU of the European Parliament
and of the Council amending Directive
2006/43/EC on statutory audits of
annual accounts and consolidated accounts
(OJ L158 of 27 May 2014, p. 196 f.).
45 Regulation No. 537/2014 of the European
Parliament and of the Council of 16 April
2014 on specific requirements regarding
statutory audit of public-interest entities
(OJ L158 of 27 May 2014, p. 77 f.).