Outline

1. CONVERGENCE AND AUDIT Gonzalo RamosSecretary GeneralPublic Interest Oversight Board (PIOB)XVIII CongresoNacional de AuditoríaSevilla, Noviembre 25-27, 2009

2. Some propositions on convergence The crisis and Audit The PIOB The Road Ahead Outline

3. Convergence is the process of aligning national standards with international standards. Convergence is not about harmonization or uniformity. Convergence is a voluntary process. Decisions about the application of standards pertain to sovereign national authorities. A necessary condition for convergence is that international standards are of high quality regarding not only their technical content but also their process of development . Global convergence is good. The adherence of Auditors to common high quality standards ensures comparability and consistency , increasing market confidence. Convergence is a complex process: Development, adoption, implementation. SomepropositionsonConvergence

4. The current financial crisis represents a massive failure of financial markets to price risk. Booming markets went hand in hand with the relaxation of prudential vigilance under the perceived good functioning of markets. The response to the crisis has meant a radical change of approach towards more regulation. In so far as the process of Audit also fulfills a regulatory function, auditing will probably be subject to similar pressures and expectations as other regulatory area The current crisis provides an opportunity to converge towards global standards. The crisis and Audit

5. The Public Interest Oversight Board • The PIOB was created in 2005, as a body independent of the audit profession, to provide independent oversight to the 3 standard setting bodies: • The International Auditing and Assurance Standards Board (IAASB) • The International Ethics Standards Board for Accountants (IESBA), and • The International Accounting Education Standards Board (IAESB) as well as their Consultative Advisory Groups (CAGs) and the Compliance Advisory Panel (CAP). • Major goals have been achieved, including: the standard-setting Boards have undergone big changes in composition, diversity and due process applied; their CAGs have been substantially strengthened; and IFAC has worked to enhance its public interest agenda. • The body of International Standards on Auditing (ISAs) has undergone a major “Clarity” project, completed in February 2009, and the Code of Ethics for Professional Accountants, including requirements for auditor’s independence, has been revised and completed in June 2009

6. The Road Ahead • After standard development, the challenge for effective convergence is now adoption and implementation of standards. • The true gain from successful standard setting will come from the application of the new standards. • The realization of public benefits will emerge slowly and much later than standard development and publication, as implementation takes root and modifies actual practice. • This means that the road to the achievement of higher quality financial reporting and higher quality audits is still ahead.

7. Thankyou