Our submission to the International Auditing and Assurance Standards Board (IAASB) and International Ethics Standards Board for Accountants (IESBA) on the future of audit standard-setting, June 2026.
Auditors are a bit like structural engineers, checking there are no leaks that might destroy a dam or impinge on the integrity of a bridge. It only tends to be when audit fails that we notice. And the consequences of failure can be devastating, not just for investors, but for staff, suppliers, and customers. We need only remember the hardship caused by Enron’s collapse in December 2001, bank failures in the financial crisis of 2007/8, or the bankruptcy of construction giant Carillion in the UK in 2018.
It would thus be reckless to neglect the standards that govern auditors’ work, or assume the profession can be left to get on with things. Yet this, unfortunately, appears to be our collective approach, as demonstrated by the lack of oversight and resourcing being devoted to the international audit Standard Setting Boards (SSBs): the International Audit and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA).
This needs to change and our submission to the SSB’s joint stakeholder survey that we are releasing today proposes four concrete actions to promote more rigorous and independent auditing, including:
An Investor Accountability Standard that gives investors genuine insight into the audit and meaningful levers to act on it — moving beyond boiler-plate disclosure, supporting regular competitive tenders, annual auditor elections, and open dialogue between auditors, audit committees and shareholders.
An Audit Firm Governance Standard that brings the transparency and internal controls expected of any public-interest entity to audit firms themselves, including published financial statements, a standardised audit-quality dashboard, and disclosure of the firms' lobbying.
We propose housing both within an expanded set of Audit Governance, Accountability & Ethics Standards, shifting the emphasis towards governance and accountability. Ethical behaviour cannot be prescribed; it has to be incentivised.
Move audit standard-setting to an independent multilateral body, such as the International Organisation of Securities Commissions (IOSCO) or the International Federation of Independent Audit Regulators (IFIAR), properly resourced and funded by governments.
At the heart of all our proposals is the need to directly acknowledge and tackle conflicts of interest that undermine auditors’ accountability to investors and which we believe are undermining the independence of the standard setting system.
We are also keen to draw attention to the dangerous dependence currently of the SSBs and the Public Interest Oversight Board (PIOB) on the audit profession, which is currently funding around 98% and 50% of these bodies’ budgets, respectively[1]. In the case of the PIOB, in its financial statements for 2025 published in April, it issued its fourth Going Concern warning, underscoring the threats to its future. In order to survive, it described how it received a grant of €500,000 in September 2025 from the International Federation for Ethics and Audit (IFEA), the very body it has a remit to oversee. Worse still, the grant is conditional on the PIOB working with IFEA “on the enhancement of efficiency and simplification of the current standard-setting structure”, but no details on the nature of the changes have been released, raising questions over their alignment with the public interest. The PIOB should not have to go cap in hand to the audit profession for funding.
Audit standard setting appears to be in crisis. This is not something governments, regulators or investors should ignore. Independent and rigorous audit is critical to financial market stability and efficient functioning. It underpins trust in companies’ accounts, enabling investors to allocate capital with greater confidence. This, in turn, supports economic growth.
We hope our proposals spark a healthy debate and bold action.
You can read our full submission here.
[1] Data for SSB’s funding via IFEA is available for 2024 in the latest financial statements (https://ifacweb.blob.core.windows.net/publicfiles/2025-11/IFEA-2024-Financial-Statements.pdf)
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