At a time when the audit profession is facing increased scrutiny, it is welcome news to see that nearly 80% of jurisdictions worldwide have adopted the International Standards for Auditing (ISAs) for audits, provided by the International Auditing and Assurance Standards Board (IAASB). The adoption of these standards shows that recognition for a consistent auditing framework in an increasingly global business environment is keenly felt.

It is also promising to see that more than 60% of jurisdictions have adopted the International Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA).^[1] This Code is a consistent framework of ethical behaviour for providing any professional service by professional accountants, including independence in providing assurance services as they are required. 

Having this uniformity allows global accounting networks to establish audit methodologies, as well as ethics and independence policies, uniformly for all member firms. This works regardless of jurisdiction – meaning that networks are then better able to develop their services for working across multiple borders.

In a global business environment, decision makers need to trust the information given to them more than ever before. Ultimately, audits are providing an informed opinion to the decision makers in a business about the accuracy and reliability of the information presented, allowing them to make critical business decisions. A business that doesn’t have reliable information simply will not be able to make good decisions and thus its stakeholders will suffer as a result. If the information businesses produce is not trusted, then their reputations can suffer and this could seriously impact their growth. This is because a large part of business growth derives from trust.

That is why it is important to remember that audit standards have a strong connection to the real economy. Auditing is not about box ticking and should always add credibility to the financial information that organisations and shareholders use.

It is hoped that the IESBA Code of Ethics will continue to be adopted more widely, because ethical standards provide the basis for better decision making and good business practice, as well as leading to ‘good outcomes’ in and of themselves. In this way, the Code starts to influence behaviour across the whole of the audit value chain, and in turn drive the quality of audit information.

As the business environment becomes ever more integrated and complex, it is important that international standards like those issued by the IAASB and the IESBA continue to drive audit quality and see widespread adoption. This is not only important for ethical business practices, but for growth too. If society, shareholders and governing bodies can have more confidence in the information they use to make decisions then businesses will benefit from the trust that this creates in their operations.

 [1] According to a new study by IFAC—International Federation of Accountants