The International Organization of Securities Commissions (IOSCO) has published a Report on Good Practices for Audit Committees in Supporting Audit Quality. The purpose is to assist audit committees of listed companies with supporting external audit quality.
The Report sets out the role of a listed company’s audit committee and others person involved in a company’s financial reporting cycle, as well as highlighting the importance of audit quality and attributes of audit firms that may influence audit quality. It also provides useful suggestions for good practice by audit committees when supporting audit quality.
The Report has been prepared at a general level for listed companies across different jurisdictions. It will be useful for companies listed or admitted to a regulated market in the United Kingdom, as well as companies admitted to non-regulated markets (such as AIM) that have audit committees.
Separately, IOSCO has published a statement for issuers on the importance of addressing environmental, social and governance (ESG) matters when disclosing information to their investors. The statement lists sustainability, climate change, labour practices, diversity and “general governance-related factors” as specific examples.
IOSCO emphasises that ESG matters can have a material short-term or long-term impact on an issuer’s business, as well as on risks and returns for investors. It is therefore encouraging issuers to consider the materiality of ESG matters to their business and to assess risks and opportunities in light of their business strategy and risk assessment methodology.