Lewis Ferguson, a member of the Public Company Accounting Oversight Board, has been elected to chair the International Forum of Independent Audit Regulators through April 2015, a group determined to help identify how to measure audit quality and how the Big 4 may affect it.

Ferguson has served as vice chair of the group of 46 global, independent audit regulatory bodies since March 2012. IFIAR has agreed to a work plan and charter revisions meant to facilitate a role as a leader in audit quality by commenting on standards and interacting with other international organizations. The work plan also emphasizes a focus on studying measures of audit quality and examining how the governance structures and business models of large auditing networks may either contribute to or detract from audit quality.

A number of organizations globally have already taken up projects to begin identifying indicators of audit quality and ways it can be measured, Ferguson notes, including the PCAOB, the Center for Audit Quality, and the Financial Reporting Council in the United Kingdom. “Initially, IFIAR will simply gather information,” he says. “That's what IFIAR is about -- information sharing. Then we can begin to have a dialogue with people in other countries to see if we can come up with definitions that people can agree on as to what constitutes audit quality and how we might measure that.”

As part of its two-year plan, the IFIAR also agreed to conduct in 2013 a second survey of members' inspection findings. The first survey enabled members to compare notes with respect to where they find the most common audit problems, which included fair value measurements, internal control testing, and engagement quality reviews at the top of the list. IFIAR also is focused on establishing an enforcement working group to facilitate cooperation and information sharing on enforcement issues. 

Ferguson says one of his objectives as chairman of the group is to increase the group's visibility globally and trumpet its message about the importance of independence in the audit profession and in the regulation of auditors. “In countries where they don't have independent regimes, we provide data and information that shows the benefits of independence,” he says. “Most IFIAR members are strongly supportive of that.”

One of the benefits of PCAOB participation in IFIAR is to help drive and shape the organization, Ferguson says, but it also helps to have direct dialogue with regulators in other countries where the PCAOB is currently denied access to conduct inspections of firms that are registered in the United States. The PCAOB still is barred from inspecting firms in Belgium, China, Czech Republic. Denmark, Greece, Hong Kong, Hungary, Ireland, Italy, Luxembourg, Poland, Portugal, and Sweden. Of those, only China, Czech Republic and Hong Kong are not IFIAR members, according to the group's website. Ferguson says the PCAOB is making significant progress in gaining access to many of those countries, but the most serious obstacles still remain in China, Italy, and Hong Kong, where those audits involve businesses in China.