In this research note, we examine the role of independent assurance in post-crisis initiatives aimed at achieving financial stability and how this relates to current and proposed regulatory mandates. We draw comparisons with these regulatory developments and the US’s Sarbanes Oxley (SOX) legislation, and similar legislation in other jurisdictions that were enacted with the aim of reducing the risk of material misstatements in financial reporting. We consider whether the role and responsibilities of auditors framed in SOX legislation should be extended more broadly to risk reporting.
In principle, we support an expanding role for accountants and auditors to adapt financial metrics and reporting to achieve more comprehensive and precise disclosure of accepted risks in audited financial statements. This represents both a risk quantification and an accounting challenge as regulators seek to more fully engage accountants and auditors in achieving greater financial stability while risk-adjusting the financial system.
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