Former PCAOB chief auditor to lead IAASB
Martin Baumann, the former chief auditor and director of professional standards at the Public Company Accounting Oversight Board, has been appointed as the new chair of the International Auditing and Assurance Standards Board.
He has been appointed for a three-year term starting Jan. 1, 2019, and will be succeeding Professor Arnold Schilder, whose has chaired the IAASB for a decade. The appointment comes during a time of extensive changes and uncertainty at both organizations. The IAASB, which has been supported by the International Federation of Accountants, has come under pressure from a group of international financial regulators known as the Monitoring Group to open up its global standard-setting board for audit and assurance, as well as the related accounting education standard-setting board IESBA, to include more people who aren’t part of the accounting and auditing profession, such as investors and bankers.
The Monitoring Group, which includes representatives from the International Organization of Securities Commissions, the World Bank, the European Commission, the Basel Committee on Banking Supervision released a consultation paper last November to solicit feedback on its proposals, and the IAASB and IFAC agreed to make changes (see IFAC offers possible solutions to resolve dispute over standard-setting).
Major changes have also been taking place this year at the U.S. audit standard setter, the PCAOB. The entire five-member board, including the chairman, are new this year, and a number of other high-ranking officials, including Baumann, have stepped down (see PCAOB shakeup continues with departure of chief auditor). Baumann worked at the PCAOB for 12 years, not long after the PCAOB was founded in the wake of the Sarbanes-Oxley Act of 2002. He oversaw a number of landmark standard-setting projects at the PCAOB, including an overhaul of the audit reporting model.
Baumann was also responsible for establishing auditing and related professional practice standards for audits of all companies registered with the Securities and Exchange Commission. He also chaired the PCAOB’s Standing Advisory Group and served on the IAASB and International Ethics Standards Board for Accountants Consultative Advisory Groups. Previously he was chief financial officer at Freddie Mac and a senior partner at PricewaterhouseCoopers.
As the new chair of the IAASB, Baumann will be responsible for leading finalization and implementation of IAASB’s strategic objectives; actively engaging stakeholders around the world, including national standard setters, regulators, investors and firms of all sizes; and delivering high-quality standards in the public interest.
“The IAASB plays a vital role in the world's capital markets,” Baumann said in a statement. “High-quality professional standards developed in the public interest by the IAASB provide the markets with confidence in the important work done by auditors. I am committed to working tirelessly to ensure the IAASB meets its mandate, and continues to be recognized as a highly-regarded independent organization developing high-quality standards."
Baumann succeeds Schilder, a professor whose term as IAASB chairman will conclude after a decade of service at the end of this year. Schilder has led the way at the IAASB in setting assurance standards to address key aspects of sustainability reporting, along with groundbreaking new auditor reporting standards and improvements now underway in other auditing standards. Currently there are nearly 130 jurisdictions around the world using or in the process of adopting the clarified International Standards on Auditing. Baumann will work closely with Schilder starting Oct. 29, 2018 to provide for a smooth transition.
In the wake of the Monitoring Group proposals, IFAC pointed out that Baumann’s appointment was recommended by an Interim Nominating Committee after an extensive international search. The IFAC Board endorsed the Interim Nominating Committee’s recommendation, which was approved by the Public Interest Oversight Board, which oversees the IAASB’s activities. IFAC said the Monitoring Group was informed of that recommendation.
The Interim Nominating Committee was formed by the Monitoring Group in February 2018 to conduct the process for the next chair of the IAASB. The nominating committee was chaired by Ryozo Himino, Vice Minister for International Affairs at Japan’s Financial Services Agency. It comprised four other members including Guy Andrade, Huguette Labelle, Lord Jonathan Hugh Mance and Sir David Tweedie, the former chairman of the International Accounting Standards Board, along with two other observers, Rachel Grimes and Eddy Wymeersch. The Interim Nominating Committee followed an open and transparent process to select the most suitable candidate for the position. It will disband now that its mandate has been completed.
“Martin Baumann is a leader who brings vision, a passion for the public interest and a depth of experience to the role of IAASB Chair,” Himino stated. “As its next chair, he will lead the IAASB during an important period of innovation and change as well as continuing the board’s work developing high-quality international audit, assurance, quality control and related services standards that are accepted and used around the world.”