A group of international regulators and financial institutions is proposing a new mechanism to set standards for auditing in global capital markets.

The “Monitoring Group” exists specifically to bring greater quality and credibility to audits that are relied on in global capital markets. The group is made up of the the Basel Committee on Banking Supervision, European Commission, Financial Stability Board, International Association of Insurance Supervisors, International Forum of Independent Audit Regulators, International Organization of Securities Commissions, and the World Bank.

The group is challenging the current method by which international auditing standards are written, which is via the International Auditing and Assurance Standards Board. IAASB is overseen by the International Federation of Accountants, which is a global professional body operated by the accounting and auditing profess itself. The Monitoring Group says the process is problematic because there are concerns about the independence of the standard-setting process and the extent to which it is responsive to the public interest.

The Monitoring Group wants to wrest control of the setting of auditing standards and ethics standards away from the profession itself. It proposes changing the structure of the international standard-setting process so that a single board would develop and adopt both auditing and ethical standards for auditors. Currently, the IAASB sets auditing standards and IFAC’s International Ethics Standards Board for Accountants sets ethics standards. The proposal says IFAC should continue to set education standards.

The Monitoring Group also proposes to change the nomination process to appoint members to the standard-setting bodies, and it proposes changes to the funding model, including diversifying the funding base and establishing a fee system on the profession to fund the new structure.

Nigel James, associate chief accountant at the Securities and Exchange Commission, said during a recent speech U.S. accountants should tune into the proposals because the United States is heavily invested in international capital markets, which would be affected by the altered approach. “As a result of the connection between international capital markets, raising the quality of audit standards outside the United States benefits U.S. investors and our markets,” he said.

James implored U.S. accountants to study the proposal and comment by the mid-February comment deadline. The paper represents an “important opportunity” for accountants to influence the future of international auditing and ethics standard-setting, he said.

“Your perspectives can help determine what type of funding arrangements should be established to fund the reformed structure in a manner that does not compromise the independence and objectivity of the boards,” said James. “Your feedback can assist in determining the level of competence needed to be eligible for selection to the Boards. You can make a difference.”