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Editorial

Editorial It is estimated that by late 2017, the aggregate global value of cryptocurrencies had reached over $US 200 billion. Though a single instance, Bitcoin, represented approximately two thirds of that total, there were by that time in excess of one thousand different forms of cryptocurrency in existence.The rise of these alternative assets has posed challenges to existing regulatory frameworks and led to stern words of caution from a number of the world's monetary and securities supervisory agencies, including the Monetary Authority of Singapore (MAS), the US Securities and Exchange Commission (SEC) and the Australian Securities and Investments Commission (ASIC). JP Morgan CEO Jamie Dimon took the discourse to a more strident level, labelling Bitcoin a fraud and predicting its demise.Broadly contemporaneously with this storm of controversy, a ban on fundraising via initial coin offerings was announced in China and Korea, with widespread speculation of similar regulatory interventions in other jurisdictions, notably Japan.It has been claimed that the technologies that underpin cryptocurrencies, if not the currencies themselves, have the potential to fundamentally disrupt any industry based on intermediation or the need for trusted counterparties as a basis for the facilitation of exchange. They pose potentially profound challenges for the assessment and collection of taxation as well as the capacity to monitor and supervise financial flows. It is unsurprising, therefore, that they have well and truly caught the attention of financial regulators even though the nature of responses and the principals that might underpin responses are as yet far from clear.Yet recently, in his final week of office, the outgoing chair of the Australian Securities and Investments Commission (ASIC), Greg Medcraft, chose to highlight none of the foregoing matters as things that might be regarded as posing grave risk to the integrity of the financial system and markets, but rather, made a series of emphatic declarations about audit quality.Medcraft characterised audit quality in Australia as unacceptably poor and revealed that ASIC reviews had concluded that in almost a quarter of audits sampled for review, the audit had not provided reasonable assurance that the accounts were accurate or free of misstatements. He asserted that audits by global participants in the audit services markets had been conducted with a lack of adequate scepticism and that in his view, this problem was worsening.Whilst swiftly rebutted by each of the global “big four”, the strident and particular nature of Medcraft's statements nevertheless at least reinforces the inherent importance of continued scholarly focus on the nature, role and efficacy of audits and demonstrates a clear opportunity for the scholarly community to contribute to the formulation of better policy and practice. This edition is devoted precisely to that objective, with seven articles devoted to a variety of aspects of audit and a further closely related piece examining the regulation of non‐GAAP earnings disclosures. It is hoped that this compendium of work from scholars from around the globe will indeed be of assistance to policy makers and an inspiration to other scholars to invest their energies in work focused on this critical domain. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australian Accounting Review Wiley

Editorial

Carlin, Tyrone M.
Australian Accounting Review , Volume 27 (4) – Jan 1, 2017
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Publisher
Wiley
Copyright
Copyright © 2017 CPA Australia Ltd (CPA Australia)
ISSN
1035-6908
eISSN
1835-2561
DOI
10.1111/auar.12220
Publisher site
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Abstract

It is estimated that by late 2017, the aggregate global value of cryptocurrencies had reached over $US 200 billion. Though a single instance, Bitcoin, represented approximately two thirds of that total, there were by that time in excess of one thousand different forms of cryptocurrency in existence.The rise of these alternative assets has posed challenges to existing regulatory frameworks and led to stern words of caution from a number of the world's monetary and securities supervisory agencies, including the Monetary Authority of Singapore (MAS), the US Securities and Exchange Commission (SEC) and the Australian Securities and Investments Commission (ASIC). JP Morgan CEO Jamie Dimon took the discourse to a more strident level, labelling Bitcoin a fraud and predicting its demise.Broadly contemporaneously with this storm of controversy, a ban on fundraising via initial coin offerings was announced in China and Korea, with widespread speculation of similar regulatory interventions in other jurisdictions, notably Japan.It has been claimed that the technologies that underpin cryptocurrencies, if not the currencies themselves, have the potential to fundamentally disrupt any industry based on intermediation or the need for trusted counterparties as a basis for the facilitation of exchange. They pose potentially profound challenges for the assessment and collection of taxation as well as the capacity to monitor and supervise financial flows. It is unsurprising, therefore, that they have well and truly caught the attention of financial regulators even though the nature of responses and the principals that might underpin responses are as yet far from clear.Yet recently, in his final week of office, the outgoing chair of the Australian Securities and Investments Commission (ASIC), Greg Medcraft, chose to highlight none of the foregoing matters as things that might be regarded as posing grave risk to the integrity of the financial system and markets, but rather, made a series of emphatic declarations about audit quality.Medcraft characterised audit quality in Australia as unacceptably poor and revealed that ASIC reviews had concluded that in almost a quarter of audits sampled for review, the audit had not provided reasonable assurance that the accounts were accurate or free of misstatements. He asserted that audits by global participants in the audit services markets had been conducted with a lack of adequate scepticism and that in his view, this problem was worsening.Whilst swiftly rebutted by each of the global “big four”, the strident and particular nature of Medcraft's statements nevertheless at least reinforces the inherent importance of continued scholarly focus on the nature, role and efficacy of audits and demonstrates a clear opportunity for the scholarly community to contribute to the formulation of better policy and practice. This edition is devoted precisely to that objective, with seven articles devoted to a variety of aspects of audit and a further closely related piece examining the regulation of non‐GAAP earnings disclosures. It is hoped that this compendium of work from scholars from around the globe will indeed be of assistance to policy makers and an inspiration to other scholars to invest their energies in work focused on this critical domain.

Journal

Australian Accounting Review – Wiley

Published: Jan 1, 2017

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