Transcript INTERNATIONAL FEDERATION OF ACCOUNTANTS

International Federation of Accountants
Update on IFAC and its Role with SMPs
Szymon Radziszewicz
IFAC Technical Manager, Compliance Program
18 November 2008
IFAC
IFAC Today
• Global organizations for the accountancy profession
with 157 members and associates in 123 countries
• Supports the global development of the profession
• Encourages compliance and convergence
• Promotes values of integrity, transparency and
expertise
IFAC
Independent Standard-Setting Boards
• International Standards
– International Auditing and Assurance Standards Board
(IAASB)
– International Ethics Standards Board for Accountants
(IESBA)
– International Accounting Education Standards Board
(IAESB)
– International Public Sector Accounting Standards
Board (IPSASB)
IFAC
Committees
• Representation
– Small and Medium Practices Committee
– Professional Accountants in Business Committee
– Developing Nations Committee
• Compliance Advisory Panel
– Evaluates whether IFAC members are complying with
the requirements to maintain their membership in
IFAC
SMP INFLUENCE
Percentage of Small and Medium Businesses by
Region
99.7%
99%
97%
75%
95%
97%
IFAC
Characteristics of SMPs
• Demonstrates one or more of the following
– Most of its clients are SMEs
– Ordinarily does not audit listed entities
– Majority of client work may non-assurance
(non-audit) work
– Has direct and hands-on quality control
procedures
IFAC
SMP Challenges in the Environment
• Relevance of international standards
– Auditing standards more detailed and revisions
in the last few years
– Financial reporting standards more complex
• Regulations and audit quality
• Increased competitive pressure
• Small and medium practices have fewer
resources
IFAC
How is IFAC Assisting?
• Composition of standard-setting boards and
projects
– More SMPs
• IFAC is exploring ways to provide
implementation support
• Raising awareness about the needs of professional
accountants in developing and emerging
economies a priority
IFAC SMP Committee
Overview
• Finland
• Germany
• Italy
• Malta
• Spain
• Turkey
• UK
• Canada
• USA
• Nigeria
• Tunisia
• Brazil
• Israel
• China
• Hong Kong SAR
• India
• Malaysia
Chair – Sylvie Voghel (Canada)
18 members
Resources – one full-time senior technical manager
IFAC
Small and Medium Practices Committee
• Purpose: “…to identify and represent the
needs of the constituents and, where
applicable, to give consideration to relevant
issues, pertaining to SMEs / SMPs”
• Standard-setting impact
– Input into the IAASB standard-setting process
– “Think smaller audit practice” approach
– Follow IASB’s proposed “IFRS for Private
Entities”
IFAC
Small and Medium Practices Committee
• Host annual SMP conference
– Hong Kong, Malta, Nigeria
• Develop tools for SMPs
– Guide to Using International Standards on
Auditing in the Audit of Small – and Medium –
Sized Entities (“The ISA Guide”)
– Based on ISAs effective as at December 31,
2006
IFAC
The ISA Guide (December 2007)
• Not a substitute for the ISAs!
– Designed to help SMPs efficiently, effectively
and consistently apply ISAs
• Translations: Chinese, Czech, Romanian,
Russian, Spanish, others
• Plan for an update 2010
• Available for free
Use of graphics, tables, consider points
Sample Chapter Layout
IFAC
IAASB and the ISA Clarity Project
• Objective: To improve clarity of ISAs and
consistency of application
• All issued ISAs part of a “Clarity” review
• Structural improvements
– Be clear about the objective of the standard
and therefore its purpose for the audit process
– Wording simplified where possible
• All will have an effective date of December
15, 2009
IFAC
IAASB and the ISA Clarity Project
• Before
“The auditor should make inquiries of management,
internal audit and others to determine whether they
have knowledge of…fraud affecting the entity.”
• Redrafted requirements:
“The auditor shall make inquires of management…
fraud affecting the entity”
“For those entities that have an internal audit function,
the auditor shall make inquiries…”
IFAC
Staff Audit Practice Alert – Fair Value
• Highlights areas within the ISAs that are
particularly relevant to the audit of fair
value accounting estimates
• Especially relevant to audits of entities that
have investments in financial instruments
especially those in illiquid markets
• Reminds auditors of their obligations
IFAC
IAASB Future Strategy
• Stability for 2 years
• Process for assessing the effectiveness of
the implementation of new standards
• Explore concept of alternative assurance
services
– Is there be an alternative to an audit?
– What type of assurance would it provide given
an audit provides “reasonable assurance”?
18
IFAC
Code of Ethics
• Ethical compliance a hallmark of the
accounting profession
• Key projects of the IESBA
– Clarity project
– Conflicts of interest
– Fraud and illegal acts
• IESBA Implementation Materials for SMPs
– To help SMPs apply independence section of
Code of Ethics (2009)
IFAC
Other Useful Guides
• Quality Control Guide (SMPC)
– Assist smaller size practices in developing and
implementing quality controls
• Practice Management Guide (SMPC)
– TBD – Assist auditors in managing their
practices, client acceptance process, HR etc
IFAC
Valuable to SMEs
• Business Planning Guide: Practical
Application for SMEs
• Defining and Developing an Effective Code
of Conduct for Organizations
• Internal Controls – A Review of Current
Developments
• Internal Control From a Risk-Based
Perspective
IFAC
Importance of IFAC Members
• Continue to be responsive to change
• Focus on education and training
• Raise awareness to key stakeholders about
the needs of the profession
• Seek input from their members
IFAC
Provision of Practical Support
Web-based Resources – International Center for SMPs
• See http://www.ifac.org/SMP/ for:
– IFACnet portal
– News
– Resources (relevant links, free publications,
discussion board, etc.);
• Possible future developments:
– Global firm directory
– Online networking between SMPs (& SMEs)
IFAC
Provision of Practical Support
Web-based Resources - IFACnet
• See http://www.ifacnet.com
• Customized web search engine providing access to
resources of IFAC, its member bodies, and others
• Possible future developments:
– Menu of key search terms
– Improved language capability
IFAC
How Can You Get Involved?
• Effective communication is critical
• Visit IFAC SMP website and sign up for our eNews
• Raise awareness of IFAC activities:
– To other accountancy bodies;
– To other SMPs and SMEs; and
– To others – students, donor agencies, regulators etc
• Provide feedback
International Federation of Accountants
www.ifac.org