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International Federation of Accountants A&IS/CAP/DNC Report Russell Guthrie Executive Director, Quality and Member Relations IESBA Meeting New York City, New York February 17, 2009 Topics to be Covered • What we know today • Adoption and Implementation Support • Compliance Program – Status • Developing Nations initiatives • Specific matters for IESBA consideration – Adoption and Implementation – SMO Revisions Developing Nations Committee Challenges • Lack of stakeholder engagement • Outdated legal frameworks • Weak accountancy professional organizations • Widespread non-compliance with standards • Weak monitoring/enforcement mechanisms • Lack of access to (translated) international standards and related implementation guidance • Inadequate training and curricula/poor linkage with academia Adoption and Implementation Support IFAC – Beyond Standard Setting • Adoption – Advocacy – Policy Advice Adoption and Implementation Support IFAC – Beyond Standard Setting • Implementation Support – Availability – Accessibility (Translations) – Application Support – Core Training and Education Materials (currently deferred due to resource constraints) Member Body Compliance Program Statements of Membership Obligations (SMOs) • SMO 1 Quality Assurance • • • • International Education Standards International Standards on Auditing International Code of Ethics International Public Sector Accounting Standards Investigation and Discipline International Financial Reporting Standards SMO 2 SMO 3 SMO 4 SMO 5 • SMO 6 • SMO 7 Member Body Compliance Program Assessing Compliance • Part 1 – Fact-based questionnaire on the regulatory and standard-setting framework in a member’s home country • Part 2 – Self-assessment of compliance with specific requirements of the SMOs • Part 3 – Members and associates develop action plans to address gaps Member Body Compliance Program Status of Preparation of Action Plans as of February 1, 2010 • 76 – Published Action Plans • 39 – Drafts received and under review • 40 – In progress but no submitted draft • 3 – Suspensions • 1 – Expulsion to be considered by Board – Feb Member Body Compliance Program Monitoring of Published Action Plans • Soft updates – Completed after six months – Based on interviews with key individuals Obtain understanding of current progress Encourage continuing communication Offer to be of further assistance – Memorandum prepared for archives and CAP review Member Body Compliance Program Monitoring of Published Action Plans – 20 completed as of February 1, 2010 Overall member bodies generally remain on track Some delay caused by changes in regulatory environment or change in priorities Also noted a number of positive developments • Annual progress reports – Include submission of updated Action Plans – 10 completed or actively in progress Member Body Compliance Program Need for Financial and Technical Resources to Achieve Desired Actions • Meaningful execution of Action Plan depends on: – Ability of developing bodies to clearly communicate their challenges, required actions, and need for resources – Willingness of national government and donor agencies to provide support and financial resources – Development of useful implementation tools by the DNC and standard setters – Support of regional organizations and developed bodies serving as mentors/partners Member Body Compliance Program Program to Review the SMOs (2010-2012) • Clarification and increased consistency including – “No less stringent standards” SMO 4 (Ethics) – Statement of applicability in SMO 7 (IFRS+IFRS-SMEs) • Member body governance practices • Corporate governance (OECD principles)? • Review of QA and I&D – Public oversight for auditors of PIEs? Developing Nations Committee Key activities • Tools and Guidance – Establishing and Strengthening Professional Accountancy Organizations – Technicians Guidelines – Mentoring Guidelines • Advocacy and Liaison with Donor Community • Capacity building to support Public and Private sector Financial Management Developing Nations Committee Key activities • Mentoring/Twinning by Developed Bodies • Outreach – Professional Accountancy Organizations – Governments – Firms Code of Ethics – Specific Matters • Compliance Program – Limited to self assessment and limited external validation • Adoption challenges – Principles and rules at a national level often embedded in legislation, regulation and member body governance documents • Implementation challenges – Overcoming cultural barriers Code of Ethics – Specific Matters • Definition of “Professional Accountant” • SMO 4 Revision – other considerations – Consistency – convergence, translation, etc. – IFAC Member Obligations • CoE applicable to a wide group of stakeholders • SMO establishes member body obligations • “No less stringent standards” Adoption and Translation Adoption/Translation/Advocacy Activity • • • • • • • • • • • • Australia Cambodia France Finland Germany Hong Kong Iceland Ireland Kenya Latvia Macedonia Mauritius • • • • • • • • • • • • Netherlands Nigeria Romania Russia Scotland Slovakia Spain South Africa Swaziland Tanzania Ukraine Zambia International Federation of Accountants www.ifac.org