Perspectives of the European Accountancy Profession

Olivier Boutellis-Taft FEE Chief Executive

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Contents

2  About FEE  Policy update & challenges  Auditing and assurance services  Ethics and independence  Financial reporting  Beyond financial reporting and auditing  Profession’s perspective on key debates

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About FEE

3   43 professional institutes of accountants 32 European countries, including all 27 EU

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Representing the profession

 Combined membership of more than 500,000 professional accountants  In public practice, business, government, and education  All contributing to a more efficient, transparent, and sustainable European economy  Recognising the public interest

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Adding value to members

 Making representations to the EU Institutions and to international organisations  Identifying, analysing and influencing relevant public policy developments  Promoting co-operation among Members

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Financial Reporting Accounting Insurance

Advancing members’ activities

Auditing Ethics Company Law Corporate Governance Sustainability Qualification and Market Access SMEs-SMPs

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Banks Public Sector Taxation And more…

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FEE Reach out

  Position papers, research, studies, comment letters, press releases Executive Communiqué  Weekly e-update  Newsletter  Annual Review  New initiative: Telebriefings  More information, more timely, more regularly  More interaction with all Member Bodies, esp. more distant and smaller ones  More accessible (for SMPs)  More time and cost efficient  More carbon efficient and environmentally friendly

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Auditing (1)

 Statutory Audit Directive (May 2006) to be implemented by EU Member States by July 2008, but on 31 July 2009:  Commission has not yet checked national transpositions  Many Member States are still executing the changes  6 have not yet fully implemented the Directive: Austria, Estonia, Ireland, Italy, Luxembourg and Spain • They hope to implement in 2009 • Commission plans to take them to the European Court of Justice

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Auditing (2)

 More work to do on:  International cooperation on public oversight  Limiting auditors’ liability • EC Recommendation of 6 June 2008; Member States to report by 5 June 2010  Adoption of International Standards on Auditing (ISAs) in the EU • EC Consultation on Adoption of ISAs • Debate on proportionality in SME audits

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Other Assurance Services

 Need to get clarity on assurance on non-financial information  Assurance on corporate governance statements  Assurance on sustainability reports  FEE paper on alternative assurance engagements (i.e. other than the audit)  Developments should be accelerated at international level (IAASB) and slowed down at national level to avoid further fragmentation

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Ethics & Independence

 Principles in Articles 21 & 22 of the Directive  EC 2002 Recommendation on independence still applicable  Revised IFAC Code of Ethics (July 2009), effective 01/01/11, significantly strengthens the independence requirements for public interest entities (PIEs) audits, non-PIE audits and other assurance services

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Financial Reporting

 Need to keep momentum on global standards  Impact of the financial crisis, especially on financial instruments (IAS 39 – IRFS 7)  Debate on convergence  Reform of the 4th Directive on annual accounts  Simplification debate: Member State option to exempt micro-entities  Complete Overhaul of the Directives?  Role of IFRS for SMEs?

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Beyond accounting and auditing

 Internal Market  Recognition of professional qualifications  Taxation  C 3 TB  ECJ case law  Sustainability

Trends in non financial reporting

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FEE Policy Statements

   Financial Crisis   Reflecting on the Crisis Matters of Specific Relevance for Statutory Auditors during the Financial Crisis  Call for Action for European SMEs  Dynamic Provisioning for Financial Instruments  Shaping a Sustainable Economy  Auditing and Assurance  International Standards on Auditing Financial Reporting  Future Approach to Setting Global Financial Reporting Standards Sustainability  The Contribution of the Accountancy Profession  Non-Financial Information   Cost Internalisation Multiple-Stakeholders: The Essence of Multidisciplinary Teams  Embedding Sustainability into Corporate Governance  Carbon Emissions Information  Towards a Sustainable Economy: the contribution of Assurance 14

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Role of National Professional Bodies

 National Institutes/Chambers play a key role to  Support their members and advise public authorities  Strive for equally high standards in all Member States • Regulation and Oversight dot not replace professionalism and ethics  Invest in education  Ensure representativity and relevance of International Bodies such as IFAC or FEE that rely on strong local Institutes/Chambers

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