Transcript Definition of Professional Accountant

International Federation of Accountants
Definition of Professional Accountant
Bob Rutherford
IESBA Meeting
New York, USA
October 2011
Definition of Professional Accountant
Existing Definition
“An individual who is a member of an IFAC
member body”
• Use of definition:
– IESBA – defined term, which is further subdivided into “professional accountant in public
practice” (Part B) “professional accountant in
business” (Part C)
– IAASB Glossary
– IAESB - Framework
Definition of Professional Accountant
Concerns With Existing Definition
• Too simplistic – does not convey understanding of
roles, functions and competence demonstrated by a
professional accountant
• Does not recognize that professional accountants not
necessarily members of IFAC member bodies (e.g.
some professional accountants in business and public
sector)
• Does not recognize that professional standards are
adopted and enforced at the national/regional level
• Not helpful in the public’s understanding of the term
professional accountant
Definition of Professional Accountant
Elements of a New Definition
• Provide an understanding of the breadth of competence,
roles and functions demonstrated by professional
accountants
• Embrace those professional accountants not members
of member bodies that are subject to qualification and
oversight
• Provide help in identifying users of IFAC standards and
the publics understanding of the term professional
accountant
Definition of Professional Accountant
Proposed Definition of IFAC Task Force
The term professional accountant describes a person
who has expertise in the field of accountancy,
achieved through formal education and practical
experience, and who:
• Demonstrates and maintains competence;
• Complies with a code of ethics:
• Is held to a high professional standard; and,
• Is subject to enforcement by a professional
accountancy organization or other regulatory
mechanism
Definition of Professional Accountant
Proposed Revisions to Task Force Definition
1st Bullet: Demonstrates and maintains competence
• Working Group (WG) agreed a PA “maintains
competence” through CPD
• IESs defines CPD as Learning and development
that maintains and develops capabilities to enable
professional accountants to perform their roles
competently
• WG recommends delete 1st bullet and insert: “and
maintained through continuous learning and
development”
• “Expertise” in lead-in sentence covers
“demonstrates competence”
Definition of Professional Accountant
Proposed Revisions to Task Force Definition
2nd Bullet: Complies with a code of ethics
3rd Bullet: Is held to a high professional standard
• To ensure PAs who are not members of IFAC
member body follow robust code of ethics and held
to a “high professional standard,” WG recommends:
– Delete 2nd and 3rd bullets; and
– Insert “high professional standards equivalent to
IESBA Code of Ethics for Professional
Accountants and IAESB International Education
Standards”
Definition of Professional Accountant
Proposed Revisions to Task Force Definition
4th Bullet: Is subject to enforcement by a professional
accountancy organization or other regulatory
mechanism
• WG recommends revise to state that “compliance
with such standards” is subject to enforcement
– PA may be subject to discipline, but it is the PA’s
compliance with standards that is subject to
enforcement
Definition of Professional Accountant
Proposed Definition of IESBA Working Group
Professional Accountant - A person who has expertise
in the field of accountancy, achieved through formal
education and practical experience and maintained
through continuous learning and development; is held
to high professional standards equivalent to the
IESBA Code of Ethics for Professional Accountants
and IAESB International Education Standards, and
whose compliance with such standards is subject to
enforcement by a professional accountancy
organization or regulatory mechanism.
Definition of Professional Accountant
Considered Alternate Definition
Professional Accountant – An individual who i) is a
member of an IFAC member body or ii) has expertise
in the field of accountancy, achieved through …
• WG does not recommend alternate definition
– May be associate member bodies of IFAC whose
education standards are not as robust as IESs
– Some IFAC member bodies have affiliate
memberships that allow for non-accountants and
students who do not meet PA qualifications
– Could be misleading to public
– Definition of PA should be based on “high standard”
Definition of Accountancy
Proposed Edits to Definition of Accountancy
A field of practice in which a professional accountant
provides the measurement, recognition, preparation,
analysis, and/or disclosure of financial and relevant
nonfinancial information, or auditing of or provision
of assurance and advisory services on financial
information and, where applicable, nonfinancial
information. Such information assists managers,
investors, tax authorities, and other decision makers
in resource-allocation decisions. The field of
accountancy involves includes the study of
accounting, auditing, finance, management
consulting, financial management, and/or tax.
Definition of Accountancy
Comments Submitted by Others
• WG considered comments of CAP, IAASB,
IAESB, IAESB CAG, PAIB, SMP Committee,
IFAC Translation Dept.
• WG concluded that many of the comments have
already been addressed in the proposed definitions
• WG does not believe any further revisions to the
definitions are necessary
Questions?