International Federation of Accountants IFAC s Initiatives to Strengthen

International Federation of Accountants IFAC’s Initiatives to Strengthen the Profession Russell Guthrie, Director – Quality Assurance and Member Body Relations 14 June 2007

Today’s Presentation Topics • Overview of IFAC Activities • IFAC Member Body Compliance Program • Other Initiatives for Strengthening the Profession

IFAC’s Role IFAC Today • Expanding organization of 155 professional accountancy organizations in 118 countries • Represents 2. 5 million accountants in public practice, education, government service, industry and commerce • Provides for public interest input and has public oversight

IFAC’s Role IFAC’s Mission To serve the public interest, IFAC will continue to strengthen the worldwide accountancy profession and contribute to the development of strong international economies by…

IFAC’s Role IFAC’s Mission • Establish and promote adherence to high quality professional standards • Further the international convergence of such standards • Speak out on public interest issues where the profession’s voice is most relevant

IFAC’s Role IFAC Serves the International Profession • Professional Accountancy Organizations worldwide • Large, medium and small firms • Developed and developing countries • Professionals in business, public practice, and government

IFAC Standard Setting • 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 Service Sectors Serving the Profession • Small and Medium Practices Committee (SMPC) • Developing Nations Committee (DNC) • Professional Accountants in Business (PAIB) Committee • Forum of Firms/Transnational Auditors Committee (Fo. F/TAC)

IFAC Compliance Program Member Body Compliance Program • Statements of Membership Obligations (SMOs) serve as the foundation • Sets out requirements for existing members and applicants • Application process for new associates and members has been significantly strengthened

IFAC Compliance Program Statements of Membership Obligations • Quality assurance • Accountancy education • Auditing and assurance standards • Public sector accounting • Ethics • Investigation and discipline • Accounting standards

Membership Obligations Fulfilling Membership Obligations • Participate in the Member Body Compliance Program • Adopt international standards as an objective • Assist in implementation of the standards • Demonstrate best endeavors

Compliance Program Components • 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 – IFAC Recommendations and MB preparation of action plans

IFAC Compliance Program Parts 1 and 2 • High level of external interest – 80, 000+ Views on IFAC website – International and national regulators – Donor community – Institutional investors (FDI decisions) • Emphasize to members importance of transparency and updating of information

IFAC Compliance Program Part 3 • Development of “Policy Recommendations” by IFAC Staff based on Part 2 responses • Member Bodies develop Action Plans based on the above • Action plans must be: – Realistic – Specific (time frame and responsibility) – “Owned” by the member body

IFAC Compliance Program Part 3 – Key aspects • Buy in by member body is essential to success – Board/Council – Technical Committees – Management – Key Volunteers • Coordinate with WB-ROSC and IADB MIF activities

IFAC Compliance Program Part 3 – Key aspects • Iterative process • Confirm Recommendations – 3 months • Prepare Action Plan – 6 months • Monitoring Progress and Updating Info – Every 6 months

IFAC Compliance Program • Core principals: – Encouragement and Improvement • What does the program require? – Commitment – Communication – Demonstrate Progress • Enforcement – Suspension – Expulsion

Developing Nations Committee • Supports the development of the accountancy profession in all regions of the world • Produces materials to assist in development of professional accountancy bodies • Seeks resources and development assistance • Provides input to international standard setters

Developing Nations Tools and Guidance • “Establishing and Developing a Professional Accountancy Body” – – Provides practical guidance and examples Assists in identifying priorities for developing organizations • Used as a template by the World Bank in Macedonia when establishing a new accountancy body • Used by ICPAK in Kenya when improving their internal Governance structure

Developing Nations Tools and Guidance – in development • Mentoring Guidelines – Framework for partnerships between developed and developing bodies to increase capacity • Education Guidelines for Accounting Technicians

Developing Nations Collaboration With Donors • IFAC continues to strive for closer contact and exchange of information • Work closely to identify development needs • Work closely to identify useful common tools and reduce duplication of effort • Facilitate and contribute to development work

Developing Nations Relationships Built To Date • World Bank • African Development Bank • Inter American Development Bank • Asian Development Bank • US AID • UNCTAD • Others

IFAC Support Small and Medium Practices Committee • Input into Standard Setting – Input and involvement in IAASB processes and task forces – – “Think small” approach Supporting IASB’s project on SME standards • Developing tools for smaller practitioners – – ISA Guide (Quarter 4, 2007) QC Guide (under consideration)

IFAC Support Other Initiatives • Ethics Education Toolkit • Guidance on Practical Experience Requirements • Travel Subsidy for DN participation in IFAC Boards and Committees

Strengthening the Profession IFAC Member’s Commitment • Liderazgo • Pro actividad • Comunicación

Strengthening the Profession IFAC’s Commitment • Impulsar • Respecto • Disposición a actuar

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