International Federation of Accountants Importance of Reliable Financial Reporting in the International Context September 2005 1

The International Accountancy Profession The Profession The International Accountancy Profession Over 2.5 million professional accountants worldwide represented by over 160 IFAC member bodies in 119 countries Contributes to every sector and aspect of the global economy

The Global Environment Economic Stability and Growth Achieved through: Market-driven policies Transparency Sound corporate governance Credible financial reporting

Building a Global Financial Infrastructure The Global Environment Transparent financial reporting process Adherence to internationally recognized standards Well-designed regulatory structure Consistent application of regulations Robust corporate governance

Financial Reporting Process The Global Environment Financial Reporting Process Contributes to financial decision making Characterized by integrity by all those in the financial reporting supply chain Focuses on public interest Investors have role

Public Interest Input and Oversight IFAC activities are characterized by significant public interest input This includes consultation with regulators, standard setters and outside stakeholders Independent Public Interest Oversight Board (PIOB) oversees IFAC audit, ethics, and education standard setting and IFAC Member Body Compliance Program

Public Interest Oversight Board (PIOB) Formally established in February 2005 Comprised of 10 members appointed by regulators and international organizations Oversees the Public Interest Activity Committees Provides input on due process and work programs

IFAC Standard Setting IFAC Standard Setting International Auditing and Assurance Standards Board (IAASB) Ethics Committee International Public Sector Accounting Standards Board Education Committee Member Body Compliance Program

Has a thorough and transparent due process Standard Setting - IAASB IAASB Develops high-quality auditing, assurance and related services standards Members include practicing accountants, academics, and representatives of business and government Has a thorough and transparent due process Obtains public input through CAG, as do other IFAC standard-setting committees

Standard Setting - Ethics Ethics Committee Develops Code of Ethics applicable to accountants in public practice, business and government Code requires all accountants to act with integrity Code features principles-based approach No member body or firm is allowed to apply less stringent standards Current focus on updating guidance on independence Code serves as foundation for all codes of ethics developed and enforced by member bodies. Code endorses concepts of objectivity, integrity, and professional competence Code applicable to all professional accountants

International Public Sector Accounting Standards Board (IPSASB) Standard Setting – Public Sector International Public Sector Accounting Standards Board (IPSASB) Strives to improve public sector financial management and accountability Issues authoritative international public sector financial reporting standards These standards help to build credibility in financial reporting by governments

Standard Setting - Education Education Committee Develops standards and guidance for education and development of professional accountants worldwide Strives to achieve global quality and consistency in accounting education Underpins all standard-setting

Member Body Compliance Program IFAC Compliance Program Statements of Membership Obligations serve as the foundation Requires incorporation of IFAC and IASB standards by member bodies Requires that member bodies have quality assurance and disciplinary programs Provides global snapshot of the profession with information posted on IFAC website.

Value of International Standards Conclusion Value of International Standards Contributes to -- Efficient functioning of capital markets Greater comparability of information Investor confidence

International Federation of Accountants www.ifac.org 1