NASBA Role of State Regulators in Global Standards Setting Bob Bunting, Deputy President October 29, 2008

Obstacles to Common Standards and Uniform Quality

Obstacles Competition Sovereignty and national pride Champion industries Politics Cost and inconvenience Representation Implementation Leading to a lack of Collaboration ……..And, yet…….

IFRS & ISAs Over 110 countries require or permit the use of IFRS

Benefits of a United Global Approach

Enhanced levels of production of goods and services Suppressing corruption Enhanced transparency Promotion of growth and efficiency in capital and labor markets Provision of high quality performance information Enhanced level of competence within the accountancy profession Strong organizational governance and management structures Lower transaction costs for cross-border capital flows Consumer confidence in the integrity and efficiency of the markets Adoption of high quality international standards Stable and robust regulation that promotes growth and efficiency Reduction of poverty Lower cost of capital Improved economic decision-making in the private and public sectors High public confidence in the accountancy profession and its services Strong ethical behaviors demonstrated by professional accountants  Standards & guidance  Promoting quality  Support for Adoption  Support for Implementation  Representation  Communications Strong legal frameworks Strong professional accountancy institutes Enhanced corporate behavior Improved legislation and regulation of professional liability Confidence in international standards High quality financial management and reporting practices by organizations Enhanced attractiveness of the accountancy profession Enhanced credibility of and accessibility to financial and non-financial information Assisting fair trade Achieving social equity Strong professional accountancy firms High quality audit practices by firms Effective implementation and enforcement of international standards Enhanced governmental accountability Enhanced Corporate Social Responsibility Improved Corporate Social Responsibility reporting

IFAC’s Role in Moving the Profession to the Next Level

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 establishing and promoting adherence to high- quality professional standards, furthering the international convergence of such standards, and speaking out on public interest issues where the profession’s expertise is most relevant

Values: Integrity Expertise Transparency

IFAC Strategic Themes 1. 1.Be recognized as the international standards setter in the areas of auditing and assurance, education, ethics and governmental financial reporting 2. 2.Actively support the adoption of, and assist in, the implementation of international standards 3. 3.Continually enhance the relevance of the profession 4. 4.Be the international voice of the accountancy profession

KEY ACCOUNTABILITY OVERSIGHT CONSULTATION/ADVICE IFAC Organization

CONSULTATIVE ADVISORY GROUP Structure of the IAASB IFAC REGULATORY LIAISON GROUP M ONITORING G ROUP INTERNATIONAL AUDITING AND ASSURANCE STANDARDS BOARD P UBLIC I NTEREST O VERSIGHT B OARD Liaison/Consultation Consults/Advises ProvidesInput Provides Input Oversees Due Process/ Approves Appointments and ToR IFAC B OARD Consults/Advises Appoints Members/ Establishes ToR ED RESPONDENTS AND OTHER STAKEHOLDERS INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTIONS NATIONAL STANDARD SETTERS & REGULATORS SMALL AND MEDIUM PRACTICES COMMITTEE

Checks and Balances Monitoring Group (Regulators) Public Interest Oversight Board (Appointed by MG) Independent Chair Public Members CAG members (Regulators, Users) Transparent Process – –Minutes – –Exposure drafts – –Other observers

Regulation and the Public Interest Professional accountancy bodies and governments share common objective:Professional accountancy bodies and governments share common objective: ensuring accountants serve the public interest and meet high standards ensuring accountants serve the public interest and meet high standards And common goal:And common goal: regulation with benefits that exceed costs regulation with benefits that exceed costs Shared Regulation

Shared Regulatory System Self regulation and external regulation reinforce each other; combine to form a regulatory mix that is effective and efficient. Shared Regulation

Goals of Shared Regulation in IAASB Standard Setting Protect and respond to the public interestProtect and respond to the public interest Maintain and strengthen legitimacy through:Maintain and strengthen legitimacy through: –Independence –Performance ResponsivenessResponsiveness EfficiencyEfficiency –Accountability Shared Regulation

Standard Setting That Protects the Public Interest Shared Regulation Independence Performance Accountability Legitimacy

A Balanced System of Standard Setting Appropriately balances functions between public and private sectorsAppropriately balances functions between public and private sectors Balance between technical and nontechnical rolesBalance between technical and nontechnical roles Balance between formal and informal consultation and communicationBalance between formal and informal consultation and communication Aim is overall system performanceAim is overall system performance Shared Regulation

NASBA / State Board Roles

CONSULTATIVE ADVISORY GROUP Structure of the IAASB IFAC REGULATORY LIAISON GROUP M ONITORING G ROUP INTERNATIONAL AUDITING AND ASSURANCE STANDARDS BOARD P UBLIC I NTEREST O VERSIGHT B OARD Liaison/Consultation Consults/Advises ProvidesInput Provides Input Oversees Due Process/ Approves Appointments and ToR IFAC B OARD Consults/Advises Appoints Members/ Establishes ToR ED RESPONDENTS AND OTHER STAKEHOLDERS INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTIONS NATIONAL STANDARD SETTERS & REGULATORS SMALL AND MEDIUM PRACTICES COMMITTEE

NASBA Role of State Regulators in Global Standards Setting Bob Bunting, Deputy President October 29, 2008