Page 1 | Confidential and Proprietary Information Russell Guthrie Chief Financial Officer Executive Director, Professional Relations Compliance Program Update

Page 2 | Confidential and Proprietary Information & Beyond Evolution of the IFAC Member Compliance Program At a glance

Page 3 | Confidential and Proprietary Information Enron Arthur Andersen Sarbanes-Oxley IFAC Reforms Evolution of the IFAC Member Compliance Program

Page 4 | Confidential and Proprietary Information IFAC Member Compliance Program (CP) Statements of Membership Obligations (SMO) and IFAC admission criteria as global benchmark 2004 Evolution of the IFAC Member Compliance Program

Page 5 | Confidential and Proprietary Information Level of development and capacity Holistic approach considerations

Page 6 | Confidential and Proprietary Information Language and culture Level of responsibility of PAOs Regulatory framework and legislative tradition Holistic approach considerations Other environmental factors

Page 7 | Confidential and Proprietary Information Self-assessments Transparency – publication on IFAC website Public Interest Oversight Board commences observation of Compliance Program as a public interest activity Evolution of the IFAC Member Compliance Program

Page 8 | Confidential and Proprietary Information SMO Action Plans for continuous improvement Monitoring of progress Revised SMOs G-20 adoption status reports Evolution of the IFAC Member Compliance Program

Page 9 | Confidential and Proprietary Information Tension between “adoption” (ISAs, IFRSs, IPSASs, IESs) and “adoption of no less stringent requirements” (IESBA Code) –IESBA’s different wording for the SMO authoritative statement seems less conducive for PAOs to adopt the “book” of the Code –The Code addressed to IFAC Member Bodies sometimes seen by other stakeholders as not their matter of interest –Lack of clear understanding of what it means to adopt the Code (IAASB has its Modifications Policy…) Observations on the IESBA Code adoption

Page 10 | Confidential and Proprietary Information More complex assessment of the adoption of the Code: –Aspects embedded in laws, PAO bylaws, sector specific regulatory requirements (banking, stock exchange, insurance, etc.) –Adoption not only national but also via Forum of Firms –ISAs or IFRSs tend to be adopted “en block” –Translation, culture and awareness building (both members and external stakeholders) also an issue Observations on the IESBA Code adoption

Page 11 | Confidential and Proprietary Information Assessing quality of implementation is even more complex –What process really exist and operate in practice (as opposed to on paper) –Challenges in implementing ongoing supporting activities (I&D, CPD, etc.) –Proxy observations are used (effectiveness of I&D process, cases heard, online ethics resources for members, etc.) Observations on the IESBA Code implementation

Page 12 | Confidential and Proprietary Information Reporting on the status of adoption & SMO fulfillment  Adopted  Partially Adopted Not Adopted PAO Continuous Quality Management Cycle Not ActiveConsiderPlanExecute Review & Improve Sustain Status of AdoptionStatus of SMO Fulfillment Evolution of the IFAC Member Compliance Program

Page 13 | Confidential and Proprietary Information M&E methodology Dashboard Reports on adoption status & SMO fulfillment Guidance enabling enhanced self- assessment Compliance Program & Beyond Evolution of the IFAC Member Compliance Program

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