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

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

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

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

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

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

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

Ethics Committee Develops Code of Ethics applicable to accountants in public practice, business and governmentDevelops Code of Ethics applicable to accountants in public practice, business and government Code requires all accountants to act with integrityCode requires all accountants to act with integrity Code features principles-based approachCode features principles-based approach No member body or firm is allowed to apply less stringent standardsNo member body or firm is allowed to apply less stringent standards Current focus on updating guidance on independenceCurrent focus on updating guidance on independence Standard Setting - Ethics

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

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

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

Value of International Standards Contributes to -- Efficient functioning of capital marketsEfficient functioning of capital markets Greater comparability of informationGreater comparability of information Investor confidenceInvestor confidence ConclusionConclusion

International Federation of Accountants