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

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

Expanding organization of 155 professional accountancy organizations in 118 countriesExpanding organization of 155 professional accountancy organizations in 118 countries Represents 2.5 million accountants in public practice, education, government service, industry and commerceRepresents 2.5 million accountants in public practice, education, government service, industry and commerce Provides for public interest input and has public oversightProvides for public interest input and has public oversight IFAC Today IFAC’s Role 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 Role

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

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

IFAC Standard Setting International Auditing and Assurance Standards Board (IAASB)International Auditing and Assurance Standards Board (IAASB) International Ethics Standards Board for Accountants (IESBA)International Ethics Standards Board for Accountants (IESBA) International Accounting Education Standards Board (IAESB)International Accounting Education Standards Board (IAESB) International Public Sector Accounting Standards Board (IPSASB)International Public Sector Accounting Standards Board (IPSASB) IFAC Standard Setting

Serving the Profession Small and Medium Practices Committee (SMPC)Small and Medium Practices Committee (SMPC) Developing Nations Committee (DNC)Developing Nations Committee (DNC) Professional Accountants in Business (PAIB) CommitteeProfessional Accountants in Business (PAIB) Committee Forum of Firms/Transnational Auditors Committee (FoF/TAC)Forum of Firms/Transnational Auditors Committee (FoF/TAC) IFAC Service Sectors

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

Statements of Membership Obligations Quality assuranceQuality assurance Accountancy educationAccountancy education Auditing and assurance standardsAuditing and assurance standards Public sector accountingPublic sector accounting EthicsEthics Investigation and disciplineInvestigation and discipline Accounting standardsAccounting standards IFAC Compliance Program IFAC Compliance Program

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

Program Components Part 1 – Fact-based questionnaire on the regulatory and standard-setting framework in a member’s home countryPart 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 SMOsPart 2 – Self-assessment of compliance with specific requirements of the SMOs Part 3 – IFAC Recommendations and MB preparation of action plansPart 3 – IFAC Recommendations and MB preparation of action plans Compliance Program

Parts 1 and 2 High level of external interestHigh 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 informationEmphasize 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 responsesDevelopment of “Policy Recommendations” by IFAC Staff based on Part 2 responses Member Bodies develop Action Plans based on the aboveMember Bodies develop Action Plans based on the above Action plans must be: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 successBuy in by member body is essential to success –Board/Council –Technical Committees –Management –Key Volunteers Coordinate with WB-ROSC and IADB MIF activitiesCoordinate with WB-ROSC and IADB MIF activities IFAC Compliance Program

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

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

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

“Establishing and Developing a Professional Accountancy Body”“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 bodyUsed 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 structureUsed by ICPAK in Kenya when improving their internal Governance structure Developing Nations Tools and Guidance

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

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

World BankWorld Bank African Development BankAfrican Development Bank Inter American Development BankInter American Development Bank Asian Development BankAsian Development Bank US AIDUS AID UNCTADUNCTAD OthersOthers Developing Nations Relationships Built To Date Relationships Built To Date

Input into Standard SettingInput 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 practitionersDeveloping tools for smaller practitioners –ISA Guide (Quarter 4, 2007) –QC Guide (under consideration) IFAC Support Small and Medium Practices Committee

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

LiderazgoLiderazgo Pro actividadPro actividad ComunicaciónComunicación Strengthening the Profession IFAC Member’s Commitment

ImpulsarImpulsar RespectoRespecto Disposición a actuarDisposición a actuar Strengthening the Profession IFAC’s Commitment

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