1. 1 The Role of Auditors in Economic development & Social Justice Jan. 2006 By: Gholam hossein Davani Member of High Council of Iran Association of Certified Public Accountants (IACPA) IMA, AAA, BAA, EAA, IIA, CAAA, AAFM Dayarayan Auditing & Financial Services Firm

2. 2 Corporate Governance Law sovereignty Justice & Fairness Participate Accountability Responsibility Supreme Transparency Efficiency & Effectiveness Auditing Supreme thought on governmental resources & consumption have been come from constitution that culminate in establish public Accountants tribunal and review of governmental accounts Public accounts tribunal have been establish according article 101,102,103 supplementary to the constitution law

3. 3 Role of Auditors in good governance process Information Transparency Assurance Financial evaluation of investment project Tax auditing Culture Accountability Management decision Stock Market Reduce of Administrative Banking, Commerce, Financial & Economic entity Financial accountability of government & Privatation sec.

4. 4 Type of Institute Controller Ministry of Finance Supreme of Funds & Executive of Financial regulation Ministries & Governmental Institute Public accounts tribunal Control Budget & Regulation Variance State Chief inspectorate Irregularities Cases Control Government & Public economic entity *Audit organization Financial Audit, Tax Audit, operational audit Private Economic entity Iranian Association of Certified Public Accountants Financial Audit, Tax Audit, operational audit Shareholders Management Control Mofid Rahbar Auditing Firm** Special Audit Islamic Revolution Foundation Audit Organization Iranian Association of Certified Public Accountants Financial Audit, Tax Audit, operational audit Municipalitities Financial Supreme & Control Foundation in Iran Type of Super & Control * Audit Organization= Biggest Governmental Audit Firm in Middle East ** Mofid Rahbar = Affiliated to Islamic Leader Office

5. 5 Effected law on Governmental Co. Constitutio n Law Public Account s tribunal The customers & producers protection Org. (CPPO) Budgets Law Commercia l Law Banking & Marketing regulation Commerc e Law Social Securitie s Law Tax Act Audit Organizatio n Law Tehran Stock Exchange Law State Chief inspectorat e Punishmen t organizatio n Economic development plan Iranian Association of Certified Public Accountant

6. 6 Task of Auditors in Development Process Tax Incomes Anti-corruption Anti-Money Laundry Supreme on Budget Comply Public Interest Auditing Tax is development instrument * * * Auditing is collection tax instrument Privatization Financial Assessment of Investment project

7. 7 Role of Auditors on Foundation Supreme Governmental Tax Instrument Financial Supreme in Capital Market Financial Supreme in Money Market Performance supervision on budget of governmental Co. Financial Supreme in E-Governance

8. 8 Auditors Social Responsibilities in Development Process Social responsible Professional responsible Legal responsible

9. 9 Auditors’ Social responsibilities in Globalization Comply with Law & Regulation (Governor of Law) Comply with professional rules Supreme in human right Supreme in Comply Environmental natural law & regular Supreme on ISO & Others Quality Control Standards Supreme on world bank & IMF Loan Supreme on executive of Management Accountability TaxLabour & Social law Other governmental duties Financial International Court Struggle with Corruption & Money Laundry

10. 10 Table of Professional Accountants in UK & USA 2005 CPAACCACIMACIPFAICAEWICAIICASTOTAL 130,343238,42581,1172,92710,0193,2402,626475,697 Table of Graduate of Chartered Accountants & ACCA 2005 Location Affiliated Member & Student MemberTotal Africa43,3274,90747,234 USA18,0505,30923,359 South East Asia70,41131,323101,734 North Europe9,4232,57111,994 Middle East3,4944903,984 South Asia18,06747918,546 UK & West Europe78,96959,534138,503 Total240,741104,613345,354

11. 11 Table of AICPA’s Graduation 1999-2005 1999200020012002200320042005 Total AICPA Membership (excluding student and other affiliates) 336,635337,454336,081337,867335,111334,635327,135 Public Accounting 39.5%39.4%38.9%38.8%38.4%39.0%39.2% Business & Industry 46.2%46.4%46.6%47.4%47.7%41.6%42.8% Education 2.4%2.3% 2.4%2.3%2.4% Government 4.3%4.2%4.1%4.0%4.1%3.9% Retired & Miscellaneous 7.6%7.7%8.1%7.5%7.7%13.2%11.6% Membership in Public Practice 133,036132,943130,870130,995128,730130,343128.292 Firms with one member 22.8%21.8%21.6%21,3%21.4%22.6%23.0% Firms with 2-9 members 34.7%34.1% 33.9%34.1%29.9%31.6% Firms with 10 or more members, except the 25 largest firms 21.6%22.8% 24.0%24.5%26.0%24.7% 25 Largest Firms 20.9%21.3%21.5%20.8%20.0%21.5%20.7% CPA in the world CountryNo. FirmOffice USA World 3670 297 5808 636 Total39676444

12. 12 Active Partner Activate in Public Active in Audit Organization Non-ActiveIndividualTotal 424642963582201,368 Estimate of Audit Market Share of Private Public Accountants Share of Audit Organization Market Value of Accounting Total Personal in Public Accountants No of Public Accounting Firms 150,000,000$20,000,000 $30,000,000 $50,000,000 $3,475139 Table of Iranian Association of Certified Public Accountants (IACPA) BDOKPMG ERNEST & YOUNG DELOITTEPWC 3.315.616.918.220.3 MooresHarwathBaker tillyGrant thornton RSM 1.922.12.42.5 Big Ten Accounting Fee Income 2005 Total Market 100($B) Other Management Consulting Tax Services Audit Accounting 17%11%23%49% Table of World Accounting Services 2005

13. 13 Big Ten revenue per partner 2005 (M$) Overall Fee split 2005 (MS) Delloitte Ernst & Young PWCKPMGRSM Grant Thornton BDO 7,8106,3376,1674,7001,213828440 USA Accounting Firm Fee 2005 FirmAmountsFirmAmounts PWC3,055,000RSM1,100,000 DT3,005,000Harwath1,007,000 EY3,011,000Baker tilly970,000 KPMG2,920,000Moors Rowland 1,350,000 Grant thornton 1,990,000 Tax services Audit & Accounting Managing Consulting Others 2743219

14. 14 Overall Market Share 2005 Mid timeKPMG Ernst & Young DeloittePWC %34%12%17%21%16 Ranking Big Four in The World CountryFirmFee income ($M) USADeloitte7,8 UKPWC3,2 GermanyPWC1,372 CanadaDeloitte1,151 FranceKPMG834 NetherlandDT829 AustraliaPWC761 SpaniaDT296 KoreaPWC289 DenmarkDT286 SwitzerlandKPMG284 South AfricaPWC261 BelgiumPWC233 SwedenE&Y232 ItalyPWC203 IrelandPWC182 MexicoPWC152 JapanDT652 NorwayDT93

15. 15 Global Eight The UN Global Compact ILO conventions The OECD Guidelines for Multinational Enterprises ISO 14000 Series Account Ability 1000 The Global Reporting Initiative The Global Sullivan Principles Social Accountability 8000 Audit & Accounts Standards Comply World Standards Principles (Global Compact and Global Sullivan Principles Standards (GRI, OECD Guidelines, SA8000, AA1000S, ILO Conventions) Foundation (ILO Conventions, AA1000S) Process (SA8000, AA1000S, ISO 14000S) Performance (SA8000, OECD Guidelines, ILO Conventions) Audit & Accounting Standards GAAP, IAS, IFRS

16. 16 ILO Law & Regulation Freedom of association (Convention 87) Right to collective bargaining (Convention 98) Prohibition on forced labour (Convention 29 and 105) An environmental policy An assessment of environmental aspects An assessment of legal and voluntary obligations A management system A series of periodic, internal audits and reports to top management Prohibition on child labour Freedom from discrimination (Convention 111)