International Federation of Accountants

A&IS/CAP/DNC Report

Russell Guthrie

Executive Director, Quality and Member Relations

IESBA Meeting

New York City, New York

February 17, 2009

• What we know today

• Adoption and Implementation Support

• Compliance Program

– Status

• Developing Nations initiatives

• Specific matters for IESBA consideration

– Adoption and Implementation

– SMO Revisions

Topics to be Covered

Developing Nations Committee

• Lack of stakeholder engagement

• Outdated legal frameworks

• Weak accountancy professional organizations

• Widespread non-compliance with standards

• Weak monitoring/enforcement mechanisms

• Lack of access to (translated) international standards and related implementation guidance

• Inadequate training and curricula/poor linkage with academia

Challenges

Weak Capacity

Adoption and Implementation Support

• Adoption

– Advocacy

– Policy Advice

IFAC – Beyond Standard Setting

Adoption and Implementation Support

• Implementation Support

– Availability

– Accessibility (Translations)

– Application Support

– Core Training and Education Materials (currently deferred due to resource constraints)

IFAC – Beyond Standard Setting

Member Body Compliance Program

• SMO 1 Quality Assurance• SMO 2 International Education Standards• SMO 3 International Standards on Auditing• SMO 4 International Code of Ethics• SMO 5 International Public Sector

Accounting Standards• SMO 6 Investigation and Discipline• SMO 7 International Financial Reporting

Standards

Statements of Membership Obligations (SMOs)

Member Body Compliance Program

• Part 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 SMOs

• Part 3 – Members and associates develop action plans to address gaps

Assessing Compliance

Member Body Compliance Program

• 76 – Published Action Plans

• 39 – Drafts received and under review

• 40 – In progress but no submitted draft

• 3 – Suspensions

• 1 – Expulsion to be considered by Board – Feb

Status of Preparation of Action Plans as of February 1, 2010

Member Body Compliance Program

• Soft updates– Completed after six months– Based on interviews with key individuals

Obtain understanding of current progress Encourage continuing communication Offer to be of further assistance

– Memorandum prepared for archives and CAP review

Monitoring of Published Action Plans

Member Body Compliance Program

– 20 completed as of February 1, 2010Overall member bodies generally remain on

trackSome delay caused by changes in regulatory

environment or change in prioritiesAlso noted a number of positive developments

• Annual progress reports– Include submission of updated Action Plans– 10 completed or actively in progress

Monitoring of Published Action Plans

Member Body Compliance Program

• Meaningful execution of Action Plan depends on:

– Ability of developing bodies to clearly communicate their challenges, required actions, and need for resources

– Willingness of national government and donor agencies to provide support and financial resources

– Development of useful implementation tools by the DNC and standard setters

– Support of regional organizations and developed bodies serving as mentors/partners

Need for Financial and Technical Resources to Achieve Desired Actions

Member Body Compliance Program

• Clarification and increased consistency including

– “No less stringent standards” SMO 4 (Ethics)

– Statement of applicability in SMO 7 (IFRS+IFRS-SMEs)

• Member body governance practices

• Corporate governance (OECD principles)?

• Review of QA and I&D

– Public oversight for auditors of PIEs?

Program to Review the SMOs (2010-2012)

Developing Nations Committee

• Tools and Guidance

– Establishing and Strengthening Professional Accountancy Organizations

– Technicians Guidelines

– Mentoring Guidelines

• Advocacy and Liaison with Donor Community

• Capacity building to support Public and Private sector Financial Management

Key activities

Developing Nations Committee

• Mentoring/Twinning by Developed Bodies

• Outreach

– Professional Accountancy Organizations

– Governments

– Firms

Key activities

• Compliance Program

– Limited to self assessment and limited external validation

• Adoption challenges

– Principles and rules at a national level often embedded in legislation, regulation and member body governance documents

• Implementation challenges

– Overcoming cultural barriers

Code of Ethics – Specific Matters

• Definition of “Professional Accountant”

• SMO 4 Revision – other considerations

– Consistency – convergence, translation, etc.

– IFAC Member Obligations

• CoE applicable to a wide group of stakeholders

• SMO establishes member body obligations

• “No less stringent standards”

Code of Ethics – Specific Matters

Adoption and Translation

Adoption/Translation/Advocacy Activity• Netherlands• Nigeria• Romania• Russia• Scotland• Slovakia• Spain

• South Africa• Swaziland • Tanzania• Ukraine• Zambia

• Australia• Cambodia• France• Finland• Germany • Hong Kong• Iceland• Ireland• Kenya• Latvia• Macedonia• Mauritius

International Federationof Accountants

www.ifac.org