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The global body for professional accountants
Welcome.
The global body for professional accountants
Professional Accountancy
Organisations and Regulators: Experiences
and Expectations.
The global body for professional accountants
Sha Ali Khan:
Director – Practice Monitoring.
The global body for professional accountants
AGENDA
• Which regulators are relevant to PAOs?
• What is oversight?• Oversight of the accountancy
profession• Oversight of ACCA
The global body for professional accountants
AGENDA (continued)
• UK FRC and ACCA• PAOs approach to oversight bodies• Other ACCA relevant regulators• Concluding remarks
The global body for professional accountants
Regulators relevant to PAOs.
The global body for professional accountants
Regulators relevant to PAOs
Accounting and audit oversight bodies (a.k.a. “lead regulators”)
Governmental departments and agencies
Other PAOs: national and international
Standard setters (?)
The global body for professional accountants
Regulators relevant to PAOs
Law enforcement agencies:• police• tax authorities• anti-money laundering agencies
Other PAOs
Intelligence services
The global body for professional accountants
What is oversight?.
The global body for professional accountants
What is oversight?.
Regulation vs oversight
Profession is regulated, regulators are overseen
Oversight of regulators regulatory activities
Different degrees of oversight scrutiny
Powers of oversight boards: naming and shaming, recommendations, orders, fines and de-recognition
The global body for professional accountants
What is oversight?.
US Public Company Accounting Oversight Board (PCAOB) - regulator
Malta Accountancy Board – oversight board
UK Financial Reporting Council – both oversight board and regulator
The global body for professional accountants
Oversight of the accountancy profession.
The global body for professional accountants
Oversight of the accountancy profession
Concept of public oversight
Public interest of paramount importance in professional regulation
“Chaps regulating chaps” e.g. Jordan and Stone
Composition of oversight boards
European Union Statutory Audit Directive
The global body for professional accountants
Oversight of ACCA
UK Financial Reporting Council: UK audit
Irish Auditing and Accounting Supervisory Authority: Irish audit
HM Government’s Insolvency Service: UK insolvency
UK Financial Conduct Authority: UK investment business
Central Bank of Ireland: Irish investment business
The global body for professional accountants
Oversight of ACCA: limited oversight
Australian Tax Practitioners Board (Tax agents scheme)
South Africa Revenue Service (Tax agents scheme)
The global body for professional accountants
Oversight of ACCA by the UK Financial
Reporting Council.
The global body for professional accountants
UK FRC oversight of ACCA: interaction
ACCA’s annual plan covering regulatory activities and other strategic moves
ACCA to notify FRC of major events immediately
Annual return of regulatory activities
The global body for professional accountants
UK FRC oversight of ACCA: interaction
Annual inspection of all four UK audit regulators – same annual “theme”
Overly prescriptive recommendations: Not only what we do but how we do it
FRC acquired powers in 2012 to fine audit regulators and instruct them on regulatory conduct and procedures
All of the above funded by the PAO audit regulators
The global body for professional accountants
UK FRC requirements of ACCA’s annual plan
Regulatory objectivesGovernance arrangementsKey priorities for the yearDetailed plans for the year
The global body for professional accountants
UK FRC requirements of ACCA’s annual plan
Key targetsResourcesRegulatory costsRisksRulebook and regulation changesProgress on prior year recommendations
The global body for professional accountants
UK FRC requirements: immediate notification
Changes in senior ACCA management
Mergers and acquisitions
Major fraud or financial loss
Loss of integrity and reputation of examinations
The global body for professional accountants
PAO’s approach to oversight bodies.
The global body for professional accountants
ACCA’s approach to (and expectation of) oversight bodies
Cooperation
Technical and regulatory competence
Challenge regulatory “creep”
Challenge inappropriate recommendations (e.g. one size fits all or cost/benefit)
Constructive engagement is ACCA’s objective
The global body for professional accountants
Examples of PAO experiences of poor oversight
Cooperation between PAO and Oversight Board
Excessive costs of oversight recharged to PAO (blank cheque syndrome)
Public oversight body composition controlled by government
The global body for professional accountants
Examples of PAO experiences of poor oversight or poor regulation
Technical and regulatory competence of oversight staff
Disproportionate focus on some activities (e.g. approval of all rules and regulation changes)
Named and shamed for not following own procedures
Inappropriate use of regulatory gateways
The global body for professional accountants
Other relevant regulators.
The global body for professional accountants
Other relevant regulators: key relationship features
Common objectives (usually exchange of regulatory information)
Cooperation essential
Cooperation restricted to relevant matters
Regulatory gateways required
The global body for professional accountants
Other ACCA relevant regulators
Government agencies:
• UK Department for Business, Innovation and Skills
• Irish Director of Corporate Enforcement Other PAOs:• Other UK/Irish PAOs regulating same activities
as ACCA• International PAOs regulating ACCA members
The global body for professional accountants
Other PAOs : cooperation on investigation of dual members
Investigation protocol:
• Identify primary regulator, based on licensing body for activity and jurisdiction of suspected offence
• Primary regulator investigates and then disciplines if appropriate
• Secondary regulator disciplines member on basis of primary regulators findings
ACCA always informs other regulators interested in ACCA members’ conduct
The global body for professional accountants
Other ACCA relevant regulators
Law enforcement agencies:• police• tax authorities• anti-money laundering agencies
Intelligence services:• Financial Fraud Information
Network
The global body for professional accountants
Concluding remarks
Operating/regulating in isolation is not an option
Cooperation essential to effective regulation
Regulatory gateways essential for inter-regulator cooperation
Oversight body’s recommendations should add real value to PAO’s regulatory processes
Public interest is paramount
The global body for professional accountants
Food for thought: “Reputation is everything”
"In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward. Manufactured goods often can be evaluated before the completion of a transaction. Service providers, on the other hand, usually can offer only their reputations.”
Former Federal Reserve chairman, Alan Greenspan
The global body for professional accountants
Thank you.