Finding the Balance: Regulation and the Role of the Accountancy Profession
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Presentation given by Szymon Radziszewicz, Senior Technical Manager for the International Federation of Accountants, on the need for a balanced approach to regulation of the accountancy profession and how the accountancy profession contributes to economic stability and growth, at the 6th Cross-Border Meeting In Moldova in June 2012.
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Finding the Balance: Regulation and the Role of the Accountancy Profession
- 1. Finding the Balance Regulation and the Role of Accountancy Profession Szymon Radziszewicz Senior Technical Manager Member Body Development 6th Cross-Border Meeting Chişinău, Moldova June 22, 2012 Page 1 | Confidential and Proprietary Information
- 2. Today’s Presentation Outline • The context – History – Complexity • Regulation of the profession – the global perspective – Balancing shared regulation – Framework for strong accountancy profession • Role of the national profession – Commitment to quality – Provide support and leadership • How IFAC assists Page 2 | Confidential and Proprietary Information
- 3. 5000 Years Ago Page 3 | Confidential and Proprietary Information
- 4. 500 Years Ago Page 4 | Confidential and Proprietary Information
- 5. 16 Years Ago Page 5 | Confidential and Proprietary Information
- 6. 4 Years Ago Page 6 | Confidential and Proprietary Information
- 7. Last week Page 7 | Confidential and Proprietary Information
- 8. Complexity International Landscape Today • Pressure on the broader financial architecture – Economy in recovery • Globalization – Information, Capital, Accountants moving across borders • Diverse and segmented – Large multinationals and smaller local SMEs – International network firms and local SMPs Page 8 | Confidential and Proprietary Information
- 9. Clarity IFAC Perspective on Regulation • Global regulatory convergence – IFAC’s position; importance of high-quality globally accepted standards and consistent adoption, implementation and oversight • Balancing shared regulation – Policy Position Paper (PPP) 1 and the role of professional accountancy organizations • Statements of Membership Obligations (SMOs) – A framework for credible and high quality professional accountancy organizations Page 9 | Confidential and Proprietary Information
- 10. Finding the Balance Regulation of the Accountancy Profession • “Regulation of individual professional accountants is primarily conducted at a national level, with professional accountancy organizations playing an important role in working with governments to ensure that such regulation is effective, efficient, and in the public interest.” • Characteristics of (and threats to) effective regulation • A shared approach to regulation – roles for government and professional accountancy organizations Page 10 | Confidential and Proprietary Information
- 11. Finding the Balance Framework for Strong PAOs SMO1 Quality Assurance SMO2 International Education Standards SMO3 International Standards on Auditing SMO4 International Code of Ethics SMO5 International Public Sector Accounting Standards SMO6 Investigation and Discipline SMO7 International Financial Reporting Standards Page 11 | Confidential and Proprietary Information
- 12. Balancing Act – the SMO Applicability Framework Degree of responsibility for an SMO area No Direct Shared Responsibility For the elements for Use best endeavors to: Implement all the which Member Body requirements of the has direct a. Encourage those SMO responsibility follow responsible for the the approach for requirements to follow In exceptional situations "Direct" this SMO in departures are possible implementing them; if can be justified from AND the public interest AND perspective and need to For the elements for be documented which Member Body has no direct b. Assist in the responsibility follow implementation where the approach for appropriate "No Responsibility " Page 12 | Confidential and Proprietary Information
- 13. The Framework Building Blocks Page 13 | Confidential and Proprietary Information
- 14. Role of the Profession Strong Accountancy Profession = Inclusive and Sustainable Growth High-Quality Inclusive and Financial Information Sustainable Growth Accountancy Profession Page 14 | Confidential and Proprietary Information
- 15. Role of the Profession The Goal – Provide Quality Information • Contribute to economic stability and growth • Enhance efficiency and accountability of businesses • Promote and support governmental transparency and accountability • Be a key player in rebuilding confidence in financial markets Page 15 | Confidential and Proprietary Information
- 16. Role of the Profession Be the Voice • Educate stakeholders and advocate the role of the profession • Raising awareness about the need for accountants and auditors – Public Sector and Private Sector • Input into development of legislation and regulation Page 16 | Confidential and Proprietary Information
- 17. Role of the Profession Provide Support • Training and examination • If not the standard-setter: • Input into the development of standards • Support implementation of standards • Promote and monitor adherence to ethics and independence requirements Page 17 | Confidential and Proprietary Information
- 18. Role of the Profession Leadership through Action • Commitment to the public interest • Adherence to the values of integrity, transparency and expertise • Commitment to follow high standards • Ongoing education • Oversight of its public interest activities Page 18 | Confidential and Proprietary Information
- 19. IFAC Global Profession Page 19 | Confidential and Proprietary Information
- 20. Ultimate Objective IFAC’s Vision For the global accountancy profession to be recognized as a valued leader in the development of strong and sustainable organizations, financial markets and economies Page 20 | Confidential and Proprietary Information
- 21. Tools and Resources • www.ifac.org/ComplianceProgram • www.ifac.org/about-ifac/professional-accountancy- organization-development-committee • www.ifac.org/SMP • web.ifac.org/clarity-center/index • www.ifac.org/Ethics/Resources.php • www.ifac.org/Translations • www.ifac.org/issues-insights/public-policy-regulation Page 21 | Confidential and Proprietary Information
- 22. www.ifac.org/ComplianceProgram www.ifac.org Page 22 | Confidential and Proprietary Information
Hinweis der Redaktion
- The annual balance sheet of a Sumerian state-owned farm, drawn up by the scribe responsible for artisans: detailed account of materials and workdays for a basketry workshop.
- Do we need to despair?
- The timeswe live in are no doubtveryinteresting.
- But being part of the accountancy profession we have the tools to bring clarity to today’s complex world
- Policy Position Paper 1 emphasizes best practicein the design and implementation of regulation. An understanding of the characteristics and operations of the market is essential (market size, business diversity, economic factors, consumers, etc.). Care needs to be taken that the nature and characteristics of the operation of the market are well understood; otherwise, the regulation may not achieve its purpose. To be effective, IFAC believes that regulation should reflect six qualities: (i) transparent; (ii) proportionate; (iii) targeted; (iv) non-discriminatory; (v) implemented fairly and consistently; and (vi) subject to regular review.Regulation should aim to ensure that the quality of services provided by the profession responds effectively and efficiently to the demands of the economy and society.It must be designed to take into consideration the shocks and stresses that may occur in different economic conditions.
- The SMOs are alignedwith the underlying International Standards and providekey focus areas for the profession
- To understand how the SMOs can work for each organization, you must first understand the applicability framework
- Once you understand what are the specific responsibilities for each SMO area you can use SMOs as the building blocks defining the PAOs. While the priorities and emphasis on each SMO area can be different for each PAO, the basic ideas are the same. The accountancy profession needs to: Have solid base of education (experience, examination) and focus on lifelong continuous professional development Focus on adoption and implementation of international standards With strong ethical standards as the cornerstone AND Quality assurance and investigation & discipline as mechanisms to maintain and continuously improve high quality practice by professional accountants.
- Global organization for the accountancy professionComprised of 167 Members and Associates in 127 countriesMembers and Associates are Professional Accountancy OrganizationsRepresents 2,5 millions accountants in public practice, business, government, and academiaThe color may be uniform but there are different ways to effectively organize the profession, different legislative frameworks, different stakeholder expectations and capacity Green – membersYellow – associates onlyGrey – no IFAC representation
- Somespecifictools for PAO development:Good Practice Guidance, Establishing and Developing a Professional Accountancy BodyMentoring Guidelines for Professional Accountancy OrganizationsThe Education, Training, and Development of Accounting Technicians