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Building For Sustainable Growth
– (re)Defining Accountancy
Profession in the Age of Twitter

  Szymon Radziszewicz
  Senior Technical Manager
  Member Body Development Team Leader

  PICPA Seminar
  Manila, Philippines
  April 11, 2013




                          Page 1 | Confidential and Proprietary Information
Think Profession

Conventional Approach




                        Page 2 | Confidential and Proprietary Information
Think Profession

Live Core Values – Think Different




                                     Page 3 | Confidential and Proprietary Information
Today’s Presentation

Outline


 • The context
 • Regulation of the profession – the global perspective
 • Role of the national profession
      – Commitment to quality
      – Implementation support & thought leadership
 •   What is IFAC & its SMOs
 •   Adoption & Implementation of international standards
 •   Quality Assurance – concept & examples
 •   How IFAC assists



                                                      Page 4 | Confidential and Proprietary Information
5000 Years Ago




                 Page 5 | Confidential and Proprietary Information
500 Years Ago




                Page 6 | Confidential and Proprietary Information
84 Years Ago




               Page 7 | Confidential and Proprietary Information
5 Years Ago




              Page 8 | Confidential and Proprietary Information
Last Year




            Why Greece won't go away
            By Laurence Knight Business reporter, BBC News
            6 February 2012




                                                             Page 9 | Confidential and Proprietary Information
What Now?




            Page 10 | Confidential and Proprietary Information
Complexity


Global Landscape Today

 • Pressures on the broader financial architecture
      – Economy in recovery
      – Increased regulatory proposals resulting from global financial crisis
      – Sovereign debt crisis
 • Globalization
      – Information, capital, accountants moving across borders
      – Integrated reporting and long term sustainability
 • Diverse and segmented
      – Large multinationals/networks and smaller local SMEs and SMPs
      – Accountants in diverse roles: auditors, preparers, advisors, strategic
        business leaders (CFO/CEO/COO)
 • Twitter generation
      – 140

                                                              Page 11 | Confidential and Proprietary Information
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 (PAOs)




                                                                Page 12 | Confidential and Proprietary Information
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
                       • Shared approach to regulation –
                         roles for government and PAOs


                                         Page 13 | Confidential and Proprietary Information
Role of the Profession

Strong Accountancy Profession = Inclusive and
Sustainable Growth




                            •   Maintain core values
                            •   Think different
                            •   Push boundaries
                            •   Commit to public interest
                            •   Create, contribute, give!




                                         Page 14 | Confidential and Proprietary Information
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 (re)building confidence in financial
     markets




                                               Page 15 | Confidential and Proprietary Information
Role of the Profession

Be the Voice


 • Educate stakeholders
 • Advocate the role of the profession
 • Raise awareness
      – Need for accountants and auditors
      – Global regulatory convergence
      – Public & Private Sector
 • Input into development of legislation and regulation
 • Support to those in charge




                                              Page 16 | Confidential and Proprietary Information
Role of the Profession

Provide Support


 • Education and training
 • If not the responsible body
      •   Advocacy for international best practice
      •   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
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
IFAC

Global Profession




                    Page 19 | Confidential and Proprietary Information
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
Overview of IFAC Structure


                                                    IFAC
                                                  COUNCIL
                                 Governance
                                  and Audit                          Nominating
                                 Committee                           Committee

                                                     IFAC                                       IFAC
                                                                                             Regulatory
                                                    BOARD                                  Liaison Group

                                   Planning
                                 and Finance
                                  Committee

  Forum
 of Firms




                  Professional     Professional    Small and                      International     International      International      International
 Transnational    Accountancy      Accountants      Medium       Compliance       Auditing and       Accounting           Ethics          Public Sector
   Auditors       Organization                                  Advisory Panel     Assurance         Education          Standards          Accounting
  Committee                        in Business      Practices
                  Development       Committee      Committee                       Standards         Standards           Board for         Standards
                   Committee                                                          Board             Board          Accountants            Board


                 KEY

                 ACCOUNTABILITY




                                                                                                             Page 21 | Confidential and Proprietary Information
Oversight of IFAC PIACs


                                                    IFAC
                                                  COUNCIL
                                 Governance                                                                      Public
                                                                     Nominating                                 Interest
                                  and Audit                                                                    Oversight
                                 Committee                           Committee
                                                                                                                 Board

                                                     IFAC                                       IFAC
                                                                                             Regulatory
                                                    BOARD                                  Liaison Group

                                   Planning
                                 and Finance
                                  Committee

  Forum
 of Firms




                  Professional     Professional    Small and                      International     International      International      International
 Transnational    Accountancy      Accountants      Medium       Compliance       Auditing and       Accounting           Ethics          Public Sector
   Auditors       Organization                                  Advisory Panel     Assurance         Education          Standards          Accounting
  Committee                        in Business      Practices
                  Development       Committee      Committee                       Standards         Standards           Board for         Standards
                   Committee                                                          Board             Board          Accountants            Board


                 KEY

                 ACCOUNTABILITY
                 OVERSIGHT




                                                                                                             Page 22 | Confidential and Proprietary Information
IFAC Oversight and Consultation

                                                                                                 Monitoring
                                                    IFAC                                          Group

                                                  COUNCIL
                                 Governance                                                                           Public
                                  and Audit                          Nominating                                      Interest
                                                                     Committee                                      Oversight
                                 Committee                                                                            Board
                                                     IFAC                                         IFAC
                                                                                               Regulatory
                                                    BOARD                                    Liaison Group

                                   Planning
                                 and Finance
                                  Committee

  Forum                                                                           Consultative          Consultative            Consultative
 of Firms                                                                          Advisory              Advisory                Advisory
                                                                                    Group                 Group                   Group




                  Professional     Professional    Small and                        International        International      International      International
 Transnational    Accountancy      Accountants      Medium       Compliance         Auditing and          Accounting           Ethics          Public Sector
   Auditors       Organization                                  Advisory Panel       Assurance            Education          Standards          Accounting
  Committee                        in Business      Practices
                  Development       Committee      Committee                         Standards            Standards           Board for         Standards
                   Committee                                                            Board                Board          Accountants            Board


                 KEY

                 ACCOUNTABILITY
                 OVERSIGHT
                 CONSULTATION/ADVICE



                                                                                                                  Page 23 | Confidential and Proprietary Information
IFAC SMOs – International Soft Law

What are the SMOs



                                     • In accordance with IFAC
                                       Constitution, IFAC
                                       members and associates
                                       are required to comply
                                       with the SMOs
                                     • Member and associates
                                       have to identify and take
                                       actions to fulfill the
                                       requirements set out in
                                       the SMOs

                                                 Page 24 | Confidential and Proprietary Information
What are SMOs

Power to Grow


                • Clear benchmarks for
                  PAOs
                • Enable high quality
                  performance by
                  professional accountants
                • Encourage continuous
                  improvement
                • Drive sustainable
                  development of the
                  accountancy profession


                           Page 25 | Confidential and Proprietary Information
What are SMOs

Building Blocks



                          SMO 4: Ethics



                SMO 7:        SMO 3:        SMO 5:
                 IFRS          ISA          IPSAS



                         SMO 2: Education


                                             Page 26 | Confidential and Proprietary Information
2004 vs. 2012 SMOs

Why Revise?


                     • Serve the public interest
                     • Drive adoption and
                       implementation of
                       international standards
                     • Clarify
                     • Reflect international good
                       practice
                     • Increase effectiveness of
                       IFAC Compliance
                       Program


                                 Page 27 | Confidential and Proprietary Information
SMOs

Key Concepts



               •   Shall = requirement
               •   Applicability Framework
               •   Comply or explain
               •   Best endeavors
               •   Compliance Program




                            Page 28 | Confidential and Proprietary Information
Key Concepts

Understanding Diversity




                                                         Different
     Regulatory           Sectors of
                                                         degree of
    frameworks            profession
                                                       responsibility




                                       Page 29 | Confidential and Proprietary Information
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 30 | Confidential and Proprietary Information
Revised SMOs

Structure of the SMOs


                            Obligation


                              Scope


                      Applicability Framework


               Requirements and Application Guidance


                   IFAC Compliance Assessment



                                                Page 31 | Confidential and Proprietary Information
SMOs 2, 3, 4, 5, 7

Adoption



     Decision




                            Action
                           to make
                         the decision
                           effective

                     Page 32 | Confidential and Proprietary Information
SMOs 2, 3, 4, 5, 7

Different Approaches – One Goal


                     Adoption




                          Transposition




                                          Page 33 | Confidential and Proprietary Information
SMOs 2, 3, 4, 5, 7

Implementation


Dissemination         Implementation
 of standards            guidance




Education and                Raising
   training                 awareness


                     Page 34 | Confidential and Proprietary Information
SMOs 2, 3, 4, 5, 7

Translation



                     • Assess priorities and
                       challenges
                     • Is there a need of
                       translation to ensure
                       proper adoption and
                       implementation
                     • Process for
                       timely, accurate and
                       complete translation



                                 Page 35 | Confidential and Proprietary Information
SMO 1

Quality Assurance


   Extension of the scope to ALL audits of financial
   statements (priority for PIE audits)
   Consider QA performed by another authority to avoid
   overlap
   Ensure sufficient resources
   Refer to I&D if no corrective action
   Consideration of public oversight
   Review of implementation and effectiveness




                                           Page 36 | Confidential and Proprietary Information
Revised SMOs

What PAOs Need To Do



                       • Review and understand
                         revisions
                       • Consider actions
                         necessary to address
                         revisions
                       • Plan and execute actions
                       • Cooperate within RO/AG
                       • Reflect actions in the next
                         update of the SMO Action
                         Plan

                                   Page 37 | Confidential and Proprietary Information
It All Fits Together

Strong Global Accountancy Profession




                                       Page 38 | Confidential and Proprietary Information
Quality Assurance

Why Quality Assurance?




                      External                 Confidence
    Internal
                      Quality
    Quality                                    Credibility
                     Assurance
    Controls                                   Reputation
                      Reviews




                                 Page 39 | Confidential and Proprietary Information
Quality Assurance

Benefits



 • Protects public          • Improves the standard
   interest                   of audit work

 • Enhances reputation      • Generates referrals for
                              new business
 • Reduces risk of errors
   and omissions            • Increases profits

 • Reflected in enhanced    • Meets regulatory
   service to clients         requirements


                                    Page 40 | Confidential and Proprietary Information
Quality Assurance

Scope


 • Consider efficiency & don’t reinvent the wheel
 • ALL audits of financial statements
      – But priority to PIEs’ audits
 • Other services?
 • Mandatory or voluntary?
 • Criteria & risk factors




                                             Page 41 | Confidential and Proprietary Information
Quality Assurance

Quality Control Standards & Guidance


 • ISQC 1
 • ISA 220
 • Guidance
      –   Awareness building
      –   Manuals
      –   CPD
      –   Start small (voluntary programs)
 • Trust the market and play to the market




                                             Page 42 | Confidential and Proprietary Information
Quality Assurance

Design

 • Subject
      – Firm or engagement partner
 • Criteria
      – Suitable
      – Respectful of and aligned with the national regulatory framework
      – What needs to be considered to conclude that the QC system is adequate
        and the firm/partner complies
 • Guidance
      –   Awareness building
      –   Manuals
      –   CPD
      –   Start small (voluntary programs)
 • Trust the market & play to the market
                                                         Page 43 | Confidential and Proprietary Information
Quality Assurance

Review Cycle


 •   Cycle approach
 •   Risk-based approach
 •   Mixed approach
 •   Other considerations




                            Page 44 | Confidential and Proprietary Information
Quality Assurance

Review Team


 • Procedures
 • Documentation
 • Quality
      –   Resources
      –   Skills & competence
      –   Quality of team leader
      –   Ethical requirements
 • Confidentiality




                                   Page 45 | Confidential and Proprietary Information
Quality Assurance

Reporting & Corrective Actions


 • Conclusion
      – Is the firm’s system designed to meet requirements?
      – Is the partner subject to the system?
      – Does the firm/partner comply with internal QC system?
 • Reasons for conclusion
 • Recommendations for improvement
 • What if the review was unsatisfactory?




                                                          Page 46 | Confidential and Proprietary Information
Quality Assurance

Public Oversight Considerations


 • IFIAR principles
 • Cooperate closely & share information and expertise
 • Consider how to contribute to the regulation of the
   profession
 • IFAC PPP 1, Regulation of the Accountancy Profession




                                          Page 47 | Confidential and Proprietary Information
Quality Assurance

Review of Implementation and Effectiveness


                                  Consider




                    Improve                            Plan




                         Review              Execute




                                                              Page 48 | Confidential and Proprietary Information
Quality Assurance

Examples from Around the World


 •   Rwanda
 •   Malta
 •   Bahamas
 •   Poland




                                 Page 49 | Confidential and Proprietary Information
Examples from Around the World

Rwanda

                                 The Programme is based on the principle
 Quality in the performance      that a systematic monitoring and
 of Auditing Engagements         educational process is the most effective
 by ICPAR members is the         way to attain and maintain the envisaged
 goal of the Audit Quality       quality of professional work throughout the
 Review Programme.               profession. Thus, it depends on mutual
                                 trust and cooperation. The reviewed
 The Programme seeks to          practice unit is expected to take
 achieve its goal through        appropriate actions in response to
 education and remedial,         deficiencies in either design of its
 corrective actions. This        system of quality control, or its
 goal serves the public          compliance with that system, or both.
 interest and, at the same       These actions will be positive and
 time, enhances the              remedial. Matters touching on the
 significance of ICPAR           professional conduct of a member will be
 membership.                     investigated within the Disciplinary Process
                                 as provided for in the Laws of the Land.

                                                        Page 50 | Confidential and Proprietary Information
Examples from Around the World

Malta




                                 Page 51 | Confidential and Proprietary Information
Page 52 | Confidential and Proprietary Information
Quality Assurance

Feedback from Firms


 • I would also like to take this opportunity to thank both of you for
   the professional but friendly way you approached our visit and
   your practical findings which will enable us to focus on our
   weaknesses in the practice so that they can be rectified to bring
   all areas up to the required standard

 • In the meantime, we would like to thank you for the professional
   and courteous manner in which you carried out the review and
   for your honest and open approach. Your review has proved to
   be very constructive and has outlined valid improvements that
   need to be made in our quality control procedures



                                                   Page 53 | Confidential and Proprietary Information
Quality Assurance

Feedback from Firms cont.


 • We would like to thank you for your very helpful and
   constructive comments during your visit which we found to
   be a very productive review and a useful process carried
   out in a supporting manner

 • It is very encouraging to see that the BICA are using
   monitoring compliance officers who are realistic and
   understanding in their approach and have good solid
   actual background practice experience and appreciate
   more fully the real life problems and difficulties facing
   practitioners



                                               Page 54 | Confidential and Proprietary Information
How IFAC assists

Free Tools and Resources




                           Page 55 | Confidential and Proprietary Information
How IFAC Assists?

Free Tools and Resources


 • www.ifac.org/SMP
 • web.ifac.org/clarity-center/index
 • www.ifac.org/ComplianceProgram
 • www.ifac.org/about-ifac/professional-accountancy-
   organization-development-committee
 • www.ifac.org/Ethics/Resources.php
 • www.ifac.org/Translations
 • www.ifac.org/issues-insights/public-policy-regulation




                                              Page 56 | Confidential and Proprietary Information
THANK YOU




www.ifac.org/ComplianceProgram

          www.ifac.org




                           Page 57 | Confidential and Proprietary Information

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Building for Sustainable Growth. (re)Defining the Accountancy Profession in the Age of Twitter

  • 1. Building For Sustainable Growth – (re)Defining Accountancy Profession in the Age of Twitter Szymon Radziszewicz Senior Technical Manager Member Body Development Team Leader PICPA Seminar Manila, Philippines April 11, 2013 Page 1 | Confidential and Proprietary Information
  • 2. Think Profession Conventional Approach Page 2 | Confidential and Proprietary Information
  • 3. Think Profession Live Core Values – Think Different Page 3 | Confidential and Proprietary Information
  • 4. Today’s Presentation Outline • The context • Regulation of the profession – the global perspective • Role of the national profession – Commitment to quality – Implementation support & thought leadership • What is IFAC & its SMOs • Adoption & Implementation of international standards • Quality Assurance – concept & examples • How IFAC assists Page 4 | Confidential and Proprietary Information
  • 5. 5000 Years Ago Page 5 | Confidential and Proprietary Information
  • 6. 500 Years Ago Page 6 | Confidential and Proprietary Information
  • 7. 84 Years Ago Page 7 | Confidential and Proprietary Information
  • 8. 5 Years Ago Page 8 | Confidential and Proprietary Information
  • 9. Last Year Why Greece won't go away By Laurence Knight Business reporter, BBC News 6 February 2012 Page 9 | Confidential and Proprietary Information
  • 10. What Now? Page 10 | Confidential and Proprietary Information
  • 11. Complexity Global Landscape Today • Pressures on the broader financial architecture – Economy in recovery – Increased regulatory proposals resulting from global financial crisis – Sovereign debt crisis • Globalization – Information, capital, accountants moving across borders – Integrated reporting and long term sustainability • Diverse and segmented – Large multinationals/networks and smaller local SMEs and SMPs – Accountants in diverse roles: auditors, preparers, advisors, strategic business leaders (CFO/CEO/COO) • Twitter generation – 140 Page 11 | Confidential and Proprietary Information
  • 12. 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 (PAOs) Page 12 | Confidential and Proprietary Information
  • 13. 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 • Shared approach to regulation – roles for government and PAOs Page 13 | Confidential and Proprietary Information
  • 14. Role of the Profession Strong Accountancy Profession = Inclusive and Sustainable Growth • Maintain core values • Think different • Push boundaries • Commit to public interest • Create, contribute, give! 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 (re)building confidence in financial markets Page 15 | Confidential and Proprietary Information
  • 16. Role of the Profession Be the Voice • Educate stakeholders • Advocate the role of the profession • Raise awareness – Need for accountants and auditors – Global regulatory convergence – Public & Private Sector • Input into development of legislation and regulation • Support to those in charge Page 16 | Confidential and Proprietary Information
  • 17. Role of the Profession Provide Support • Education and training • If not the responsible body • Advocacy for international best practice • 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. Overview of IFAC Structure IFAC COUNCIL Governance and Audit Nominating Committee Committee IFAC IFAC Regulatory BOARD Liaison Group Planning and Finance Committee Forum of Firms Professional Professional Small and International International International International Transnational Accountancy Accountants Medium Compliance Auditing and Accounting Ethics Public Sector Auditors Organization Advisory Panel Assurance Education Standards Accounting Committee in Business Practices Development Committee Committee Standards Standards Board for Standards Committee Board Board Accountants Board KEY ACCOUNTABILITY Page 21 | Confidential and Proprietary Information
  • 22. Oversight of IFAC PIACs IFAC COUNCIL Governance Public Nominating Interest and Audit Oversight Committee Committee Board IFAC IFAC Regulatory BOARD Liaison Group Planning and Finance Committee Forum of Firms Professional Professional Small and International International International International Transnational Accountancy Accountants Medium Compliance Auditing and Accounting Ethics Public Sector Auditors Organization Advisory Panel Assurance Education Standards Accounting Committee in Business Practices Development Committee Committee Standards Standards Board for Standards Committee Board Board Accountants Board KEY ACCOUNTABILITY OVERSIGHT Page 22 | Confidential and Proprietary Information
  • 23. IFAC Oversight and Consultation Monitoring IFAC Group COUNCIL Governance Public and Audit Nominating Interest Committee Oversight Committee Board IFAC IFAC Regulatory BOARD Liaison Group Planning and Finance Committee Forum Consultative Consultative Consultative of Firms Advisory Advisory Advisory Group Group Group Professional Professional Small and International International International International Transnational Accountancy Accountants Medium Compliance Auditing and Accounting Ethics Public Sector Auditors Organization Advisory Panel Assurance Education Standards Accounting Committee in Business Practices Development Committee Committee Standards Standards Board for Standards Committee Board Board Accountants Board KEY ACCOUNTABILITY OVERSIGHT CONSULTATION/ADVICE Page 23 | Confidential and Proprietary Information
  • 24. IFAC SMOs – International Soft Law What are the SMOs • In accordance with IFAC Constitution, IFAC members and associates are required to comply with the SMOs • Member and associates have to identify and take actions to fulfill the requirements set out in the SMOs Page 24 | Confidential and Proprietary Information
  • 25. What are SMOs Power to Grow • Clear benchmarks for PAOs • Enable high quality performance by professional accountants • Encourage continuous improvement • Drive sustainable development of the accountancy profession Page 25 | Confidential and Proprietary Information
  • 26. What are SMOs Building Blocks SMO 4: Ethics SMO 7: SMO 3: SMO 5: IFRS ISA IPSAS SMO 2: Education Page 26 | Confidential and Proprietary Information
  • 27. 2004 vs. 2012 SMOs Why Revise? • Serve the public interest • Drive adoption and implementation of international standards • Clarify • Reflect international good practice • Increase effectiveness of IFAC Compliance Program Page 27 | Confidential and Proprietary Information
  • 28. SMOs Key Concepts • Shall = requirement • Applicability Framework • Comply or explain • Best endeavors • Compliance Program Page 28 | Confidential and Proprietary Information
  • 29. Key Concepts Understanding Diversity Different Regulatory Sectors of degree of frameworks profession responsibility Page 29 | Confidential and Proprietary Information
  • 30. 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 30 | Confidential and Proprietary Information
  • 31. Revised SMOs Structure of the SMOs Obligation Scope Applicability Framework Requirements and Application Guidance IFAC Compliance Assessment Page 31 | Confidential and Proprietary Information
  • 32. SMOs 2, 3, 4, 5, 7 Adoption Decision Action to make the decision effective Page 32 | Confidential and Proprietary Information
  • 33. SMOs 2, 3, 4, 5, 7 Different Approaches – One Goal Adoption Transposition Page 33 | Confidential and Proprietary Information
  • 34. SMOs 2, 3, 4, 5, 7 Implementation Dissemination Implementation of standards guidance Education and Raising training awareness Page 34 | Confidential and Proprietary Information
  • 35. SMOs 2, 3, 4, 5, 7 Translation • Assess priorities and challenges • Is there a need of translation to ensure proper adoption and implementation • Process for timely, accurate and complete translation Page 35 | Confidential and Proprietary Information
  • 36. SMO 1 Quality Assurance Extension of the scope to ALL audits of financial statements (priority for PIE audits) Consider QA performed by another authority to avoid overlap Ensure sufficient resources Refer to I&D if no corrective action Consideration of public oversight Review of implementation and effectiveness Page 36 | Confidential and Proprietary Information
  • 37. Revised SMOs What PAOs Need To Do • Review and understand revisions • Consider actions necessary to address revisions • Plan and execute actions • Cooperate within RO/AG • Reflect actions in the next update of the SMO Action Plan Page 37 | Confidential and Proprietary Information
  • 38. It All Fits Together Strong Global Accountancy Profession Page 38 | Confidential and Proprietary Information
  • 39. Quality Assurance Why Quality Assurance? External Confidence Internal Quality Quality Credibility Assurance Controls Reputation Reviews Page 39 | Confidential and Proprietary Information
  • 40. Quality Assurance Benefits • Protects public • Improves the standard interest of audit work • Enhances reputation • Generates referrals for new business • Reduces risk of errors and omissions • Increases profits • Reflected in enhanced • Meets regulatory service to clients requirements Page 40 | Confidential and Proprietary Information
  • 41. Quality Assurance Scope • Consider efficiency & don’t reinvent the wheel • ALL audits of financial statements – But priority to PIEs’ audits • Other services? • Mandatory or voluntary? • Criteria & risk factors Page 41 | Confidential and Proprietary Information
  • 42. Quality Assurance Quality Control Standards & Guidance • ISQC 1 • ISA 220 • Guidance – Awareness building – Manuals – CPD – Start small (voluntary programs) • Trust the market and play to the market Page 42 | Confidential and Proprietary Information
  • 43. Quality Assurance Design • Subject – Firm or engagement partner • Criteria – Suitable – Respectful of and aligned with the national regulatory framework – What needs to be considered to conclude that the QC system is adequate and the firm/partner complies • Guidance – Awareness building – Manuals – CPD – Start small (voluntary programs) • Trust the market & play to the market Page 43 | Confidential and Proprietary Information
  • 44. Quality Assurance Review Cycle • Cycle approach • Risk-based approach • Mixed approach • Other considerations Page 44 | Confidential and Proprietary Information
  • 45. Quality Assurance Review Team • Procedures • Documentation • Quality – Resources – Skills & competence – Quality of team leader – Ethical requirements • Confidentiality Page 45 | Confidential and Proprietary Information
  • 46. Quality Assurance Reporting & Corrective Actions • Conclusion – Is the firm’s system designed to meet requirements? – Is the partner subject to the system? – Does the firm/partner comply with internal QC system? • Reasons for conclusion • Recommendations for improvement • What if the review was unsatisfactory? Page 46 | Confidential and Proprietary Information
  • 47. Quality Assurance Public Oversight Considerations • IFIAR principles • Cooperate closely & share information and expertise • Consider how to contribute to the regulation of the profession • IFAC PPP 1, Regulation of the Accountancy Profession Page 47 | Confidential and Proprietary Information
  • 48. Quality Assurance Review of Implementation and Effectiveness Consider Improve Plan Review Execute Page 48 | Confidential and Proprietary Information
  • 49. Quality Assurance Examples from Around the World • Rwanda • Malta • Bahamas • Poland Page 49 | Confidential and Proprietary Information
  • 50. Examples from Around the World Rwanda The Programme is based on the principle Quality in the performance that a systematic monitoring and of Auditing Engagements educational process is the most effective by ICPAR members is the way to attain and maintain the envisaged goal of the Audit Quality quality of professional work throughout the Review Programme. profession. Thus, it depends on mutual trust and cooperation. The reviewed The Programme seeks to practice unit is expected to take achieve its goal through appropriate actions in response to education and remedial, deficiencies in either design of its corrective actions. This system of quality control, or its goal serves the public compliance with that system, or both. interest and, at the same These actions will be positive and time, enhances the remedial. Matters touching on the significance of ICPAR professional conduct of a member will be membership. investigated within the Disciplinary Process as provided for in the Laws of the Land. Page 50 | Confidential and Proprietary Information
  • 51. Examples from Around the World Malta Page 51 | Confidential and Proprietary Information
  • 52. Page 52 | Confidential and Proprietary Information
  • 53. Quality Assurance Feedback from Firms • I would also like to take this opportunity to thank both of you for the professional but friendly way you approached our visit and your practical findings which will enable us to focus on our weaknesses in the practice so that they can be rectified to bring all areas up to the required standard • In the meantime, we would like to thank you for the professional and courteous manner in which you carried out the review and for your honest and open approach. Your review has proved to be very constructive and has outlined valid improvements that need to be made in our quality control procedures Page 53 | Confidential and Proprietary Information
  • 54. Quality Assurance Feedback from Firms cont. • We would like to thank you for your very helpful and constructive comments during your visit which we found to be a very productive review and a useful process carried out in a supporting manner • It is very encouraging to see that the BICA are using monitoring compliance officers who are realistic and understanding in their approach and have good solid actual background practice experience and appreciate more fully the real life problems and difficulties facing practitioners Page 54 | Confidential and Proprietary Information
  • 55. How IFAC assists Free Tools and Resources Page 55 | Confidential and Proprietary Information
  • 56. How IFAC Assists? Free Tools and Resources • www.ifac.org/SMP • web.ifac.org/clarity-center/index • www.ifac.org/ComplianceProgram • www.ifac.org/about-ifac/professional-accountancy- organization-development-committee • www.ifac.org/Ethics/Resources.php • www.ifac.org/Translations • www.ifac.org/issues-insights/public-policy-regulation Page 56 | Confidential and Proprietary Information
  • 57. THANK YOU www.ifac.org/ComplianceProgram www.ifac.org Page 57 | Confidential and Proprietary Information

Hinweis der Redaktion

  1. Solid craftsmanship based on education, experience, examination, values
  2. Flexibility for adaptation is one of the best sustainable characteristics of a building. Besides this the award winning Sky Village project for Copenhagen building will also integrate the latest technologies according to the progressive Danish environmental standards.
  3. 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.
  4. The timeswe live in are no doubt VERY interesting…
  5. But being part of the accountancy profession we have the tools to bring clarity to today’s complex world
  6. 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.
  7. Global organization for the accountancy professionComprised of 173 Members and Associates in 129 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
  8. Let’s start by looking at what are the SMOs. They are embedded in the IFAC Constitution and in the first instance apply to all IFAC members and associates. In a sense they are international “soft law” but for IFAC members and associates SMOs
  9. But more broadly, the SMOs are globally recognized as a clear benchmark for strong accountancy profession.
  10. The 7 Statements of Membership Obligations (SMOs) serve as the basis for the IFAC Member Body Compliance Program and provide clear Framework for strong and high quality Professional Accountancy Organizations (PAOs). The SMOs are also globally recognized as the benchmark for PAOs as they work, in the public interest, to develop, continuously improve and monitor high quality professional accountants. Of course for the PAOs to be strong they need sound governance framework. While there is no SMO on Governance IFAC has some guidance and soon we will issue a refreshed version on it.As you see,we can think about the SMOs in terms of building blocks for constructing strong PAOs. First, solid PAO needs a good base of education; then come technical standards, IFRSs, ISAs, public sector accounting standards, but the whole house is kept together by a cornerstone of Ethics. All of us are simply human and, therefore, require guidance on what is right or wrong. But also because we are human, we need solid systems of external quality assurance and if wrongdoing is reported or suspected – an unbiased investigation and disciplinary system.
  11. So, why did IFAC decide to revise the SMOs in 2012? Under the oversight of the Compliance Advisory Panel and PIOB.Serve the public interest: to reflect the context of developments in international standards and today’s regulatory environment, to also reflect the expectation of the accountancy profession held by the public and key stakeholders.Clarify the SMOs: to ensure that the SMOs continue to be an effective framework for credible and high quality PAOs.To further drive adoption and implementation as clearly mandated in the IFAC strategy Changes were made to the structure of the SMOs to (A) ease the understanding of the SMOs, and (B) to add new requirements to reflect current international best practice.Presentation will cover a description of both elements of the revised SMOs.
  12. Let’s look at the next piece of the puzzle and consider what are the key concepts of the SMOs.Use of “shall” to identify requirementsUnderstanding diversity – Applicability FrameworkComply or explain - when PAO has responsibilityBest endeavors – when PAO has no responsibilityIFAC Member Body Compliance Program
  13. Probably one of the most important concepts underlying the SMOs is appreciation and understanding that PAOs are all very different.
  14. What you see on this slide is the clarified applicability framework. It is included at the very beginning of each SMO to guide PAOs what actions they have to take to satisfy SMO requirements depending on how much responsibility they have for each of the seven SMO areas.For example, if you have direct responsibility for setting auditing standards, then to comply with the SMO 3, you have to adopt and implement the ISAs and if something prevents you from doing it, you have to provide satisfactory explanation.On the other hand, if you have no responsibility for setting accounting standards for the public sector, then to comply with SMO 5, you should use your best endeavors to promote the IPSASs to the government and offer your assistance for example to organize training for government accountants.Now on to the main requirements.
  15. To further help PAOs in understanding the SMOs, we have improved and streamlined the structure of the SMOs.Each SMOs starts with clear reference to the obligations enshrined in the IFAC Constitution.It then identifies the scope of the SMOAnd proceeds to set out the applicability framework that we have just discussedAfter setting the scene, each SMO sets out relevant requirements and application guidanceFinally, each SMO concludes by indicating how IFAC approaches the assessment of each member and associate compliance with the SMO
  16. Adoption consists of two key steps: (i) the decision that the international standard is appropriate for the jurisdiction, and (ii) the actions necessary to make that decision effective.
  17. Depending on legal and regulatory framework and other jurisdiction-specific factors, adoption can take many different forms, including: requiring use of the international standards, as set by law or regulation; incorporating or transposing international standards into existing national requirements;establishing a convergence process, bringing together national and international standards to minimize and/or eliminate differences; oreliminating major departures from international standards through harmonization of national requirements with international standards.
  18. Implementation includes a range of activities that ultimately raise awareness of the standards and build understanding regarding their use in practice by individual practitioners. In addition to promoting and disseminating the standards, actions supporting implementation include design and delivery of related education, training, and practical guidance materials.
  19. Translation can also be a core element of effective implementation. In jurisdictions where English is not the official language, the responsible entity should consider their priorities and determine the impact of translation on proper adoption and implementation. Where it is deemed relevant, a process for timely, accurate, and complete translation should be established.
  20. To assist you in understanding the revisions and your considerations on what changes need to be addressed, we have prepared a range of tools that will be made available on the IFAC website after the Council ratifies the SMOs. The main tool is the Revised SMO Comparison Guide that includes: a) Summaries of major revisions to each SMO as compared to the previous SMOs issued in 2004,b) Full text of the revised SMOs with: - Paragraph references mapping it to the previous version of the SMOs Notes indicating the nature and the objective of the changes, if any, made to the paragraph.In addition, to the comparison guide, and if you will want to know more detailed information, we have also prepared and will make available:A document summarizing significant issues raised in the exposure process and conclusions reached by the CAPDetailed mark-up document from original to revised SMOs.And, of course, as always you can reach out to the IFAC staff in case you will have any further questions or required some additional clarifications.We also think about organizing learning workshops alongside events organized in the regions. We want to make use of webinar technology to organize virtual learning opportunities. And last, but not least, we want to leverage our relationships at global, regional and national level to progress our vision of global adoption and implementation of international standards.
  21. Before we will start the more exciting part of this afternoon and have more hands-on discussion about what the SMOs mean for each of you, I would like to finish my remarks by emphasizing that the Vision of the Compliance Program is one of encouragement and improvement. The Program strive to influence agendas and actions towards global adoption and implementation of the international standards, but we can only do that by partnering with you as IFAC members and associates. Since 2004, when the program was established, you – IFAC Member Bodies – have taken the lead and continue to demonstrate the commitment to building strong and high quality professionals. We are confident, that with your ongoing commitment and the support of our partners, we will continue on the road to building strong and high quality PAOs around the world for the benefit of public interest and sound and sustainable economies.
  22. Enhances reputationReduces risk of errors and omissionsReflected in enhanced service to clientsGenerates referrals for new businessIncreases profitsMeets regulatory requirements
  23. Improves the standard of audit workEnhances reputation of auditors and PICPAEnables PICPA to discharge its membership obligations to IFAC (SMO 1 – Quality Assurance) Protects the public interestEncourages inward investment by increasing confidence in audited financial statements
  24. Undertaken in accordance with IFAC SMO 1Covers compliance with International Standard on Quality Control No.1 (ISQC1) and International Auditing Standards (ISAs) ISQC 1: Firm-level review of its quality controls and proceduresISAs: Engagement reviews of each audit principalEngagement reviews will be undertaken at the same time as firm level reviews