building for sustainable growth. (re)defining the accountancy profession in the age of twitter

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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


Conventional Approach

Think Profession


Live Core Values – Think Different

Think Profession


• 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

Outline

Today’s Presentation


5000 Years Ago


500 Years Ago


84 Years Ago


5 Years Ago


Last Year

Why Greece won't go awayBy Laurence Knight Business reporter, BBC News6 February 2012


What Now?


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

Complexity


• 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)

IFAC Perspective on Regulation

Clarity


• 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

Regulation of the Accountancy Profession

Finding the Balance


Strong Accountancy Profession = Inclusive and

Sustainable Growth

• Maintain core values

• Think different

• Push boundaries

• Commit to public interest

• Create, contribute, give!

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



• 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

Be the Voice



• 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

Provide Support



• 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

Leadership Through Action



Global Profession

IFAC


For the global accountancy profession to be

recognized as a valued leader in the

development of strong and sustainable

organizations, financial markets and

economies

IFAC’s Vision

Ultimate Objective


Overview of IFAC Structure

TransnationalAuditors

Committee

Professional Accountancy Organization Development Committee

ProfessionalAccountantsin BusinessCommittee

Small andMedium

PracticesCommittee

ComplianceAdvisory Panel

InternationalAuditing andAssuranceStandards

Board

InternationalAccountingEducationStandards

Board

InternationalEthics

Standards Board for

Accountants

InternationalPublic SectorAccountingStandards

Board

Forumof Firms

Planning and Finance Committee

Governance and Audit

Committee

NominatingCommittee

IFAC Regulatory

Liaison Group

IFACCOUNCIL

IFAC

BOARD

ACCOUNTABILITY

KEY


Oversight of IFAC PIACs


Committee



Small andMedium

PracticesCommittee



Board


Board

InternationalEthics

Standards Board for

Accountants


Board

Forumof Firms



Committee

NominatingCommittee

Public Interest

OversightBoard

IFAC Regulatory

Liaison Group

IFACCOUNCIL

IFAC

BOARD

ACCOUNTABILITY

KEY

OVERSIGHT


IFAC Oversight and Consultation


Committee



Small andMedium

PracticesCommittee



Board


Board

InternationalEthics

Standards Board for

Accountants


Board

ConsultativeAdvisoryGroup



Forumof Firms



Committee

NominatingCommittee

Public Interest

OversightBoard

IFAC Regulatory

Liaison Group

MonitoringGroupIFAC

COUNCIL

IFAC

BOARD

ACCOUNTABILITY

OVERSIGHT

CONSULTATION/ADVICE

KEY


• 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

What are the SMOs

IFAC SMOs – International Soft Law


• Clear benchmarks for

PAOs

• Enable high quality

performance by

professional accountants

• Encourage continuous

improvement

• Drive sustainable

development of the

accountancy profession

Power to Grow

What are SMOs


SMO 7:

IFRS

SMO 3:

ISA

SMO 5:

IPSAS

SMO 2: Education

SMO 4: Ethics

Building Blocks

What are SMOs


• Serve the public interest

• Drive adoption and

implementation of

international standards

• Clarify

• Reflect international good

practice

• Increase effectiveness of

IFAC Compliance

Program

Why Revise?

2004 vs. 2012 SMOs


• Shall = requirement

• Applicability Framework

• Comply or explain

• Best endeavors

• Compliance Program

Key Concepts

SMOs


Understanding Diversity

Key Concepts

Regulatory frameworks

Sectors of profession

Different degree of

responsibility


Degree of responsibility for an SMO area

Direct SharedNo

Responsibility

Implement all the

requirements of the

SMO

In exceptional situations

departures are possible

if can be justified from

the public interest

perspective and need to

be documented

For the elements for

which Member Body

has direct

responsibility follow

the approach for

"Direct"

AND

For the elements for

which Member Body

has no direct

responsibility follow

the approach for

"No Responsibility "

Use best endeavors to:

a. Encourage those

responsible for the

requirements to follow

this SMO in

implementing them;

AND

b. Assist in the

implementation where

appropriate

SMO Applicability Framework


IFAC Compliance Assessment

Requirements and Application Guidance

Applicability Framework

Scope

Obligation

Structure of the SMOs

Revised SMOs


Adoption

SMOs 2, 3, 4, 5, 7

Decision

Action

to make

the decision

effective


Adoption

Tra

nsp

osit

ion

Different Approaches – One Goal

SMOs 2, 3, 4, 5, 7


Education and

training

Raising

awareness

Dissemination

of standards

Implementation

guidance

Implementation

SMOs 2, 3, 4, 5, 7


• Assess priorities and

challenges

• Is there a need of

translation to ensure

proper adoption and

implementation

• Process for

timely, accurate and

complete translation

Translation

SMOs 2, 3, 4, 5, 7


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

Quality Assurance

SMO 1


• 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

What PAOs Need To Do

Revised SMOs


Strong Global Accountancy Profession

It All Fits Together


Why Quality Assurance?

Internal Quality

Controls

External Quality

Assurance Reviews

Confidence

Credibility

Reputation

Quality Assurance


• Protects public interest

• Enhances reputation

• Reduces risk of errors and omissions

• Reflected in enhanced service to clients

• Improves the standard of audit work

• Generates referrals for new business

• Increases profits

• Meets regulatory requirements

Benefits

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

Quality Assurance


• ISQC 1

• ISA 220

• Guidance– Awareness building

– Manuals

– CPD

– Start small (voluntary programs)

• Trust the market and play to the market

Quality Control Standards & Guidance

Quality Assurance


• 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

Design

Quality Assurance


• Cycle approach

• Risk-based approach

• Mixed approach

• Other considerations

Review Cycle

Quality Assurance


• Procedures

• Documentation

• Quality– Resources

– Skills & competence

– Quality of team leader

– Ethical requirements

• Confidentiality

Review Team

Quality Assurance


• 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?

Reporting & Corrective Actions

Quality Assurance


• 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

Public Oversight Considerations

Quality Assurance


Review of Implementation and Effectiveness

Quality Assurance

Consider

Plan

ExecuteReview

Improve


• Rwanda

• Malta

• Bahamas

• Poland

Examples from Around the World

Quality Assurance


Quality in the performance of Auditing Engagements by ICPAR members is the goal of the Audit Quality Review Programme.

The Programme seeks to achieve its goal through education and remedial, corrective actions. This goal serves the public interest and, at the same time, enhances the significance of ICPAR membership.

The Programme is based on the principle that a systematic monitoring and educational process is the most effective way to attain and maintain the envisaged quality of professional work throughout the profession. Thus, it depends on mutual trust and cooperation. The reviewed practice unit is expected to take appropriate actions in response to deficiencies in either design of its system of quality control, or its compliance with that system, or both. These actions will be positive and remedial. Matters touching on the professional conduct of a member will be investigated within the Disciplinary Process as provided for in the Laws of the Land.

Rwanda



Malta



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

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

Quality Assurance


Free Tools and Resources

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

How IFAC Assists?

http://www.ifac.org/SMP

http://web.ifac.org/clarity-center/index





http://www.ifac.org/about-ifac/professional-accountancy-organization-development-committee












http://www.ifac.org/Ethics/Resources.php

http://www.ifac.org/Translations

http://www.ifac.org/issues-insights/public-policy-regulation








THANK YOU

www.ifac.org/ComplianceProgram

www.ifac.org

http://www.ifac.org/ComplianceProgram





http://www.ifac.org/

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