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Global Insights from IFAC SMP Committee

Giancarlo Attolini, Chair, IFAC SMP Committee Chair

CReCER 2013

Cartegena, Colombia

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Agenda

• Importance of SMEs and SMPs

• IFAC SMP Quick Poll

• Role of IFAC SMP Committee

• Implementation Guides

• References

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Importance of SMEs and SMPs

• SMEs typically account for majority of private sector GDP, employment and growth

• SMEs typically look to practitioners, especially SMPs, for range of professional services (assurance to advice)

• SMPs and SMEs often constrained by lack of in-house resources and expertise to efficiently implement standards

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IFAC SMP Quick Poll – About

• Identify key challenges and issues for SMPs (& SME clients)

• Runs in 17 languages (including Spanish and Portuguese)

• Almost 4,000 respondents to May-June 2013 poll (4% from Central and South America/Caribbean)

• Report, with regional analysis, to follow in 7-10 days at www.ifac.org/smp

• Preview of key findings….

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IFAC SMP Quick Poll – Key Findings I

• What is the biggest challenge faced by your small- and medium-sized entity (SME) clients?

24%

17%

16%

13%

11%

8%

7%5%

Burden of regulation

Economic uncertainty

Pressure to lower prices of their products and services

Difficulties accessing finance

Rising costs

Lack of demand for their products and services

Competition

Attracting and retaining staff

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IFAC SMP Quick Poll – Key Findings II

• What is the biggest challenge your practice is facing right now?

25%

23%

20%

7%

6%

6%

5%4%

2% 2%Keeping up with new regulations and standards

Pressure to lower fees

Attracting and retaining clients

Work-life balance

Attracting and retaining staff

Competition

Rising costs

Ability to adapt to changing client needs

Keeping up with new technology

Succession planning

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IFAC SMP Quick Poll – Key Findings III

• Other findings (previous editions of poll)

– Complexity of regulation and tax rules in particular presented the greatest challenges for SMEs

– Pace of change of new regulation/standards and tax rules in particular presented the greatest challenges for SMPs

– Of those using the IESBA Code of Ethics, most cited barrier to fully adhering to it was understanding requirements

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Role of IFAC SMP Committee – Mission

• Standards and Guidance: Contributing to the development of international standards and guidance that are stable, relevant, and can be applied in a manner proportionate to the size of an entity or practice

• Adoption and Implementation: Facilitating the adoption and implementation of high-quality international standards and guidance by SMPs and SMEs

• Development and Quality: Building competence and relevance of SMPs through IFAC member bodies and other professional accountancy organizations and promoting the value of SMPs

• Speaking Out: On public interest issues of relevance to SMPs & SMEs

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Role of IFAC SMP Committee – Key Activities

• Building and sharing knowledge, including access to resources and tools, amongst member bodies and SMPs– Implementing standards (ISAs, IFRS for SMEs, ISQC 1, IESBA Code etc.)

– Insight articles (e.g., efficiently auditing SMEs, review engagements)

– Guides on how to efficiently implement ISAs and ISQC 1 (guidance, case studies, checklists etc.)

– New guide to implementing ISRE 2400 on review engagements (Q4 2013)

– Suite of links to free resources from member bodies (e.g., AICPA)

– IFAC Global Knowledge Gateway (from 2014)

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Implementation Guides – ISA Guide Volume 1

Fundamental concepts of a risk-based audit in conformance with the ISAs

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Practical guidance on performing SME audits. Includes two illustrative case studies—one of an SME audit and one of a micro-entity audit

Implementation Guides – ISA Guide Volume 2

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Implementation Guides – QC Guide

Helps SMPs apply ISQC 1 proportionately and efficiently. Includes guidance, case study sample QC manuals and checklists

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References – General

IFAC SMP Committee website: http://www.ifac.org/smp

IFAC SMP Twitter: https://www.twitter.com/IFAC_SMP (please follow us)

IFAC SMP eNews: https://www.ifac.org/login?register (please subscribe)

IFAC SMP Community: http://www.linkedin.com/groups?home=&gid=4542841&trk=anet_ug_hm (please join us)

IFACnet: http://ifacnet.com/

IFAC SMP Forum: http://www.ifac.org/news-events/2013-06/2013-ifac-small-and-medium-practices-forum

Resources and tools (all): http://www.ifac.org/about-ifac/small-and-medium-practices-committee/smp-resources-and-tools

IFAC Translations Database: http://www.ifac.org/about-ifac/translations-permissions/translations-database (scroll down for Spanish and Portuguese)

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References – Adoption and Implementation

Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities (Third Edition) (incl. companion manual and slides): https://www.ifac.org/publications-resources/guide-using-international-standards-auditing-audits-small-and-medium-sized-en (see Translations Database for Spanish)

Guide to Quality Control for Small- and Medium-Sized Practices (Third Edition) (incl. companion manual and slides): www.ifac.org/publications-resources/guide-quality-control-small-and-medium-sized-practices-third-edition-0 (see Translations Database for Spanish)

ISRS 4410: The Standard for Today's Compilation Engagements article: https://www.ifac.org/news-events/2012-07/isrs-4410-standard-todays-compilation-engagements

• The Standard for Limited Assurance Review Engagements article: http://www.ifac.org/news-events/2012-12/standard-limited-assurance-review-engagements

• Links to other implementation resources: https://www.ifac.org/aggregator/sources/7

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