material misstatement risk

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ISA 315: material misstatement riskProperly and carefully applied, the sometimes onerous requirements of ISA 315 shouldensure that audits are tailored to individual clients circumstances, says Lisa Weaver

ISA 315, Identifying and Assessing

the Risks of Material Misstatement

Through Understanding the Entity

and Its Environment, is one of the

International Standards on Auditing

(ISAs) redrafted by the International

Auditing and Assurance Standards

Board (IAASB) as part of its Clarity

project. It lists the requirements for

obtaining business understanding, the

risk assessment and internal controls,

and so is key to successfully planning

an audit. This article explores some ofthe ISAs main requirements and the

practical implications for the auditor.

What is a misstatement?The term misstatement is not defined

in ISA 315 but in ISA 450,Evaluation of

Misstatements Identified During the Audit,

which defines it as: a difference between

the amount, classification, presentation

or disclosure of a reported financial

statement item and the amount,

classification, presentation or disclosure

that is required for the item to be in

accordance with the applicable financialreporting framework. Misstatements can

arise from fraud or error.

In other words, a misstatement

arises where there is a difference

between the reported figures and

what is expected to be reported for

a true and fair presentation of the

financial statements. Misstatements

can be factual, in the case of a clear

breach of a requirement of a financial

reporting standard, or they can be

judgmental, arising from unsuitable

estimation techniques or the selection

of inappropriate accounting policies.

ISA 315 requires that the engagement

partner and other key engagement team

members discuss the susceptibility of

the entitys financial statements to

material misstatement, and that the

partner determines which matters are

to be communicated to the rest of the

audit team. The discussion should place

emphasis on any indicators that the

financial statements may be at risk of

material misstatement due to fraud

(ISA 240.15). This discussion, along

with the significant decisions reached,

must be documented.

Obtaining and documenting anunderstanding of the entityWithout an in-depth understanding of

the audited entity, it is impossible to

properly assess the risk of material

misstatement. ISA 315.11 requires the

auditor to obtain an understanding of

five aspects of the audited entity:

a) relevant industry, regulatory and

other external factors including

applicable financial reporting

framework

b) the nature of the entity including its

operations, ownership andgovernance structures, the types of

investments it makes, and the way it

is structured and financed

c) the entitys selection and application

of accounting policies

d) the entitys goals and strategies, and

business risks that may result in

risks of material misstatement

e) the measurement and review of

the entitys financial performance.

It is worth looking at a couple of

these areas in more detail. First, the

requirement to understand the

applicable financial reporting framework

entails understanding not only the

relevant financial reporting standards

(IFRS or national) but also any relevant

industry-specific regulations. Under the

requirements of ISA 210, Agreeing the

Terms of Audit Engagements, the auditor

should already have determined the

acceptability of the financial reporting

framework as an audit precondition.

Second, obtaining knowledge of the

entitys objectives, strategies and

business risks is a crucial step in audit

planning because, according to the

application guidance (ISA 315.A30),

business risk is broader than the riskof material misstatement, though it

includes the latter. A successful

identification of risks of material

misstatement requires the auditor to

use a business risk approach.

A simple example is that a company

may face a business risk such as a fall

in demand for its products. The

associated risk of material

misstatement lies in the valuation of

inventory, therefore there is a risk of

misstatement at the assertion level.

However, the fall in demand could also

have a longer-term impact on thecompanys going concern status,

leading to a potential risk of

misstatement at the financial statement

level. Appendix 2 of ISA 315 has a

useful list of examples of events and

conditions that may indicate risks of

material misstatement.

The key elements of the business

understanding obtained about each of

the aspects outlined above must be

documented (ISA 315.32). However, the

ISA does not stipulate a method or level

of detail required for this

documentation, leaving it to the

auditors judgment to determine the

extent of documentation needed.

GET VERIFIABLE CPD UNITSAnswer questions about this article onlineStudying this article and answering the questions can count towards your verifiable CPD if you arefollowing the unit route and the content is relevant to your development needs.One hour of learning equates to one unit of CPD

52 Technical


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In the audit of smaller entities,

which often have a small range of

products or services, operate from a

limited number of locations and have a

simple ownership structure, the

documentation may be simple in form

and relatively brief and it is not

necessary to document the entirety of

the auditors understanding of the

entity. Documentation may be prepared

by using narrative notes or by

completing a structured form. The

notes may be maintained separately orincorporated in the documentation of

the overall audit strategy.

Internal controlISA 315 requires the auditor to obtain

an understanding of the internal

control relevant to the audit. This is

a crucial step in assessing the risk of

material misstatement, as one of the

components of audit risk is control risk,

defined as the risk that a misstatement

that could occur will not be prevented,

or detected and corrected, on a timely

basis by the entitys internal control.Internal control has five components,

each of which must be understood and

documented by the auditor:

a) the control environment

b) the entitys risk assessment

procedure

c) the information system, including

the related business processes,

relevant to financial reporting and

communication

d) control activities

e) monitoring of controls.

This requirement appears onerous,

and the documentation of internal

control for large and complex

organisations can indeed be laborious.

But it is important to remember that

the auditor is required to understand

and document only those elements of

internal control that are relevant to the

audit, in particular to the auditors risk

assessment, which is a matter of

professional judgment.

In determining whether a control is

relevant to the audit, matters such as the

significance of the related risk,

materiality, and the complexity of

operations should be considered. In

relation to control activities, ISA 315.20

states that an audit does not require an

understanding of all of the control

activities related to each significant class

of transaction, account balance and

disclosure in the financial statements or

to every assertion in them.

The documentation of internal control

should therefore be commensurate with

the nature, size and complexity of the

53 TO GET THE QUESTIONS GO TOwww.accaglobal.com/ab_tech


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CPDunits on the web

entity. The ISA also suggests that the

extent of documentation should be

appropriate to the experience and

capabilities of the audit engagement

team, as less experienced members of

the audit team may require more

detailed documentation to assist them

in obtaining appropriate understanding

of the entity and its controls.

In a smaller entity, the audit

documentation on internal control is

likely to be relatively simple, focusing on

how sales and purchasing cycles operateand highlighting the risks of material

misstatement that arise from the

controls in place. It is tempting to think

that in a simple system operating in a

small company there is little risk of

material misstatement, but there are

risks associated with this type of

company, especially those posed by

opportunities for management override,

and the limited scope for segregation of

duty and authorisation controls. In a

smaller company, the extent and nature

of managements involvement in internal

control is likely to be a key aspect in thedocumentation of internal control.

Given that the underpinning concept

of ISA 315 is risk assessment, it is not

surprising that one of the elements of

internal control the auditor must

understand and document is the

entitys own risk assessment process.

Most large organisations will have an

internal risk management function, the

effectiveness of which may be assessed

by the auditor.

Smaller entities will not have such a

function, and risk assessment will be

performed in an ad hoc manner by the

companys owners and/or managers. In

this case, ISA 315.17 requires the

auditor to discuss with management

whether business risks relevant to

financial reporting have been identified

and addressed, and to consider whether

this represents a significant deficiency

in internal control.

Assessing the risks of materialmisstatementHaving obtained and documented an

understanding of the entity including

its internal control, the auditor will now

be in a position to identify and assessthe risks of material misstatement,

which should be done at the financial

statement level, and at the assertion

level for classes of transactions,

account balances and disclosures.

The point of the risk assessment is

to provide a basis for designing and

performing further audit procedures,

which should include inquiries of

management and other relevant

individuals, analytical procedures,

observation and enquiry (ISA 315.6).

An important part of assessing the

risk of material misstatement is thatthe risks identified should be prioritised.

This is because ISA 315 determines

that risks which are identified as

significant require special audit

consideration. It is a matter of

judgment as to whether a risk

constitutes a significant risk, and

matters such as the complexity of the

transaction, the risk of fraud, the

involvement of related parties, and

whether the transaction is outside the

normal course of business should be

considered (ISA 315.28).

Where a significant risk is identified,

the relevant controls, including control

activities, should be understood. ISA

330, The Auditors Responses to Identified

Risks, then deals with the action that

should be taken in obtaining evidence in

relation to significant risks. If the

auditor plans to rely on controls over a

significant risk, the controls must be

tested in the current period, and

substantive procedures should be

performed in response to significant

risks at the assertion level.

Continual revision of risk

assessmentThe risk assessment outlined abovetakes place in the planning phase

of the audit. Of course, as the audit

progresses, further information may

come to light which provides additional

insight into the companys operations

and internal control. It may therefore

be necessary to revise the original risk

assessment, and modify the planned

audit procedures in response to new or

amended risks that have been identified.

Conclusion

Auditors should not underestimatethe importance of ISA 315, as

its requirements relating to risk

assessment help to ensure that audits

are responsive to individual audit

clients circumstances. When applied

properly, ISA 315 should help to reduce

audit risk. Although the requirements

of the ISA can seem onerous, careful

application of the standard and

appropriate use of auditors judgment

should mean that compliance with

documentation requirements is a

relatively straightforward process.

Lisa Weaver is advanced audit and

assurance examiner at ACCA

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FINANCIAL REPORTING

IFRS FOR SMES

The SME Implementation

Group of the IFRS

Foundation has issued for

comment five draft Q&As

relating to IFRS for SMEs. Thedrafts address the following:

*The application of IFRSfor SMEsto periods that

end before the application

date of the standard.

*Interpretation of theterms undue cost and

impracticable.

*The circumstances wherea jurisdiction permits

all entities meeting the

definition of an SME to

apply IFRS for SMEs, but

requires reference to full

IFRS in circumstances

where IFRS for SMEsdoes

not address a particular

transaction, event or

condition.

*Departure from a principlein IFRS for SMEs.

*Prescription of the formatof financial statements by

local regulation.

IASB ISSUES ANALYSES

The International Accounting

Standards Board (IASB) has

issued effect analyses for

two new standards: IFRS

10, Consolidated Financial

Statementsand IFRS 11,

Joint Arrangements. Both

analyses also consider the

relevant effects of IFRS 12,

Disclosure of Interests in Other

Entities. The IASB documents

provide insights into the

most significant effects of

the new standards.

AUDIT AND ASSURANCE

IAASB ISSUES DRAFT

The International Auditing

and Assurance Standards

Board (IAASB) has

issued an exposure draft

of a revised version ofInternational Standard on

Assurance Engagements

(ISAE) 3000, Assurance

Engagements Other Than

Audits or Reviews of Historical

Financial Information.

The proposed revisions

incorporate enhanced

requirements and

guidance in the light of

concerns raised by users

and to reflect the growing

use of ISAE 3000 by

professional accountants

and national standard-

setters. ISAE 3000 has

also been redrafted to

achieve consistency with

the approach taken in

clarified ISAs where

relevant.

AUDITOR REPORTING

The IAASB has also issueda consultation paper,Enhancing the Value of

Auditor Reporting: Exploring

Options for Change, which is

seeking to establish whether

there are common views

among users of audited

financial statements as to

the usefulness of reporting

by auditors.

The paper suggests a

number of options and

invites views.

Yvonne Lang, director,

Smith & Williamson

A round-up of the latest developments in financial reporting and audit

Technical update 55


5/17

Contrasting pictures

[Don Strickland enjoyed a high-flying career as a top executive at Kodak and Apple. In this interview, heexplains the impact of differing management styles on the two companies

Q:What impact did different leadership

styles have on Kodak and Apple?

A:The two companies have ended up invery different positions. Kodak has not

coped with change as well as Apple. Ithas gone from being one of the worldslargest companies to one with a marketvalue of less than US$1bn. Apple,in contrast, thrived on the changingconditions and has become theworlds most innovative and successfulcompany. The results show financially.Apple is one of the worlds highest-value companies with a market valueof US$350bn. Why the difference? Myanswer is leadership culture.

It is not that one leadership culture

is right and another wrong. Rather, it isabout matching the leadership cultureto the corporate culture and theenvironment in which the companyoperates. When change occursgradually and predictably, as was thecase until the 1990s, leadership fromthe top works extremely well. Executive

management knows what needs to bedone; middle managementcommunicates, sets goals and tracksprogress; workers get it done. This is

the classic model of efficiency that hasdominated business for hundreds ofyears. Indeed, this leadershipmodel served Kodak well for over 100years, since it was founded in 1880.

However, in times of rapid andunpredictable change, leadership fromthe top just doesnt work. In a rapidlychanging environment, top executivesdo not know what needs to be done.They know some but not all of whatneeds to be done. In fact, no singleperson in the organisation knows what

needs to be done. The organisation justneeds to react and move quickly basedon a distributed consensus. If thecompany takes a wrong turn, it needsto quickly find out and changedirection. This can only happen withdistributed leadership. This is whyApple has achieved such success.

Q:We have seen a lot of change in

recent years. Do you anticipate a return

to the leadership from the top style?

A:I believe that the pace of change

since 1990 will continue for at least thenext generation. In fact, it is probablythe new norm. I am not just talkingabout technological change such asthe internet, mobile devices and cloudcomputing. Even more important arethe changes taking place outside ofthe technology sphere. The formationof geopolitical federations, such asthe European Union, the African Unionand the Association of Southeast AsianNations, is levelling the economic

Don Stricklands first job after

graduating was as an engineer with

Eastman Kodak, where he helpeddesign the first cameras that went

to the moon. Over the following 20

years he worked his way across and

up the company.

From the day he joined Kodak hewas struck by how the top executivesknew everything about the business.They said do this, and the rest ofthe company loyally followed andmade it happen. That leadershipculture, which he now callsleadership from the top, was highlysuccessful for Kodak.

But in the 1990s with theintroduction of digital technology, theinternet, new sources of competition,

and many more changes that wouldtransform the landscape of business,

Strickland became frustrated by thecompanys inability to adapt. Heremembers a speech that the KodakCEO gave to employees in which hesaid: We will make the elephantdance. The intention was good, butthe lesson Strickland learnt was thatelephants dont dance!

In 1990, Kodak appointed him asthe executive contact for Apple. A fewyears later, he joined Apple as theexecutive in charge of the publishingdivision. The challenge was huge: torefocus the publishing business fromprint media to the internet. Apple wasclose to bankruptcy at the time, butStrickland knew he had a tremendous

*CAREER HISTORY

asset in the leadership culture. AtApple, every employee was expected tobe a leader. Nobody was expected toknow everything, but everybody wasexpected to contribute to the solution.He calls this leadership culturedistributed leadership.

Strickland went on to head up asuccessful Silicon Valley startupcompany and then a public company,before becoming a consultant andmotivational speaker.

56 Careers


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7/17

Career resources

Professional developmentACCA provides you with a host of

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ACCA58


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VIJAY BALA FCCA, CFO, MICROSOFT MALAYSIA:

ACCA GAVE ME PRACTICAL KNOWLEDGE THATCOMPLEMENTED MY UNIVERSITY QUALIFICATION

59


9/17

1NOTICE AND AUDITORS REPORTThe notice of meeting and auditors report

on the accounts for the period 1 April 2010

to 31 March 2011 were taken as read.

2THE MINUTESThe minutes of the AGM held on 16September 2010 and published in the

November 2010 issue of Accounting

and Business were taken as read, and

signed as correct.

3RESOLUTION 1Adoption of the report of the Council and

accounts for the period 1 April 2010 to 31

March 2011

Mark Gold gave his presidential

address and asked Helen Brand (chief

executive) to give a presentation. He

then invited questions and commentson the report and accounts.

The president drew members

attention to the statement which had

been circulated and which showed that

valid proxy votes had been cast in

respect of Resolution 1 as follows:

FOR:4,588 AGAINST:43

The president then put the resolution

to the meeting and, on a show of

hands, declared it carried, the votes

being cast as follows:

FOR:48 AGAINST:0

4 RESULT OF THE BALLOT FOR THEELECTION OF MEMBERS TO COUNCIL

The scrutineers report and the number

of votes received by each candidate in

the ballot for the election of members

of Council were reported, as follows:

Name Votes1 Laura Perrin 3,543

2 Pauline Hobson 3,250

3 Alexandra Chin 3,182

4 Rosanna Choi 3,095

5 Francis Chittenden 2,950

6 Coutts Otolo 2,811

7 Stephen Bailey 2,514

8 Anthony Tyen 2,399

9 Taiwo Oyedele 2,270

10 Dat Khalid Ahmad 2,251

ACCA 106th AGMMinutes of the 106th annual general meeting of ACCA at 29 Lincolns Inn Fields, London WC2,on 15 September 2011, chaired by ACCA president Mark Gold in the presence of 59 members

....................................................................

11 Orla Collins 2,231

12 Nisreen Rehmanjee 2,195

13 Datuk Nasir Ahmad 2,137

14 Peter Fee 2,059

15 Patrick Chan 1,948

16 Isabelle Li 1,58917 David Li 1,481

18 Bolivia Cheung 1,448

19 Frankie Ho 1,313

20 Samreen Ashraf 1,301

21 Nestor Wang 1,254

22 Hin Leong 1,074

23 Noman Tahir 853

The president, therefore, declared

the following members elected or

re-elected to Council: Stephen Bailey,

Alexandra Chin, Francis Chittenden,

Rosanna Choi, Pauline Hobson,

Dat Khalid Ahmad, Coutts Otolo,Taiwo Oyedele, Laura Perrin and

Anthony Tyen.

5RESOLUTION 3Appointment of auditors

The president reported that Council

recommended that BDO LLP, chartered

accountants and registered auditors,

be re-appointed as ACCAs auditors. He

then invited questions on Resolution 3.

The president drew members


been circulated and which showed that

valid proxy votes had been cast inrespect of Resolution 3 as follows:

FOR:4,482 AGAINST:149





FOR: 45 AGAINST:1

6RESOLUTION 4Bye-law amendments to remove an area of

automatic liability to disciplinary action that

could result in unfairness if the underlying

facts were not investigated

The president invited questions on

Resolution 4. He then drew members


been circulated and which showed

that valid proxy votes had been cast in


FOR: 4,461 AGAINST:169



hands, declared it carried, the votesbeing cast as follows:

FOR: 44 AGAINST:0

7RESOLUTION 5Bye-law amendments to clarify that, unless

there is a statutory obligation to the contrary,

a member must promptly bring to ACCAs

attention any matters that render them or

another member liable to disciplinary action




been circulated and which showedthat valid proxy votes had been cast in







FOR: 42 AGAINST:2

8RESOLUTION 6Bye-law amendments to reduce from

six to three the number of consecutive

Council meetings a member can miss

without prior leave of absence beforehaving to vacate office




been circulated and which showed

that valid proxy votes had been cast in







FOR: 46 AGAINST:0

The president thanked members for their

attendance and declared the meeting

closed at 2.15pm.

60 ACCA


10/17

61

Have you made your

CPD declaration?

Your annual CPD declaration for 2011 is due for submission to ACCA by 1 January 2012.

The easiest way to make your annual declaration is online, by visiting www.accaglobal.com

and logging into your myACCAe-business account. Alternatively, you can complete the CPD

declaration form which is sent to you with your annual subscription pack in November.

For more information on your CPD requirements, visit www2.accaglobal.com/members/cpd/


11/17

For the first time e-learning was

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offer and looked for ways to enhance

these to meet your learning needs.

ACCA62


12/17

ACCA

Ready for your CPD declaration?

[Now is the time to start thinking about completing your CPD activity for 2011, and submitting your CPDdeclaration to ACCA. If youre not sure what to do or what counts, youll find the answer here

A) NEED TO COMPLETE

SOME LAST MINUTE

LEARNING?

Make sure its relevant to your

role or it will not contribute

towards your CPD activity. Have

you tried:

*ACCAs virtual learning centre(VLC)?

*Harvard ManageMentor?*BPPs CPD Centre?*The Open Universitys CPD

modules?

Go to virtuallearn.accaglobal.comto find a range of free or

discounted resources.

B) ANY CPD QUESTIONS?

Visit our new CPD i-guide. Its

an interactive tool you can click

through and answers questions

such as:

*What are the main benefits ofdoing CPD?

*How flexible is CPD to mycircumstances?

*Could I be exempt?*What will happen if I dont

meet the requirement?

For an answer to these and

many more questions visit

www.accaglobal.com/cpdi-guide

C) HOW DO I SUBMIT MY

CPD DECLARATION?

You can submit your annual CPDdeclaration online at any point in

the year by logging into myACCA.

Alternatively you can complete

a paper version, which you will

receive as part of your annual

subscription renewal notification.

This must be returned to ACCA by

1 January of the following year.

The annual declaration process

is simple and should only take you

a few minutes.

*Indicate your chosen CPD routeand whether you are involved inthe audit of historical financial

information.

*Confirm that you have keptyour professional ethics up

to date.

*Members who have not beenable to meet the CPD

requirement are given an

option to declare this on the

form, and ACCA will contact

them to ensure they make up

any CPD shortfall.

D) WHATS THE BEST WAY

TO KEEP EVIDENCE?

You are required to keepevidence of your participation

in the appropriate CPD route

for three years as it may be

required as part of ACCAs CPD

review process.

For tools and examples to

support you in keeping your

records, visit www.accaglobal.

com/members/cpd/evidence

E) CAN I CARRY OVER UNITS

TO NEXT YEAR?You can carry forward up to 21

units of verifiable CPD to the

following year if you exceeded

the requirement.

Now is a great time to start

planning your learning and

development through 2012. How

will your CPD help support your

business goals?

For more information go to

www.accaglobal/members/cpd

63


13/17

Beyond the headlines

[While the media is focusing on the stagnatingeconomy, ACCA president Dean Westcottstresses that the news is not all bad

One of the key issues which has struck me in my time

as an officer with ACCA has been the importance of

ACCA members engaging with their organisation.I have seen that in action in meetings, at Continuing

Professional Development events, roundtables and in

the new global forums, which will draw on our global

expertise to help shape future policy.

It is your membership body and we rely on your input

to help guide our strategy and work.

Nowhere is the value of that engagement more

evident and welcome than in our Global Economic

Conditions Survey, which gathers the views of 2,800

members from around the world and gives a real sense

of the issues which the profession and businesses face.

The survey paints a depressing picture, with the view

that any signs of a global recovery have disappeared three-quarters of all respondents thought economic

conditions were deteriorating or stagnating with half

no longer having confidence in the economic prospects

of their own organisations.

But what is also significant is that while the situation

is serious, the report has suggested that the constant

flow of negative headlines in the media is actually

making finance professionals more pessimistic than

they need to be.

Certainly, we know things are tough and we all live in

a world where media sentiment has a major influence on

our working lives and on the decisions we take.

But it is also critical for us all to look at the reality of

the situation which we face and to act and advise thosewe work for with that in mind.

We need to ensure that we continue to tell it as

it is. Where things are bad we need to say so, but,

equally, where there are opportunities we need to

point them out.

We have a unique insight into the situation that

organisations of all sizes and in all sectors face, and we

need to ensure that the wider public is aware of what is

really going on.

While it would be nave to suggest that we are not

affected by what we see in the media, it is incumbent on

us to provide the facts as they are, to ensure our clients

and employers can see beyond the headlines.

Dean Wescott FCCA is finance director at Hinchingbrooke

Hospital in Cambridgeshire, England

Comment64


14/17

01Both Bangladesh president Zillur Rahman and ACCA

chief executive Helen Brand addressed the event

TO READ MORE ON THE GEC SURVEY GO TOwww2.accaglobal.com/gep

BEHAVIOUR TOPS THE

BILL IN BANGLADESHAt an ACCA Bangladesh event on ethics on 21 September,

ACCA chief executive Helen Brand declared: Demands for

transparency put greater pressure on finance professionals toact ethically and to be transparent, whether here in Bangladesh

or around the world. This is why its critical that finance

professionals have a very strong ethical compass at their core.

The high-profile event was attended by Bangladesh president

Zillur Rahman, Standard Chartered Bank CEO Jim McCabe and

ACCA Bangladesh manager Mohua Rashid, along with hundreds

of other guests.

President Rahman strongly urged businesses to embed ethics

in everything they do and praised ACCAs efforts in endorsing

ethics and developing the profession. Without ethical

accountants and without ethical business practices, businesses

suffer Bangladesh suffers, he said. You can have the right

kind of regulations, but if you dont have the right kind of

people, you wont get the right kind of decisions.The event helped demonstrate ACCAs commitment towards

ensuring that ACCA-qualified professionals have an ethical core.

LATEST TRENDSAny signs of a recovery in the global economy have

disappeared, according to the largest ever survey of

finance professionals undertaken by ACCA. But the

report stresses that, while the economic situation

is tough, the constant flow of depressing headlines

may be making finance professionals even more

pessimistic than conditions warrant. Here is a

snapshot of the picture from around the world.

Middle EastThe Middle East has outperformed all other major

regions in business confidence, although by the

smallest of margins. Just over a quarter (26%) ofthe 84 respondents in the region reported confidence

gains, compared with 42% three months ago. Two-

thirds (65.5%, up from 40%) believe the global

economy is stagnating or has gone into reverse.

However, access to finance is not as much of a

problem as it was, and demand appears to be

strengthening; even investment is picking up.

CyprusRespondents in Cyprus were among the most

pessimistic, as was notably the case in other small,

open economies. In Cyprus this was combined with

the specific effects of the explosion at Zygi thatinterrupted power supplies. As a result, 58% of the

sample of 80 finance professionals in Cyprus (up from

37.5%) reported loss of confidence in the prospects

of their organisations, with 84% (up from 67%)

believing the economy is stagnating or slumping.

Central and Eastern EuropeHere, business confidence is significantly affected by

economic developments in the rest of the continent,

and while the East outperforms the West, neither is

in very good shape. Just over half of the CEE sample

of 147 reported a loss of confidence in their own

organisations (up from 25% three months ago), and

two-thirds (67%, up from 51%) see only stagnationor decline ahead for the global economy.

The AmericasOf the 182 respondents in the region, those in the

Caribbean were more confident about the prospects

of their organisations than their North American

colleagues (20% reporting confidence gains vs 12%).

However, the Caribbean view of the global economy

was decidedly gloomier (73% vs 63% anticipating

deterioration or stagnation).

In North America, demand for and access to

finance are improving, while cashflow problems and

business failures are down. In the Caribbean, on the

other hand, demand is weaker and so business

opportunities tend to focus mostly on niche markets

or serving the needs of cost-conscious customers.

AfricaWhile Africa is still the region with the most economic

optimism, lagging only behind the Middle East for

business confidence, it is now in negative territory on

both counts. Many of the 396 respondents (44.3%,

up from 31.5%) in Africa reported loss of business

confidence, and for the first time most respondents

(51%) feel the global economy is deteriorating or

stagnating. However, in Ghana, the worlds fastest-

growing economy, more than half the sample (51%)

reported gains in business confidence, as did 48% of

respondents in briskly growing Zambia.

ACCA news 65


15/17

InsideACCA

ACCA CONNECT OPEN 24/7

The ACCA Connectcontact centre will

now be providing global support 24

hours a day, seven days a week, 365

days a year.

Judith Bennett, director of service

delivery, says: ACCA is the first

professional accountancy body to

provide this round-the-clock service.

Tel: +44 (0)141 582 2000

Email: [email protected] or

[email protected]

IPSC 2011

ACCA is to host its third annual

International Public Sector

Conference with a theme of audit

and financial management adding

public value on 15 December.

It will focus on the value of audit

and scrutiny, environmental audit and

financial management and reporting.

A free webcast will be available

after the event at http://uk.

accaglobal.com/databases/events/

uk/members/IPSC2011

NEW HEAD FOR CAMBODIA

Senaka Fernando MBE has become

the new head of ACCA Cambodia,

taking over from Dalis Chhorn, who is

leaving to return to her own business.

Fernando was previously a director at

PwC in Cambodia.

IFAC UNDER DISCUSSION

ACCA-sponsored members

of International Federation of

Accountants (IFAC) boards and

committees have met with theACCA president, chief executive

and senior staff to discuss public

interest issues, accountants in

the corporate sector and IFACs

strategy. They also explored ways

for ACCA to continue to support

IFAC in representing and developing

the profession.

There are three new ACCA

nominees for 2012: Brendan

Murtagh joins the International

Auditing and Assurance Standards

Board, Clare Minchington the

International Accounting Education

Standards Board, and Phoebe Yu

the Compliance Advisory Panel.

Council highlightsNewly elected members help makeACCA a more diverse organisation

65Ethics event inBangladeshACCAs efforts inendorsing ethics praised

64Dean WestcottEngagement is all, says

ACCA president

63Something to declareIts time to start planningyour CPD declaration

62Digital ageIntroducing thee-learning suite

60AGM proceedingsMinutes of the 106thannual general meeting

58ACCA benefitsMake the most of yourmembership

ACCAs IFAC representatives: (clockwise from right)

Japheth Katto, Irene Ngandwe, ACCA president Dean

Westcott, Dorothy Ngwira, Brendan Murtagh, Phoebe Yu,

Marta Rejman and Alan Johnson

Council held its annual meeting on Thursday 15

September. Before the meeting, the 106th annual

general meeting of ACCA took place (see page 60).

Members voting at the AGM gave overwhelming

support to the various resolutions that were put.

At the annual Council meeting, Council chose

ACCAs officers for the coming year. ACCAs newpresident is Dean Westcott; he will be supported by

Barry Cooper (deputy president) and Martin Turner

(vice president).

Council also welcomed three new members whose

election was declared at the AGM: Stephen Bailey

(UK), Rosanna Choi (Hong Kong SAR) and Taiwo

Oyedele (Nigeria). There are now 17 different

nationalities represented on ACCAs 36-member

Council (up from 16 in 2010), reflecting the

increasing diversity of ACCA.

Council took a number of other decisions at its

annual meeting:

*It approved Council standing orders for20112012, in accordance with the bye-laws.

*It chose three Council members to serve on thenominating committee in 20112012, along with

the officers.

*It agreed to re-appoint Council member BrianMcEnery as a director of CCAB.

*It agreed a Council work plan and a set ofobjectives for the Council year 20112012.

The next meeting of Council is on 26 November,

immediately following the 2011 meeting of the

International Assembly.

66 ACCA news


16/17

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