NASBA Role of State Regulators in Global Standards Setting

1. NASBA Role of State Regulators in Global Standards Setting Bob Bunting, Deputy President October 29, 2008

3. Obstacles to Common Standards and Uniform Quality

4. Obstacles • Competition • Sovereignty and national pride • Champion industries • Politics • Cost and inconvenience • Representation • Implementation • Leading to a lack of Collaboration • ……..And, yet…….

5. Over 110 countries require or permit the use of IFRS IFRS & ISAs • Over 110 countries require or permit the use of IFRS

6. Benefits of a United Global Approach

7. Reduction of poverty Enhanced levels of production of goods and services Suppressing corruption Improved Corporate Social Responsibility reporting Improved legislation and regulation of professional liability Promotion of growth and efficiency in capital and labor markets Improved economic decision-making in the private and public sectors Enhanced Corporate Social Responsibility Enhanced governmental accountability High quality financial management and reporting practices by organizations High quality audit practices by firms Enhanced level of competence within the accountancy profession Provision of high quality performance information Confidence in international standards • Standards & guidance • Promoting quality • Support for Adoption • Support for Implementation • Representation • Communications Strong professional accountancy firms Lower cost of capital Enhanced transparency Stable and robust regulation that promotes growth and efficiency Strong ethical behaviors demonstrated by professional accountants Adoption of high quality international standards Strong professional accountancy institutes Lower transaction costs for cross-border capital flows Effective implementation and enforcement of international standards Enhanced corporate behavior High public confidence in the accountancy profession and its services Strong organizational governance and management structures Enhanced credibility of and accessibility to financial and non-financial information Consumer confidence in the integrity and efficiency of the markets Enhanced attractiveness of the accountancy profession Strong legal frameworks Assisting fair trade Achieving social equity

8. IFAC’s Role in Moving the Profession to the Next Level

9. Mission To serve the public interest,IFAC will continue to strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards, and speaking out on public interest issues where the profession’s expertise is most relevant

10. Values: Integrity Expertise Transparency

11. IFAC Strategic Themes • Be recognized as the international standards setter in the areas of auditing and assurance, education, ethics and governmental financial reporting • Actively support the adoption of, and assist in, the implementation of international standards • Continually enhance the relevance of the profession • Be the international voice of the accountancy profession

12. IFAC Organization KEY ACCOUNTABILITY OVERSIGHT CONSULTATION/ADVICE

13. Structure of the IAASB PublicInterestOversightBoard Monitoring Group CONSULTATIVE ADVISORY GROUP Oversees Due Process/ Approves Appointments and ToR Consults/ Advises Consults/ Advises Liaison/ Consultation INTERNATIONAL AUDITING AND ASSURANCE STANDARDS BOARD IFAC Board IFAC REGULATORY LIAISON GROUP Appoints Members/ Establishes ToR ProvidesInput ED RESPONDENTS AND OTHER STAKEHOLDERS INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTIONS NATIONAL STANDARD SETTERS & REGULATORS SMALL AND MEDIUM PRACTICES COMMITTEE

14. Checks and Balances • Monitoring Group (Regulators) • Public Interest Oversight Board (Appointed by MG) • Independent Chair • Public Members • CAG members (Regulators, Users) • Transparent Process • Minutes • Exposure drafts • Other observers

15. Regulation and the Public Interest Professional accountancy bodies and governments share common objective: ensuring accountants serve the public interest and meet high standards And common goal: regulation with benefits that exceed costs Shared Regulation

16. Shared Regulatory System Self regulation and external regulation reinforce each other; combine to form a regulatory mix that is effective and efficient. Shared Regulation

17. Goals of Shared Regulation in IAASB Standard Setting Protect and respond to the public interest Maintain and strengthen legitimacy through: Independence Performance Responsiveness Efficiency Accountability Shared Regulation

18. Standard Setting That Protects the Public Interest Shared Regulation Legitimacy Independence Performance Accountability

19. A Balanced System of Standard Setting Appropriately balances functions between public and private sectors Balance between technical and nontechnical roles Balance between formal and informal consultation and communication Aim is overall system performance Shared Regulation

20. NASBA / State Board Roles

21. Structure of the IAASB PublicInterestOversightBoard Monitoring Group CONSULTATIVE ADVISORY GROUP Oversees Due Process/ Approves Appointments and ToR Consults/ Advises Consults/ Advises Liaison/ Consultation INTERNATIONAL AUDITING AND ASSURANCE STANDARDS BOARD IFAC Board IFAC REGULATORY LIAISON GROUP Appoints Members/ Establishes ToR ProvidesInput ED RESPONDENTS AND OTHER STAKEHOLDERS INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTIONS NATIONAL STANDARD SETTERS & REGULATORS SMALL AND MEDIUM PRACTICES COMMITTEE

22. NASBA Role of State Regulators in Global Standards Setting Bob Bunting, Deputy President October 29, 2008