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International Federation of Accountants

International Federation of Accountants. Update on IFAC and its Role with SMPs Szymon Radziszewicz IFAC Technical Manager, Compliance Program 18 November 2008. IFAC. IFAC Today. Global organizations for the accountancy profession with 157 members and associates in 123 countries

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International Federation of Accountants

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  1. International Federation of Accountants Update on IFAC and its Role with SMPs SzymonRadziszewicz IFAC Technical Manager, Compliance Program 18 November 2008

  2. IFAC IFAC Today Global organizations for the accountancy profession with 157 members and associates in 123 countries Supports the global development of the profession Encourages compliance and convergence Promotes values of integrity, transparency and expertise

  3. IFAC Independent Standard-Setting Boards • International Standards • International Auditing and Assurance Standards Board (IAASB) • International Ethics Standards Board for Accountants (IESBA) • International Accounting Education Standards Board (IAESB) • International Public Sector Accounting Standards Board (IPSASB)

  4. IFAC Committees • Representation • Small and Medium Practices Committee • Professional Accountants in Business Committee • Developing Nations Committee • Compliance Advisory Panel • Evaluates whether IFAC members are complying with the requirements to maintain their membership in IFAC

  5. SMP INFLUENCE Percentage of Small and Medium Businesses by Region 99% 99.7% 97% 75% 95% 97%

  6. IFAC Characteristics of SMPs • Demonstrates one or more of the following • Most of its clients are SMEs • Ordinarily does not audit listed entities • Majority of client work may non-assurance (non-audit) work • Has direct and hands-on quality control procedures

  7. IFAC SMP Challenges in the Environment • Relevance of international standards • Auditing standards more detailed and revisions in the last few years • Financial reporting standards more complex • Regulations and audit quality • Increased competitive pressure • Small and medium practices have fewer resources

  8. IFAC How is IFAC Assisting? • Composition of standard-setting boards and projects • More SMPs • IFAC is exploring ways to provide implementation support • Raising awareness about the needs of professional accountants in developing and emerging economies a priority

  9. IFAC SMP CommitteeOverview • Finland • Germany • Italy • Malta • Spain • Turkey • UK • Canada • USA • Israel • China • Hong Kong SAR • India • Malaysia • Nigeria • Tunisia • Brazil Chair – Sylvie Voghel (Canada) 18 members Resources – one full-time senior technical manager

  10. IFAC Small and Medium Practices Committee • Purpose: “…to identify and represent the needs of the constituents and, where applicable, to give consideration to relevant issues, pertaining to SMEs / SMPs” • Standard-setting impact • Input into the IAASB standard-setting process • “Think smaller audit practice” approach • Follow IASB’s proposed “IFRS for Private Entities”

  11. IFAC Small and Medium Practices Committee • Host annual SMP conference • Hong Kong, Malta, Nigeria • Develop tools for SMPs • Guide to Using International Standards on Auditing in the Audit of Small – and Medium –Sized Entities (“The ISA Guide”) • Based on ISAs effective as at December 31, 2006

  12. IFAC The ISA Guide (December 2007) • Not a substitute for the ISAs! • Designed to help SMPs efficiently, effectively and consistently apply ISAs • Translations: Chinese, Czech, Romanian, Russian, Spanish, others • Plan for an update 2010 • Available for free

  13. Use of graphics, tables, consider points

  14. Sample Chapter Layout

  15. IFAC IAASB and the ISA Clarity Project • Objective: To improve clarity of ISAs and consistency of application • All issued ISAs part of a “Clarity” review • Structural improvements • Be clear about the objective of the standard and therefore its purpose for the audit process • Wording simplified where possible • All will have an effective date of December 15, 2009

  16. IFAC IAASB and the ISA Clarity Project • Before “The auditor should make inquiries of management, internal audit and others to determine whether they have knowledge of…fraud affecting the entity.” • Redrafted requirements: “The auditor shall make inquires of management… fraud affecting the entity” “For those entities that have an internal audit function, the auditor shall make inquiries…”

  17. IFAC Staff Audit Practice Alert – Fair Value • Highlights areas within the ISAs that are particularly relevant to the audit of fair value accounting estimates • Especially relevant to audits of entities that have investments in financial instruments especially those in illiquid markets • Reminds auditors of their obligations

  18. IFAC IAASB Future Strategy • Stability for 2 years • Process for assessing the effectiveness of the implementation of new standards • Explore concept of alternative assurance services • Is there be an alternative to an audit? • What type of assurance would it provide given an audit provides “reasonable assurance”?

  19. Code of Ethics Ethical compliance a hallmark of the accounting profession Key projects of the IESBA Clarity project Conflicts of interest Fraud and illegal acts IESBA Implementation Materials for SMPs To help SMPs apply independence section of Code of Ethics (2009) IFAC

  20. Other Useful Guides Quality Control Guide (SMPC) Assist smaller size practices in developing and implementing quality controls Practice Management Guide (SMPC) TBD – Assist auditors in managing their practices, client acceptance process, HR etc IFAC

  21. Valuable to SMEs Business Planning Guide: Practical Application for SMEs Defining and Developing an Effective Code of Conduct for Organizations Internal Controls – A Review of Current Developments Internal Control From a Risk-Based Perspective IFAC

  22. Importance of IFAC Members Continue to be responsive to change Focus on education and training Raise awareness to key stakeholders about the needs of the profession Seek input from their members IFAC

  23. IFAC Provision of Practical Support Web-based Resources – International Center for SMPs • See http://www.ifac.org/SMP/ for: • IFACnet portal • News • Resources (relevant links, free publications, discussion board, etc.); • Possible future developments: • Global firm directory • Online networking between SMPs (& SMEs)

  24. IFAC Provision of Practical SupportWeb-based Resources - IFACnet • See http://www.ifacnet.com • Customized web search engine providing access to resources of IFAC, its member bodies, and others • Possible future developments: • Menu of key search terms • Improved language capability

  25. IFAC How Can You Get Involved? • Effective communication is critical • Visit IFAC SMP website and sign up for our eNews • Raise awareness of IFAC activities: • To other accountancy bodies; • To other SMPs and SMEs; and • To others – students, donor agencies, regulators etc • Provide feedback

  26. International Federation of Accountants www.ifac.org

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