ANAN RETREAT

1. ANAN RETREAT on • Good governance code for professional accountancy organisations (PAOs) Premier Training & Consulting

2. A presentation by: Emmanuel G. Ogbonnaya MSc, FCCA, FCA, CCFS, ACTI Premier Training & Consulting

3. Topic: • Professional Accountancy Organisations (PAOs) obligations to students, members and the public. Premier Training & Consulting

4. PAOs’ obligation to students Premier Training & Consulting

5. Professional Accountancy Organisations (PAOs) Obligations to Students • Fair and transparent admission policy for all potential students • a policy to ensure that an individual seeking to begin a programme of Professional Accounting Education that would lead to membership of a PAO is fair and transparent i.e. every student is considered on merit based on meeting the PAO’s minimum requirement for admission • the policy must set out a minimum entry requirement that should be equivalent to that for admission into a recognised university degree or its equivalent; • the policy must be made publicly available and can be accessed closely or remotely either electronically or in hardcopies through network of offices; Premier Training & Consulting

6. PAOs’ obligations to students cont’d • it is not unusual to expect a candidate commencing a programme in accounting education to do so with some level of capabilities i.e. skills, some values, ethics and attitudes and students should be encouraged to disclose such information. Premier Training & Consulting

7. PAOs’ obligations to Students Cont’d • however, of importance is the extent of these capabilities, which could also influence candidate’s entry point into professional accounting education (e.g. AAT-without first degree, NCE, OND/HND, BA/BSc), thus the capabilities that come with each of these qualifications must be assessed; • PAOs have obligation to ensure that an individual embarking on a programme of professional accounting education do so with appropriate level of prior education and learning relevant to provide the necessary foundation to acquire the professional knowledge, skills, values, ethics and attitudes that are essential to become a professional accountant Premier Training & Consulting

8. PAOs’ obligations to Students cont’d • They should carefully draw up training programmes for students of varying capabilities to ensure that each stream of students is provided the required accounting education programme in accordance with their strengths at entry point, which could be: • post graduate entry level; • post secondary school entry level; or • at some point between higher education and below an undergraduate degree • a fair and transparent admission policy should also recognise work experience, mature students, candidates joining the programme part-way through their career and other types of learning Premier Training & Consulting

9. PAOs’ obligation to students • There might also be some other types of learning that PAOs would have to identify and recognise as an acceptable entry point/pathway into accounting education • It should be said that whichever route, there should be consistency with the overall programme of professional accounting education and must be inline with the laid down accounting education programme admission policy of the PAOs concerned. Premier Training & Consulting

10. PAOs’ obligations to students cont’d • In some cases PAOs will want some level of assurance that it has high enough entry point to guarantee the likely success in the programme of professional accounting education. Therefore, assessment of these entry-point obligations must be discharged with high level of professional integrity and proficiency; • It is likely that some PAOs would want to assess the quality of the degree from tertiary institutions whose qualifications are tendered for admission into their professional accounting education programme. • This is very important as research has shown that there is a correlation between the quality of the degree tendered for admission into professional accountancy education and the successful completion of the programme. Premier Training & Consulting

11. PAOs’ obligation to students • Further, it should also be said that there need to be proper cross-checking of students’ entry qualifications not only for the authenticity but as noted earlier, to assess the standing of the institutions whose qualifications are tendered at the entry point of professional accounting education programme given the varying levels of quality of degrees from some universities. Premier Training & Consulting

12. PAOs’ obligations to students cont’d • In its Framework (FW) for International Education Standards (IES) for professional accountants, the International Education Standards Board (IESB) notes that “overall objective of accounting education is to develop competent professional accountants” and sets out a number of major training headings under its educational concepts required to build competence, which is defined “as the ability to perform a work role to a defined standard with reference to working environment” FW para.12. Premier Training & Consulting

13. PAOs’ obligation to Students Cont’d • to demonstrate competence in a role, the standard notes that, a professional accountant must possess the necessary: (a) professional knowledge; (b) professional skills; and (c ) professional values, ethics and attitudes. • therefore, PAOs must be aware of, and should design their accounting education programme to integrate the basis for acquiring competencies built around the above for the promotion of the profession when individual professional accountancy graduates become members of PAO. The ability to meet the level of competence should be checked at entry point Premier Training & Consulting

14. PAOs obligations to students cont’d • Training & Teaching Procedures: It is important to stress here a computer phraseology that says“ garbage in garbage out”; so is true of teaching & training of professional accountancy students. Poorly designed and structured training and teaching procedures will produce poorly prepared graduate members with less than average level of competence and capabilities. The effect of this will run across generations; given that one can not give what they do not have. Premier Training & Consulting

15. Training & Teaching Procedures cont’d • But how should our training and teaching programmes be structured and packaged to provide the needed competencies and capabilities to PAOs’ students? • This obligation can be addressed by designing teaching and training programmes that significantly highlight competencies required at various study areas; • it should also create awareness to students of the related work profile in the particular study area and performance objectives in the study area as well. Premier Training & Consulting

16. Training and Teaching Procedures cont’d • The mode of training and teaching has continue to change with the advent of ICT and various other information technology infrastructure that have made various training and teaching methods very interactive. • As a result, the different training modes or methods must be identified including any training and teaching modules that are conducted electronically. • Given the fair and transparent training and teaching methods, PAOs must designed their training and teaching modules to be consistent across the different training and teaching programmes. Premier Training & Consulting

17. Training and Teaching procedures cont’d • Procedures for highlighting importance of competencies, work related profile and performance objectives is shown below: Premier Training & Consulting

18. PAOs’ obligations to students cont’d Premier Training & Consulting

19. PAOs’ obligations to students cont’d • The emphasis here are competencies(as opposed to just listed the topics and areas of study in the syllabus) so that the students’ attentions are drawn. • As much as possible the relevant competencies are linked to certain job related roles that students may be interested on completion (an area most PAOs’ training information fails to mention). • Also for students to be made aware of the identified key performance measurement objectives that employers may use. Premier Training & Consulting

20. PAOs’ obligations to students cont’d • for the training programme to be fair, PAOs must design it to ensure that a comparable level of professional competence at the point of qualification is attained by candidates from all possible entry routes whether from the secondary school, further or higher education; • information about teaching and training locations e.g. training location centres, whether training could be obtained on-line from the PAO or their accredited training organisations Premier Training & Consulting

21. PAOs’ obligations to students cont’d • Given the continuing relevance of work experience, PAOs’ admission policy should also include the recognition of work experience, mature candidates and those joining the part-way through their career and with the varying degrees of students capabilities. • As noted before, there might be some other types of learning that PAOs might want to recognise as acceptable path into their accounting education. Premier Training & Consulting

22. PAOs’ obligations to students cont’d • it should be said that which ever routes that are chosen, there should be consistency with the overall programme of professional accounting between one period and another; • however, where there are updates in professional standards, legal or regulatory framework such should be reflected in the training and teaching of the PAO as soon as practicable to ensure students remain well informed of the changes. Premier Training & Consulting

23. PAOs’ obligations to students cont’d • In respect of updates, PAOs should know that they have a major obligation to students by ensuring that major changes to their key training subjects are brought to their attention and arrangement made to incorporate the changes into their training programme • For example, update on IFRS, ISA, or other professional standards such as ethics to professional accountants or issuance of new standards, there should have lapsed period after which the changes are incorporated into the students learning materials for example, 6 months after the effective date of the standards or changes. Premier Training & Consulting

24. PAOs’ obligations to students cont’d • to provide students with the assurance of high quality of the PAO’s qualification, it is important that candidates from all possible routes achieve a comparable level of professional competence at the point of qualification; Premier Training & Consulting

25. PAOs’ obligation to Students cont’d • it is very common this days to find PAOs, having some pre-admission training programme before finally admitting students (such as ANAN conversion course programme to assess the capabilities of individual students through integrated classroom coursework). This allows PAOs to gain such guaranteesand ANAN has this pre-admission training programme in place i.e. conversion course. Premier Training & Consulting

26. PAOs’ obligations to students cont’d • Examination and Membership conferment • PAOs should design examinations that place more emphasis on students’ competencies and capabilities particularly at the point of exit (i.e. final examinations) because the final examinations precede the period of transition to membership following qualification; • The professional qualifying certificates certify the holders as being competent to carry out work as professional accountants; • The certificates act as assurance both to the student and the public that the holder can perform work of a professional accountant. Premier Training & Consulting

27. Examination and membership Conferment cont’d • Major questions to ask by PAOs in order to identify their key obligations to students at this point preceding membership include: • Do our examinations particularly, the final sections test integrated knowledge and application on, for example, financial reporting (separately, on IFRS, IPSAS and IFRS for SMEs) by students? • Can students of the PAO demonstrate sufficient knowledge and understanding of the application of ISAs, ISQC, Premier Training & Consulting

28. Examination and membership conferment cont’d • Can they demonstrate professional ethics, values, attitudes , understanding and are able to comply with regulatory and legal frameworks that the public looks to see in a professional accountant? • With respect to financial and performance management respectively, can our newly qualified demonstrate integrated knowledge and application of the relevant concepts required in real life situations? • These questions are geared toward the appropriate level of competencies and capabilities, which are generally acquired through PAO’s training and are demonstrated through training as well as through examinations. • It needs to be said that more of these competencies and capabilities will become focal points at membership terrain. Premier Training & Consulting

29. Examination and membership conferment cont’d • The table below summarises the recent rating of newly qualified finance professionals having a good working knowledge of different finance areas; • The results point PAOs to where they should prepare students more for competence acquisition bearing in mind the more likely rewards in terms of job opportunities; • financial management high rating shows how critical a tool it is for all businesses and its understanding and application is not restricted to private sector. Premier Training & Consulting

30. Rating (%age ) of newly qualified finance professionals having a good working knowledge of different finance areas Source: ACCA , the complete finance professional 2013 Premier Training & Consulting

31. PAOs’ obligations to members • As other members of the accountancy profession would have noticed, professional accountants have become so dependent on their professional bodies to facilitate their development in all aspects of their professional career in order to remain relevant after qualification; • This means that members are on regular basis looking out for issues and information emanating from their PAOs and these may well include courses, seminars and conferences, etc.; • This may even seem more burdensome if the dependency is on more than one PAO, for example, a member of ANAN and ICAN or ACCA and ICAEW, for those who are members of more than one PAO. Premier Training & Consulting

32. PAOs’ obligations to members cont’d But why should this be the case? • well there is this believe that what happens in and around the profession would more likely be known first by the PAOs; and • this is said to be the case where or because the relevant regulatory bodies work closely with PAOs and would prefer to disseminate information to professional accountants through their relevant PAOs. Premier Training & Consulting

33. PAOs’ obligations to members cont’d • However, it needs to be said that PAOs do not necessarily have privy to regulatory information as and when it emerges and/or the dissemination of emerging information to their members; • From observations, in most cases, the major big accounting & auditing firms who, one way or another, participate in major international regulatory committees would have greater privy to emerging information in the profession than some PAOs. Premier Training & Consulting

34. PAOs’ obligations to members cont’d • Also given the state of transparency in due process particularly, in respect of standard setting and amendments to existing standards by regulatory authorities, information dissemination (with the advent of internet) has been made seamless and some members are likely to have new regulatory information emerging from the relevant authorities before their PAOs. • Therefore, the dependency of members on their PAOs for relevant information to assist them maintain their competencies may not anymore be contested. Premier Training & Consulting

35. PAOs’ obligations to members cont’d • However, given this level of dependency on PAOs by their members, what major obligations do PAOs have to their members? • The concept of lifelong learning brings a major obligation on PAOs to ensure that their members remain competent through out their career • See diagram below: Premier Training & Consulting

36. PAOs’ obligations to members cont’d The concept of lifelong learning: LIFELONG LEARNING Commences following enrolment into accountancy education programme All accountancy education training programmes Becoming a qualified accountant Throughout the professional accountant’s career through Up to and Premier Training & Consulting

37. PAOs’ obligations to members cont’d • In its standard, the International Education Standards (IES-7) issued by the International Education Standards Board (IESB) titled-Continuing Professional Development: A Programme of Lifelong Learning and Continuing Development of Professional Competence, the standard, para.13 requires IFAC member bodies to “promote the importance of continuous improvement in competence and a commitment to lifelong learning for all professional accountants”. Premier Training & Consulting

38. PAOs’ obligations to members cont’d • The standard prescribes that IFAC member bodies should: • Foster a commitment to lifelong learning among professional accountants; • Facilitate access to continuing professional development opportunities and resources for their members; • Establish for members benchmark for developing and maintaining the professional competence necessary to protect public interests; and Premier Training & Consulting

39. PAOS’ obligations to members cont’d • monitor and enforce the continuing development and maintenance of professional competence of professional accountants. • However, the standard recognises the principle that it is the responsibility of each professional accountant to develop and maintain professional competence necessary to provide high quality services to their clients, employers and other stakeholders. Premier Training & Consulting

40. PAOs’ obligations to members cont’d • Mandatory CPD for all Professional Accountants • IES 7 para.18 notes that member bodies should require all professional accountants to develop and maintain competence relevant and appropriate to their work and professional responsibilities. • However, the standard stresses that the responsibility for developing and maintaining competence rests primarily with each professional accountant. Premier Training & Consulting

41. PAOs’ obligations to members cont’d • Therefore, PAOs, in organising CPD programmes is in the spirit of ensuring that members take advantage of the platform provided by them. • It may seem unlikely that if professional accountants were left to provide on their own, the required level of continuing CPD it may lack cohesion and also may not sufficiently identify gaps in competence and training needs. But see below how some PAOs manage CPD activities. Premier Training & Consulting

42. PAOS’ obligations to members cont’d • However, where PAOs conduct CPD programmes for their members themselves, they are required to consider what is relevant and appropriate for professional accountants. • The standard requires that the following issues be considered: • relevance-given the expected contributions to competence of professional accountants, acceptable CPD activities should facilitate the development of the professional knowledge, professional skills and professional values, ethics and attitudes of the professional accountant, relevant to their current and future work and professional responsibilities. Premier Training & Consulting

43. PAOS’ obligations to members cont’d • Another issue to be considered is Measurement of CPD activities • paras. 25, 26 IES-7, require Professional accountants to measure learning activities or outcomes to meet the member body’s (such as ANAN) CPD requirements. • The standard also notes that learning activity can be measured in terms of effort or time spent, or through a valid assessment method,which measures competence achieved or developed. Premier Training & Consulting

44. PAOS’ obligations to members cont’d • The issue of measurement brings on another issue of verification of CPD activities . • First is the fact that CPD records must be kept be professional accountants, which document related CPD activities and can be produced when required by the PAO. • This is to enable the CPD attained by the professional accountant to be verified. It is recognised that some learning activities may be measured but not verified Premier Training & Consulting

45. PAOs’ obligations to members cont’d • Given that CPD is to develop the professional competence of professional accountant, the standard identifies three approaches through which CPD activities could be achieved thus: • Input-based approaches these require establishment (presumably, by PAOs) of a set amount of learning activities that are considered appropriate to develop and maintain competence. • Output-based approaches these are where the professional accountants are required to • demonstrate, by way of outcomes, that they develop and maintain professional competence. Premier Training & Consulting

46. PAOs’ obligations to members cont’d • The standard also recognises a third approach, which is a combination of the two approaches noted above. • Combined approaches—these refer to methods that effectively and efficiently combine elements of the input and output based approaches, setting the amount of learning activities required and measuring the outcomes achieved. • Our research shows that most PAOs adopt the combined approach, which brings in some level of flexibility and professional judgement. See ACCA and ICAEW CPD Administration tables below. Premier Training & Consulting

47. PAOs’ obligations to members cont’d • However, a major obligation that rest on PAOs is to ensure that while assisting members (whichever approach adopted) to achieve their CPD activities, they are required to establish a systematic process to monitor whether professional accountants meet the CPD requirement and the system must provide for appropriate sanctions for failing to meet the requirement, including failing to report or failing to develop and maintain competence. Premier Training & Consulting

48. PAOs’ obligations to members cont’d • The systematic process put in place by PAOs vary and the variants include the following: (i) PAO directly setting and administering activities that count toward CPD including training. This provides the PAO the opportunity to monitor and enforce compliance on CPD requirement; (ii) PAO permits members to attain a specific number of CPD units or hours and produce evidence that the PAO can verify; (iii) PAO in addition to providing CPD activities by itself, also permits or registers some training providers including employers as authorised CPD training providers Premier Training & Consulting

49. PAOs’ obligations to members cont’d • PAOs are said to base their decision of what systematic process to adopt on the basis of cost efficient and convenient ways of administering CPD to members before adopting a CPD process. • For example, ACCA has four streams through which members can satisfy their CPD requirements and these are shown in the table below. • Also ICAEW has quite a different system of administering CPD on its members as shown below. Premier Training & Consulting

50. PAOs’ obligations to members cont’d Premier Training & Consulting ACCA CPD ADMIN.