International Ethics Standards Board for Accountants

1. International Ethics Standards Board for Accountants Definition of Professional Accountant Bob Rutherford Paris June 2010

2. Definition Professional Accountant Project Status • IFAC Task Force formed, one conference call held to date • Aim to have revised definition for consideration in second half of 2010

3. IFAC Task Force Composition • Public Interest Activity Committees – IAASB, IESBA, IAESB • Compliance Advisory Panel • Small and Medium Practices Committee • Developing Nations Committee • Professional Accountants in Business Committee

4. Existing Definition “An individual who is a member of an IFAC member body” • Use of definition: • IESBA – defined term, which is further sub-divided into “professional accountant in public practice” (Part B) and “professional accountant in business” (Part C) • IAASB Glossary • IAESB - Framework

5. Concerns with Existing Definition • Does not convey understanding of roles and functions of a professional accountant • Professional accountants are not necessarily members of IFAC member bodies • Does not recognize that professional standards are adopted and enforced at the national/regional level • Definition could be seen as limiting applicability of international standards (including the Code) • Definition is circular and confusing

6. Questions Considered by TF Whether definition should be broadly defined or should be limited to members of IFAC member bodies Whether two separate definition should be developed for professional accountant and accounting technician What elements should be included in a revised definition of professional accountant

7. IESBA Issues • Majority of requirements directed to professional accountant – if any change to definition IESBA will need to consider implications • Expansion of definition – IESBA will need to determine whether appropriate for all requirements. Exposure of Code needed • No expansion but use of different term – may not require exposure

8. Elements of Definition • Expertise in accounting, auditing, finance or tax which will normally include one or both of: • Measurement, recognition, preparation, validation, summarization, analysis, and disclosure of financial and, where applicable, nonfinancial information; or • Auditing of and provision of assurance and advisory services on financial information and, where applicable, nonfinancial information

9. Elements of Definition • Engaged in an occupation: • Held to a high ethical standard • Acts with integrity and in the public interest • Agrees to rules of conduct and possesses requisite skills, training, and experience to make the judgments necessary in applying those rules of conduct • Subject to enforcement by membership in a professional organization or through another regulatory mechanism recognized within its jurisdiction as upholding defined high standards of performance

10. Elements of Definition • Engaged in an occupation (cont’d): • Requiring specialized knowledge in a widely-recognized body of learning • Obtained through formal education programs and practical experience requirements • Demonstrated level of competence by assessment • Uses professional judgment based on principles and operates with a degree of autonomy • Kept current through continuing education/continuing professional development

11. Elements of Definition A professional accountant may also hold a certification or license, or may have some widely recognized authorization or qualification to deliver specified accountancy services

12. Any other comments?