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IFAC Update May 2011
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June 6, 2011
The IFAC Update provides summaries of developments from the International Federation of Accountants (IFAC) and the independent standard-setting boards it supports over the past month.
IFAC News in Brief
1. New Exposure Draft Issued by IAASB
2. Creation of New Pan-African Accountancy Organization Praised by IFAC
IFAC was in attendance in Dakar, Senegal, for the launch of the newly created Pan-African Federation of Accountants (PAFA) to support the efforts of member bodies throughout Africa who were critical in the formation of this new regional body. This new organization gives the profession the opportunity to speak with one voice on African economies and strategies, both within Africa and globally. Göran Tidström, IFAC’s president, praised the commitment of the accountancy profession in Africa in acting to protect the public interest and develop the profession. For more information, please see the press release on IFAC’s website.
3. PAIB Committee Holds Forum in Australia on Improving Governance Practices
The Professional Accountants in Business (PAIB) Committee recently held a forum in Australia for professional accountants, co-sponsored by CPA Australia and the Institute of Chartered Accountants in Australia. The forum was held in conjunction with the PAIB Committee meeting and attended by approximately 150 participants. The focus of the forum was on how professional accountants in business can support their organizations to improve governance practices through the integration of financial and non-financial information into their reporting. Key discussions included how integrated reporting can drive good governance practices, including new systems and processes to measure, analyze, and report an organization’s environmental, social, and economic performance. The conclusions of the forum can be found in the Media Center on IFAC’s website.
4. SMP Quick Poll: Small Businesses Challenged by Pace of Regulatory Change
Regulation continues to pose a challenge for small- and medium-sized practices (SMPs) and their small- and medium-sized entity (SME) clients, but pace of change, rather than complexity, is the biggest regulatory challenge for both groups, according to IFAC’s second SMP Quick Poll (April/May 2011). Complexity ranked third for SMPs and second for their SME clients. Other key findings include: optimism slid among SMPs, with 23% of respondents expecting an improvement in business this year, compared with 38% in January; and burden of regulation outpaced economic uncertainty as the most cited “biggest challenge” faced by practitioners’ SME clients. To read more, including a summary of key findings, see the SMP Quick Poll, April/May Poll Results.
IFAC would like to thank its member bodies who distributed the poll to their members and encourages them to participate in subsequent polling to lend consistency to the trending data. IFAC member organizations who wish to participate in the next poll should contact PaulThompson@ifac.org.
Recent and Upcoming Events
1. IFAC CEO Addresses Government Borrowers’ Forum
Ian Ball, IFAC’s CEO, recently spoke at the World Bank Government Borrowers’ Forum, hosted by the Chilean Ministry of Finance in Santiago, Chile. The session, New Rules and Regulations for All, was attended by senior representatives of official-sector issuers in capital markets and was an invitation-only session designed to facilitate candid exchanges on issues that are frequently sensitive. Mr. Ball’s presentation, What Role Can Accounting Standards for the Public Sector Play in Promoting Government Transparency?, can be found in the Media Center on IFAC’s website.
2. Annual CReCER Conference to Be Held in Argentina This Month
This year’s CReCER conference will be held in Buenos Aires, Argentina, June 29–July 6. CReCER (Accounting and Accountability for Regional Economic Growth) is a regional event organized by the World Bank, IFAC, the Inter-American Development Bank, the Global Public Policy Committee, which is comprised of the six largest auditing firms in the world, and the Argentine Federation of Professional Councils in Economic Sciences. The conference will consist of three parts—Development of Capital Markets in Latin America and the Caribbean, which is by invitation only; The Importance of Better Financial Information for Better Economic Development, which is an open event and will focus on local and international issues of interest for those in the public and private sector; and an IFRS workshop for small- and medium-sized entities. For more information, please visit CReCer’s website.
3. PAIB Committee Hold Forum in Australia on Improving Governance Practices
The Professional Accountants in Business (PAIB) Committee recently held a forum in Australia for professional accountants, co-sponsored by CPA Australia and the Institute of Chartered Accountants in Australia. The forum was held in conjunction with the PAIB Committee meeting and attended by approximately 150 participants. The focus of the forum was on how professional accountants in business can support their organizations to improve governance practices through the integration of financial and non-financial information into their reporting. Key discussions included how integrated reporting can drive good governance practices, including new systems and processes to measure, analyze, and report an organization’s environmental, social, and economic performance. The conclusions of the forum can be found in the Media Center on IFAC’s website.
4. SMP Address at Conference: Non-Audit Services for SMEs
Bernard Scicluna, a member of IFAC’s Small and Medium Practices (SMP) Committee, recently gave a presentation covering non-audit services for small- and medium-sized entities (SMEs). The presentation, Non-Audit Services to SMEs: Review and Compilation Engagements—Market Tools When a Voluntary Choice Is the Only Solution, was given at the European Federation of Accountants and Auditors for SMEs conference, SMEs as the Engine of the European Recovery. The presentation can be found in the Media Center on IFAC’s website.
5. IFAC Deputy President Addresses PICPA Global Convention
Warren Allen, IFAC’s deputy president, recently addressed the delegates attending the PICPA Global Convention, hosted by PICPA International, the international affiliate of the Philippine Institute of Certified Public Accountants (PICPA). Mr. Allen discussed the importance of global standards in auditing, ethics, education, and the public sector. The convention was held in Vancouver, Canada in May. Attendees included members of the profession from the US, Canada, Australia, Europe, the Philippines, and the Middle East.
6. Recent Speaking Engagements for the IAASB
International Auditing and Assurance Standards Board (IAASB) members continue to encourage greater understanding of global standards for auditing by making presentations and speeches to audiences around the world. During May, IAASB Chair Arnold Schilder, gave two presentations on the international stage. The first, Clarity, Relevance, and Quality—Perspectives on International Auditing Standard Setting, took place at the Baker Tilly International EMEA (Europe, Middle East, and Africa) Regional Conference in Cyprus and addressed developments in the accountancy profession and standard setting. The second presentation, The Need for Regulation and Harmonized Auditing Standards to Ensure High Audit Quality, was given at the Audit and Assurance Conference, organized by the Auditing Special Interest Group of the British Accounting and Finance Association and hosted by the Institute of Chartered Accountants of Scotland.
Open Consultations and Exposure Drafts
1. IAASB Invites Comment on Recently Proposed Exposure Drafts and Consultation Papers
The International Auditing and Assurance Standards Board (IAASB) recently released the following:
? International Standard on Assurance Engagements (ISAE) 3410, Assurance Engagements on Greenhouse Gas Statements, addresses the practitioner’s responsibilities in identifying, assessing, and responding to risks of material misstatement, and contains illustrative assurance reports on greenhouse gas statements. Comment Deadline: June 10, 2011
? International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, a principles-based standard that can be applied effectively to a broad range of assurance engagements, ranging from assurance on statements about the effectiveness of internal control to direct engagements, such as performance or “value for money” audits, to possible future engagements addressing integrated reporting or corporate social responsibility reporting. Comment Deadline: September 1, 2011
? Enhancing the Value of Auditor Reporting: Exploring Options for Change looks to obtain views on enhancing the quality, relevance, and value of auditor repointing on an international basis. The consultation paper describes issues with current financial reporting, including a perceived “information gap,” identified by some stakeholders. It also sets out possible options for change and seeks input as to whether such options might be effective in enhancing auditor reporting and the communicative value of the auditor’s report. Comment Deadline: September 16, 2011
2. IPSASB Publishes Exposure Drafts and Proposed Conceptual Framework Documents
The International Public Sector Accounting Standards Board (IPSASB) issued an exposure draft and two consultation papers related to its project to develop a Conceptual Framework for the general purpose financial reporting of public sector entities. Summaries of the consultation papers can be found in the “At a Glance” publications, which have been posted along with the consultation papers. Comment Deadline: June 15, 2011
? Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Role, Authority, and Scope; Objectives and Users; Qualitative Characteristics; and Reporting Entity proposes that the objectives of financial reporting should be to provide information for accountability and decision-making purposes.
? Elements and Recognition in Financial Statements identifies alternative asset and liability-led and revenue and expense-led approaches to financial statements and considers the key characteristics of assets, liabilities, revenue, and expenses.
? Measurement of Assets and Liabilities in Financial Statements considers the measurement bases that may be appropriate for the elements that are recognized in financial statements.
The IPSASB also recently released the following:
? Exposure Draft 45, Improvements to IPSASs 2011, which proposes the deletion of the Introduction section of each IPSAS where relevant (i.e., 21 of 31 IPSASs); the addition of an Objective paragraph to the four IPSASs that do not currently include an Objective paragraph (IPSASs 6–8 and 10); and improvements to four IPSASs (IPSAS 16, 17, 19, and 21). Comment Deadline: June 30, 2011
? Key Characteristics of the Public Sector with Potential Implications for Financial Reporting provides background on issues affecting the development of a Conceptual Framework for public sector entities and standard setting. In particular, it highlights that public sector entities are likely to depend upon taxation rather than commercially generated profits for their continued existence—and have governance arrangements that generally involve a legislative body holding an executive to account. The paper is geared toward those who may have limited familiarity with the public sector, particularly those with more experience in financial reporting for the private sector, including not-for-profit entities. Comment Deadline: August 31, 2011
3. IAESB Invites Comment on Proposed Revised, Clarified Education Standards
The International Accounting Education Standards Board (IAESB) has released the following exposure drafts:
? International Education Standard (IES) 4, Professional Values, Ethics, and Attitudes, which proposes the development of professional values, ethics, and attitudes be addressed by learning and development activities that occur throughout the career of the professional accountant. This revision to IES 4 will be helpful to educational organizations, employers, regulators, government authorities, and other stakeholders who support the learning and development of professional accountants. Comment Deadline: July 15, 2011
? International Education Standard 6, Assessment of Professional Competence will assist professional accountancy organizations to understand both the learning and development requirements for areas of assessment of professional competence, and their obligations in upholding the standard. The revised standard addresses elements that are essential to assessing professional competence over the career of a professional accountant, including proposing:
o a principles-based approach, which specifies the requirements for the assessment of professional competence across the Initial Professional Development (IPD) and Continuing Professional Development (CPD) of a professional accountant;
o principles of individual assessment used by member bodies to assess professional competence—applied across IPD and CPD career stages—that shall be reliable, valid, equitable, transparent, and sufficient; and
o a requirement that IFAC member bodies undertake a formal evaluation of the adequacy of competence of aspiring professional accountants prior to their admission to the profession and have a systematic process to verify whether professional accountants meet CPD requirements.
Comment Deadline: July 28, 2011
4. Predictive Business Analytics Exposure Draft Released by PAIB Committee
New guidance on predictive analytics has just been released by the Professional Accountants in Business (PAIB) Committee. Predictive Business Analytics: Forward-Looking Measures to Improve Business Performance, part of the International Good Practice Guidance series, is designed to help professional accountants working in commerce, industry, financial services, education, and the public and not-for-profit sectors, as well as their organizations, embrace predictive analytics to achieve better forward-looking performance insights. Comment Deadline: July 29, 2011
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