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IFAC Update: July 2011
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August 2, 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. Exposure Draft Issued by IAESB
Please see the Open Consultations and Exposure Drafts Section for more details.
2. Updated Quality Control Guide Released by SMP Committee
The Small and Medium Practices (SMP) Committee recently released the third edition of its comprehensive implementation guide, Guide to Quality Control for Small- and Medium-Sized Practices, Third Edition. The guide is designed to promote consistent implementation of International Standard on Quality Control 1, Quality Controls for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements. This edition of the guide features enhancements to the two sample manuals as well as other refinements for clarity and consistency, using a practical “how-to” approach to help practitioners develop their firms’ quality control systems.
3. IFAC Submits Comments on Global Accountancy Profession Issues
IFAC has submitted a comment letter on the European Commission's Green Paper, The EU Corporate Governance Framework, which stresses the importance of focusing on a wider range of stakeholder issues, the application of governance principles in spirit rather than in name, and reporting that embraces a broader, integrated reporting approach.
IFAC has also submitted a response to the IFRS Foundation Trustees' Strategy Review, which includes comments on defining the public interest, the IFRS Foundation and the International Accounting Standards Board's proposal to develop standards for other entities in addition to private, and the IFRS Foundation's governance.
On behalf of the Private Sector Taskforce of Regulated Professions and Industries, IFAC submitted the interim report Regulatory Convergence in Financial Professions and Industries for consideration by the G20 deputies. This interim report comes ahead of a final report in September 2011 and focuses on global regulatory convergence. This is a critical issue for capital markets and is a matter on which the private sector has expertise that can assist the G20 in its objective to achieve a level playing field in relation to regulation, including standards, and to provide comparability and consistency for investors, regulators, and market participants.
Recent and Upcoming Events
1. IFAC/FEE Roundtable Deliberates SME Regulation
Members of the Small and Medium Practices (SMP) Committee recently participated in a debate organized by the Fédération des Experts Comptables Européens (FEE) on regulation for small- and medium-sized entities (SMEs). The event was designed to raise awareness of regulatory challenges facing the SMP community and to discuss possible solutions. SMP Committee Chair Sylvie Voghel presented the results of the April SMP Quick Poll, which showed that SMPs are concerned about the impact of regulation on their SME clients and SMPs. At the end of the roundtable, participants agreed that “smart” regulation is necessary—regulation that imposes a burden proportionate to the size and complexity of the entity, is relevant to the particular needs and circumstances of SMEs and SMPs, and changes at a pace that is feasible. Delegates recognized that such regulation is beneficial in promoting transparency, efficiency, and sustainability among SMEs.
2. IFAC President and CEO Meet with Finance Leaders in India
Göran Tidström, IFAC’s President, and Ian Ball, IFAC’s CEO, recently returned from a trip to India to attend a series of events organized and hosted by the Institute of Chartered Accountants of India (ICAI). Among other meetings, Mr. Tidström and Mr. Ball met with the Secretaries of the Ministries of Corporate Affairs and Commerce and Industry. The ICAI also hosted events for the IFAC leaders, including meetings with ICAI leadership, a press event, and a dinner hosted by the president of ICAI, Mr. G. Ramaswamy.
Open Consultations and Exposure Drafts
1. IAASB Invites Comment on Recently Proposed Exposure Draft and Consultation Paper
The International Auditing and Assurance Standards Board (IAASB) recently released the following:
? 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. This 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. 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 1, Entry Requirements to a Program of Professional Accounting Education, currently prescribes the principles to be used in setting entry requirements for professional accounting education and practical experience. The proposed revision is intended to protect the public interest by establishing fair and proportionate entry requirements, which help those considering professional accounting education make appropriate career decisions, and ensuring that these requirements are not misrepresented. The revised standard proposes:
o specification of entry requirements for professional accounting education;
o explanation for the rationale behind the entry requirements;
o a requirement that excessive barriers to entry are not put in place; and
o a requirement to make relevant information publicly available so that candidates can assess their chances of successful completion.
Comment Deadline: September 21, 2011
? International Education Standard 5, Practical Experience Requirements, currently prescribes the practical experience IFAC member bodies should require before qualification as a professional accountant. Additionally, this IES can be helpful to educational organizations, employers, regulators, government authorities, and any other stakeholders who support the practical experience of professional accountants. The proposed revision continues to support the use of practical experience in developing the competence of an aspiring professional accountant, but also proposes:
o greater flexibility in measuring practical experience;
o permitting supervisors or mentors to direct an aspiring professional accountant’s experience; and
o requiring practical experience to be recorded in a verifiable and consistent form.
Comment Deadline: October 8, 2011
3. IPSASB Publishes Exposure Draft on Financial Reporting Implications
The International Public Sector Accounting Standards Board (IPSASB) recently released Key Characteristics of the Public Sector with Potential Implications for Financial Reporting, which provides background on issues affecting the development of a Conceptual Framework for public sector entities and standard setting. In particular, this exposure draft 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
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