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SMP eNews - August 2011
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August 8, 2011
August SMP Quick Poll Now Open!
Are you a practitioner in a small- or medium-sized (SMP) practice? Then take the SMP Quick Poll! The poll should take only three minutes to complete, and the results will be highlighted in the next issue of SMP eNews.
This edition of the poll features questions on business advisory and auditor reporting, in addition to repeating a few questions from our first two polls in order to gather trending data, which we will analyze and present in a composite report at the end of the year. Polling will close on September 9, 2011.
1. Quick Poll Reveals Burden of Regulation as Top Challenge for SMEs and SMPs
The second SMP Quick Poll elicited 440 responses over a period of three weeks (April 27, 2011 to May 19, 2011). In this edition, burden of regulation replaced economic uncertainty (cited in the January poll) as the most cited "biggest challenge" faced by practitioners' small- and medium-sized entity (SME) clients. About one-quarter of respondents indicated that economic uncertainty is still the biggest challenge faced by SMEs.
Similarly, when asked about the most important issue facing their practices right now, nearly half the respondents cited keeping up with regulations and standards (44%), which was followed by attracting and retaining clients (26%). The aspect of regulation that poses the greatest challenge for both small- and medium-sized practices (SMPs) and their SME clients is pace of change. See the full report here: April/May Poll Results.
The IFAC SMP Quick Poll aims to take a snapshot of the key issues confronted by SMPs and their SME clients, and to help raise awareness of the SMP community and its vital role in supporting small business and shaping policy. The SMP Committee is issuing the poll quarterly throughout 2011.
Thank you to everyone who participated in our first two polls and to those member bodies and regional organizations that published the polls in their newsletters, or otherwise helped promote them. We hope you'll do the same with the August poll (see above and SMP Quick Poll).
2. IFAC Increases Support for SMPs: An Interview with SMP Committee Chair Sylvie Voghel
It's been over a year since the IFAC Board reviewed the activities of the International Federation of Accountants (IFAC) to support small- and medium-sized practices (SMPs), and made targeted recommendations for improvements and increased support based on the changing market environment and needs of our constituents. In a recent interview, SMP Committee Chair Sylvie Voghel spoke about the committee's role in implementing the recommendations, its initiatives and activities, and provided an update on progress made so far.
Ms. Voghel concludes with a call to action, emphasizing this year's focus on increasing the engagement of IFAC's member bodies and their SMP members: "The IFAC SMP Committee is here to champion the cause of SMPs and represent the global SMP constituency. However, in isolation, its influence is limited; effective and enduring implementation of the IFAC Board recommendations depends upon a collective effort by IFAC, its member bodies, and the willingness of SMPs to engage, get involved, and speak with a single voice at the national, regional, and global level."
Visit the SMP Committee page to learn more about the committee and to access their Strategy and Work Plan 2011-2014.
3. IFAC SMP Committee Releases Updated Quality Control Guide
The SMP Committee is proud to present the third edition of its comprehensive implementation guide: the Guide to Quality Control for Small- and Medium-Sized Practices, 3e (August 2011). 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.
The third edition of the guide features enhancements to the two sample manuals as well as other refinements for clarity and consistency with ISQC 1. First released in 2009 and developed with CGA-Canada, the guide contains the requirements set out in the standard in addition to implementation guidance, including discussion material and a case study that can be used as a basis for education and training. With a practical "how-to" approach, the guide is designed to help practitioners develop their firms' quality control systems.
For additional guidance, see the article, Tips for Cost-Effective ISQC 1 Application, which summarizes key elements of the standard and features five tips for successful implementation. The updated guide is available in the SMP Publications and Resources area of the IFAC website.
4. New Website Coming Soon
We are currently in the process of redesigning the IFAC website to better suit your needs. The new site will feature a clean and modern design, a more intuitive architecture/navigation, expanded content, and topical and timely issues and insights. Since our information will be organized around issues and outputs--and include cross-referencing and tagging--it will be easier to find the information you're looking for, as well as related resources.
Along with the rest of the site, the content and design of the International Center for Small and Medium Practices will be enhanced. The landing page will now host a live SMP Twitter feed; a "Spotlight On" area will highlight recent publications and developments; and the SMP Discussion Board will be refreshed. We hope you will participate!
We're looking forward to launching the site later in 2011, and to hearing your feedback.
Meetings and Events
5. IFAC-FEE SME Regulation Roundtable
The Small and Medium Practices (SMP) Committee and the Fédération des Experts Comptables Européens (FEE) recently co-hosted a debate on regulation for small- and medium-sized entities (SMEs). The event aimed to raise delegates' awareness of regulatory challenges facing the SMP community and to discuss possible solutions to address them. 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 in general on their SME clients and SMPs (see Ms. Voghel's speech and slides).
Delegates considered the following questions: What needs to be regulated and to what degree? What principles should be observed in developing accounting and auditing regulations that will affect SMEs and SMPs? And, what is the appropriate balance between principles, rules, and reliance on professional judgment? Delegates also considered the benefits of good regulation.
Ultimately, participants agreed on the need for "smart" regulation--that is, regulation that imposes a burden proportionate to the size and complexity of the entity, that is relevant to the particular needs and circumstances of SMEs and SMPs, and that changes at a pace that is practicable. Delegates recognized that such regulation is beneficial in promoting transparency, efficiency, and sustainability among SMEs.
6. Belgian Member Bodies Host SMP Debate
Over dinner following the IFAC-FEE Regulation Roundtable, SMP Committee members participated in an SMP debate organized by Belgian IFAC member bodies Institut des Experts Comptables et des Conseils Fiscaux and Institut des Réviseurs d'Entreprises. The debate focused on how accountants and auditors can better serve SMEs. Participants discussed how to communicate the value of an SME audit and other assurance services in addition to the need for practices to consider expanding into business advisory services, as SMEs are increasingly demanding these services from
7. Recent SMP Committee Speeches and Videos
Slides and speeches from several of the committee's many recent speaking engagements are now available:
In July, Sylvie Voghel presented the results of the April SMP Poll at the IFAC-FEE Regulation Roundtable (see her speech and slides).
In May, Bernard Scicluna spoke at the European Federation of Accountants and Auditors for SMEs (EFAA) Conference on non-audit services to SMEs (see his presentation).
In March, the SMP Committee held its annual SMP Forum in Istanbul, Turkey. Videos of sessions 1-3 and interviews conducted by SMP Committee Deputy Chair Giancarlo Attolini are available in the IFAC Media Center.
8. SMP Committee Meeting Highlights
The last SMP Committee Meeting was held July 7-8, 2011 in Brussels, Belgium. Agenda items included, among others, strategic planning for the next three years, recent comments submitted to the International Auditing and Assurance Standards Board (IAASB), and the status of the revisions of the three Guides for SMPs: the Guide to Quality Control for SMPs (QC Guide), the Guide to Using ISAs in the Audits of SMEs (ISA Guide), and the Guide to Practice Management for SMPs (PM Guide). The updated QC Guide has been released (see above) and the other two are planned for later this year. For more highlights from the meeting, see the SMP Committee Meetings page of the IFAC site. The next meeting will be held in October 27-28, 2011, in New York (US).
Standards and Guidance
9. SMP Committee Contributes To Standard Setting
The SMP Committee will contribute to the following consultations from the International Auditing and Assurance Standards Board (IAASB), which are currently open for comment. Given their relevance and importance, the SMP Committee encourages SMPs and SMEs to respond as well.
A) Proposed International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, requests examples of assurance engagements currently being undertaken in practice and the scalability of requirements, which is of particular importance to SMPs and SMEs. The comment deadline is September 1, 2011.
B) Enhancing the Value of Auditor Reporting: Exploring Options for Change explores possible options for enhancing the quality, relevance, and value of auditor reporting on an international basis. Auditor reporting is also addressed in the August SMP Quick Poll (see above).
The Consultation Paper asks whether or not the proposed changes address the needs of users of SME financial statements, which may be different from the needs of users of larger entities' financial statements. The comment deadline is September 16, 2011.
See Exposure Drafts and Consultation Papers to view all consultations and responses from the SMP Committee and others. Comments are posted after the comment period has closed.
10. Developments with IESBA SME/SMP Working Group
Last fall, the International Ethics Standards Board for Accountants (IESBA) formed the SME/SMP Working Group to help address the unique and challenging issues faced by this constituency in complying with the IESBA Code of Ethics for Professional Accountants (the Code). At their June meeting, the IESBA reviewed the group's preliminary findings and recommendations, which include developing additional guidance to deal with specific requirements in the code and considering expanding the Code to deal more specifically with non-assurance services, particularly tax services, in the future. To access the entire preliminary report, see the background papers from the June meeting.
Next, the Working Group will address the IESBA's feedback and conduct interviews to validate their initial findings. The group plans to present a final report at the IESBA's October meeting.
11. New XBRL Paper Released by IFAC and ISACA
The IFAC Professional Accountants in Business (PAIB) Committee and ISACA recently published a paper on eXtensible Business Reporting Language (XBRL), a universal language for business reporting that is gaining momentum globally. Leveraging XBRL for Value in Organizations discusses the benefits of using XBRL and provides guidance for accounting and assurance professionals in helping their organizations gain value from it. The paper explains how XBRL can benefit SMEs specifically by helping to reduce the burden of regulation caused by the requirements, in many jurisdictions, to report to numerous regulators and other agencies. To access the paper, see the PAIB Publications and Resources area of the IFAC website.
12. IFRS for SMEs: Implementation Group Releases Final Q&As
In June, the International Accounting Standards Board (IASB)'s SMP Implementation Group released Q&A 2011/01 Use of the IFRS for SMEs in a Parent's Separate Financial Statements. The guidance addresses reporting for a parent entity that does not have public accountability.
The SMP Implementation Group, on which SMP Committee member Ricardo Rodil and Technical Advisor Robin Jarvis participate, assists the IASB on implementation matters related to the IFRS for SMEs, including developing guidance to address specific questions that arise from those implementing the standard. The group has additional Q&As that are currently open for public consultation. To learn more see the IASB website.
For more information about any of the items mentioned above or other information about the SMP Committee, please contact communications@ifac.org.
About the SMP Committee
The SMP Committee of the International Federation of Accountants represents the interests of professional accountants operating in small- and medium-sized practices and other professional accountants who provide services to small- and medium-sized entities. The committee develops guidance and tools, and works to ensure the needs of the SMP and small- and medium-sized entity (SME) sectors are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce. Through its independent standard-setting boards, IFAC sets international ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high-quality performance by professional accountants in business.
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