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IFAC Update: October 2011
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November 1, 2011
The IFAC Update provides summaries of developments over the past month from the International Federation of Accountants (IFAC) and the independent standard-setting boards it supports.
IFAC News in Brief
1. Exposure Drafts and Consultation Paper Issued by IESBA and IPSASB
Please see the Open Consultations and Exposure Drafts section for more details.
2. IPSASB Releases IPSAS 32–Service Concession Arrangements: Grantor
The International Public Sector Accounting Standards Board (IPSASB) has approved a landmark new standard, IPSAS 32, Service Concession Arrangements: Grantor (IPSAS 32). Service concession arrangements provide a way for governments and other public sector entities to build the infrastructure necessary to maintain and improve critical public services. The use of service concession arrangements continues to increase due to the ongoing global financial and economic crises. Until now, public sector entities have had no international guidance on how to report such transactions.
3. IPSASB Issues Improvements to IPSASs 2011
The IPSASB has also published Improvements to IPSASs 2011. The IPSASB’s improvements project is modeled on the IASB’s annual update program. Improvements are made to existing IPSASs to maintain alignment with International Financial Reporting Standards (IFRSs), as well as other general improvements. The 2011 amendments relate primarily to improving consistency between the standards. They do not represent substantive revisions to existing IPSASs.
4. Latest SMP Quick Poll Results Released
The Small and Medium Practices (SMP) Committee’s most recent SMP Quick Poll has revealed an increased level of optimism among SMPs. While the burden of regulation continues to be a challenge, overall optimism has increased—nearly 40% of practitioners polled expect business to be better this year than it was last year, compared with only 23% who felt this way in April. The poll also showed that most SMPs continue to generate the largest part of their revenue from traditional accountancy-based services, even though many SMPs now offer business advisory services as well. For full SMP Quick Poll results, see the SMP Committee’s Publications and Resources on the IFAC website.
5. IAASB Releases Post-Implementation Review of Understanding and Implementation of ISAs
The International Accounting and Auditing Standards Board (IAASB) has released Plan for a Post-Implementation Review of the Clarified International Standards on Auditing, which is the second phase of the IAASB’s efforts to monitor the implementation of the Clarity Project’s redrafted and revised standards. The review is focused on whether the clarified ISAs are being consistently understood and implemented in a way that achieves the IAASB’s goals in revising and redrafting them.
6. IESBA Approves Its 2011-2012 Strategy and Work Plan
The International Ethics Standards Board for Accountants (IESBA) has approved the IESBA Strategy and Work Plan, 2011-2012, which sets the direction and priorities for its activities. The work plan is focused on three key strategic areas—development of standards, adoption and implementation, and convergence—with plans to develop additional guidance for professional accountants on identifying and addressing a conflict of interest, responding to suspected illegal acts, and dealing with a breach of a requirement in the Code of Ethics for Professional Accountants (the IESBA Code), as well as considering the recommendations from a working group looking into the challenges accountants in small- and medium-sized entities and practices face in complying with the IESBA Code.
7. Forum of Firms Admits Two New Members
Two new members were recently admitted to the Forum of Firms—Baker Tilly International Limited and Nexia International. Both firms were admitted after confirmation that they have met the Forum’s membership standards, which include reporting that they have implemented a globally coordinated quality assurance program, have policies and methodologies based on International Standards of Auditing, and have met other specific requirements of the Code of Ethics for Professional Accountants. For more information, please see the press release and the Forum of Firms website.
8. Peter Wolnizer Appointed Chair of the IAESB for 2012-2014 Term
Peter Wolnizer has been appointed as the new Chair of the International Accounting Education Standards Board (IAESB) after confirmation by the Public Interest Oversight Board. The appointment will be effective January 1, 2012 for the 2012-2014 term. Professor Wolnizer is a professor of accounting at the University of Sydney (Australia), where he has served as the Dean of the Faculty of Economics and Business for 12 years. He also previously served a three-year term on the IAESB from 2004 to 2006, and chaired the Education Committee of CPA Australia from 2000 to 2009. Professor Wolnizer currently serves as CPA Australia’s International Higher Education Advisor.
9. IFAC Makes Recommendations to G-20 in Pursuit of Global Economic Stability
In a recent letter to the G-20, IFAC issued a call for institutional changes and urged pursuit of a coordinated long-term approach to promote global economic stability and greater fiscal sustainability. The letter, issued prior to the G-20 meeting in Cannes, France, November 3-4, 2011, encourages a focus on:
? addressing public sector debt problems by encouraging review of institutional changes in public sector financial management and adoption of accrual-based accounting;
? maintaining momentum for regulatory convergence, including adoption and implementation of international standards; and
? supporting integrated reporting and the work of the International Integrated Reporting Committee.
The letter to the G-20 with the full recommendations is available on the IFAC website.
10. New Chair For IESBA Sought
On behalf of the International Ethics Standards Board for Accountants (IESBA), IFAC is seeking a new Chair of the IESBA to serve on a remuneration basis beginning in January 2013. The IESBA Chair is appointed for a three-year term by the IFAC Board, with the approval of the Public Interest Oversight Board. The Chair will lead the direction of the IESBA and facilitate the deliberative and consultative process that underpins the authority of the IESBA. For further information on the position, please see the press release and the Call for Applications, Chair of the IESBA. Applications are due by February 10, 2012.
11. IFAC Submits Final Report to the G-20 on Behalf of the Private Sector Taskforce
As part of the Private Sector Taskforce of Regulated Professions and Industries, IFAC put forward the Private Sector Taskforce (PSTF) Report to the G-20 Deputies, which calls on the G-20 to promote economic stability through regulatory convergence and presents a set of recommendations on how to promote convergence from the perspective of a number of financial professions and industries. Coordinated by IFAC, the PSTF was established in May 2011, at the request of the Presidency of the G-20, to provide an analysis of the development of financial policy and regulation in order to facilitate economic stability in the world’s capital markets.
12. Forum of Firms Holds International Symposium on Audit Quality
The Forum of Firms recently held an international symposium to share perspectives from various stakeholders on audit quality. The symposium gathered experts to discuss key auditing issues in order to support work currently being undertaken by the International Auditing and Assurance Standards Board (IAASB), which is working to develop an international framework for audit quality. Attendees debated the expectations of auditors by investors, regulators, and management, as well as the role those charged with governance have in contributing to audit quality. For more information on the IAASB’s framework project, see the Audit Quality project webpage.
Recent Events
1. IFAC President Participates in EARNet Symposium
IFAC President Göran Tidström, recently spoke at the 6th European Auditing Research Network (EARNet) Symposium in Bergen, Norway, hosted by the Norwegian School of Economics. Mr. Tidström’s presentation focused on Audit Firm Governance.
2. IPSASB Member Speaks at University of Windsor Graduation
International Public Sector Accounting Standards Board (IPSASB) member Sheila Fraser, the former Auditor General of Canada, recently spoke at the University of Windsor (Canada) fall graduation ceremony, telling graduates to enjoy their work while staying true to their values, and to speak the truth. She also counseled the graduates to “not be so fixated on a goal that you miss an opportunity to go in a new direction.” Ms. Fraser was also awarded an honorary degree from the University during the ceremony. For more information, please see The Windsor Star and the University of Windsor for a video of the ceremony (session two, minute 25).
3. CIMA World Conference Includes Address by IFAC Chief Executive
Ian Ball, IFAC Chief Executive Officer, recently spoke at the Chartered Institute of Management Accountants (CIMA) World Conference 2011, held in Cape Town, South Africa. Mr. Ball spoke during the Finance and Its Future Challenges session, which addressed how the role of finance professionals is constantly evolving and how organizations can position themselves ahead of the pack. Mr. Ball discussed how professional accountants in business are driving sustainable organizational success. For more information on the topic, please see Competent and Versatile: How Professional Accountants in Business Drive Sustainable Organizational Success.
4. IAASB Chairman Participates in Auditing Conference in Poland
Prof. Arnold Schilder, Chairman of the International Auditing and Assurance Standards Board (IAASB), recently spoke during the Krajowa Izba Biegłych Rewidentów (Polish National Chamber of Statutory Auditors)’s 12th Annual Auditing Conference, The Influence of ISAs [International Standards on Auditing] on the Audit Process in Poland, in Jachranka, Poland. Prof. Schilder spoke during one of the plenary sessions, which addressed international experiences in the implementation of ISAs. Prof. Schilder’s presentation spoke to the growing momentum for use and acceptance of the clarified ISAs and provided effective implementation tools and resources. His presentation also provided insights into the IAASB’s current and future initiatives.
5. IFAC Contributes to UNCTAD ISAR Session on the Importance of Capacity Building for High-Quality Financial Reporting
Mark Allison, Chair of the International Accounting Education Standards Board (IAESB), recently participated in the United Nations Conference on Trade and Development (UNCTAD) 28th Session of the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) in Geneva, Switzerland. The focus of this year’s session was the importance of capacity-building activities in improving countries’ positions in international markets and attracting investors. During the session, UNCTAD presented its Capacity-Building Framework For High Quality Corporate Reporting, a practical quantitative guidance tool designed to assist developing countries in identifying gaps in their accounting and reporting systems and priority areas for capacity-building and technical assistance in this area. Based on international benchmarks and good national practices, this Framework tool covers financial and non-financial aspects of corporate reporting, including environmental issues, corporate social responsibility, and corporate governance disclosure. Additional information on the event is available through UNCTAD’s website.
6. Integrated Reporting Discussed by IFAC President at FSR Conference
Göran Tidström, President of IFAC, recently gave the keynote address at the FSR – danske revisorer (Danish Institute of Auditors)’s annual financial reporting conference, which took place on Denmark’s National Accounting Day. Mr. Tidström discussed the need and global push for integrated reporting, the International Integrated Reporting Committee and its recently released Towards Integrated Reporting: Communicating Value in the 21st Century, and the role IFAC plays in the discussion.
7. SMP Committee Chair Speaks at FIDEF Conference
Small and Medium Practices (SMP) Committee Chair Sylvie Vogel spoke at Fédération Internationale des Experts-Comptables et Commissaires Aux Comptes Francophones (International Federation of Francophone Accountants and Auditors, or FIDEF)’s 30th Anniversary Conference in Paris recently. Ms. Vogel participated in one of the roundtables and discussed the role of adoption and global convergence of international standards as it relates to the needs and concerns of small- and medium-sized practices and entities.
8. PAO Development Committee Chair Attends OECD Anniversary Event
Deborah Williams, Chair of the Professional Accountancy Organization (PAO) Development Committee, recently attended the 50th anniversary of the Organisation for Economic Co-operation and Development (OECD)’s Development Assistance Committee, which coincided with the launch of the Development Co-operation Report 2011.
Open Consultations and Exposure Drafts
1. IESBA Releases New Exposure Draft for Comment
The International Ethics Standards Board for Accountants (IESBA) has released Proposed Changes to the Code of Ethics for Professional Accountants Related to the Provisions Addressing a Breach of a Requirement of the Code, which provides guidance for professional accountants on actions to be taken for any breach of the Code of Ethics for Professional Accountants. The Exposure Draft also includes a robust framework for addressing a breach of a requirement, which will increase transparency. Comment Deadline: January 23, 2012
2. IPSASB Releases New Exposure Draft and Consultation Paper, Invites Comment
The International Public Sector Accounting Standards Board (IPSASB) has issued the following Exposure Draft and Consultation Paper:
? Exposure Draft (ED) 46, Recommended Practice Guidelines Reporting on the Long-term Sustainability of a Public Sector Entity’s Finances, builds on a consultation paper issued in late 2009 and provides good practice guidelines on reporting on the long-term fiscal sustainability of a public sector entity, and emphasizes that entities may be able to draw on projections that are already being made by other bodies, which will ensure a cost-effective approach. It also provides users with information on the impact of decisions made by the reporting date under current policy. IPSASB has also released an At a Glance summary of the material in the Exposure Draft. Comment Deadline: February 29, 2012
? Reporting Service Performance Information discusses the IPSASB view that service performance information is necessary to meet the objectives of financial reporting, which is to provide information that is useful to users of General Purpose Financial Reports for accountability and decision making. The project also aims to present a principles-based approach to developing a consistent framework for public sector entities. IPSASB also released an At a Glance summary for this Consultation Paper. Comment Deadline: April 15, 2012
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