Costing Levels Maturity Model, published as a companion document to the International Good Practice Guidance, Evaluating and Improving Costing in Organizations, aims to help professional accountants decide what level of costing sophistication to use given organizational requirements and the needs of managers and employees.
The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has released a new International Good Practice Guidance publication, Evaluating and Improving Costing in Organizations, which establishes six fundamental principles that can help professional accountants and their organizations to evaluate and improve their approach to costing. The guidance recognizes the importance of distinguishing between the purposes and information needs of cost accounting to meet the demands of external reporting, cost measurement, and reporting for internal decision support. A companion document, Costing Levels Maturity Model, has also been published to help professional accountants decide what level of costing sophistication to use given organizational requirements and the needs of managers and employees.
"Professional accountants have a significant role to play in ensuring that they, and the costing models and systems they use, provide relevant information and analysis to support performance evaluation and planning and management decisions," says Roger Tabor, Chair of the PAIB Committee. "Good costing information is essential to interpret and analyze past performance. And it can be used predictively to guide decisions about many aspects of an organization's future operations. These activities are different, and the guidance is designed to help professional accountants provide valuable information to their management customers."
This IFAC guidance is targeted to professionals working in commerce and industry, as well as the public sector, education, and the not-for-profit sector. It recognizes that, when used effectively, costing can provide clear and timely information. The guidance cautions, however, that all cost information is not created equal: Highly aggregated cost information, for example, which is compiled for external reporting purposes, may not reflect such relationships closely enough to support future strategic and operational decisions.
The new Costing Levels Maturity Model can also help professional accountants exercise professional judgment to assess their organization's existing costing capability for supporting internal managerial analysis and decisions. The PAIB Committee seeks comments from professional accountants and IFAC member bodies on the model to help its continued development.
Evaluating and Improving Costing in Organizations and Costing Levels Maturity Model can be downloaded free of charge from the PAIB section of the IFAC online bookstore at www.ifac.org/store. The PAIB Committee welcomes all feedback, which can be emailed to paib@ifac.org. About IFAC IFAC (www.ifac.org) 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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce.
This International Good Practice Guidance establishes six fundamental principles that can help professional accountants and their organizations to evaluate and improve their approach to costing.
The International Federation of Accountants (IFAC) and its Small and Medium Practices (SMP) Committee welcome the release of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) by the International Accounting Standards Board (IASB). IFAC encourages its 157 member organizations to carefully consider how to use the standard in their respective jurisdictions.The International Federation of Accountants (IFAC) and its Small and Medium Practices (SMP) Committee welcome the release of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) by the International Accounting Standards Board (IASB). IFAC encourages its 157 member organizations to carefully consider how to use the standard in their respective jurisdictions.
"This global accounting standard represents a very significant step on the path to global convergence of financial reporting practices by SMEs. It will contribute to enhancing the quality and comparability of SME financial statements around the world and assist SMEs in gaining access to finance," remarks IFAC Chief Executive Ian Ball, adding, "The beneficiaries will be not only SMEs, but also their customers, clients, and all other users of SME financial statements."
IFAC, largely through its SMP Committee, has been closely following and supporting this project since its inception. It has provided input to the IASB to assist it in reaching a solution that will contribute to the quality of SME financial reporting without placing costly and unnecessary compliance burdens on SMEs.
Sylvie Voghel, chair of the IFAC SMP Committee, points out, "This standard is a significant development; however, its issuance is not the end of the story, but rather the opening chapter. Consistent and effective implementation will demand a concerted international effort to mobilize the necessary support for companies and preparers. The development of free training materials by the International Accounting Standards Committee Foundation is a very positive step in this direction."
Ms. Voghel adds, "The IASB will also need to monitor the implementation of the IFRS for SMEs and be prepared to revise and update it. Such flexibility is key to ensuring its continued relevance and usability."
IFAC is currently considering the role it can play together with its member bodies to facilitate implementation of the new standard. About IFAC IFAC (www.ifac.org) 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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce.
Introduction Good morning. I would like to thank you for inviting me to speak on this wonderful occasion, and to say how very pleased I am to be here today.
As you may know, the ICAI was one of the founding member bodies of the International Federation of Accountants, IFAC, and has always been one of our key members. So it is even more gratifying to offer my personal congratulations on ICAI's Diamond Jubilee.
I also bring greetings and congratulations from IFAC's President, Bob Bunting, and Chief Executive, Ian Ball, who cannot be here today.
I'm here to look ahead this morning, and speak to you about the changing dimensions of the accountant's role. In other words, I will speak about what is expected of our profession today and tomorrow, and how we can better live up to those expectations.
In the course of my remarks, I will tell you about a few things that the International Federation of Accountants (IFAC) and the standard-setting Boards that operate its auspices are doing to help professional accountants keep the public interest in mind as they function as accountants and auditors.
Good morning. I'm delighted to be here this morning, as Accounting Technicians Ireland unveils its new identity program-to show IFAC's support for the work you are doing and to recognize the increasingly important role of accounting technicians in business and the public sector.
I would like to congratulate ATI collectively, but especially Mr. Aidan Collins, your new president, and Ms. Gay Sheehan, your chief executive, as you take this major step forward in increasing the organization's visibility.
As you know, IFAC, the International Federation of Accountants, is the global organization for the accountancy profession. Our mission is to serve the public interest by strengthening the profession and contributing to the development of strong and stable economies worldwide.
Consistent with that mission, we recognize the important role that accounting technicians play in providing a wide range of taxation and accountancy services to organizations of all sizes and types, and in contributing to business growth and development. We are proud to call Accounting Technicians Ireland one of our own, your organization having joined IFAC in 1991 and having been a strong supporter of our work since that time.
During its meeting in Dublin, Ireland, last week, the Board of the International Federation of Accountants (IFAC) agreed to hold a G-20 Accountancy Summit on July 23-24 in London to obtain the perspectives of accountancy institutes on how the profession can best contribute to strengthening the global financial system.
"Our goal is to identify and summarize the collective viewpoints of IFAC and accountancy institutes in G-20 countries and to submit these to the G-20 Working Groups prior to their September meeting," says IFAC President Robert Bunting. "This will be a follow up to IFAC's letter to three G-20 Working Groups in March, in which we indicated our support of their recommendations to implement international standards, improve the international regulatory framework, and strengthen the roles of the International Monetary Fund and the World Bank."
During the meeting, Board members considered the implications of the financial crisis and heard reports from the chairs of IFAC's independent standard-setting boards on their initiatives to update and develop new international auditing, education, ethics, and public sector accounting standards, particularly in those areas that would help the profession to address issues related to the financial crisis, and to adopt and promote their adoption and use by a wide group of stakeholders. Such adoption and implementation is vital to improving the transparency of the financial system and is consistent with G-20 recommendations.
In addition, the Board discussed how IFAC can best support small and medium practices, including assisting them in addressing issues emerging from the financial crisis and increasing awareness of the role of professional accountants in business in risk management, corporate governance, and transparent financial reporting.
"In addressing the current financial crisis, IFAC has remained focused on its commitment to serving the public by strengthening the profession and working together with other constituencies-business leaders, governments, international organizations, and regulators-to strengthen financial reporting and auditing," emphasizes Mr. Bunting.
About IFAC IFAC (www.ifac.org) 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 157 members and associates in 123 countries and jurisdictions, representing more than 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.
The International Federation of Accountants (IFAC) released its 2008 annual report today, highlighting initiatives to help restore global financial stability and, in addition, describing how some of IFAC's core work-developing international standards and guidance-became even more relevant in the current economic environment.
"As a result of the crisis, some of the ideas IFAC has been communicating for decades are resonating with greater force," said Ian Ball, Chief Executive Officer. "Chief among these is the need for convergence to global standards."
The report features messages from IFAC's immediate Past President FermÃn del Valle, IFAC Chief Executive Officer Ian Ball, and Public Interest Oversight Board Chair Professor Stavros Thomadakis, who commented, "As in past years, IFAC has continued its commitment to the public interest, both in what has been achieved already and in priorities established for the future." In addition, it includes reports from the chairs of the Consultative Advisory Groups to IFAC's independent standard-setting boards.
A key feature of the report is its Service Delivery section, which compares IFAC's planned services with those delivered in five areas:
Standards and Guidance
Promoting Quality
International Collaboration Activities
Representation of the Accountancy Profession in the Public Interest
Information Services
"This section of the annual report-which comprehensively describes the services delivered by IFAC in 2008-is critical in demonstrating IFAC's accountability to its stakeholders," said Mr. Ball, adding, "For this reason, we have sought and received assurance from our independent auditors about the reliability of this information."
The annual report describes the actions taken, over the past year, by IFAC and its standard-setting boards in advancing convergence of auditing, ethics, and public sector accounting standards; revising and updating the independence standards of the Code of Ethics for Professional Accountants; establishing a new framework for International Education Standards; and developing new benchmark guidance for professional accountants in business, as well as for small- and medium-sized practices.
About IFAC IFAC (www.ifac.org) 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 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. In addition to setting international public sector financial reporting standards through the IPSASB, IFAC, through its independent standard-setting boards, sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high-quality performance by professional accountants in business.
Speaking yesterday to staff at the World Bank in Washington, D.C., Robert L. Bunting, President of the International Federation of Accountants (IFAC), said that the global accounting profession, with the support of the World Bank, must move ahead decisively with implementing a single set of high-quality international financial reporting and auditing standards. "Implementation is vital to strengthening global financial systems, especially during this time of economic crisis," stated Mr. Bunting.
He said that IFAC is committed to working closely with the World Bank and other institutions to deliver assistance efficiently where it can have the greatest impact. He cited two critical areas where the two organizations must build on current synergy:
To establish the appropriate professional accounting infrastructures and legal and regulatory mechanisms in developing and other countries; these are necessary pre-requisites for the effective implementation of standards; and
To urge reforms of public sector financial management systems, encouraging increased government accountability and the adoption of accrual accounting where resources permit.
Mr. Bunting emphasized IFAC support for the extension of work in these areas by the World Bank and the International Monetary Fund.
He also noted that IFAC has called on the G20 to support the World Bank's Reports on the Observance of Standards and Codes (ROSC) initiative as a tool to assess a country's financial reporting architecture and measure the future effectiveness of economic reforms resulting from the economic crisis.
In his remarks, Mr. Bunting also pointed out that small- and medium-sized entities (SMEs) and micro-entities require special attention. Some of these entities will be the next Microsofts, Googles, and IKEAs, contributing new jobs, innovation, and wealth to national and international economies if they are allowed to innovate and grow. "SMEs face challenges that are exacerbated in times of economic crisis-the ability to obtain capital and the rising costs of fuel, supplies, and other factors of production," Mr. Bunting explained. "We must take care not to further exacerbate these challenges through unnecessary and inappropriate re-regulation of the private sector and we must consider the cost-burden of their meeting regulatory and compliance requirements."
While IFAC-with 158 members in 123 countries and jurisdictions-is known for its work in establishing international standards for auditing, education, ethics, and public sector accounting, Mr. Bunting pointed out that one of its less-recognized roles will increase in importance in the coming years: as a facilitator and driver of the adoption and implementation of high-quality international standards.
"IFAC is committed to providing leadership on implementation issues by encouraging and facilitating collaboration among firms, practitioners, member bodies, regulators, and other stakeholders," stated Bunting, adding, "To do so effectively, the world must agree on a single set of standards."
To view Mr. Bunting's full speech, go to the IFAC Media Center at https://www.ifac.org/MediaCenter/?q=node/view/638. About IFAC IFAC (www.ifac.org) 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 158 members and associates in 123 countries and jurisdictions, representing more than 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.
1) The Financial Crisis and the Opportunities for Change
A. Rahm Emanuel, President Obama's White House Chief of Staff, has stated, "Never let a serious crisis go to waste....it's an opportunity to do things you couldn't do before." It is certainly too great a crisis for IFAC to sit out. There are opportunities that we and other public interest enterprises cannot afford to miss. In IFAC's case:
Recognition of the importance of accounting and auditing is at a high point.
The interconnectedness of the world's financial markets and economies has been demonstrated in a resounding way.
The concern for a "level playing field" in the financial markets has created momentum for convergence of financial standards.
B. The Financial Crisis is a game changer for IFAC, as well as for other international institutions like the World Bank. We must act now and do so decisively to counteract the crisis as much as possible. For IFAC, we are faced with two tranches of economic reform:
In one tranche are those working to stabilize banks and improve the flow of credit; this is an area in which IFAC's role is that of a minor player;
In the other tranche are those working on the re-regulation of financial markets; here, IFAC has a major role to play.
