The latest IFAC SMP Quick Poll showed that the vast majority (73%) of the nearly 4,000 small- and medium-sized accounting practices (SMPs) surveyed are either currently providing or have plans to provide sustainability services to their clients, suggesting that there’s a sizeable market for these services among the small businesses that SMPs typically serve.

Of those who offer sustainability services, many offer more than one service; the most common service provided, indicated by over 75% of respondents, is advisory services. Reporting and assurance are the next most commonly provided services with about 50% and 40%, respectively.

“The widespread provision of sustainability services suggests that small businesses are increasingly recognizing the tangible benefits of operating more sustainably. This, in turn, seems to be fueling a desire to seek advice from their professional accountants,” commented SMP Committee Chair Giancarlo Attolini. “SMPs can help their SME clients in many ways, for example, advising on the costs and benefits of behavioral changes aimed at reducing waste, appraising potential investments in alternate sources of energy, and assisting with the implementation of an environmental management system (EMS). This is a large and growing area of demand that SMPs need to be prepared to meet.”

Results varied somewhat by size of practice and region. The larger the size of the SMP, the more likely it was to be offering sustainability services. More than half of the practices with 21 or more professional accountants currently offer these types of services, compared to 37% of sole practitioners. By region, Asia and Africa/Middle East were most likely to offer sustainability services, while Central/South America and Australasia/Oceania were the least likely.

The report also includes results on the biggest challenges facing SMPs and their clients, among other topics. As in previous polls, burden of regulation and economic pressures ranked highest. However, tensions around rising costs, competitive stresses, and keeping up with technology gained in importance. This changing mix suggests that SMPs are enjoying a more favorable economic climate and planning for growth.

See the full report in the SMP Committee area of the IFAC site: www.ifac.org/SMP. Due to different response rates in different geographic areas, results may not be statistically representative of global or regional populations of SMPs.

The mid-year 2013 poll received 3,678 responses and was conducted in 16 languages from May 29 to July 8. The poll, conducted twice annually, is intended to take a snapshot of key challenges and trends influencing SMPs globally. IFAC wishes to thank the many member and regional organizations that helped with translation and distribution of the poll.

About the SMP Committee
The SMP Committee of the International Federation of Accountants (IFAC) represents the interests of professional accountants operating in small- and medium-sized practices (SMPs). The committee develops guidance and tools and works to ensure the needs of the SMPs 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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

This report summarizes the results of the IFAC SMP Quick Poll, conducted May 29-July 8, 2013. This edition of the poll received 3,686 responses and was conducted in 16 languages.

The International Public Sector Accounting Standards Board (IPSASB) has issued Recommended Practice Guideline 2 (RPG 2), Financial Statement Discussion and Analysis.

Financial statement discussion and analysis assists users to understand the financial position, financial performance, and cash flows presented in an entity’s general purpose financial statements. It also enables users to gain further insights into the operations of the entity, from the perspective of the entity itself. RPG 2 provides guidance for presenting such information.

While the form and content of the information depends on the nature of the entity and its regulatory environment, financial statement discussion and analysis will generally include:

• An overview of the entity’s operations and environment;
• Information about the entity’s objectives and strategies;
• An analysis of the entity’s financial statements; and
• Risks and uncertainties related to the financial statements.

“Financial statement discussion and analysis presented in accordance with RPG 2 represents good practice,” explained IPSASB Chair Andreas Bergmann. “It sets out the status, scope, and reporting boundary for the information. RPG 2 is intended to encourage more public sector entities to provide users with financial statement discussion and analysis.”

Dr. Bergmann added, “It will promote comparability across entities that present financial statement discussion and analysis; at the same time, its flexible application will benefit entities in jurisdictions that have local requirements or regulations. The issuance of RPG 2 is an important step for the IPSASB, because it further extends our pronouncements on presentation of information beyond that presented in general purpose financial statements.

How to Obtain the RPG
To access the RPG, visit the IPSASB website. The IPSASB encourages IFAC members, associates, and regional accountancy bodies to promote the availability of these documents to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland.

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. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Auditing and Assurance Standards Board (IAASB) today released proposals to enhance the future auditor’s report. The IAASB’s Exposure Draft, Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs), responds to calls from investors, analysts, and other users of audited financial statements in the wake of the global financial crisis for the auditor to provide more relevant information in the auditor’s report based on the audit that was performed.

“We expect the proposed new and revised standards will result in substantive changes to how auditors contemplate and approach communication to users of their reports—the beneficiaries of a financial statement audit,” explained Prof. Arnold Schilder, IAASB Chairman. “These changes are critical to the perceived value of the financial statement audit and thus to the continued relevance of the auditing profession.”

The IAASB’s deliberations on the proposed new and revised ISAs were informed by international research, two public consultations, stakeholder outreach including three public roundtables held in 2012, and the 165 responses to the June 2012 Invitation to Comment: Improving the Auditor’s Report. “The signals from these inputs were clear: Change is essential. There is support for the IAASB’s direction, and for a global solution. Challenges exist, but they can be overcome,” added Prof. Schilder.

The Exposure Draft includes a new proposed ISA titled Communicating Key Audit Matters in the Independent Auditor’s Report. This proposed ISA directs auditors of financial statements of listed entities to communicate in their report those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements. “The intended outcome of this proposal is more informative audit reports, with information about the audit of the financial statements that is unique and more specific to the entity that has been audited,” noted James Gunn, IAASB Technical Director.

Among other enhancements, the IAASB is also proposing requirements for auditors to include specific statements about going concern in their reports, to make an explicit statement about the auditor’s independence from the audited entity and, for listed entities, to disclose the name of the engagement partner in the auditor’s report. The Exposure Draft includes example reports that illustrate the application of the proposed new and revised ISAs in various circumstances.

How to Comment
The IAASB invites all stakeholders to respond to this Exposure Draft, which includes specific questions for respondents on key aspects of the proposals and highlights areas of focus for various stakeholders in responding to the Exposure Draft. To access the Exposure Draft and submit a comment, visit the IAASB’s website at www.iaasb.org. Comments on the Exposure Draft are requested by November 22, 2013.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC).

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. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Public Sector Accounting Standards Board (IPSASB) has issued Recommended Practice Guideline 1 (RPG 1), Reporting on the Long-Term Sustainability of an Entity’s Finances. RPG 1 provide guidance on reporting on the long-term sustainability of a public sector entity’s finances over a specified time horizon in accordance with stated assumptions on policy and demographic and economic variables.   RPGs are a new type of publication that provides guidance on the broader aspects of financial reporting that are outside the financial statements.

The sovereign debt crisis brought into sharp focus the importance of the fiscal condition of governments and other public sector entities to the global economy. Concerns persist about the ability of governments to meet debt servicing obligations. The extent to which governments can maintain their current levels and quality of service delivery and meet social benefit program obligations—without raising taxes and contributions or increasing debt to unsustainable levels—is a major economic and social issue.

Although such concerns have generally existed in nations with well-established social programs, there is a growing realization that they also extend to fast-developing nations that have recently established such programs.

Policies and decisions current as of the reporting date have a long-term impact on future inflows and outflows of resources. Information on the consequences of such policies and decisions supplements information on liabilities, expenses, assets, and revenue in the financial statements. Flows that are captured by long-term fiscal sustainability reporting include:

• Future tax receipts and intergovernmental transfers that do not meet the definition of an asset
• Obligations relating to social benefits programs that do not meet the definition of a liability

“RPG 1 provides straightforward guidance on presenting information about the capacity of an entity to provide social benefits at existing levels, to maintain existing taxation revenues and to meet its financial commitments,” said IPSASB Chair Andreas Bergmann. “By developing guidance on reporting information about the long-term sustainability of an entity’s finances, RPG 1 reflects the IPSASB Conceptual Framework’s position that, in order to meet users’ needs, the scope of financial reporting is more comprehensive than the financial statements.”

The development  and finalization of the RPG benefited greatly from the oversight of a task force with a wide membership, including representatives of (a) standard setters with involvement in developing guidance for reporting on fiscal condition, (b) governments that have many years’ experience reporting on long-term fiscal sustainability, and (c) supranational organizations such as the International Monetary Fund, the Organisation for Economic Co-operation and Development, and Eurostat, the statistical agency of the European Union.

How to Obtain the RPG
To access the RPG, visit the IPSASB website. The IPSASB encourages IFAC members, associates, and regional accountancy bodies to promote the availability of these documents to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland.

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. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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Co-hosted with the Institute of Certified Public Accountants of Uganda
and the Pan African Federation of Accountants 

RPG 2 provides guidance for preparing and presenting financial statement discussion and analysis. Financial statement discussion and analysis will assist users to understand the financial position, financial performance, and cash flows presented in the general purpose financial statements (“financial statements”).

RPG 1 provides guidance on reporting on the long-term sustainability of a public sector entity’s finances (“reporting long-term fiscal sustainability information”). It also provides information on the impact of current policies and decisions made at the reporting date on future inflows and outflows and supplements information in the general purpose financial statements (“financial statements”).

IFAC President Warren Allen and IIA President/CEO Richard Chambers discuss the recently signed Memorandum of Understanding with Compliance Week.