Just before his untimely death in July 2008, Rashad Malik, the Commissioner of the SEC in Pakistan, wrote a very thought-provoking article on ethics and business.

In it, he suggested that ethics, as standards of society, do not exist in a vacuum but have to be evaluated with reference to accepted thresholds, actions, and feelings. To what extent, he asked, can the regulatory environment in a jurisdiction take account of ethical issues? At first sight, regulatory environment or statutory law do not give much attention to core ethical issues. The regulation in any system does not mention ethics and no legal texts refer to ethical concerns. The regulatory environment, however, does take account of ethics, for example, through enforcement and dispute settlement outcomes, which inevitably reflect certain values about how society perceives actions.

In today’s environment our thoughts on corporate governance immediately turn to visions of boards of directors rewarding themselves with lavish bonuses or unscrupulous owners creating corporate giants without substance. The names of Madoff and Satyam are on everyone’s lips today. In the papers this week, I have seen the initials of seven people accused of swindling Dh 1.8 billion from the Dubai Islamic Bank. A year ago, we were all talking about corporate failure at the Northern Rock Building Society. And before that, the discussion over coffee would have been Enron and WorldCom.

But corporate governance is much bigger than personal gain by a few key individuals in the upper levels of a company. The core of ethical concerns with regard to international economic relations usually comprise human rights, labor standards, environmental protection, and more recently extended to cooperation on anti-terrorism, anti money laundering, and transparency.

Many large companies have ethics and compliance officers. Why? Because there are so many expectations of business and so little public agreement on what ethics means at the detailed level that companies develop Codes of Conduct by which to govern their actions as corporate citizens and  as individuals working in that corporate culture. Of course, a written Code of Conduct does not mean much. Enron was loudly acclaimed as having a model Code with its Visions and Values platform encompassing Respect, Integrity, Communication, and Excellence values statement.

Where are we today?

While businesses brace for the worst and adjust their financial and operating strategies, the indicators from an ethics perspective are equally daunting:

• Business confidence has reached a record low
• 70% of workers in one recent study admitted they have already downloaded confidential company data for future personal use if they find themselves looking for a job
• 90% of compliance, legal, finance and risk executives surveyed say they expect fraud activity to increase in 2009

It is difficult to continue talking about the value of high ethical standards and the importance of individual action when the outlook for a company is grim.

Patricia Harned is President of the Ethics Resource Center. She has helped to shape ethics training for the securities industry in the U.S. She believes the Audit Committee can be a stabilizing influence in ethical matters today.

They must be alert to the fact that conditions are ripe for financial fraud – even in your business. I was talking to one senior partner from the national office of one of the Big 4 audit firms this week. He told me that his office had 200 open files of situations where they were considering a going concern qualification as part of the audit report. In all companies that are facing this trauma, the temptation to skirt the rules will grow. Pressures rising, revenue falling and a perception that the future will only be worse are the ingredients for taking “out of the box” survival strategies too far.

Transparency should be your company mantra. The media is fixated on the economic situation and, as a result, stakeholders are developing impressions of corporate activity from sources wholly apart from the Corporate Communications Department.

I am indebted to Dr. Saidi, who is not only Chief Economist of DIFC but also the Executive Director of the Hawkamah Institute of Corporate Governance, set up here in GCC in 2006. He referred me to their 2007–2008 survey report on corporate governance in MENA. I encourage you to read it.

The key to success will be stakeholder trust, and trust is built through consistent transparency. The ethics compliance officer and audit committee should help set the tone for communication and disclosure. The Hawkahma survey identified that most, but not all, companies provide financial statements but non-financial disclosure could be improved, 32% of GCC companies do not publish an annual report in English, only 23% of companies publicly preannounce the date of their AGM, only 25% of banks and listed firms provide information on their dividend policies on line, 19% of GCC companies have no website at all, and only 2% of GCC companies hold analyst meetings or conference calls. You cannot be a credible company on the world stage if you do not communicate. We heard from Dr. Nasser Saidi earlier today about his vision of the GCC creating a common currency, becoming the third global currency, and a global capital market center. I strongly suggest that the viability of the GCC, as a global market, will be dependent on local businesses listed on that center being seen at the leading edge of good corporate governance and leading proponents of full and complete disclosure of financial and non-financial information. Only then will businesses from around the world feel confident in seeking to raise money on this exchange.

There is no one country that has a perfect system of corporate governance. We can all learn from each other. Don’t reject one country’s model on the basis that it was not made here. Take the best elements from different frameworks and adopt them to your environment. And all countries have weaknesses that need to be overcome. Whether it is the U.S. preference for having the Chairman and CEO roles held by one person, in spite of overwhelming global views that this is a bad idea, or the GCC experience that only 25% of listed family-owned enterprises have a family council in place, we can all improve. I want to recognize good governance that I have seen since I arrived in Dubai last week. The Abu Dhabi Ship Building company announced its general meeting in the papers. I was pleased to note that one of the items on the agenda was a proposal to amend the company’s Articles of Association to comply with the Corporate Governance Code for Joint Stock Companies. In the same paper, Qatar Telecom announced its annual meeting, which included a proposal to determine the remuneration of the directors for the year ended December 2008.

So where do you look for good ideas? The Organisation for Economic Co-operation and Development (OECD) published the OECD Principles of Corporate Governance: 2004. They are intended to assist governments in their efforts to evaluate and improve the legal, institutional, and regulatory framework for corporate governance in their countries, and to provide guidance and suggestions for stock exchanges, investors, corporations, and other parties that have a role in the process of developing good corporate governance. Last month IFAC published International Good Practice Guidance (IGPG) that provides a framework and principles-based guidance for the professional accountant in business and their organizations on evaluating and improving governance in organizations. It is based on the OECD principles and can be downloaded free of charge from the IFAC website. Look to Appendix B for a list of useful resources.

I am a member of the Institute of Directors in my home country of Canada. To become a director of a publicly listed company there, it is very desirable, although not yet mandatory, that you take 12–15 days of training and pass an examination run by the Institute of Directors to show you have the overall skills needed to act properly as a corporate director. The companies that provide directors and officers liability insurance are beginning to ask how many directors on a board have had this training and rewarding companies who recruit these qualified directors by lowering premiums on the D&O insurance. Those boards are a better risk.

And finally, I call on each of you to lead by example. Your credibility as a professional has taken you a lifetime to achieve. It can take a single unethical action to destroy. And not only do you destroy your own reputation, but you damage the reputation of everyone from the same professional background or holding a similar job title. Headline journalism brands us all. The 999 members of boards of directors who act ethically and apply good corporate governance practices are forgotten in the 1 case that is reported in the press.

I liked the 5 Cs of Linda de Beer’s presentation. They are worth repeating:

• Conscience – acting with intellectual honesty
• Care
• Competence – knowledge and skills, but also a willingness to be reviewed
• Commitment – diligence in the performance of duties
• Courage – to always act with integrity

Thank you.

The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has developed a comprehensive Sustainability Framework to support professional accountants and their organizations in integrating a sustainable way of thinking and working in all business processes.  The Framework illustrates how a commitment to sustainability can help to further improve an organization's products or services, motivate its people, lower its costs and enhance its reputation.The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has developed a comprehensive Sustainability Framework to support professional accountants and their organizations in integrating a sustainable way of thinking and working in all business processes.  The Framework illustrates how a commitment to sustainability can help to further improve an organization's products or services, motivate its people, lower its costs and enhance its reputation.

Designed from four different perspectives - business strategy, internal management, financial investors, and other stakeholders - the new Framework challenges conventional ways of thinking about economic, social and environmental achievements. It also promotes the injection of sustainability leadership into the full management cycle, from making and executing strategic decisions to reporting on performance to all stakeholders.

Roger Adams, chair of the PAIB Committee's Sustainability Framework Project, highlights the holistic view of sustainability taken by the Framework: "It recognizes the importance of the three main dimensions of sustainability: economic viability, social responsibility, and environmental responsibility, as well as their interconnectivity. We hope that this Sustainability Framework provides the means and motivation for professional accountants to address sustainability issues with greater vigor."

"Although the accounting sector itself might be considered a relatively low-impact sector in terms of direct environmental and social impacts, it is the accountant's involvement in the twin issues of organizational decision-making and external reporting that imposes on the accountancy profession the responsibility for understanding, absorbing and articulating the implications of the sustainable development debate," emphasizes Mr. Adams.

IFAC's Sustainability Framework is a web-based tool that allows users to easily navigate those sustainability issues that are most important to their immediate roles and to select and use those examples of good sustainability practice that can work in their organizations.

The Sustainability Framework can be accessed free-of-charge on the IFAC website.

About IFAC
IFAC (http://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 122 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. The organization, through its independent standard-setting boards, sets international ethics, auditing and assurance, education, and public sector accounting standards. IFAC also issues guidance to encourage high quality performance by professional accountants in business.

This International Good Practice Guidance provides a framework and principles-based guidance for professional accountants in business and their organizations in evaluating and improving governance. Although most organizations have a governance structure in place, it is often focused on conformance with regulations. This conformance is necessary but a governance structure should also support an organization’s efforts to improve performance. This guidance helps create a balance between performance and conformance.

As part of its ongoing commitment to support professional accountants in business and their organizations in enhancing governance and in assessing and delivering organizational performance, the International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB) Committee has released two new proposed International Good Practice Guidance documents for public comment. The proposed guidance addresses evaluating and improving governance structures and use of costing to support effective decision making.

Governance
The newly released exposure draft, Evaluating and Improving Governance in Organizations, sets out a framework, a series of fundamental principles, practical guidance, and references on how to evaluate and improve governance in organizations. The purpose of this guidance is to assist professional accountants and their organizations in creating a balance between conformance with rules and regulations and organizational performance.

Costing
The second proposed International Good Practice Guidance, Costing to Drive Organizational Performance, is designed to assist professional accountants in business in delivering useful cost information to support effective decision making and organizational performance. The proposed guidance sets out eight fundamental principles of costing that encourage a performance-based view of costing to help professional accountants in business to ensure that costing information supports forward-looking strategic and operational decisions.

"This principles-based good practice guidance addresses key strategic and financial management issues that many professional accountants in business address in their daily work," states Edward Chow, Chair of the PAIB Committee. "Our goal is to develop principles-based guidance that offers a global perspective and places professional accountants in business at the heart of driving organizational performance."

How to Comment
Comments on the two proposed guidance documents are requested by September 23, 2008. They may be viewed by going to http://www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org. They may also be faxed to the attention of the PAIB Committee Technical Manager at +1-212-286-9570 or mailed to PAIB Committee Technical Manager at 545 Fifth Avenue, 14th Floor, New York, NY 10017, USA.

All comments will be considered a matter of public record and will ultimately be posted on the IFAC website. A summary of online feedback on the proposed governance guidance will also be posted on the IFAC website.
 
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 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 standards on ethics, auditing and assurance, education, and public sector accounting. Through its Professional Accountants in Business Committee, IFAC issues guidance to encourage high quality performance by professional accountants in business.

In recent years, accountants in the external auditing profession have started assuring corporate sustainability reports. But are accountants adequately trained for this challenge, and do extant standards provide sufficient guidance? This presentation outlines current developments in external assurance on sustainability.

Distinguished guests and dearest colleagues, thank you for the privilege of speaking to you today. This is a great occasion for the Polish accountancy profession: the 100th Anniversary of the Accountants Association in Poland (AAP).

Today's celebration of this institution's centenary of life is an extremely significant event. It is a relevant occasion, especially if you consider all that's happened in the history of the country where this institution has operated during these years.

Good morning ladies and gentlemen. Thank you for inviting me to speak before you today on a topic that I think is critical to the well being of Sri Lanka and to other countries both in South Asia and worldwide: that is, the importance of corporate governance in the public sector. It is a topic that is receiving increasing attention from the media, the public and governments themselves, although it has been long been of importance to the International Federation of Accountants (IFAC).

For twenty years, IFAC has been working to improve the financial reporting and financial management of governments at all levels - national, state and provincial, and local - as well as that of other public sector entities worldwide. The fiscal accountability of governments is central to enhancing economic growth and development worldwide - one of IFAC's most important goals. Failing to hold governments to account, can, I believe, compromise and even jeopardize ongoing private sector initiatives to building and maintaining confidence in the financial reporting process, lead to friction within government management, and, in less stable environments, result in significant citizen unrest.

Thank you, Mr Birsen, for the very kind introductory remarks and good afternoon to all of you. I am pleased to be able to speak to you today on the topic of corporate governance and financial markets - a topic that continues to receive attention from investors, analysts, business leaders, regulators, and the accounting profession around the world.

This information paper provides an overview of enterprise sustainability and sets out the business/financial case for addressing sustainable development at the enterprise level in terms of the risks that sustainable development poses and the opportunities which it brings. It also seeks to identify the main sustainability related roles which the professional accountant in business might occupy, either today, tomorrow or at some more distant future time.

This information paper features interviews conducted by Robert Bruce, a leading accountancy journalist, with professional accountants operating in business throughout the world to seek their views on the role of professional accountants in business in sustainability.