The Call for Applications:Chair of the International Ethics Standards Board for Accountants (IESBA) was issued today.

The Chair will lead the strategic direction of the IESBA, serving on a remunerated basis for a minimum of 150 days per year beginning January 1, 2015. He/she will work closely with the IESBA senior staff to facilitate the deliberative and consultative processes that underpin the authority of the IESBA and the legitimacy of its standards and activities. In addition, the Chair will be involved in developing and maintaining effective relationships with national standard setters, regulators, and other key stakeholders.

The successful candidate should have effective leadership, communication, and strategic skills; demonstrated technical and professional competency; and a commitment to the IESBA and its mission to protect the public interest. He or she will have very significant and senior experience. Exposure to professional ethical issues at a national, regional, or international level would be an asset, as would familiarity with regulatory and standard-setting processes. Only individuals who possess the highest integrity will be considered. The preferred candidate is an individual who is not a professional accountant. Candidates who are professional accountants will need to demonstrate their independence from the accountancy profession.

The IESBA Chair reports functionally to the Public Interest Oversight Board on matters related to the Board’s work program and refers to the Managing Director, Professional Standards, as a resource and key source of advice.

The IESBA is an independent standard-setting body that develops and issues the Code of Ethics for Professional Accountants (the Code). The Code includes standards on auditor independence and is applicable to the actions and decisions of all professional accountants, including those in business.

For further information about the position, please see the Call for Applications: Chair of the IESBA on the IFAC website. Applications are due by June 6, 2014.

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information.

About IFAC
The International Federation of Accountants (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 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The Accountant's Carlos Martin Tornero and Vincent Huck interview industry leaders about key issues facing the profession, encompassing transparency, public sector financial management reform, MINTs, 'hot' Southeast Asia, management accounting and the ongoing regulation debate. 

The World Survey starts this year in a Central London café, where we met Warren Allen, currently presiding over the International Federation of Accountants (IFAC). As IFAC president, Allen is globetrotting the world, London being a brief stop between meetings in New York and Australia.

"This is an exciting profession. We quote 2.5 million professional accountants under IFAC membership and there are not enough of us," Allen says, taking a sip of his cappuccino.

IFAC membership could expand this year with new countries, six candidates from around the world whose identity Allen would not reveal at this stage. The accountancy profession has attained global status, and what affects international mainstream economics affects accountants too.

Accountants, especially in the West, have felt the impact of the economic crisis in the past few years. At times it looked like they had lost public trust and that their relevance in the global economy was put into question. But as the tide of the economic recession recedes and economic recovery starts to be a reality again, accountants look at playing a major role in the economy and regaining public confidence.

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The UK Department for International Development (DFID) and the International Federation of Accountants (IFAC), the global organization for the accountancy profession, today announced an agreement to develop professional accountancy organizations (PAOs) in emerging economies. The new initiative was announced at a roundtable event in London, hosted by Justine Greening, UK Secretary of State for International Development, and attended by Warren Allen, IFAC President.

Under the agreement, DFID will provide £4.935m funding to IFAC over seven years. The funding will be used to strengthen PAOs in at least 10 DFID focal countries in four regions: Asia, the Caribbean, the Middle East and North Africa, and Sub-Saharan Africa. IFAC will facilitate, coordinate, and supervise capacity building programs and technical support, including peer-to-peer support by more established PAOs, including those in the UK. These programs will build the developing country PAOs’ managerial, financial, and technical capacity so that they can drive improvements in professional and ethical standards.

“IFAC has a long history of working to build capacity and strengthen PAOs as part of our public interest mission, and we are delighted about this significant next step in that journey,” said Fayez Choudhury, CEO of IFAC. “Well-functioning PAOs ensure a sustainable supply of professional accountants that support high-quality accounting practices and financial information in both the public and private sectors. They support enhanced confidence in business and transparency in use of public funds, giving rise to increased foreign investment and donor funding and improved government accountability and transparency—and therefore are essential to economic growth and stability.”

Ms. Greening said, “The UK’s financial sector is second to none and its skills and experience can boost development across the world. By helping developing countries to manage their own resources better and attract investment we can create the jobs and growth needed to lift people out of poverty.”

IFAC and DFID are signatories of MOSAIC: Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration, which sets out the basis for improving cooperation and collaboration between IFAC, international donors, and the international development community to increase the capacity of PAOs and improve the quality of financial management systems in emerging economies.

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 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Accounting Education Standards Board has released an International Education Information Paper to help professional organizations conduct written examinations of aspiring accountants seeking qualification.

IFAC and the Institute of Chartered Accountants of Scotland (ICAS) have collaborated on this paper in order to highlight some of the key issues to be considered in developing the International Accounting Standards Board’s (IASB)’s Conceptual Framework. The IASB initiative, in taking forward the difficult challenge of reviewing and updating its conceptual framework, is welcomed. IFAC and ICAS believe that it is important to engage all financial reporting stakeholders in the debate on the Conceptual Framework, as this will potentially become the roadmap for future financial reporting.

IES 4 prescribes the learning outcomes for professional values, ethics, and attitudes that aspiring professional accountants are required to demonstrate by the end of Initial Professional Development. Professional values, ethics, and attitudes are defined as the behavior and characteristics that identify professional accountants as members of a profession. These include the ethical principles generally associated with, and considered essential in defining, the distinctive characteristics of professional behavior.

IES 3 prescribes the learning outcomes for professional skills that aspiring professional accountants are required to demonstrate by the end of Initial Professional Development. Professional skills are the (a) intellectual, (b) interpersonal and communication, (c) personal, and (d) organizational skills that a professional accountant integrates with technical competence and professional values, ethics, and attitudes to demonstrate professional competence.

IES 3 is effective from July 1, 2015.

IES 2 prescribes the learning outcomes for technical competence that aspiring professional accountants are required to demonstrate by the end of Initial Professional Development. Technical competence is the ability to apply professional knowledge to perform role to a defined standard.

It is effective from July 1, 2015.

This report is published by MOSAIC (Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration), a historic Memorandum of Understanding that sets out the basis for improving cooperation and collaboration between IFAC and the international development community that will provides the foundation for increasing the capacity of professional accountancy organizations (PAOs) and improving the quality of financial management systems in emerging economies.

Workshop Session

During the Professional Accountancy Organization (PAO) Development Committee meeting in Accra, Ghana, a half-day open workshop session was held to which representatives of Pan African Federation of Accountants (PAFA) member bodies from across the continent were invited. The aim of the session was to:

• present the IFAC Statements of Membership Obligations (SMOs) and look at the changes made during the revision process;
• allow participants to share their experiences with adoption and/or implementation of the international standards in the SMOs, regardless of the development stage of the organization and IFAC membership status; and
• familiarize all participants with the Dashboard Reports and allow them to consider the responsibilities, adoption status, and current priorities for one or more SMOs in their own jurisdiction.

Following a presentation from IFAC staff, PAO Development Committee members, observers, and guests split into three groups to focus on three different SMO aspects:

• approaches to adoption and implementation of international standards;
• implementing quality assurance; and
• establishing effective investigation and disciplinary processes.

The workshop promoted exchange between participants and provide an open forum to share experiences and ideas. Below is a summary of some of the themes of discussion.

Summary of Discussion

Approaches to adoption and implementation of international standards

Responsibility: It is unusual for a PAO to have the responsibility for every standard-setting SMO (3, 4, 5, and 7). Where the responsibility lies elsewhere, understanding the environment, including any relevant legislation and resource challenges, is key to understanding the PAO’s role in supporting the associated processes. Due to the core role of government, challenges to progress on SMO 5 (International Public Sector Accounting Standards, or IPSAS) include a range of financial and political factors that differ significantly from one jurisdiction to the next. In cases where the PAO is not responsible for education and training, the PAO should consider a formal collaboration with the relevant educational institution(s). This can allow efficient sharing of information around the International Education Standards (IES) for timely updates to curriculum and training programs, resulting in the appropriate training of high quality professionals.

Enforcement: Enforcement of a code of ethics may be challenging where PAOs have limited capacity or a limited legal mandate. A consideration may be to work in partnership with a national anticorruption body to make additional resources available and may permit legal enforcement of a code of ethics in the jurisdiction. Working with a public institution also grants a wider audience, enabling key information regarding cases to be communicated in the public interest.

Proactivity: Not all PAOs evolve in a jurisdiction where the support and development of the accountancy profession is a priority for the government and/or other stakeholders. Where legislation related to the accountancy profession does not exist at the national level, PAOs should consider how best to enhance the relevance of the profession and encourage best practice from their members. This may include amending a PAO’s bylaws and rulebook to require members to use international standards in their professional practice. Such a decision must be supported by appropriate training, tools, and guidance.

Communications: Advocacy around the importance of international standards and information-sharing activities aimed at regulators and governments, as well as the public, should be a key part of a PAO’s strategy. Establishing and maintaining dialogue with key players in the political arena can ensure the accountancy profession is on their agenda. Where responsibility for standard setting or key implementation activities lies elsewhere, clearly communicating the assistance a PAO can provide to relevant stakeholders in support of high-quality financial information is essential.

Strategic planning: The ongoing update of standards by the international standard-setting boards requires processes to be in place to ensure timely adoption and implementation at the jurisdiction level. An agreed-to plan allows for objective setting, appropriate allocation of resources, and determination of a realistic timeline for implementation. SMO Action Plans are a tool that can be used for such an organizational planning process.

Implementing quality assurance

Quality review program: When establishing a quality review program , consider assessing existing internal quality review programs for larger firms and, depending on their effectiveness, placing some reliance on those programs when conducting specific reviews. For smaller firms, a robust quality review program can be monitored and supported by the PAO, which can feed findings into development programs. Peer review is typically ineffective in small jurisdictions where the profession is close-knit and, therefore, finding independent professionals is a challenge. Regional quality assurance systems can be a solution where capacity doesn’t exist at the national level.

Stakeholder engagement: Achieving buy-in from all stakeholders is crucial. A relationship with the auditor general can ensure high-level awareness of the results of all audits. At the early stages of the program’s implementation, when dealing with a firm that falls short of requirements, sensitizing those that will be affected, rather than seeking to instantly punish, can prove most effective. Public reporting of findings at the country level to highlight key themes from reviews, for example, can also help with this process.

Continuing professional development (CPD): Due to the importance of members in practice undertaking relevant CPD, a number of PAOs have introduced percentage-based mandatory practice-related CPD as a condition of annual practicing license renewal. More generally, PAOs should ensure that a wide range of CPD training and resources are available for members to update their knowledge and skills—this is particularly vital to assist small- and medium-sized practitioners (SMPs) who may not have capacity for in-house training.

Establishing effective investigation and disciplinary processes 

Advocacy and communication: Relationships should be built and maintained with government and other regulators to publicize the role of the PAO in investigating and disciplining its members. In jurisdictions where PAO membership is not mandatory to practice, it can be of crucial importance to ensure the public understands requirements and how to access quality professionals. Penalties for practicing without a license should be significant enough to act as a deterrent. Decisions regarding publication of names of individuals found to be practicing without a license or violating other regulations should be tied to the severity of each case.

Committee composition: Legislation can negatively affect an effective investigation and disciplinary process, since smaller jurisdictions can struggle to maintain the committee composition required by law. Where appropriate, credibility of disciplinary or appeals tribunals can be enhanced through the appointment of ministry or high court officials, or by their involvement in selecting committee members, such as the chair. Public members and legal representation, in addition to the presence of accountants on the committee, can enhance objectivity and transparency.

Cooperation with regulators: Agreements with regulatory authorities can ensure appropriate flow of information around cases. Where there is overlap in the processes of a PAO and those of an independent or audit regulator, a formal relationship can help avoid duplication and may lessen administrative burden on the PAO.

Background

The IFAC Member Body Compliance Program

The IFAC Member Body Compliance Program is one of continuous development and improvement for PAOs—IFAC members and associates. It is based on the IFAC Statements of Membership Obligations (SMOs), which serve as a technical framework for PAOs to set strategic objectives. The program operates with oversight and advice from the IFAC Compliance Advisory Panel (CAP) and is subject to Public Interest Oversight Board (PIOB) review. IFAC member body development staff and the PAO Development Committee work with PAOs to support their progress in addressing the SMOs.

The Revised SMOs

The IFAC SMOs were revised and ratified by the IFAC Council in November 2012 to use “plain English” principles and express member bodies’ obligations more clearly. At a high level, the revisions include:

• clearer definition of obligations;
• greater clarity and improved flow of logic;
• a focus on adoption and implementation, aligned with IFAC’s strategy;
• an applicability framework to guide PAOs with varying levels of responsibility for SMO areas;
• the extension of the scope of external quality assurance review to apply to all audits of financial statements; and
• a clarified process of investigation and discipline with a stronger connection to SMO 1.

IFAC members and associates are required to address the SMOs by developing, executing, reviewing, and regularly updating their SMO Action Plan.

SMO Progress Reports

Dasboard Reports are prepared by IFAC staff based on an evaluation of information presented by the IFAC member or associate in their SMO Action Plan. Dashboard Reports provide a high-level snapshot of the status of a PAO and its jurisdiction at a point in time. To evaluate and monitor progress made by IFAC members and associates, Dashboard Reports use three interrelated indicators.

• The level of responsibility that the PAO has for each of the seven SMO areas.
• The adoption status (at the country/jurisdiction level) of the international standards relevant to each SMO area.
• The status of progress made by the PAO, as represented in their SMO Action Plan.

Dashboard Reports, in addition to addressing these three areas, also provide background information on the IFAC member or associate, including its size, sectors of the profession served, and a general indication of available resources and capacity.