CMA as a Game Changer in Supporting Sustainable Strategies: Risk Management

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CMA as a Game Changer in Supporting Sustainable Strategies: Risk Management

  1. 1. CMA as a game changer insupporting sustainablestrategies: risk managementVincent Tophoff, InternationalFederation of Accountants (IFAC)ICAI National Cost ConventionNew Delhi, IndiaMarch, 2012 Page 1 | Confidential and Proprietary Information
  2. 2. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management Overview • IFAC and its PAIB Committee • IFAC’s work on risk management and internal control • Recent developments in risk management and internal control: • Global Survey on risk management and internal control • Revision of the COSO Framework on Internal Control • Development of implementation guidance to the ISO Risk Management Standard • IFAC’s International Good Practice Guidance (IGPG) on Evaluating and Improving Internal Control in Organizations • Next steps Page 2 | Confidential and Proprietary Information
  3. 3. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management The International Federation of Accountants (IFAC) is: • The global organization of the accountancy profession • 164 member bodies and associates in 125 countries • 2.5 million professional accountants in public practice, commerce, industry, financial services, the public sector, education, and the not-for-profit sector • Public interest focused More than half are in this box. We call them PAIBs and the PAIB Committee exists to support them Page 3 | Confidential and Proprietary Information
  4. 4. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management What IFAC does: • Establish and promote adherence to high quality professional standards • Further adoption and implementation of standards • Support the global development of the accountancy profession • Provides a global voice and promotes the value of professional accountants worldwide • Helps its members support professional accountants in business and small and medium practices Page 4 | Confidential and Proprietary Information
  5. 5. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC’s PAIB Committee >Topic Areas of Importance: • Governance and ethics • Risk management and control • Sustainability and corporate responsibility • Financial and performance management • Business reporting • Promoting and contributing to the value of PAIBs Ergo: The CMA/PAIB as a game changer in supporting sustainable strategies! Page 5 | Confidential and Proprietary Information
  6. 6. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC Risk Management & Internal Control > Activities • Collaborating with experts (among others with ICAI) on the development of guidance for CMAs/PAIBs on risk management and internal control • Participating in global risk management and internal control standard setting organizations (e.g., COSO & ISO) • Engaging in dialogue with the various issuers of governance codes around the globe (e.g., OESO, G20, UNCTAD, and Ministry of Corporate Affairs of India) Page 6 | Confidential and Proprietary Information
  7. 7. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC Risk Management & Internal Control > Publications • Defining and Developing an Effective Code of Conduct for Organizations • Internal Control from a Risk-Based Perspective interviews with CMAs/PAIBs • Evaluating and Improving Governance in Organizations a framework for how CMAs/PAIBs can contribute to evaluating and improving governance in organizations • Integrating the Business Reporting Supply Chain interviews with 25 prominent business leaders • IFAC’s Global Survey on Risk Management and Internal Control— Results, Analysis, and Proposed Next Steps • Evaluating and Improving Internal Control in Organizations • All IFAC Publications free-of-charge at www.ifac.org Page 7 | Confidential and Proprietary Information
  8. 8. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management Global Survey on Risk Management and Internal Control—Results, Analysis, and Proposed Next Steps • Received over 600 responses from around the globe (29% or 5% from CMAs and other experts from India) • More awareness of the benefits of risk management and internal control systems should be created • Risk management and internal control systems should be better integrated into organizations‟ overall governance, strategy, and operations • Risk management and internal control requirements and guidelines should be further aligned internationally Page 8 | Confidential and Proprietary Information
  9. 9. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC participation with COSO (1) • Committee of Sponsoring Organizations of the Treadway Commission (COSO) • Providing thought leadership through the development of frameworks and guidance on enterprise risk management and internal control • Through Frameworks on Enterprise Risk Management and Internal Control (widely used for SOX certification) Page 9 | Confidential and Proprietary Information
  10. 10. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC participation with COSO (2): Framework Page 10 | Confidential and Proprietary Information
  11. 11. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC participation with COSO (2) • Revision of the COSO Internal Control Framework to: – Enhance and clarify application of Framework in todays business and risk environment – Codify the Framework criteria in 17 principles for development of systems of internal control and in evaluating the effectiveness – Expand to internal and non-financial reporting guidance • Exposure draft available at www.coso.org (until March 31) • Push from PAIB Committee for more leading edge thought leadership in area of risk management and internal control Page 11 | Confidential and Proprietary Information
  12. 12. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC participation with ISO 31000 (1) • International Standards Organization (ISO) developed the standard ISO 31000:2009 Risk Management • Provides principles and generic guidelines on risk management • Can be used by any public, private or community enterprise, association, group, or individual • Can be applied to any type of risk, whatever its nature, whether having positive or negative consequences Page 12 | Confidential and Proprietary Information
  13. 13. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC participation with ISO 31000 (2): Principles • Creates value • Integral part of organizational processes • Part of decision making • Explicitly addresses uncertainty • Systematic, structured and timely • Based on the best available information • Tailored • Takes human and cultural factors into account • Transparent and inclusive • Dynamic, iterative and responsive to change • Facilitates continuous improvement Page 13 | Confidential and Proprietary Information
  14. 14. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC participation with ISO 31000 (3): Process Page 14 | Confidential and Proprietary Information
  15. 15. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management Global Crisis: • Ethical flaws • Governance in name but not in spirit • Regulatory overload, leading to legalistic compliance • Risk & control systems too narrowly focused Conclusions: • Appropriate application of risk management and internal control standards and principles is often the problem • CMAs/PAIBs support their organizations in evaluating and improving their risk management and internal control Page 15 | Confidential and Proprietary Information
  16. 16. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IFAC’s International Good Practice Guidance • Evaluating and Improving Internal Control in Organizations (exposure draft) • Designed to establish a benchmark for good practice in maintaining effective internal control in response to risk, and help CMAs/PAIBs and their organizations create a cycle of continuous improvement for their internal control systems Page 16 | Confidential and Proprietary Information
  17. 17. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management IGPG Principles > Good Internal Control Should: • Support the organization’s objectives • Define clear roles and responsibilities • Link to individual performance • Ensure sufficient competency • Support organizational culture • Respond to risk • Be communicated regularly • Be monitored and evaluated regularly • Provide for accountability and transparency Page 17 | Confidential and Proprietary Information
  18. 18. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management Next step > Further Global Alignment of Guidelines • IFAC facilitates further global alignment of risk management and internal control guidelines • Through bringing various risk management and internal control standard setting organizations (and their guidelines!) closer together • As per the outcomes of our survey! Page 18 | Confidential and Proprietary Information
  19. 19. ICAI National Cost ConventionCMA as a game changer in supporting sustainablestrategies: risk management Questions? • Many thanks for your interest • Happy to answer your questions Page 19 | Confidential and Proprietary Information
  20. 20. • For further information please contact:• Vincent Tophoff at vincenttophoff@ifac.org• Visit www.ifac.org Page 20 | Confidential and Proprietary Information

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