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IFAC – Current Issues and Initiatives

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Presentation by Mario Abela , Leader, Research and Development at the at 32nd Annual Caribbean Conference, June 4, 2014

Presentation by Mario Abela , Leader, Research and Development at the at 32nd Annual Caribbean Conference, June 4, 2014

Published in: Business, Technology

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  • Since you are familiar with IFAC, you might have seen this map before. We use it to introduce newcomers to the global accountancy profession and to IFAC.

    And it works for that purpose. But what we don’t always have a chance to talk as much about is all that is going on in some of these gray places on the map. We know the map only tells part of the story—there is a great deal going that you can’t see here.

    Not just about turning the map green – that’s the start not the finish – it’s about how we support one another to build a strong and respected global profession. Increasingly we a global marketplace in both the public and private sectors so we need to respond to that but recognizing the inherent challenges!
  • 4
  • In addition to our operating lines, there are three supporting themes, and we have made great progress in those areas:

    Focus on stakeholder engagement;
    Diversification of funding; and
    Fit-for-purpose processes.

    We have implemented a stakeholder engagement process, which identifies our key stakeholders and provides an internal point-person for each. Our goal, as CEO Fayez Choudhury says, is “relentless” stakeholder engagement.

    We also have increased our focus on diversified funding as we work on a number of initiatives across the four operating lines—including more effective approaches to working with development agencies and a proposed initiative to enhance transparency and accountability in the public sector.

    We are also reconsidering all IFAC processes to determine whether they are fit for purpose.

    One of more recent achievements under this category is the approval of a new constitution at our Special Council Meeting in February. In it, we now have a document that serves the needs of the global accountancy profession and makes IFAC a stronger and more responsive organization.

    The key changes help ensure broad representation from all parts of the profession, reflect best practice and facilitate effective and efficient decision making, and clarify and reinforce the independence of the standard-setting boards.
  • 6
  • As many of you know, just a few weeks ago IFAC received a grant from the UK Department for International Development (DFID), a MOSAIC signatory, for £4.935m over seven years.
    One of the reasons we were successful in persuading DFID to help the global cause of strengthening capacity building in the accountancy profession is because we were able to show the clear connections between strong PAOs, high-quality financial reporting, economic growth, and the aid effectiveness agenda.
    This is the case IFAC has been making for years, a case you are all familiar with. But even though DFID has been involved with MOSAIC for the last two years, this was new to some.
  • One of the other key aspects we successfully explained to DFID is how important an integrated concept and plan is to making capacity building work.
    IFAC uses a methodology that enables all PAO development needs to be incorporated into a capacity building program.
    IFAC is committed to the quality of PAOs.
    PAOS are committed to the competency and capability of accountancy professionals (preparers and auditors) in collaboration with local stakeholders
    Accountancy professionals are committed to the integrity of public and private sector organizations and the quality of financial information in their local jurisdiction.

    IFAC strongly supports PAOs being recognized as the “go to” resource in this method of capacity building.

  • The integrated concept categorizes PAOs into three dimensions based on where they are in their development and evolution as a PAO to help them focus on what the most pressing issues are for their growth.

    Three dimensions
    PAO Sustainability – the strategic and financial viability of a PAO in the professional environment
    PAO Standards and enforcement – the technical, intellectual aspects of international professional standards in the context of adoption and implementation
    PAO Relevance – the ability of the PAO to achieve recognition of the relevant stakeholders in the macro- and micro-environment in the jurisdiction, both in the private and public sector.

    Helping PAOs focus on what is most relevant for where they are in their evolution as a PAO helps them growth efficiently and logically. It helps them move from an ad hoc organization to a PAO with informal practice to one with good practice to strong practice to best practice.
  • Capacity building in four regions
    Development of PAOs in all 10 DFID-focus countries

    The key to success in all of this is engagement with IFAC members, regional PAOs, accountancy groupings, and other stakeholders so we can clearly build evidence and demonstrate the role of the PAO being assisted and the impact on the economy.
  • DFID/IFAC: clarifying expectations, process, requirements

    Management systems and program team

    Country selection

    Informing interested and qualified PAO (consultants)

    Communications
  • Lest you think our work in development, capacity building, and with DFID, is the only thing IFAC is focused on, let me reassure you it is only one of our current initiatives.
  • 13
  • Accountability Now!

    High-quality financial information can help governments make better decisions.

    IFAC, in collaboration with others, is working to improve government financial transparency and accountability through the adoption and implementation of high-quality accrual-based accounting standards, i.e., IPSASs.
  • As accountants, we know that financial reporting is important, but increasingly investors and other stakeholders are demanding more.

    Integrated reporting has emerged as a major initiative to promote transparency and accountability and enhance investor/stakeholder confidence.

    We strongly support the IIRC in its efforts to integrate financial and non-financial disclosures. In addition, IFAC has signed a Memorandum of Understanding with the IIRC to promote cooperation, coordination, and alignment.

    We also recognize that multiple models exist, and global consistency is important. We must have robust international reporting frameworks and high-quality international assurance standards.

    Our initiatives in this field build on the International Integrated Reporting Council’s efforts, and underscore the accountancy profession’s important role in reporting and assuring this information.





  • Another key IFAC activity is improving the credibility of financial reporting.

    High-quality financial information makes a nation’s or region’s investment climate more attractive and facilitates business development.

    Compiling, auditing, and disseminating high-quality financial information is what we do as accountants. We serve as the foundation for that information.

    Unfortunately, debate and commentary on the quality of financial reporting often fails to recognize the complexity of the process.

    But as we know, all components of the “financial reporting supply chain”—the people, systems, processes, standards, mandated and voluntary requirements, behaviors, and interactions—need to be high quality to support strong and credible financial reporting.

    Critical analysis and potential changes are necessary at all points along the chain, with all participants having important roles to play.

  • IFAC also provides knowledge and support to accountants around the world, especially for professional accountants in business and small- and medium-sized practices, which support small- and medium-sized entities. IFAC has long supported initiatives that benefit these constituencies, developing relevant resources and guidance and working with them to raise their profiles and represent their interests.

    Recently, IFAC launched the Global Knowledge Gateway, a platform designed to bring together news, views, resources, and thought leadership for the worldwide accountancy profession.

    The Gateway
    Newly minted global hub
    Content from IFAC, our member organizations, and other notable groups and individuals
    The result of a year-long project to answer the call to better leverage IFAC’s position as the global accountancy organization
    Designed to serve IFAC’s member organizations and the profession by sharing the valuable resources members produce with a broader, global audience of professional accountants

    Allows professionals to
    access resources from around the world
    learn about emerging areas of the profession
    stay connected to the most pressing accountancy issues and news of the day
    interact by exchanging views, making recommendations, and sharing information and resources.
     
  • Nine topic areas:
    Business reporting
    Ethics
    Financial leadership & development
    Governance
    Performance and financial management
    Risk management & internal control
    Sustainability
    Audit & assurance
    Practice management
  • In closing, I would like to emphasize that IFAC understands that in order to make the positive changes the accountancy profession wants to make in the world, we must all seek to share knowledge, partner with one another, and support global, regional, and national efforts.

    IFAC will continue to support your efforts to strengthen the profession, grow national, regional, and global capacity, and develop strong and vibrant economies.

    Thank you again for inviting me to speak with you today.
  • Transcript

    • 1. Page 1 | Confidential and Proprietary Information IFAC – Current issues and Initiatives Mario Abela Leader – Research and Development ICAC Board Meeting June 4, 2014
    • 2. Page 2 | Confidential and Proprietary Information • The global organization for the accountancy profession • 179 member and associate Professional Accountancy Organizations (PAOs) • Work in the public interest to build sustainable organizations and economies • Support independent standard-setting boards Strengthening Organizations, Advancing Economies
    • 3. Page 3 | Confidential and Proprietary Information Strengthening Organizations, Advancing Economies
    • 4. Page 4 | Confidential and Proprietary Information IFAC Operating Lines • Supporting standards development • Improving quality and capacity • Supporting the profession • Global representation and advocacy
    • 5. Page 5 | Confidential and Proprietary Information • Focusing on stakeholder engagement • Diversifying funding • Evolving IFAC processes Supporting Themes
    • 6. Page 6 | Confidential and Proprietary Information Supporting Standards Development • Success stories: – 80+ government/public sector entities using/planning to adopt IPSASs – 90+ jurisdictions using/adopting clarified ISAs or using as a basis for national standards – 120+ jurisdictions using/adopting the Code of Ethics for Professional Accountants
    • 7. Page 7 | Confidential and Proprietary Information IFAC and the UK Department for International Development (DFID)
    • 8. Page 8 | Confidential and Proprietary Information IFAC is committed to the quality of PAOs Capacity Building through an Integrated Approach PAOs are committed to competency, capability, & performance of accountancy professionals • In collaboration with local stakeholders, authorities Accountancy professionals are committed to: • the integrity of public & private sector organizations and representatives • the quality of financial information
    • 9. Page 9 | Confidential and Proprietary Information • PAO Sustainability • PAO Standards and Enforcement • PAO Relevance Capacity Building through an Integrated Approach
    • 10. Page 10 | Confidential and Proprietary Information • Capacity building in four regions • Development of PAOs in 10 DFID-focus countries • Key to success: engagement leading to evidence, impact on economy What Does the DFID Funding Mean?
    • 11. Page 11 | Confidential and Proprietary Information • DFID/IFAC: clarifying expectations, process, requirements • Management systems and program team • Country selection • Informing interested and qualified PAO • Communications Next Steps for DFID and Capacity Building
    • 12. Page 12 | Confidential and Proprietary Information Additional Global Initiatives
    • 13. Page 13 | Confidential and Proprietary Information • Success stories: – ASEAN Seminar on FRSC – Convening global public sector leaders on public sector financial management – Engaging the G-20, European Commission, IFRS, and others on key matters Global Representation and Advocacy
    • 14. Page 14 | Confidential and Proprietary Information • Encouraging governmental transparency, accountability • Advocating adoption, implementation of high quality, accrual-based accounting standards – International Public Sector Accounting Standards (IPSASs) Accountability Now!
    • 15. Page 15 | Confidential and Proprietary Information Enhancing Organizational Reporting Non-financial reporting is important for: • Decision making • Promoting transparency • Discharging accountability
    • 16. Page 16 | Confidential and Proprietary Information Strengthening the Links in the Financial Reporting Supply Chain All components of the “financial reporting supply chain” need to be of a high quality to support strong and credible financial reporting.
    • 17. Page 17 | Confidential and Proprietary Information • News, views, resources, thought leadership – Access global resources – Learn about emerging areas – Stay connected to pressing news – Exchange views, make recommendations, share information and resources Global Knowledge Gateway Support for Professional Accountants
    • 18. Page 18 | Confidential and Proprietary Information • Business reporting • Ethics • Financial leadership & development • Governance • Performance and financial management • Risk management & internal control • Sustainability • Audit & assurance • Practice management Support for Professional Accountants Global Knowledge Gateway
    • 19. www.wcoa2014rome.com Will you join the global accountancy community in Rome in November 2014? www.ifac.org