They contribute to the professionProtect the public interest as proponents of good corporate governance and consistent global standardsPromote and develop knowledge, skills and competence througheducation, certification and CPD programs. Produce capable professionals.Through adoption and implementation of international professional and ethical standards they set the bar for behavior and practice of accountancyprofessionals, enhancing public trustAssistwithsound public policy guidance and advice on accountancyrelatedtopics by acting as a center of knowledge and expertiseFurther the quality of financialreportingthroughreview, investigation, and discipline of professionals.
They contribute to the economy (the bigger picture)Attract Foreign Direct Investment (FDI) – The development of capital markets requires credible and reliable financial information to build investor confidence, further sound economic and financial management, and increase the attractiveness of a country’s investment climate, which facilitates FDI and business development. Promote Growth and Development of the SME Sector – According to the Organisation for Economic Cooperation and Development (OECD), small- and medium-sized entities (SMEs) account for over 60% of gross domestic product (GDP) and 70% of total employment in low-income countries. These businesses require high-quality financial information to support business planning, facilitate access to credit, and expand operations; thus, enhancing their ability to thrive and grow. Enhance Transparency and Accountability in theUse of Public Funds – High-quality financial information in the public sector enables assessment of the impact of fiscal and monetary policy decisions; assists external reporting by governments to electorates, taxpayers, and investors; and aids internal management decisions in resources allocation (planning and budgeting), monitoring, and accountability. Improve the Design and Delivery of Vital Public Services – Utilizing the information provided through high-quality financial reporting, policymakers and others in positions of authority can improve the efficiency and effectiveness of government programs, better achieve the objectives of their design, and successfully deliver vital public services to those in need.
For our purposes today, the most important bullet point is the second. So how does IFAC contribute to the development of strong PAOs?
For our purposes today, the most important bullet point is the second. So how does IFAC contribute to the development of strong PAOs?
IFAC’s Member Body Development team includesseventechnical staff who are devoted to supportingboth the Compliance Program and PAO DevelopmentCommittee
The staff holdregional portfolios covering Africa, Americas and Caribbean, AsiaAustralasia-Oceania, Middle East; and Europe and Central Asia. Combined, they have proficiency in six languagesincludingArabic, French and Spanish.
I am sure we are all familiarwith the Compliance Program…Program and Compliance Advisory Panel (CAP) launched in 2004 as part of IFAC reforms. PIOB Oversight – Observers at CAP meetings since 2007Established the 7 Statements of Membership Obligations (SMOs) which serve as the Program’s basis and provide benchmarks for PAOsEncourage continuous improvement and developmentEvaluate the extent to which members are meeting the SMO requirementsAssist members in adopting and implementing international standards and best practicesDemonstrate progress being madePromote transparency through publication of responses on the IFAC website. IFAC’s 167 members and associates are required to participate in the Compliance Program to demonstrate that they are maintaining their good standing and addressing the requirements of IFAC membership. Through the Compliance Program IFAC gathers and publishes a great deal of information relating to the work of its member bodies around the world and the developments within national professions. This information can be leveraged by donors, regional bodies, regulators and indeed mentors interested in development of the profession.
The development activities on which IFAC focuses, primarily through the Professional Accountancy Development Committee, all serve to further develop and strengthen existing PAOs. In 2011, in-country advisory and technical assistance was provided to over 100 PAOs (including associates, members and potential members). The MOSAIC MOU between the donor community and IFAC is an historic agreement that underlies the goals and objectives of the PAO Development Committee and works to enhance donor support for the establishment and strengthening of PAOs around the world. This development has significant implications, potentially for all of us here today.
MOSAIC sets forth the basis for improving cooperation and collaboration between IFAC and international donors, as well as the rest of the international development community. MOSAIC will help organizations to align activities, focus on building the capacity of professional accountancy organizations, and achieve mutually beneficial results to create stronger systems of public financial management, higher quality accountancy information, and financial reporting, which is IFAC’s vision.The signing ceremony took place in Busan, Korea in November 2011 at the Fourth High Level Forum on Aid Effectiveness, hosted by the Organization for Economic Co-operation and Development. On February 22, 2012, the MOSAIC inaugural Steering Committee Meeting will be held in Jaipur, India. This meeting will be generously co-hosted by the Institute of Chartered Accountants of India (ICAI) and the Institute of Cost and Works Accountants of India (ICWAI). It is expected that this first meeting will build on MOSAIC’s signing and will create consensus around: the goals and objectives of MOSAIC; establishment of the MOSAIC Steering Committee; establishment of the MOSAIC Secretariat; and the proposed Work Program.In setting out the basis for improving cooperation, the agreement provides the foundations for increasing the capacity of PAOs and improving the quality of financial management systems in emerging and developing economies. It is expected that peer-to-peer relationships, such as PAO mentoring, will play a critical role in its implementation.
So what lessons hasIFAC learned through the membership application process? How might these be useful to existing and potential mentors?We have observed that often the quality of the sponsor’s report, and the depth of their understanding of the applicant, is improved significantly when a mentoring agreement has been in place.Due to the stringent requirements for membership and the need for IFAC to fully appreciate the applicant’s environment, is important that the applicant is in contact with IFAC well before an application is considered. MBD staff are keen to establish relationships with potential applicants.Where foundations are being laid through donor aid, can the PAO evidence not only current funds but its future financial viability?Is there a clear understanding of the PAO’s role in furthering the adoption and implementation of international standards and best practice in the country?Does the PAO have legal backing or can it clearly show its important position in the country’s financial reporting chain? Does it have a public interest justification? Finally, IFAC recommends a 2-3 year gap between Associate and full Member status. However, in practice a 4-5 year timeline is more realistic, and particularly where resources are low. A strong mentor with a clear understanding of the challenges would no doubt accelerate this process.
Mentoring: The IFAC Perspective
The IFAC PerspectiveRussell GuthrieExecutive Director, Quality andMember Relations, IFACMentoring Insights – The MentorPerspectiveDubai, UAEFebruary 17th 2012 Page 1 | Confidential and Proprietary Information
Why are PAOs important? Page 2 | Confidential and Proprietary Information
Important to the Profession• Act in the public interest• Develop and produce competent accountancy professionals• Promote strong professional and ethical standards• Act as a resource to government, regulators, donors, mentors, and regional and international organizations• Further the quality of financial reporting Page 3 | Confidential and Proprietary Information
Important to the Economy• Attract Foreign Direct Investment (FDI)• Promote growth and development of the Small- and Medium-sized entities (SME) sector• Enhance transparency and accountability in the use of public funds• Improve the design and delivery of vital public services Page 4 | Confidential and Proprietary Information
What is IFAC’s role? Page 5 | Confidential and Proprietary Information
IFAC’s MissionTo serve the public interest by:• Contributing to the development, adoption and implementation of high-quality international standards and guidance;• Contributing to the development of strong professional accountancy organizations (PAOs) and accounting firms, and to high-quality practices by professional accountants;• Promoting the value of professional accountants worldwide; and• Speaking out on public interest issues where the accountancy profession’s expertise is most relevant. Page 6 | Confidential and Proprietary Information
IFAC’s MissionTo serve the public interest by:• Contributing to the development, adoption and implementation of high-quality international standards and guidance;• Contributing to the development of strong professional accountancy organizations (PAOs) and accounting firms, and to high-quality practices by professional accountants;• Promoting the value of professional accountants worldwide; and• Speaking out on public interest issues where the accountancy profession’s expertise is most relevant. Page 7 | Confidential and Proprietary Information
Member Body Development CAP/ PAO Compliance Development Program Committee Member Body Development Team Page 8 | Confidential and Proprietary Information
Member Body Development Team• Russell Guthrie – Development/PAODC• Sylvia Tsen – Quality/CAP• Szymon Radziszewicz – Team Leader• Thomas Zimmerman/Darlene Nzorubara – West Europe and Africa• Joseph Bryson – Latin America and Caribbean• Daria Koukhar – North/Cent/East Europe and Central Asia• Gabriella Kusz – Southern Europe and Middle East• Marta Russell – Asia - Pacific Page 9 | Confidential and Proprietary Information
Compliance Program Self -Assessment Overview of national Benchmarking against the 7 regulatory and standard- SMOs setting framework Action Plan Strategic document illustrating a PAOs progress toward, or continued compliance with, SMO requirements Page 10 | Confidential and Proprietary Information
A Focus on PAO DevelopmentPAO Development Committee• Develop the capacity of the accountancy profession – Outreach to existing and potential IFAC Member Bodies – PAO workshops focusing on capacity building and SMOs• Increase awareness building and knowledge sharing – Mentoring Program – Participation in regional events and alignment with regional bodies• Engage and deepening development partnerships – MOSAIC (Memorandum of understanding to Strengthen Accountancy and Improve Collaboration) Page 11 | Confidential and Proprietary Information
MOSAIC• Improving co-operation between IFAC and the international donor community, increasing the capacity of PAOs and improving the quality of financial management systems• Signed at the OECD Fourth High Level Forum on Aid Effectiveness in Busan, Korea in November 2011• Inaugural Steering Committee Meeting to be held in Jaipur, India in February 2012 Page 12 | Confidential and Proprietary Information
What have we accomplished globally? Page 13 | Confidential and Proprietary Information
Where we are today• Established technical architecture for PAOs – SMOs – Action Plans• Clear strategic commitment to development of the profession – PAODC• Engagement with Donor Community – MOSAIC Page 14 | Confidential and Proprietary Information
What can IFAC do well? Page 15 | Confidential and Proprietary Information
IFAC Strengths• Establishing and maintaining a global strategic and policy framework• Convening stakeholders• Making strategic decisions for maximum impact – Meeting locations – Provide speakers for RO/AG/MB events• Communications, global guidance and tools Page 16 | Confidential and Proprietary Information
What must be accomplished locally? Page 17 | Confidential and Proprietary Information
Key Considerations in PAO Development• Legislation: Legal recognition/structure• Regulation of the Profession: Relationship with government• Governance: Organizational structure• Committees: Key areas of function/activity• Management: Professional staff• Financing: Funding operations and activities• Marketing/Promotion: Raising awareness and defining value statement Page 18 | Confidential and Proprietary Information
IFAC Membership Process – Lessons Learned• Pre-existing mentoring arrangement can improve the quality of the application and the sponsor’s due diligence report.• A relationship with IFAC should be formed early.• Ensure complete understanding of the membership requirements. – Financial viability where donor funds constitute significant percentage of income – Evidence commitment to meeting SMOs wherever ultimate responsibility lies – Ensure legal “building blocks” are in place• Considerable progress must be shown to move from Associate to Member. Page 19 | Confidential and Proprietary Information
Challenges for IFAC/RO/AG/MB• Capacity – this is a challenge for all our organizations but involvement of MBs and RO/AGs is critical – PAO Expertise – Ability to act/influence locally in a sustained manner• Unity – as we deepen engagement through MOSAIC can we deliver coherent regional and national strategies?• Coordination – communication and consultation will be essential for our collective success Page 20 | Confidential and Proprietary Information
Thank You Page 21 | Confidential and Proprietary Information