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The Changing Face of Auditing and Ethics: Implications for SMPs

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Presentation given by Giancarlo Attolini, chair of the Small and Medium Practices Committee of the International Federation of Accountants to the IFAC Chief Executives Strategic Forum in New York, NY, …

Presentation given by Giancarlo Attolini, chair of the Small and Medium Practices Committee of the International Federation of Accountants to the IFAC Chief Executives Strategic Forum in New York, NY, February 27, 2012.

Published in: Business, Technology

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  • 1. The Changing Face of Auditingand Ethics: Implications forSMPsGiancarlo Attolini, Chair, Small andMedium Practices (SMP) CommitteeIFAC Chief Executives Strategic ForumNew York, USAFebruary 27, 2012 Page 1 | Confidential and Proprietary Information
  • 2. Introduction• Regulation and standards – Capable of being applied in manner proportionate to size and complexity of entity and practice (regulatory burden is main concern of SMEs & SMPs) – Stable platform (pace of change is main source of burden for SMEs & SMPs) – Relevant to SMEs and SMPs• Policy/regulatory proposals need to be appraised in terms of – Public interest – Impact on small- and medium-sized entities (inc. micro) – Sufficient appropriate evidence – Benefits versus costs (not burdens!) Page 2 | Confidential and Proprietary Information
  • 3. General Observations• Regional consultation, global implications• EC’s objectives include – Reduced administrative burden (SMEs); audit of “small undertaking” seen as “significant administrative burden” in draft EU Accounting Directive – Increased choice/competition in audit market (PIEs)• High stakes – Change will be highly disruptive so must be sure of benefits of change• … but lack of evidence to support many proposals• Relatively low impact on SMPs versus larger firms ... Page 3 | Confidential and Proprietary Information
  • 4. Proposals of Most Relevance to SMPs (and SMEs)• Restriction on non-audit services – SMP Committee research/polls reveal SMEs want “one-stop shop” – Risk of disproportionate outcome for SMEs• Mandatory rotation – Risk of greater audit market concentration (unless coupled with other measures• ISA adoption – Risk of diverging practices at SME level (different approaches to proportionality inc. use of review) Page 4 | Confidential and Proprietary Information
  • 5. Proposals of Most Relevance to SMPs (and SMEs)• Mandatory tendering/abolition of Big Four clauses – Help improve competition and challenge perception that size means quality• European “passport” – Greater cross-border mobility of auditors• Audit oversight – Risk that public oversight will prove disproportionate for SMEs Page 5 | Confidential and Proprietary Information
  • 6. Conclusion• Global Accountancy Profession needs to – Speak with one voice, setting aside differences – Focus on evidence-based, public interest motivated arguments – Better articulate the value of the profession (competence, integrity, etc.) and its services (audit, business advisory, etc.) Page 6 | Confidential and Proprietary Information
  • 7. Thank-youwww.ifac.org/smp Page 7 | Confidential and Proprietary Information