Distinguished guests, ladies and Gentlemen,
It is a great honour for me to address this important gathering on the occasion of the
first annual conference to be held by The Mediterranean Federation of Accountants.
I must first thank our distinguished guests for accepting our invitation to attend this
conference and speak to us:
His Excellency Mr. Recep Onal, Minister of Economy
Mr. Gazi Ercel, President of the Central Bank of Turkey
Mr. Mustafa Ozyurek, President of the Union of Chambers of Certified Public
Accountants of Turkey
Mr. Rene Ricol, Deputy President of the International Federation of Accountants,
And Mr. Renato Ruggiero,Former Secretary General of World Trade Organization,
I would like to begin by providing a brief introduction on the Mediterranean
Federation of Accountants and its objectives. Then, I will talk about some of the
important challenges that our profession faces today, and finally I will comment
briefly on the topics included in the Conference.
The idea of establishing the Federation was initiated by the two Italian Institutes;
The National Council of Dottori Commercialisti
and The National Council of Ragionieri
Their idea was met with acceptance and keen support from many of the accounting
bodies in the region, and the Federation was formally established by the founding
members signing its bye laws in Rome on 28 October 1999 Presently the Federation
is comprised of the professional accounting bodies in 12 countries. They are in
alphabetical order,: Algeria, Cyprus, Egypt, France, Greece, Israel, Italy, Malta,
Portugal, Romania, Spain and Turkey. I am confident that it will not be long before
other Mediterranean countries join the Federation.
It is only natural for the accounting bodies of the countries in the Mediterranean
region to get together in one professional organization. In addition to our
geographical ties, we share common traditions , common history, and I may say
common characters. Ladies and Gentlemen, we have shared many aspects of the past
and we shall work together to share many aspects of the future.
Let me now mention in brief some of the more important objectives of the
By joining forces and working together as a team, the Federation provides the vehicle
through which our region can become a significant player within the International
Federation of Accountants (IFAC). This will ensure that our region's interests and
opinions are properly considered at the international level within our profession.
The Federation serves as an institutional body to dialogue on accounting and related
matters directly with the European Union – the largest economic market in the world.
The accounting profession in our region encompasses more than half a million
qualified accountants. These accountants possess valuable talent and experience.
The Federation is a mechanism through which this talent and experience can work in
concert to contribute more effectively to the prosperity and success of our individual
countries, and the region as a whole.
Last but not least
The Federation serves as the forum through which the member countries may interact
in a manner which leads to the sharing of knowledge, experience and best practices to
our mutual benefit. To this effect, the Federation will arrange conferences, seminars,
and training courses; and will also provide technical assistance that may be required
by member countries.
I am confident that the Federation will succeed in achieving its objectives. Indeed, it
is my belief that the success of the Federation could soon serve as an example for
other professions in our region.
Ladies and Gentlemen,
There are many challenges facing our profession today. Many of these challenges are
difficult and new, and require attention and contribution from all accounting bodies
whether national, regional, or international.
Let me briefly make a mention of two of these challenges:
The First is the need for worldwide adoption of international accounting and auditing
In this world of vast economic development, and cross border investment and capital
movements, the raising of the quality of financial information is of paramount
importance, at both national and international levels. This requires the use of
accounting and auditing standards by all countries, - developed and developing - that
are; not only appropriate for use nationally, but also in line with standards prepared
for use internationally. Financial information must; on one hand, be prepared using
common measurement criteria and fair and comprehensive disclosure; and, on the
other hand; be audited in compliance with a single frame-work of auditing standards
that provides users, across the world, with consistent level of assurance regarding the
operating results and financial position of entities.
The Federation recognizes the great work and achievements of IFAC in the
preparation and issuance of International accounting and auditing standards, and it's
endeavors towards their adoption worldwide. As such, IFAC has been pivotal in
raising the quality and reliability of financial information, nationally and
internationally. However, there is much more work that need to be done worldwide
in this respect.
As a regional organization of accounting bodies, the Federation can - and indeed will
- contribute to the ongoing process and efforts aimed at raising the quality and
reliability of financial information worldwide.
The second challenge facing the profession is the need to adapt to the revolution
presently taking place in the Information and Telecommunication Technology
The developments that have taken place in Information and Telecommunication
Technology have had a huge impact on all aspects of the profession, especially
auditing. E-commerce, lack of hard documentary evidence, loss of audit trail, etc. ,
have increased significantly the level of IT skills needed to be possessed by the
auditor, and greatly impacted the audit approach and methodology. There is no more
black box approach or round the computer audits.
The difficulty of this challenge is that we have very little time for preparation.
Before long, qualified accountants who do not develop their IT skills will no longer
be qualified. It is a race against time, it is a matter of survival for our profession.
Given the seriousness of the situation, The Federation will form a task force to study
and monitor the developments taking place in this area. Also, the Federation will
hold workshops and seminars for the purpose of reviewing and understanding current
developments in IT technology, and their impact on our profession.
Ladies and Gentlemen
In deciding on the program of our conference we endeavored to include topics that
relate to some of the current issues facing our profession.
Let me briefly review these topics.
Liberalization is probably one of the most challenging issues that is facing the
profession today. The service sector with all its diversity, has become the fastest
growing sector of the world economy; a natural development as world economies
become more global. Accountancy services are targeted for liberalization in the
"General Agreement on Trade in Services"; and are included in the next round of
negotiations. This puts great pressure on the practitioners in the services industry to
discuss liberalization of their services, and to provide the negotiators with concrete
These proposals, while aiming to achieve the liberalization of services, must do so in
a way that protects the interests of all parties concerned, especially those in
Hopefully, one of the outcomes of this conference will be definite proposals, on how
The Federation may coordinate the efforts of its members, in order to provide a
consistent message from the region, on how the liberalization of the profession
Another topic on the program is "Independence of Auditors "
This is a most important topic because the objectivity of the auditor is the most
important feature of our profession. It is the milestone on which the credibility of our
reports rests. Lack of independence would undermine the value of our service to
society and consequently the value of our profession in general.
There are many factors that affect independence. Two important ofwhich are:
The provision of "non audit services" to audit clients AND;
The ownership of the capital of accounting firms
Some countries prohibit the auditor from providing non-audit services to audit
clients, while other countries do not.
Some countries require accounting firms to be entirely owned by professional
accountants, while others allow accounting firms to be partly owned by out-siders.
We therefore need to devise common set of rules on independence, but these rules
must not be too rigid as to undermine the capabilities and the development of
The conference session on independence should provide a good forum for the
exchange of views on this important topic.
Another topic is "small and medium sized enterprises" referred to as SME:
SME represent an integral part of the economic structure of most countries. They
contribute new ideas, generate employment opportunities, and stimulate the economic
growth of countries, that is, they are vital for world prosperity.
Many Governments have introduced statutory audits to serve the interests of
creditors, providers of finance, and the public at large. While an audit is of long-term
benefit to SME in providing reliability and credibility to their accounts; and thus
contributing to their successful survival; the cost of an audit and the increased
administrative burden associated with it; may outweigh the benefits derived from the
"Small and medium sized enterprises" have specific features, which warrant unique
financial reporting and disclosure requirements, and an audit approach and
methodology that is somewhat different from those applied to large enterprises.
Also, because of the relatively few resources allocated to the financial and internal
control systems, SME normally require from professional accounting firms not only
audit but also taxation advice, compilation of annual accounts and other financial
advisory services. As a result, the issue of independence may come into question.
All these issues relating to SME financial reporting and audit will be discussed in the
Public Sector Accounting, Auditing and Financial Reporting, is another topic in the
The public sector, which runs from various levels of government to a diverse
multitude of not-for-profit institutions, is becoming increasingly concerned about the
way it manages its money, personnel, facilities, and equipment, as well as on how to
make more effective use of resources. Also, more and more of public sector entities,
especially utilities, are up for privatization, which results in the need for more
elaborate and more reliable financial information to facilitate the valuation and
privatization process. As a result; the information needs of users of public sector
financial statements are becoming more complex and demanding. This requires
changes in the accounting and auditing standards governing public sector.
IFAC's Public Sector Committee has recently approved 8 new standards for the
public sector and is at present looking into several relevant areas including;
performance measures and reporting; and cost accounting principles in the public
Given these current developments in public sector and their impact on our
professional responsibilities; we included public sector in the conference program.
Ladies & Gentlemen
The Conference provides a valuable opportunity for us to discuss all these topics in a
manner that capitalizes on our collective knowledge and experience. I am therefore
confident that the Conference will be successful and fruitful.
In conclusion; on behalf of the Federation, I would like to express once again sincere
thanks and appreciation to our distinguished Guests:
His Excellency Mr.Recep Onal
Mr. Gazi Ercel
Mr. Mustafa Ozyurek
Mr. Rene Ricol
Dr. Kamal Darwish
Mr. Renato Ruggiero
I would like also to acknowledge with great appreciation the extensive efforts exerted
by Mr.Masum Turker in arranging this conference. Mr. Turker is a member of the
council of the Federation representing Turkey.
Last but not least, I express sincere thanks to The Union of Chambers of Certified
Public Accountants of Turkey for hosting our conference and for locating it in the
charming city of Istanbul.