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Action Plan Workshop Apr 23 2009

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AFAA Workshop on Action Plans

AFAA Workshop on Action Plans

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  • 1. International Federation of Accountants Szymon Radziszewicz Technical Manager, Compliance Program IFAC Beirut, 23 April 2009 Action Plans: Challenges and Success Factors IFAC Compliance Program Workshop for AFAA Members
  • 2. IFAC Compliance Program
    • Background and Status
    • Action Plans – Issues & Challenges
    • Key Success Factors
    • Why prepare?
    • Points for discussion
  • 3.
    • How it all started?
      • 7 Statements of Membership Obligations
      • Self-Assessment through Parts 1 and 2
    • Where is it heading?
      • Part 3, Action Plans for continuous improvement
    IFAC Compliance Program
  • 4. Part 3, Action Plans
    • All IFAC members and associates participate
    • All 7 Statements of Membership Obligations to be addressed:
      • To achieve compliance
      • To maintain compliance
  • 5. Part 3, Action Plans – Current Status Status as of April 22, 2009 All IFAC AFAA Published Action Plans 32 1
    • Draft Action Plans received
    • Complete, partial sections, local language
    • Review underway by staff and Compliance Advisory Panel
    63 3 Working on Action Plans 47 3 Policy Recommendations in process of review 15 2 TOTAL 157 9
  • 6. Issues – Adoption of ISAs and IFRS
    • Treated as a “one-time” process
    • Significant gaps remain (“local adaptation”)
    • No ongoing mechanism to keep up with issuance of new standards
    • Insufficient resources
    • Translation challenges
  • 7. Issues – Adoption of ISAs and IFRS
    • Adoption versus implementation
    • There is a huge difference between adoption and implementation
    • Although many countries have formally adopted IFRS and ISA, many lack the experience, skills, training and basic tools to put them properly into practice
  • 8. Issues – Code of Ethics and I&D
    • Use of outdated Code of Ethics
      • Not using the threats and safeguards framework
    • Applicability to both auditors AND accountants in business
    • Investigation and disciplinary programs
      • Mechanisms developed but no power or sufficient resource to properly sanction
  • 9. Issues – Quality Assurance and Quality Control
    • The structure of the program does not conform with SMO 1, Quality Assurance
    • QA system may have been established, but:
      • Not implemented
      • Not sustainable
      • Based on outdated standards
    • Quality control standards at the firm and engagement level have not been mandated
      • Need to adopt ISA 220 and ISQC 1
  • 10. Issues – Education
    • Need for both academic education and practical experience
      • Real life experience in accounting and auditing
      • Applying ethical principles
    • University syllabus and final examination updates
    • CPD – number of hours and monitoring compliance
  • 11. Key Challenges
    • Lack of financial and technical capacity in many professional accountancy bodies calls for:
      • Investment in the accountancy profession by national governments and donor agencies
      • Support of regional organizations
      • More advanced bodies acting as mentors
      • Development of implementation tools
    • Ability of bodies to clearly communicate challenges, required actions, and need for resources will be crucial to obtain assistance
  • 12.
    • Establish or enhance existing processes to support adoption and implementation of international standards
    • Continuous updating of education and training programs
    Solutions – Action Plan Objectives
  • 13.
    • Implement or improve external quality assurance programs
    • Keep watching brief on new and modified standards and regulatory changes and address them in a timely and effective manner
    • Establish or maintain good relationship with government and regulators
    • Meaningful actions, clear accountabilities and reasonable timelines
    Solutions – Action Plan Objectives
  • 14. Part 3, Action Plans - Example
  • 15. Key Success Factors
    • Taking Ownership of the Action Plan:
      • Use technical committees to draft the plan for each SMO
      • Discuss Action Plan at all levels of organization’s governance structure
      • Involve key stakeholders: regulators and government
  • 16.
    • Taking iterative approach:
      • Frequent interactions with the Compliance staff
      • Submit drafts / partial drafts for an early review
      • Incorporate Compliance staff’s feedback and suggestions
    Key Success Factors
  • 17. Key Success Factors
      • Identify resources needed to make the
      • necessary changes:
      • Internal:
        • Staff
        • Volunteers
      • External:
        • Funding sources / potential donors
        • Twinning partners / mentors
  • 18. Available Supporting Materials
      • Guidance Notes
      • Action Plan Template
      • Published Action Plans http://www.ifac.org/ComplianceAssessment/published.php
  • 19. Way Forward
      • Action Plan is just the first step along the way…
      • “ Evergreen” document that needs to be continuously updated for future developments
      • Progress reporting and monitoring
      • IFAC to facilitate assistance and provide valuable tools
      • Cooperation within AFAA – way to success
  • 20. Important Developments to Address Now
      • IAASB Clarity Project
      • Revisions of the Code of Ethics
      • Need to be reflected in the Action Plan
  • 21. Why Prepare? “ Participating in the Compliance Program has been truly meaningful and rewarding experience for CICPA, leading to important improvement in major areas of the development of the accounting profession in China. Especially, the Policy Recommendation and Action Plan process have been very helpful for us to work out the convergence plan, enhance quality assurance program and communicate effectively with regulators and the government.” China (CICPA)
  • 22. Why Prepare? “ Completing the Action Plan was a very useful exercise for the CICA as it allowed us to consolidate and summarize in one place all that we were doing to fulfill our IFAC obligations and assists us in demonstrating to all of our stakeholders our strong commitment to quality.   The Action Plan provides us with a useful tool for managing our commitment to SMOs and how we are performing as a member body, and we believe the process will prove equally useful to other IFAC members.” Kevin Dancey, President and CEO CICA Canada
  • 23. Why Prepare?
    • The Action Plan process helped:
      • “ to accelerate our discussions around convergence” – Brazil
      • “ to organize our goals and steps to achieve them so they can be clearly seen” – Russia
      • “ in the process of becoming full member of IFAC” – Romania
      • “ to confirm that the we are heading in the right direction” – Czech Republic
  • 24. Points for Discussion
    • Key Priorities?
    • Key Challenges?
    • Relationship with government and regulators?
    • Standard-Setting:
      • Responsibilities?
      • Legal Framework?
    • “ Low hanging fruits”?
    • What can AFAA do to assist?
  • 25. Turbulent Times – Times of Opportunity Success happens when preparation meets opportunity
  • 26. International Federation of Accountants Beirut, 23 April, 2009 Thank You Please Visit www.ifac.org/ComplianceProgram For Further Information