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Pak july sep_2010

  1. 1. J U L Y - S E P 2 0 1 0What arE YoU Practicing?
  2. 2. co nTecTsVolume 43 Issue 3 JUlY-SEP 2010 The mosT imporTanT issuepublications committee facing The profession inchairman and chief editorAdnan Zaman, FCA 2009 is addressing ThemembersAbdul Rashid, FCA needs of smesAbdul Wahid, FCA and smpsAijaz Ahmed, ACAAltaf Noor Ali, ACAAsad Feroze, ACAHeena Irfan Ahmed, ACAJehan Zeb Amin, ACAM. Amir Afzal Rana, ACAM. Fahim A. Rauf, FCAMuhammad Rehan Razzak, ACAMutee-ur-Rehman Mirza, FCAOmer Mustafa Ansari, FCARaheel Abbas Rizvi, ACA 16The councilpresidentShaikh Saqib Masood, FCA By way ofVice presidentsHafiz Mohammad Yousaf, FCA puBlicZahid Iqbal Bhatti, FCA accounTing pracTicemembersAbdul Rahim Suriya, FCAAdnan Zaman, FCAAhmad Saeed, FCANazir Ahmad Chaudhri, FCAKhalid Rahman, FCAMohammad Abdullah Yusuf, FCANadeem Yousuf Adil, FCANaeem Akhtar Sheikh, FCAPervez Muslim, FCARafaqat Ullah Babar, FCARashid Rahman Mir, FCASalman Ali ShaikhShaikh Saqib Masood, FCASohail AhmadWaqar Masood Khan 4 Adnan Ahmad Mufti, FCAYacoob Suttar, FCA Strategic Decisions During Recession 28secretary M. Amir Afzal Rana, ACAShoaib Ahmed, ACA Something Beyond Financial 32publication coordinatorAsad ShahzadZehra Hassan Corporate Governance 37 The Pakistan Accountant July-Sep 2010 Page 1
  3. 3. ediTor’s lETTEREditor’s LetterwhaT are you pracTicing? Evolution and transformation are perhaps the most remarkable processes that create simultaneously excitement as well as apprehension. In today’s rapidly changing environment stagnancy is the first step towards decline, anyone who does not move with the change gets left behind. Diversifying and expanding the area of expertise is the new mantra for the decade, the complete amalgamation of technology in even mundane practices has increased consumer’s awareness, with their needs changing and demanding more, smart providers who are able to anticipate and match their needs move ahead. Historically, the SMP-SME relationship is regarded as being underpinned with the need for SMEs to have statutory audit and this necessary relationship provided a foundation for subsequent advice and support. From the SME relationship, the factors underpinning a strong SMP-SME relationship include competency, trust and proximity. However now the equation is changing, with the incessant changing environment, the role of Accountants has also drastically undergone transformations, no more are accountants just confined to auditing. With the needs of the SMEs expanding they expect more from SMPs. SMPs need to match the growing demand and in order to do so they need to develop capacity and overcome the challenges lying ahead. There is a changing regulatory environment; growing competition from new entrants to the advice marketplace; and the capability of SMPs themselves to provide specialist advice. Opportunities and challenges come hand in hand; while the diversification of role of accountants presents a great opportunity for the SMPs it also brings forth the challenges of capacity building and threats of competitiveness. I feel that SMPs need a platform where they can collaborate and learn together to overcome the competitive challenges ahead. I feel the time is now when we have to nurture our practice, realizing that the beauty of a garden lies in the different varieties of flowers and like flowers no two practices offer the exact same, they each bring a unique and distinctive color to the canvas of accounting. I feel that the new way forward for the SMPs particularly for building capacity lies in capitalizing on their uniqueness while being open to adaption and change. I feel Wayne Dyer’s “Transformation literally means going beyond your form.” appropriately shows the way to strive for continuous improvement, meet the increasing expectations and paves the way to the road leading to a brighter future. Adnan ZamanThe Pakistan AccountantJuly-Sep 2010Page 2
  4. 4. presidenT’s PAGEPresident’s PagewhaT are you Experts and economists unanimously hail assurance services principally but not the development of small and medium exclusively to clients who are small andpracTicing? enterprises as a crucial factor in medium entities (SMEs) and other strengthening Pakistan economy. accountants to the extent that they According to the Small and Medium support SMEs. Enterprises Development Authority (SMEDA), “SMEs constitute nearly 90% The SMP committee formed as a part of of all the enterprises in Pakistan; employ ICAP’s initiative to provide a platform for 80% of the non-agricultural labor force; SMPs to come together and jointly work and their share in the annual GDP is towards identifying problems and issues 40%, approximately.” faced by the SMPs. The committee reviews international and regional best The recent times have practices for consideration of adoption by witnessed a gradual the SMPs after affecting suitable changes change in the mindset with in the context of the business the role of the Accountants requirements and local environment as widening considerably, well as the relevance and proportionality According to a research of professional standards and provides conducted by the recommendations on the extent of their International Federation of applicability to SMPs/SMEs. Accountants (IFAC) a shift is seen in the needs and A critical factor is effective networking. I the expectations of Small feel the solution lies in collaborations and and Medium Enterprises (SMEs) from sharing of resources, SMPs should Small and Medium (accountancy) collaborate while not compromising their Practices (SMPs) from being focused individuality and uniqueness. In order to primarily for audits to a much wider match to the growing needs of SMEs, continuum of business advisory services. SMPs have to specialize as well as work on the capacity building to be able to I feel this expansion in role presents an cater to the increasing competitive opportunity for SMPs; they must evolve to environment. I must acknowledge the role match the expectations and meet the of SMP committee which coordinates with growing needs. The opportunity ICAP for issuance of consultation papers, presented is huge but so are the initiating debates or discussion on issues challenges. Information Technology has affecting the SMPs in bridging the gap drastically changed the environment; I between the SMPs as well as with other classify Information Technology as entities. possibly the greatest tool as well as a challenge for the SMPs. It is imperative In order to strengthen the understanding that its impact is analyzed and assessed. and application of International In order to match to the growing Standards, the Institute has embarked expectations SMPs need to be updated upon an awareness program, focusing on with the emerging Information Technology the SMPs. The Institute is mindful of the techniques and adoption in the conduct of problems that might arise in their professional practice. understanding the implementation of ISCQ1 and is imparting the required The definition of Small and Medium training to educate and support the Practices varies from one jurisdiction to practicing members. another. There is no precise globally recognized definition of Small and Medium Practices, because what is considered small or medium-sized in one jurisdiction may be quite larger in another. However, certain general parameters are used to help determine what constitutes Shaikh Saqib Masood an SMP; they provide accounting and The Pakistan Accountant July-Sep 2010 Page 3
  5. 5. Join THE DISCOURSEJoin thE This issue’s topic is: Ready to manage theDiScoUrSE Generation Y? The Generation Y has arrived and is here to stay. Is your organization ready to manage the new generation? “Children and young adults born during the 1980s and 1990s are known as Generation Y. Generation Y professionals are in their 20s and are just entering the workforce. With numbers estimated as high as 70 million, Generation Y is the fastest growing segment of today’s workforce.” commenTs ,Z on X,Y enerati te world G w well corpora rs is ho I fee l in the ha t matte , ount, w e, learn really c observ do es not able to e inted is . Anyon n appo xecute the perso and re-e , rectify rvive in plan, e xecute rely su g tha t will su of doin capable re. te cultu corpora 3180) CA (R # S ana, A Ahmad , UAE ghgrou S harajah rateoffice@s orpo sana.cNo question not to welcome Generation Y. They are I am the only one in my organization falling into thisalready in mainstream. While being more educated, generation, therefore having none to manage. I think myintelligent and joining practical life in an advanced high ups know better how to manage me:)-technological era as compared to two decades back’sgeneration, it is sad that a peaceful, high growth oriented Arshad Khan, ACA (R # 6215)atmosphere essential for opportunities could not be Peshawarprovided to them. Good luck Generation Y. arshad.yousufzai@hotmail.comTameez-ul-Haque, FCA (R # 0973) ‘Generation Y has created a need for a cultural overhaulKarachi for which most organizations, including mine, are yet ready. One reason could be Generation Y being a high- maintenance generation which requires their managers to set clear expectations from them, offer flexibility, respect The Pakistan Accountant July-Sep 2010 Page 4
  6. 6. Join THE DISCOURSEand communicate with them in their language. However n Development and mentoring: Continue to invest inthis generation, can prove to be most high-performing one personal development and training-explore expandingif organizations are able to leverage on the information, coaching/mentoring programs to younger workers.creativity and technological skills which they bring to the Provide variety and fresh challenges - considerworkplace with them’. promoting cycles of experience in mentoring programs to younger workers.Zeeshan Khurram, ACA (R # 6056) n Brand your Organization: The Generation Y expectsDammam, Saudi Arabia more from their employer and is not afraid to ask more!! Articulate your employer brand—communicates internally and externally what it means to work for your organization. Have clear goals, statements and be committed to deliver the promise.I feel before being able to effectively manage it isimportant to understand the people. Naveed Abdul Hameed, ACA (R # 5905) KarachiThe main difference in Generation Y and previous is their confidence and ambitions. TheseGeneration Y qualities along with their familiarity withinformation technology have resulted in Generation Yhaving high expectations of the employers, seeking out A key to managing people is realizing that everynew challenges and not being afraid of questioning generation brings its unique set of values andauthority. expectations to workforce. Organizations need to understand the expectations of the Generation Y andA recent study conducted in UK showed the priorities of meet them accordingly.Generation Y regarding employment, being completelydifferent from their predecessors. Career development and I feel that following tips can be useful to manage thelearning opportunities topping the list followed by generation Y effectively.compensation package, the nature of job and job security. n They need to be treated respectfully.Career development is the top most priority of Generation n They are goals driven; they need clear goals andY, organizations should ensure that all the available career objectives.paths are understood and are clearly communicated to n They expect and should be awarded with challengingprospective employees. Further, for learning aspirations of jobs for better performance.Generation Y to be met the organization should employ n Involvement in decision making enhances their moralejob rotation and formal and informal training techniques. leading to better output. n Allowing a little fun at the job significantly enhancesShah Rukh Memon, ACA (R # 5913) their productivity.Doha, Muhammad Abrar, ACA (R # 6126) Sialkot abrarmuhammad@hotmail.comBefore Organizations get ready to manage the GenerationY, they need to understand what they want. Studies showthat the millennials crave International experience, prefer YES……because we have to!development opportunities to cash bonuses, Experience,sustainability and career planning is a major factor for Since we are the people who stand ahead of Generation Ythem. According to Peter Sheahan, Generation Y is not in the row of managers, we are responsible to manage notjust about demographics- it’s about mindset! only them but also ourselves. I feel it does not surmount to be an uphill task for us as Generation Y has alreadySome tips to manage millennials could be: adopted most of our thoughts, knowledge and styles, asn Know what they want: Use market research in order to major psychological theories suggest by now hence there understand what millennials want and how these is no major chance of difficulties, clashes or hurdles desires might differ from older workers. emanating from the process of management ofn Motivation: Think creatively when rewarding Generation Y. millennials, is it time to shift focus from cash bonuses and company cars to other things? What we need to do is to keep an open mind to theirn Grow Globally: The Generations Y rates international positive thoughts and be ready to understand their psyche exposure highly and is more technologically inclined, towards development and humanity. border and boundaries are no limitations. Consider global working opportunities-how might this Muhammad Rehan, ACA (R # 5547) enthusiastic generation support your global mobility Khanewal needs? The Pakistan Accountant July-Sep 2010 Page 5
  7. 7. coVer STORY The most important issue facing the profession in 2009 is addressing the needs of SMEs and SMPs (Source: IFAC Global leadership Survey 2008) Small and medium sized definition for the SMPs also act as an integral enterprises and practices had not been prescribed. component in SME’s must be considered as a However IFAC has chosen financing need. The SME main driver for innovation, to define SMPs as – SMP relationship can be employment as well as “accounting practices regarded as a necessary social and local integration whose clients are mostly relationship. SMPs around the globe. They SMEs, external sources perform a large number of are playing a vital role in are used to supplement important tasks of SMEs. the economic activities limited in-house technical Most important among around the globe and can resources, and contain a them is the financialUsman Akbar Manda, ACA never be ignored in the limited number of reports or annual reports. worldwide conferences professional staff. What So they always turn to and agendas. SMEs are constitutes an SME differs SMPs to produce these now crucial to most depending on the country.” statements. Also SME- developed and developing (IFAC 2010) SMP relationship is also economies. For instance, prominent because of the in the European Union, SMPs are uniquely meant compliance work being SMEs contribute to over for helping the SME’s. provided to SMEs by 99% of all enterprises and They help SME’s to SMPs in common 100 million jobs. This perform in a more efficient business world. represents almost 67.1% and effective way, of private sector assisting in compliance In the credit crunched employment. For the with the rules and world, SME’s are playing a survival of SME’s, SMP’s regulations and business very important role as run as a blood. A unique support services. They world big giants are inThe Pakistan AccountantJuly-Sep 2010Page 6
  8. 8. coVer STORYdoldrums and cannot Bringing improvement and in this credit crunched for ensuring the quality ofemploy more labor force. strength in the work and world economy and in work in the SME’s andInstead big corporations structure of SMP’s shall future business world. They SMP’s sector, there is aare in the move towards bring the same effect in need to develop more dire need for thefiring and layoff. In this SME’s. SMP’s in today’s effective communication improvement in financialscenario, SME’s provide a world offer a wide range of networks with clients, reporting. The frameworkplatform for the provision of services to SME’s. They coworkers, government for reporting on financialjob facility and hence put range from payroll instrumentalities, legal and statements of SME’s needsome healing effect on the processing, forecasts and other professionals. In improvement so that theinjured worldwide projections, litigation taking initiative towards interests of theeconomy. In my opinion, support, personal financial advisory role, they need to stakeholders can beroles and work of SMP’s planning, business involve themselves in protected and presentand SME’s have a direct valuation, mergers and strategic decision makingco-relation between them. acquisitions, financial including proficiency inIn financial terms, we can management, assurance forward thinking andsay that there is a perfect and related services, enhancing the abilitypositive co-relation co- reporting, strategic to weigh alternatives.efficient of 1 between the planning, tax planning, a They also need totwo arms of the economy. few of them to be focus on sharpeningSo SMP’s should focus on mentioned. In the recent the analytical skills forimproving the quality of trends of the business analyzing the potentialwork and concentrate on world, range and quality of opportunities andmore areas for the advisory advice to be provided to projects andto SME’s. This is quite SMEs by SMPs has been continually striving forevident from a survey growing at an exponential the devises to bringconducted in different rate. This is due to the improvement in bothcontinents. information needs of methods and owner-managers of SMEs effectiveness. ThisAccording to a survey who are in a need to fulfill can be very effectiveconducted in UK, Australia their regulatory obligations for the SMPs are thisand Canada, SME’s think and day-to-day and shall strengthen tothat SMP’s provide them strategic challenges. absorb the shocks ofthe in the following ways: economic downfalls. Before discussing on how At the sametimel practitioners most SMEs redefine themselves managing, motivating popular source of in this credit crunched and inspiring their own business advice for world, let’s have a look on professional SMEs; what is the main Motivation personnel so thatl practitioners most and Reason for SMEs’ Use quality and competent trusted source of of Accountants or SMPs as workforce is available business advice for Business Advisers. Broadly all the time. SMPs SMEs; and there are three main issues also need to developl practitioners most because of which SMES strength to highly rated source of rely on SMPs as business acknowledging and business advice for advisors; recognizing people for SMEs their contributions and l Competency performance withinIn this perspective, SMP’s l Trust their workinghave to act as a very l Proximity and environment withoutresponsible segment of the responsiveness considering theeconomy and in helping personal interests.the medium sized SMPs should consider This factor is oftenenterprises. They have to them and keep them as a lacked very much inimprove and broaden the focal point before taking most of the corporateextent of their services for any change or redefining world and especiallytheir own safety and for themselves. in Pakistan.protecting the SME’s whichrely heavily on them. They There are some very Now referring to someare a key business important roles which specific issues for theadvisors to the SME’s. SMEs are required to play initiatives for SMPs, The Pakistan Accountant July-Sep 2010 Page 7
  9. 9. coVer STORYinformation in a way that is SME’s. In addition to this, lending activity to the accurate and reliableuseful to the decision audit quality control SME’s. provision of information,makers. Now SME’s need standards also need to be Internet centers for SMP’sa lot of attention by the implemented in the SME’s. l Obtaining financial and SME’s should beregulatory bodies for the Again this objective can be statements of the small developed. Centers forreporting standards setting achieved if SMP’s step clients, information sharing can bebodies. In this regards, forward and take the l Time taken in gathering developed andSMP’s can take an initiatives. They can also information to make the membershipinitiative to identify the use accounting information decision for lending facility created inloopholes and defects in to achieve sound financial l Timeliness of the order to get thethe current prevailing management. information provided funds for theframework. They can take maintenance ofall the stakeholders in this Another important role, the Source: Micro-Entity Financialambit and identify the accountants are supposed Reporting: Some Empirical the center. Any Evidence on the Perspective ofproblematic area and share to play is the assistance of Preparers and Users (IFAC SMP information whichthem with the standard SME’s in obtaining bank Committee Information Paper, Oct. is to be shared insetting bodies. One of the finance and other financing 2007, draft) the center shouldproblems due to ineffective facilities. As discussed be accurate. Afinancial reporting is the earlier, SME’s face For obtaining financial checklist for the reliableSME’s also face problem in problems while obtaining statements and information should begetting financing activity loan or other financing from consistency in the fulfilled by the data before itdue to this which is the financial institutions. presentation, this can be can be entered in thediscussed in detail in the lending organizations are best overcome by using internet center for sharing.following paragraphs. more inclined for lending computerized packages. As a more proactiveImprovements to financial facilities towards large Today, IT has become approach, a dedicatedreporting can increase the corporations, SME’s face integral component in search engines can beconfidence of investors and difficulties in obtaining financial reporting and developed for SME’s andusers of these reports can them. This bridge can be consistency cannot be SMP’s. This shall bring ingive an impetus to the best covered with the help brought without using the the quality of work not onlyeconomy which is badly of SME’s. The main clutches of IT and its for SMP’s but in the work ofhurt by the blow of global problem that is faced in this related facilities. SME’s and othereconomic crisis and credit respect is the non Computerized packages stakeholders as well.crunch. availability of information to can be helpful in order to the lender or in the required ensure that the consistency In the era of globalization,Reliance on the financial format. SMP’s can help is achieved in the the sharing of knowledgestatements can be SME’s to develop a presentation of information. and experience across theimproved by applying ISA’s framework in consultation world is very important foron audits of SME’s. Till with the lenders and SME’s In order to counter the the improvement in qualitynow, no auditing standards for provision of information problem of time lag in of work and provision offor the small and medium and subsequent help in obtaining information for good service in every nooksized enterprises have decision making for the financial institutions, and corner of thebeen developed. This is a extending financing facility facilities need to be continents. Thebig vacuum for the SMP’s to the SME’s by financial developed for the sharing improvement in the qualityto step forward and perform institutions. According to a of knowledge. Again to of work by SMP’s can betheir role. SMP’s should study conducted, financial achieve this objective, brought about by sharing ofendeavour to develop institutions face the reliance is on the IT knowledge and experienceauditing standards for following problems in facilities and internet. For on a platform. This can be The Pakistan Accountant July-Sep 2010 Page 8
  10. 10. coVer STORYa very effective quality demand for advice. This in some relaxation in and at the same time beinitiative by the SME’s. It is turn brings new challenges some corporations for profitable. This can beimperative to get in touch for SMPs. The major the statutory financial done by introducing taxwith the fellow accountants challenges are: audits but a rise in incentives. Along with thataround the world. Seminars compliance linked to on the recommendations ofshould be conducted for l consolidation within the environment, health SMP’s, develop nationalSMP’s for achieving this. accountancy industry: and safety and and international standardsThe geographical scope of Big giant firms are employment. This that are easy forservice can be extended always ready and in a reduces the market for application and tailoredbeyond the boundries of stronger position to the SMEs. according to thethe home country to other acquire small requirements of SME’s andcountries as well. practitioners. They l reluctance of some stakeholders. SMPs alsoAccounting, auditing and often present golden SMPs: Some cannot work in an effectiveconsulting services can be offer to the SMPs, customers are not able manner and provide qualityprovided through especially when to the pay the required work until and unlessnetworking at far furlong entering in the foreign fee as desired by the quality labor force isdistances. This shall help market to get local SME. So there is available in the market. ForSME’s as well for the representative and market but still no the supply of qualitygrowing globalization market as well. So with service is provided. advisors and accountants,needs in the upcoming a growth merger and Also with some SMEs, institutes and professionalfuture business world. acquisition there is a their heterogeneity of body too shall have to play decline in sole need makes SMPs their very sensitive role. One fact to be practitioners. reluctant to provide the Ensuring that the worth mentioned services. professional and members here is that SME l rise in the provision of of their respective bodies market is very services by larger Such changes for the remain competitive and dynamic. The practitioners: large demand of services by more supply is entered in The market conditions and regulatory environment within which SMEs operates is constantly changing. With this background, it is imperative for the advisors of SMEs to respond to the market demands and requirements. If SMPs do not cope with the changes and devise strategies for them, it can pose a serious threat to their position as key providers of advice and support to SMEs. practitioners are in a SMPs and their clients’ the market after ensuring market conditions better position to environment have that they are competitive and regulatory capture market. significant implications for and able to provide good environment Although their rates are SMPs. If SMPs do not cope quality work. within which comparatively high but with the changes and SMEs operates is with the recent financial devise strategies for them,constantly changing. With crises and reduction in it can pose a serious threatthis background, it is the clientage, large to their position as key The author isimperative for the advisors corporations have providers of advice and Senior Business Consultantof SMEs to respond to the reduced their fees and support to SMEs. in IBM Italia S.p.amarket demands and hence grabbing the Global Business Servicesrequirements. Among them market of SMEs. Neverthless, national and Department.the most important is the international institutionsrequirement of statutory l shift in the regulatory also have to play a veryaudit which is increasing environment: As important part to achieveand also bringing changes discussed earlier, all the above aims. Theywithin it in almost every regulatory environment shall have to providecountry. But other factors has been constantly practical support to SMP’sare also affecting the changing. Now there is to provide high quality work The Pakistan Accountant July-Sep 2010 Page 9
  11. 11. coVer STORYthE LaW oF thE corPoratE JUngLE –SUrViV oF thE aLFittESt Saira Shamsie, ACAAs the socio economic dynamics are human element helps in reducing treating the other SMPs as a supportchanging with shrinking boundaries, turnover and ensures stability. In fact group rather than a business rival.ever changing technology, this is an attraction for people joining This change in attitude can help inuncertainty, survival is only for the any organisation in the current broadening resources andfittest. scenario of instability. harnessing opportunities. With the internet age sharing intellectual dataAs the world stage is set for change The million dollar question is how do latest professional developments andthis gives empowerment to the SMPs with limited resources and guidelines is possible more than evermiddle tier the Small and Medium financial constraints manage to before. A strong intellectual dataPractices (SMPs) and Small and provide the enabling environment base of case studies, guides,Medium Entities (SMEs). The game is needed to sharpen the softer skills of illustrative and presentations can helpof making the right choices, to make their staff to have the cutting edge. in training the SMP staff to bringefficient use of resources, be tech them at par to the big foursavvy, use net working and last but The only answer is to build an professional standards.not least be open to change. environment of trust and mutual sharing. It is essential to use net Further, round tables and experienceTo evolve and to gain market share working and pooling of resources. sharing sessions can be invaluable inthe importance of a proactive human SMPs need to foster change by sustaining development. The Instituteresource equipped to of Charteredface the challenge Accountants ofcannot be over Pakistan (ICAP) hasemphasized. The Sidat was been playing a key Ebrahim YacoobSMPs need to build ing Session with role in this front by Ex perience Shar ne 30, 2009on their cash knowledge of arranging workshops held on Ju perience andgenerating asset - ed his vast ex He said the to p on varied subjects and Mr. Sidat shar his audience.their staff by providing g issues with eir bu siness also inviting seasoned the accountin ere growing thcareer growth, MPs faced w logy. members from thetraining, mentoring challenges S d keeping current techno profession to ity anand the spirit and and productiv share their rich ider the need to consenvironment for He emphas ised that firms best the firm experience in practice. who want thetackling challenges. of their clients that the need for expectations so recognizeProviding an enabling rm s must al rvices is There is need for has to offer. Fi lue added seenvironment with client specia lization and va networking amongample training firms as more firmsopportunities and the growing. globally are becoming The Pakistan Accountant July-Sep 2010 Page 11
  12. 12. coVer STORYmembers of professional networks to IFAC BOARD APPROVES Small First” approach to tacklingserve the specialized needs of RECOMMENDATIONS TO ASSIST complexity.clients. SMPS The recommendations can beTo give the competitive edge the The IFAC has approved a set of categorized into the following areas:International Federation of recommendations designed toAccountants (IFAC) has been expand support to member bodies in n Increase the visibility, voice, andproviding full support to the SMPs by their work to assist SMPs. The profile of SMPs - for example, bydeveloping material especially for recommendations are intended to communicating and advocatingtheir needs. Some of the latest aids give SMPs the additional practical the importance of the SME sectorare Practice Management Guide, QC support needed to provide high- and the role of SMPs inGuide, ISA Guide to name a few. quality professional services to their supporting this sector;Further, for informal interaction SMP main clients: small- and medium- n Expand the monitoring of globalCommittee twitter has also been sized entities (SMEs). IFAC considers regulatory reform to ensure itslaunched. the health of the SME sector, which suitability for SMEs and SMPs; accounts for the majority of private n Develop guidance, resources, and sector employment and gross tools-in collaboration with member domestic product (GDP) worldwide, to bodies - that help promote and be crucial to global economic build the capacity of SMPs to growth and financial stability, as well deliver high-quality accounting, as the public interest. Through these assurance, and business advisory recommendations, IFAC also seeks services; and, to enhance SMP participation in n Enhance the extent andThe SMP Committee is piloting Twit- international standard-setting and effectiveness of participation ofter as a vehicle for communicating regulatory and policy development. SMPs in the development ofand engaging with SMPs, member IFAC’s independent standard-setting IFAC’s standards throughbodies and others. The SMP Commit- boards and other groups will be increased SMP representation ontee Twitter will keep users up-to-date encouraged to further embed SMP certain independent standard-with global developments in the and SME considerations into their setting boards and other activitiesSMP/SME sector. Please visit work programs - for example, through where SMP contributions are increased involvement of SMPs in essential. projects and by adopting a “Think Quarterly Magazine of The Institute of Chartered Accountants of Pakistan Advertisment Rates Positions Per Issue Four Issues Rupees Rupees Back Cover 30,000 116,000 Inside Front Cover 20,000 76,000 Inside Back Cover 20,000 76,000 Inside Pages 10,000 38,000 Subscription Rates Single Copy Annual CA Students (After Completion of Training Periods) Rs. 40 Rs. 150 Others Rs. 60 Rs. 200 The Pakistan Accountant July-Sep 2010 Page 12
  13. 13. coVer STORYSMAll AND MEDIUM SIZED reduce the reporting burden for SMEsENTITIES (SMES) revisions to the IFRS will be limited to once every three years.In Pakistan the SMEs make up amajor portion of the documented In particular, the IFRS for SMEs: Comparison to full IFRS:economy representing the privatesector. It was generally felt that in the It covers most of the full IFRS n provide improved comparability requirements, but includescase of small and medium-sized for users of accounts relaxations for SMEs:entities, the cost of compliance withcomplete set of IAS as notified by the n enhance the overall confidence in The following topics have beenSecurities and Exchange the accounts of SMEs, and excluded:Commission of Pakistan (SECP) wasconsiderably more than the benefits n reduce the significant costs n earnings per shareaccruing from the use of such involved of maintaining standards n interim financial reportingstandards. In order to address this on a national basis. n segment reportingissue, the Institute (ICAP) developed n special accounting forthe accounting framework that could The IFRS for SMEs has to date been assets held for salebe used for the preparation of the adopted by over 60 jurisdictionsgeneral purpose financial statements The following options have worldwide. been disallowed:by the Small and Medium-Sizedentities. The decision of which entities these n financial instrument standards may apply to has, however, options, includingAlthough, the International been left to the individual jurisdictions available‐for‐sale,Accounting Standards Board (IASB) discretion. held‐to‐maturity and fairwas working on a project to develop value optionsIFRS for Small and Medium-sized Currently the Institute is in the n the revaluation model forEntities, it was expected that it may process of adoption of IFRS for SMEs property, plant andtake a few years for finalizing this equipment, and for for Medium Sized entities (excludingstandard. To fill the gap during the intangible assets small size entities for whichtransitory period the Institute had n proportionate consolidation compliance to these standards is for investments intaken the initiative to formulate the considered not practicable). jointly‐controlled entitiesStandards for Accounting and n for investment property,Financial Reporting for Small and With the IFRS for SMEs the SMEs measurement is driven byMedium-sized Entities. On the have a tool for greater transparency circumstances rather thanrecommendation of the ICAP the and comparability of financial allowing an accountingSECP vide SRO No. 860(I)/2007 statements in the global market. policy choicedated August 21, 2007 had notified Hence giving an opportunity to n between the cost and fairthe Accounting and Financial expand and reach out to markets value modelsReporting Standards for MSEs and beyond the geographical borders. n Various options forSSEs issued by ICAP under Section government grants.234(3) of the Companies Ordinance,1984. The following areas have been The author is simplified: Manager Technical ServicesIFRS FOR SMES at ICAP, Karachi. n Financial instrumentsThe IASB issued on July 9, 2009 an measurementIFRS designed for use by SMEs, n Goodwill amortizationwhich are estimated to represent n Borrowing cost expensedmore than 95 per cent of all n Investments in associates and Jvs can be measuredcompanies. The standard was a at costresult of a five-year development n PPE useful life reviewprocess with extensive consultation of n Defined benefit plansSMEs worldwide. measurement n Simplified tax approachThe IFRS for SMEs is a self- n No separate held for salecontained standard of about 230 assetspages tailored for the needs and n Biological assets FV notcapabilities of smaller businesses. necessaryMany of the principles in full IFRSs for n Equity settled share basedrecognising and measuring assets, payment measurementliabilities, income and expenses havebeen simplified, topics not relevant toSMEs have been omitted, and thenumber of required disclosures hasbeen significantly reduced. To further The Pakistan Accountant July-Sep 2010 Page 13
  14. 14. coVer STORY By Way of Public accounting Prelude: Practice took the idea of being a fish in a tiny pound of my own, and applied for a practicing certificate. The The coming year 2011 will mark the Golden Jubilee idea flourished when a dear friend in practice of this august Institute. On a humble note, it will also encouraged me to get rolling and I seized the mark completion of my first decade in public moment. accounting practice. Here is what this journey has been like…..... Verily, the first sacrifice my new venture required was the prospect of giving up whatever pittance I How it started? was assured towards the end of the month, as a salaried employee throughout my professional It must be a proverbial sunny day of my life when I career.Altaf Noor Ali, ACAThe Pakistan AccountantJuly-Sep 2010Page 14
  15. 15. coVer STORYThe ideal way to end up as for a fresh qualified person to set up I would find it difficult to have a go.somebody notable in a public practice an office without any seed money ongoes through audit training in a his own and ofcourse without any On the way there was some comicrelatively larger audit firm, and option of external finance? relief as well. It was in the form of myultimately gaining partnership, after interaction with symbolic cool andqualifying and serving in managerial A related step was to set aside colourful professional clowns, two ofcapacity for some time. My case was enough to get the practice going to which I describe below. I believedifferent. Yes, my audit training was settle financial commitments in time, every practitioner gets to meet them.from one such firm, but I was whether of paying monthly rent or How they are responded depends ontempted by the glamour of the other expenses for maintaining the the individual.‘industry’, and eight years later the office. It looked as if I complete theconventional route was not there for full cycle from being a month end One day, a gentleman walked in myme. payee to the payer. From now office and asked me if I would be onwards, on every first of the month interested in doing an audit of hisWith practicing certificate in my hand instead of myself receiving a salary, I small business. He wanted it done toa month later, I felt privileged and would be paying rent and the rest of obtain visa for the U.S. As thehappy. That day a new firm bearing the stuff. discussion progressed, I came tomy name came into being. know that he was in import export Paraphernalia and financing: business of which he had notThe Silent Vow: maintained any books. He went on to As the firm started rolling, I add what he wanted me to ‘show’ inI remember holding the practicing appreciated how important it is to his financial statements.certificate with reverence. When my have some kind of financialfather (a physician) saw it, he asked arrangement available to achieve the The next one was a semi-qualifiedwhen I will be taking the oath. He expansion but who’s there to finance accountant who walked into my office.shared my faint disappointment when it? This is true for a green field office His purpose of meeting me was toconveyed that the chartered like my own or an established firm. I find out if I would be interested inaccountants do not take a ceremonial have not heard of any bank providing ‘thapafy’ (certify without verification)oath like physicians, though both finance, possibly because a statements prepared by him forprofessions hold the element of practitioner like myself would not applicants of consumer loans frompublic interest supreme. have a collateral to offer. That may be commercial banks. Easy money for one reason why the growth of most one signature but guess not my typeMy first reading was the bulky code professional firms is so retarded. The of work!of ethics for the practitioners. I fact is any start-up firms goes throughreflected on its application and a painful period during the initial In the times ahead, some goodsilently vowed never to let my years. Guess too much to expect our opportunities also came by goingcommercial interests come above the Institute to have some arrangements through press advertisements. Goodprofessional ones. I felt a worthy in place to ease the process? to see that reading newspaperburden of trust and a collective became more interesting. It becameresponsibility placed on my shoulders Not to be deterred, my first act in a source for searching organizationsin this new role, something I never office was to place a small portrait of searching for auditors. For example, Ifelt all the while I was serving as an a young and handsome Mr. was keen about developing auditemployee. Mohammad Ali Jinnah, with brilliance expertise in educational institutions and inspiration radiating from it, on from schools to university, compatibleEnergising the firm: my desk. I have been a great admirer with my appointment in a panel of of his character and ability…wishing monitoring consultants by the InstituteMy first step towards my practice was to emulate it in my own humble way. for inspecting and reporting onto secure suitable rented premises. selected academic and financialFortunately, the search came to a In action: aspects of private educationfruitful end. I got a fine office at institutions registered for tutoringreasonable terms from an I remember my first audit job well. It students of first four modules.acquaintance. I wish I had the came as an audit of an employeefinancial prudence of saving enough provident fund scheme of a non- Even today, the newspapers continuein my earlier career to have bought banking financial institution. The next to be a valuable source. However, asthe premises and save the rent. one was something similar from a software company. These kinds of a practitioner I found negotiating a fairThe process of setting up an office audits became my principal expertise audit fee to be a major hurdle in mostinvariably involves higher funds than in years ahead. The issue was that such cases. This may be so becauseone would estimate; items required to these audits are annual events most clients do not see an audit as amake the office functional keep on lasting for less than a month. What value adding business activity, and inadding up, so does the cost. From should I be doing in the meanwhile? my opinion rightly so because anoffice fittings, furniture and computer audit is primarily a complianceto electric kettle all is necessary. I I started actively looking for more activity. Our only contribution ashad to draw upon my savings to get it opportunities as external auditor. I auditors to the financial statementsdone but imagine what it must be like was aware that without quality ratings appears to be a The Pakistan Accountant July-Sep 2010 Page 15
  16. 16. coVer STORYone-page standard audit report, which match those paid to an individual. The last audit when you start the audit forin principle is also correct. The emoluments of a ceo exceed those of the current year. Similar sob storiesbehind-the-scene endless hours of an auditor, without any exception, in from my network and one wonders ifthe auditor that goes into bringing the all cases I studied. The board of payment of audit fee is a priority at allrag-tag financial statements handed directors appear to be more generous for the client.over initially to bring it to the point than the shareholders who appointwhere that to him and one-page- auditors in the general meetings. With time as the most preciousstandard-report appears respectable irreplaceable commodity alargely remains unacknowledged. Graceful reputable firms, with global professional has, there is no time to affiliations, who are in best position to waste on following up clients to payThe issue of audit fee and of its not command audit fee of their liking, if their dues. I decided to get paid inbeing paid: they find themselves often in such a advance. Some of my colleagues position, what would be the level of argued with me on charging fee inWith only one in five chartered audit fee for the rest of us? In short, advance, even going on to suggestaccountants in public practice and the minimum hourly rates, provided in that it is not permitted, but failed tothey being only ones providing audit ATR-14, apply to the listed show me where it says so. Instead,service, the context is right forbooming public practices. In additionthere is ATR-14 that prescribes theminimum hourly rate for computingaudit fee for accepting audits ofcompanies only. However, the waythe profession has evolved over lastfifty less one year, its caretakersclearly failed to capitalize on itsstrengths. Many questions haveremained unattended. For example,what about the audit fee of theentities other than companies? Theseconcerns affect small and mediumsize and it practices most and haveonly cumulated over a period of time,resulting in unbelievably low auditfee.The severity of how low the audit feesare can be gained from studying thegiants of the profession - from thosewho are in the best position tocommand a fair audit fee. let us doso by comparing the emoluments of companies only and even there it is as a counter-attack they would askan external auditor and a chief not applied in majority of cases. I am me to show them where it is permittedexecutive officer of a listed company yet to hear any professional firm ever to charge audit fee in advance, orand see who’s getting a better deal. being reprimanded on this count to even half of it. The fact is that our convince me that the Institute while technical literature is completely silentEssentially we are profiling a awarding quality ratings considers if on the issue.professional firm, maintaining the audit fee is commensurate withinternational affiliation and technical the number of hours on-the-job. Beyond audits:human resource base, giving an Undercutting audit fee has become aindependent opinion about the favourite pass time in which the Apart from audit, I did interesting duefinancial statements of a listed professional firms appear to be diligence assignments for and an individual who is the contributing or is it an indication that One such assignment was on behalfhighest executive officer of a listed they are finding it increasingly difficult of a freight forwarding company forcompany. As to responsibilities, the to reach a break-even point. equity injection in a trucking ventureauditor is bound by a code of conduct with another company. It turned outand follows certain technical Add to the issue of low level of fee the that major recasting and reformattingstandards in giving his audit opinion. issue of not being paid for the of the key financial information wasOn the other hand, ever heard about services rendered in a reasonable required and about 50% morea code of conduct applying to the time. Clients somehow tend to go resources, for validating agreed-uponceos in general or any ceo ever short on memory and priority about parameters. The Hobson’s choicebeing held responsible for whether the audit fee is paid, once was in doing a mediocre job andprofessional negligence? Given this, the audit report is signed. Infact, one attaining the standard I had in mindthe sad fact is that the emoluments colleague shared that his clients are when accepting it. I concluded thepaid to the audit firm do not even so spoilt that they pay the fee for the assignment with a financial loss but The Pakistan Accountant July-Sep 2010 Page 16
  17. 17. coVer STORYwith a professional consolation. research for individual clients. My first with latest technical developments in break through came from a accounting and auditing, specially asAt this point my clients included discussion with a former colleague the practitioner ages. That thebusinesses where owners appointed who virtually became a victim of number of listed companies beingme to act as a consultant and internal financial scam involving placing an audited by sole practitioners hasauditors. Sometimes, I was applying amount with an individual for a high gone down is cited as knowledge to present the most return. He was lucky to escape it and There is a limited amount of truth in itpressing business issues to the made it a point never to trust as well but you cannot ignore theowner independently, or analyzing individuals and was looking for some character of auditor out of thisarea sales receivables, or assistance in setting up an picture. Enron was not audited by adocumenting year-end closing of the investment account with a broker, sole practitioner.accounts. advice on acquiring investments, and doing the keeping book-keeping. As a practicing member, it is alsoMeanwhile, extra effort in developing important to take charge of your owngood rapport with fellow professionals We got the ball rolling by setting up professional development. There is astarted paying off. I collaborated with an account with a stock broker of noticeable improvement in the stellar repute. Meanwhile, we technical literature coming out from defined his risk profile, the international standard-setters. The practice of auditing has become expected returns and However, the Continuing Professional sophisticated over last many years. investment strategy. We Development program of the Institute agreed upon certain has not shown much improvement in Regulators have started believing fundamentals, the foremost terms of relevance, contents, delivery that most sole practitioners find it being that we will not be and evaluation of participants. A clear increasingly difficult to be updated trading securities in short- exception to this general trend was awith latest technical developments in term. We will build his CPD program in which Mr. Ibrahim investment portfolio on a long- Sidat, FCA was invited to share hisaccounting and auditing, specially as term basis, buying experiences as a practitioner. I wish the practitioner ages. That the pre-determined equities at a such “tea sessions” can be a regular number of listed companies being reasonable cost with the monthly feature to groom objective of enjoying a steady practitioners. audited by sole practitioners has return with protection ofgone down is cited as evidence. There capital as objective. The web offers most fantastic of is a limited amount of truth in it as opportunities to learn in your own Another avenue that time. In my case, I find myself well but you cannot ignore the somehow shaped during frequently visiting and commenting character of auditor out of this these years was imparting on the exposure drafts of the picture. Enron was not audited by a training. It started with a International Accounting Standards sole practitioner. session on ‘international Boards ( and auditing framework’ for junior International Auditing and Assurance joint directors at the State Standards Board ( firm of chartered accountants Bank of Pakistan at the Nationalon management consultancy Institute of Banking and Finance Meanwhile, my quest for freshassignments, which kept my precious (NIBAF). I found myself designing learning took me to a post-graduatedfinancial analysis and reporting skills courses for NIBAF in corporate diploma in Islamic Banking andcrisp and relevant. governance, internal auditing, Insurance, clear the exams of international accounting, licensed International FinancialOne such assignment was to monitor consolidation, corporate valuation etc. Analyst, US and go for a lawand report to a banking syndicate on This stream further developed when I graduation. I served uninterrupted asthe cashflows of corporate entity on did a two day work shop for internal a humble worker in some committeesmonthly basis that had defaulted on a auditors of commercial banks as an of the Institute and also contributed ahuge facility. The challenging part open-enrollment course. It is hard few articles for this magazine as well.was to wade our way through a work but much fun conducting anplethora of information, validating and activity as a facilitator than a Conclusion:presenting it in a manner that quickly participant and gaining CPD hours.informs the syndicate about the story Since then the training has been a looking back the past decade, beingbehind the numbers. Within six favourite activity. in practice gave me a new dimensionmonths of this assignment the debt to look at life. Most experienceswas renegotiated and the syndicate Professional Development: bought me immense satisfaction as awas able to claim most of the struck practitioner and an individual.amount. The practice of auditing has become looking forward, I see a realistic sophisticated over last many years. potential for the public practices allSometime during this exciting period, Regulators have started believing that over Pakistan to grow well in theI started exploring the area of most sole practitioners find it coming decade.investment book-keeping and increasingly difficult to be updated The Pakistan Accountant July-Sep 2010 Page 17
  18. 18. coVer STORYThe evoltion of smpsInternational Federation of Accountant’s President Robert l Bunting says“SMPs Should Evolve to SatisfySMEs’ growing needs.”Small- and medium-sized practices (SMPs) today can no empathise with their clients’ resource constraints. Thislonger rely strictly on compliance work to pay the bills. The contrasts with very large practices where the focus is onreason why is simple: SMEs (small- and medium-sized large companies and SME clients may have to deal withenterprises) – the traditional client of the SMP – several departments.increasingly need a broad range of competencies beyondthe core skill set of the small practice. At the same time, Building Trustthe threshold for mandatory statutory audits has risen in But the assumption that SMEs nearly always choose ansome countries and increases are under consideration in SMP is not correct. A significant proportion of the clients ofmany others. A fast-changing and complex regulatory large accounting practices – the Big Four and second-tierenvironment means that SMEs want their SMP to provide practices in most countries – are SMEs. These are moreproactive business advisory services. SMEs need advice likely to have the resources and the benefits of economiesthat will help them generate business plans and financial of scale to offer services and products to meet theirforecasts, identify and manage risk, define and implement clients’ accounting and other specialised support needs; inIT systems, and value the business. SMPs must evolve to fact, they often position themselves as ‘professionalmeet these growing needs or face dwindling clients and services supermarkets’. Many SMPs actually use largerrevenues. A new study by the International Federation of firms to provide limited speciality services to their SMEAccountants (IFAC) makes clear that smaller accountancy clients or as a technical backstop for their own clientpractices need to address their skills base, their working service work. While compliance work will remain hugelymethods and their referral models if they are to meet the important for SMPs – accounting services and tax areevolving needs of the SMEs that are their lifeblood. The core services at all levels in public practice – technicalstudy – The Role of Small and Medium Practices in competency and timely delivery in compliance work buildProviding Business Support to Small- and Medium-sized trust and usually lead to requests for non-complianceEnterprises, written by professors Robert Blackburn and advice and support. This is a time-proven formula drivenRobin Jarvis – points out that accountants are still SMEs’ in part by the nature of most small business owner-most frequently used source of advice. According to a managers, many of whom are determined to make all theirstudy last year by the UK’s Open University, trade own decisions and avoid advertising any managerialconnections, the media, family and friends are all weakness. In this kind of ‘fortress enterprise’ culture, manyimportant, but none ranks as highly as the accountant. SMEs do not request advisory services until the expertSMPs are usually highly experienced in dealing with has already provided a specific demonstration of theirSMEs and, as small enterprises themselves, can competency. The Pakistan Accountant July-Sep 2010 Page 18
  19. 19. coVer STORYBecoming Knowledge Professionals provision of compliance services wins them ‘competence’Business consulting services represent a crucial growth trust.area for SMPs. As mentioned at the start, the raising ofthe statutory audit threshold has diminished a key Responsiveness/ proximity: SMEs rate SMPs’revenue stream for many SMPs and the market is responsiveness to their demands so highly that it can beincreasingly competitive. As a result, if they are to thrive regarded as more important than a qualification orrather than merely survive, SMPs must diversify and competency. The geographical proximity of SMPs to theirfocus on other advice requirements for SMEs (or provide SME clients is also important. Many owner-managersaudit services to larger companies). They must develop prefer face-to-face meetings with their advisers, and valuetheir skills base beyond bookkeeping, tax preparation and ease of access.audit. In short, they must move from being accountingtechnicians to knowledge professionals. So how can Robert l BuntingSMPs overcome the unavoidable resource constraints in- becamehouse and provide a range of services to their clients? president of theThe most common model is to expand the technical and Internationalsoft skills of existing personnel. Some accountants can Federation ofmake the transition from ‘accounting expert’ to Accountantsmanagement adviser through experience and self (IFAC) indevelopment. Others may need training or coaching to November 2008.grasp the necessary flexibility and an understanding of the He is a partner atcontext and cultural environment of the SME. For Moss Adamsexample, accountants might need to hone their where he servedinterpersonal skills or make time to discuss a client’s as chairman andsuccession planning (or other business advisory needs). chief executiveAnother common model is to focus on a specific industry officer from 1982sector or speciality linked, for example, to the music to 2004. Mossindustry or environmental legislation. This model usually Adams is aworks best in large cities or where a particular industry is member ofhighly concentrated. But there have been successful Praxity (formerlycases where SMPs are willing to travel further to serve Moores Rowlandtheir clients. A third model, which can be a standalone International)strategy or one that complements the first two, involves where Buntingthe SMP participating in a high-quality referral network. served asBefore using one, SMP owners should analyse the chairman fromdifferent types of networks and carefully consider how 1998 to 2004. From 2004 to 2005, Bunting was chairmanthey will monitor service quality and timelines for the of the Board of Directors of the American Institute ofclients they refer. But referral networks offer SMPs many Certified Public Accountants (AICPA). Go topotential advantages: they are an effective way to satisfy for more about the SMP Committee.the increasing breadth of demands from SME clients.They also offer the opportunity to gain clients through The Role of Small and Medium Practices in Providingreferrals from other network members or to win new ones Business Support to Small and Medium-sized Enterprisesdue to their more extensive service capabilities. – by ACCA’s head of small business Professor Robin Jarvis and Professor Robert Blackburn of KingstonWhy SMEs Use SMPs University and published by IFAC –is available forCompetency: SMEs often lack the full range of download at expertise. Most outsource their financial medium-practices-committee/ to SMPs with their required technicalcompetencies and expertise in statutory audit and This article originally appeared in the ACCAstaxation. Accountancy Futures.Trust: As members of a regulated profession with codesof conduct, accountants enjoy ‘institutional’ trust. Their The Pakistan Accountant July-Sep 2010 Page 19
  20. 20. coVer STORY An Interview with sylvie Voghel chair, small and medium practices committee international federation of accountantsQ QHow does IFAC support Small- and While IFAC can do little to help SMEs How does the IFAC SMP CommitteeMedium-Sized Entities (SMEs) and directly - IFAC is not, after all, an operate and how is it resourced?Small and Medium Practices association of SMEs - IFAC(SMPs)? recognizes their importance and The IFAC SMP Committee was provides invaluable indirect support formed in 2004, and is now aA thriving SME sector is a vital part of to them. First, IFAC supports SMPs committee of 18 members from alljob creation, social cohesion, (primarily through their member across the globe, with a wealth ofinnovation and economic growth. In bodies) so that they can provide experience in the SMP and SMEmany – if not most – countries around better services to their SME clients – sectors. We have formal workingthe world, SMEs represent the vast services that meet the SMEs’ needs procedures, project teams, a strategicmajority of entities as well as the and are of high quality; this in turn and operational plan, a communications plan, and a full-timemajority of private sector employment helps SMEs prosper. And second, senior technical manager. Ourand Gross Domestic Product. IFAC supports professional strategy is two-fold. Firstly, we helpAccording to the Organisation for accountants in business (again shape international standards –Economic Co-operation and primarily through their member primarily auditing and assurance,Development (OECD), SMEs account bodies), many of who work in SMEs. ethics and accounting – by providingfor over 95% of enterprises and 60– Much of the support that IFAC input into the standard-setting70% of employment in OECD provides for SMPs and SMEs comes process. We do this to ensure thatcountries. from the work of the SMP Committee these standards are relevant to SMPs that I chair. and SMEs and can be cost effectively applied. The Pakistan Accountant July-Sep 2010 Page 21