Page 1 | Confidential and Proprietary InformationBuilding For Sustainable Growth– (re)Defining AccountancyProfession in th...
Page 2 | Confidential and Proprietary InformationConventional ApproachThink Profession
Page 3 | Confidential and Proprietary InformationLive Core Values – Think DifferentThink Profession
Page 4 | Confidential and Proprietary Information• The context• Regulation of the profession – the global perspective• Rol...
Page 5 | Confidential and Proprietary Information5000 Years Ago
Page 6 | Confidential and Proprietary Information500 Years Ago
Page 7 | Confidential and Proprietary Information84 Years Ago
Page 8 | Confidential and Proprietary Information5 Years Ago
Page 9 | Confidential and Proprietary InformationLast YearWhy Greece wont go awayBy Laurence Knight Business reporter, BBC...
Page 10 | Confidential and Proprietary InformationWhat Now?
Page 11 | Confidential and Proprietary InformationGlobal Landscape Today• Pressures on the broader financial architecture–...
Page 12 | Confidential and Proprietary Information• Global regulatory convergence– IFAC’s position; importance of high-qua...
Page 13 | Confidential and Proprietary Information• Regulation of individualprofessional accountants isprimarily conducted...
Page 14 | Confidential and Proprietary InformationStrong Accountancy Profession = Inclusive andSustainable Growth• Maintai...
Page 15 | Confidential and Proprietary InformationThe Goal – Provide Quality Information• Contribute to economic stability...
Page 16 | Confidential and Proprietary Information• Educate stakeholders• Advocate the role of the profession• Raise aware...
Page 17 | Confidential and Proprietary Information• Education and training• If not the responsible body• Advocacy for inte...
Page 18 | Confidential and Proprietary Information• Commitment to the public interest• Adherence to the values of integrit...
Page 19 | Confidential and Proprietary InformationGlobal ProfessionIFAC
Page 20 | Confidential and Proprietary InformationFor the global accountancy profession to berecognized as a valued leader...
Page 21 | Confidential and Proprietary InformationOverview of IFAC StructureTransnationalAuditorsCommitteeProfessionalAcco...
Page 22 | Confidential and Proprietary InformationOversight of IFAC PIACsTransnationalAuditorsCommitteeProfessionalAccount...
Page 23 | Confidential and Proprietary InformationIFAC Oversight and ConsultationTransnationalAuditorsCommitteeProfessiona...
Page 24 | Confidential and Proprietary Information• In accordance with IFACConstitution, IFACmembers and associatesare req...
Page 25 | Confidential and Proprietary Information• Clear benchmarks forPAOs• Enable high qualityperformance byprofessiona...
Page 26 | Confidential and Proprietary InformationSMO 7:IFRSSMO 3:ISASMO 5:IPSASSMO 2: EducationSMO 4: EthicsBuilding Bloc...
Page 27 | Confidential and Proprietary Information• Serve the public interest• Drive adoption andimplementation ofinternat...
Page 28 | Confidential and Proprietary Information• Shall = requirement• Applicability Framework• Comply or explain• Best ...
Page 29 | Confidential and Proprietary InformationUnderstanding DiversityKey ConceptsRegulatoryframeworksSectors ofprofess...
Page 30 | Confidential and Proprietary InformationDegree of responsibility for an SMO areaDirect SharedNoResponsibilityImp...
Page 31 | Confidential and Proprietary InformationIFAC Compliance AssessmentRequirements and Application GuidanceApplicabi...
Page 32 | Confidential and Proprietary InformationAdoptionSMOs 2, 3, 4, 5, 7DecisionActionto makethe decisioneffective
Page 33 | Confidential and Proprietary InformationAdoptionTranspositionDifferent Approaches – One GoalSMOs 2, 3, 4, 5, 7
Page 34 | Confidential and Proprietary InformationEducation andtrainingRaisingawarenessDisseminationof standardsImplementa...
Page 35 | Confidential and Proprietary Information• Assess priorities andchallenges• Is there a need oftranslation to ensu...
Page 36 | Confidential and Proprietary InformationExtension of the scope to ALL audits of financialstatements (priority fo...
Page 37 | Confidential and Proprietary Information• Review and understandrevisions• Consider actionsnecessary to addressre...
Page 38 | Confidential and Proprietary InformationStrong Global Accountancy ProfessionIt All Fits Together
Page 39 | Confidential and Proprietary InformationWhy Quality Assurance?InternalQualityControlsExternalQualityAssuranceRev...
Page 40 | Confidential and Proprietary Information• Protects publicinterest• Enhances reputation• Reduces risk of errorsan...
Page 41 | Confidential and Proprietary InformationScope• Consider efficiency & don’t reinvent the wheel• ALL audits of fin...
Page 42 | Confidential and Proprietary Information• ISQC 1• ISA 220• Guidance– Awareness building– Manuals– CPD– Start sma...
Page 43 | Confidential and Proprietary Information• Subject– Firm or engagement partner• Criteria– Suitable– Respectful of...
Page 44 | Confidential and Proprietary Information• Cycle approach• Risk-based approach• Mixed approach• Other considerati...
Page 45 | Confidential and Proprietary Information• Procedures• Documentation• Quality– Resources– Skills & competence– Qu...
Page 46 | Confidential and Proprietary Information• Conclusion– Is the firm’s system designed to meet requirements?– Is th...
Page 47 | Confidential and Proprietary Information• IFIAR principles• Cooperate closely & share information and expertise•...
Page 48 | Confidential and Proprietary InformationReview of Implementation and EffectivenessQuality AssuranceConsiderPlanE...
Page 49 | Confidential and Proprietary Information• Rwanda• Malta• Bahamas• PolandExamples from Around the WorldQuality As...
Page 50 | Confidential and Proprietary InformationQuality in the performanceof Auditing Engagementsby ICPAR members is the...
Page 51 | Confidential and Proprietary InformationMaltaExamples from Around the World
Page 52 | Confidential and Proprietary Information
Page 53 | Confidential and Proprietary InformationFeedback from Firms• I would also like to take this opportunity to thank...
Page 54 | Confidential and Proprietary InformationFeedback from Firms cont.• We would like to thank you for your very help...
Page 55 | Confidential and Proprietary InformationFree Tools and ResourcesHow IFAC assists
Page 56 | Confidential and Proprietary InformationFree Tools and Resources• www.ifac.org/SMP• web.ifac.org/clarity-center/...
Page 57 | Confidential and Proprietary InformationTHANK YOUwww.ifac.org/ComplianceProgramwww.ifac.org
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Building for Sustainable Growth—(re)Defining Accountancy Profession in the Age of Twitter

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Presentation given by Szymon Radziszewicz, IFAC Senior Technical Manager, during a seminar on the IFAC and the accountancy profession at the Philippines Institute of Certified Public Accountants.

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  • Solid craftsmanship based on education, experience, examination, values
  • Flexibility for adaptation is one of the best sustainable characteristics of a building. Besides this the award winning Sky Village project for Copenhagen building will also integrate the latest technologies according to the progressive Danish environmental standards.
  • The annual balance sheet of a Sumerian state-owned farm, drawn up by the scribe responsible for artisans: detailed account of materials and workdays for a basketry workshop.
  • The timeswe live in are no doubt VERY interesting…
  • But being part of the accountancy profession we have the tools to bring clarity to today’s complex world
  • Policy Position Paper 1 emphasizes best practicein the design and implementation of regulation. An understanding of the characteristics and operations of the market is essential (market size, business diversity, economic factors, consumers, etc.). Care needs to be taken that the nature and characteristics of the operation of the market are well understood; otherwise, the regulation may not achieve its purpose. To be effective, IFAC believes that regulation should reflect six qualities: (i) transparent; (ii) proportionate; (iii) targeted; (iv) non-discriminatory; (v) implemented fairly and consistently; and (vi) subject to regular review.Regulation should aim to ensure that the quality of services provided by the profession responds effectively and efficiently to the demands of the economy and society.It must be designed to take into consideration the shocks and stresses that may occur in different economic conditions.
  • Global organization for the accountancy professionComprised of 173 Members and Associates in 129 countriesMembers and Associates are Professional Accountancy OrganizationsRepresents 2,5 millions accountants in public practice, business, government, and academiaThe color may be uniform but there are different ways to effectively organize the profession, different legislative frameworks, different stakeholder expectations and capacity Green – membersYellow – associates onlyGrey – no IFAC representation
  • Let’s start by looking at what are the SMOs. They are embedded in the IFAC Constitution and in the first instance apply to all IFAC members and associates. In a sense they are international “soft law” but for IFAC members and associates SMOs
  • But more broadly, the SMOs are globally recognized as a clear benchmark for strong accountancy profession.
  • The 7 Statements of Membership Obligations (SMOs) serve as the basis for the IFAC Member Body Compliance Program and provide clear Framework for strong and high quality Professional Accountancy Organizations (PAOs). The SMOs are also globally recognized as the benchmark for PAOs as they work, in the public interest, to develop, continuously improve and monitor high quality professional accountants. Of course for the PAOs to be strong they need sound governance framework. While there is no SMO on Governance IFAC has some guidance and soon we will issue a refreshed version on it.As you see,we can think about the SMOs in terms of building blocks for constructing strong PAOs. First, solid PAO needs a good base of education; then come technical standards, IFRSs, ISAs, public sector accounting standards, but the whole house is kept together by a cornerstone of Ethics. All of us are simply human and, therefore, require guidance on what is right or wrong. But also because we are human, we need solid systems of external quality assurance and if wrongdoing is reported or suspected – an unbiased investigation and disciplinary system.
  • So, why did IFAC decide to revise the SMOs in 2012? Under the oversight of the Compliance Advisory Panel and PIOB.Serve the public interest: to reflect the context of developments in international standards and today’s regulatory environment, to also reflect the expectation of the accountancy profession held by the public and key stakeholders.Clarify the SMOs: to ensure that the SMOs continue to be an effective framework for credible and high quality PAOs.To further drive adoption and implementation as clearly mandated in the IFAC strategy Changes were made to the structure of the SMOs to (A) ease the understanding of the SMOs, and (B) to add new requirements to reflect current international best practice.Presentation will cover a description of both elements of the revised SMOs.
  • Let’s look at the next piece of the puzzle and consider what are the key concepts of the SMOs.Use of “shall” to identify requirementsUnderstanding diversity – Applicability FrameworkComply or explain - when PAO has responsibilityBest endeavors – when PAO has no responsibilityIFAC Member Body Compliance Program
  • Probably one of the most important concepts underlying the SMOs is appreciation and understanding that PAOs are all very different.
  • What you see on this slide is the clarified applicability framework. It is included at the very beginning of each SMO to guide PAOs what actions they have to take to satisfy SMO requirements depending on how much responsibility they have for each of the seven SMO areas.For example, if you have direct responsibility for setting auditing standards, then to comply with the SMO 3, you have to adopt and implement the ISAs and if something prevents you from doing it, you have to provide satisfactory explanation.On the other hand, if you have no responsibility for setting accounting standards for the public sector, then to comply with SMO 5, you should use your best endeavors to promote the IPSASs to the government and offer your assistance for example to organize training for government accountants.Now on to the main requirements.
  • To further help PAOs in understanding the SMOs, we have improved and streamlined the structure of the SMOs.Each SMOs starts with clear reference to the obligations enshrined in the IFAC Constitution.It then identifies the scope of the SMOAnd proceeds to set out the applicability framework that we have just discussedAfter setting the scene, each SMO sets out relevant requirements and application guidanceFinally, each SMO concludes by indicating how IFAC approaches the assessment of each member and associate compliance with the SMO
  • Adoption consists of two key steps: (i) the decision that the international standard is appropriate for the jurisdiction, and (ii) the actions necessary to make that decision effective.
  • Depending on legal and regulatory framework and other jurisdiction-specific factors, adoption can take many different forms, including: requiring use of the international standards, as set by law or regulation; incorporating or transposing international standards into existing national requirements;establishing a convergence process, bringing together national and international standards to minimize and/or eliminate differences; oreliminating major departures from international standards through harmonization of national requirements with international standards.
  • Implementation includes a range of activities that ultimately raise awareness of the standards and build understanding regarding their use in practice by individual practitioners. In addition to promoting and disseminating the standards, actions supporting implementation include design and delivery of related education, training, and practical guidance materials.
  • Translation can also be a core element of effective implementation. In jurisdictions where English is not the official language, the responsible entity should consider their priorities and determine the impact of translation on proper adoption and implementation. Where it is deemed relevant, a process for timely, accurate, and complete translation should be established.
  • To assist you in understanding the revisions and your considerations on what changes need to be addressed, we have prepared a range of tools that will be made available on the IFAC website after the Council ratifies the SMOs. The main tool is the Revised SMO Comparison Guide that includes: a) Summaries of major revisions to each SMO as compared to the previous SMOs issued in 2004,b) Full text of the revised SMOs with: - Paragraph references mapping it to the previous version of the SMOs Notes indicating the nature and the objective of the changes, if any, made to the paragraph.In addition, to the comparison guide, and if you will want to know more detailed information, we have also prepared and will make available:A document summarizing significant issues raised in the exposure process and conclusions reached by the CAPDetailed mark-up document from original to revised SMOs.And, of course, as always you can reach out to the IFAC staff in case you will have any further questions or required some additional clarifications.We also think about organizing learning workshops alongside events organized in the regions. We want to make use of webinar technology to organize virtual learning opportunities. And last, but not least, we want to leverage our relationships at global, regional and national level to progress our vision of global adoption and implementation of international standards.
  • Before we will start the more exciting part of this afternoon and have more hands-on discussion about what the SMOs mean for each of you, I would like to finish my remarks by emphasizing that the Vision of the Compliance Program is one of encouragement and improvement. The Program strive to influence agendas and actions towards global adoption and implementation of the international standards, but we can only do that by partnering with you as IFAC members and associates. Since 2004, when the program was established, you – IFAC Member Bodies – have taken the lead and continue to demonstrate the commitment to building strong and high quality professionals. We are confident, that with your ongoing commitment and the support of our partners, we will continue on the road to building strong and high quality PAOs around the world for the benefit of public interest and sound and sustainable economies.
  • Enhances reputationReduces risk of errors and omissionsReflected in enhanced service to clientsGenerates referrals for new businessIncreases profitsMeets regulatory requirements
  • Improves the standard of audit workEnhances reputation of auditors and PICPAEnables PICPA to discharge its membership obligations to IFAC (SMO 1 – Quality Assurance) Protects the public interestEncourages inward investment by increasing confidence in audited financial statements
  • Undertaken in accordance with IFAC SMO 1Covers compliance with International Standard on Quality Control No.1 (ISQC1) and International Auditing Standards (ISAs) ISQC 1: Firm-level review of its quality controls and proceduresISAs: Engagement reviews of each audit principalEngagement reviews will be undertaken at the same time as firm level reviews
  • Building for Sustainable Growth—(re)Defining Accountancy Profession in the Age of Twitter

    1. 1. Page 1 | Confidential and Proprietary InformationBuilding For Sustainable Growth– (re)Defining AccountancyProfession in the Age of TwitterSzymon RadziszewiczSenior Technical ManagerMember Body Development Team LeaderPICPA SeminarManila, PhilippinesApril 11, 2013
    2. 2. Page 2 | Confidential and Proprietary InformationConventional ApproachThink Profession
    3. 3. Page 3 | Confidential and Proprietary InformationLive Core Values – Think DifferentThink Profession
    4. 4. Page 4 | Confidential and Proprietary Information• The context• Regulation of the profession – the global perspective• Role of the national profession– Commitment to quality– Implementation support & thought leadership• What is IFAC & its SMOs• Adoption & Implementation of international standards• Quality Assurance – concept & examples• How IFAC assistsOutlineToday’s Presentation
    5. 5. Page 5 | Confidential and Proprietary Information5000 Years Ago
    6. 6. Page 6 | Confidential and Proprietary Information500 Years Ago
    7. 7. Page 7 | Confidential and Proprietary Information84 Years Ago
    8. 8. Page 8 | Confidential and Proprietary Information5 Years Ago
    9. 9. Page 9 | Confidential and Proprietary InformationLast YearWhy Greece wont go awayBy Laurence Knight Business reporter, BBC News6 February 2012
    10. 10. Page 10 | Confidential and Proprietary InformationWhat Now?
    11. 11. Page 11 | Confidential and Proprietary InformationGlobal Landscape Today• Pressures on the broader financial architecture– Economy in recovery– Increased regulatory proposals resulting from global financial crisis– Sovereign debt crisis• Globalization– Information, capital, accountants moving across borders– Integrated reporting and long term sustainability• Diverse and segmented– Large multinationals/networks and smaller local SMEs and SMPs– Accountants in diverse roles: auditors, preparers, advisors, strategicbusiness leaders (CFO/CEO/COO)• Twitter generation– 140Complexity
    12. 12. Page 12 | Confidential and Proprietary Information• Global regulatory convergence– IFAC’s position; importance of high-quality globally accepted standardsand consistent adoption, implementation and oversight• Balancing shared regulation– Policy Position Paper (PPP) 1 and the role of professional accountancyorganizations• Statements of Membership Obligations (SMOs)– A framework for credible and high quality professional accountancyorganizations (PAOs)IFAC Perspective on RegulationClarity
    13. 13. Page 13 | Confidential and Proprietary Information• Regulation of individualprofessional accountants isprimarily conducted at a nationallevel, with professionalaccountancy organizations playingan important role in working withgovernments to ensure that suchregulation is effective, efficient,and in the public interest• Shared approach to regulation –roles for government and PAOsRegulation of the Accountancy ProfessionFinding the Balance
    14. 14. Page 14 | Confidential and Proprietary InformationStrong Accountancy Profession = Inclusive andSustainable Growth• Maintain core values• Think different• Push boundaries• Commit to public interest• Create, contribute, give!Role of the Profession
    15. 15. Page 15 | Confidential and Proprietary InformationThe Goal – Provide Quality Information• Contribute to economic stability and growth• Enhance efficiency and accountability of businesses• Promote and support governmental transparency andaccountability• Be a key player in (re)building confidence in financialmarketsRole of the Profession
    16. 16. Page 16 | Confidential and Proprietary Information• Educate stakeholders• Advocate the role of the profession• Raise awareness– Need for accountants and auditors– Global regulatory convergence– Public & Private Sector• Input into development of legislation and regulation• Support to those in chargeBe the VoiceRole of the Profession
    17. 17. Page 17 | Confidential and Proprietary Information• Education and training• If not the responsible body• Advocacy for international best practice• Input into the development of standards• Support implementation of standards• Promote and monitor adherence to ethics andindependence requirementsProvide SupportRole of the Profession
    18. 18. Page 18 | Confidential and Proprietary Information• Commitment to the public interest• Adherence to the values of integrity, transparency andexpertise• Commitment to follow high standards• Ongoing education• Oversight of its public interest activitiesLeadership Through ActionRole of the Profession
    19. 19. Page 19 | Confidential and Proprietary InformationGlobal ProfessionIFAC
    20. 20. Page 20 | Confidential and Proprietary InformationFor the global accountancy profession to berecognized as a valued leader in thedevelopment of strong and sustainableorganizations, financial markets andeconomiesIFAC’s VisionUltimate Objective
    21. 21. Page 21 | Confidential and Proprietary InformationOverview of IFAC StructureTransnationalAuditorsCommitteeProfessionalAccountancyOrganizationDevelopmentCommitteeProfessionalAccountantsin BusinessCommitteeSmall andMediumPracticesCommitteeComplianceAdvisory PanelInternationalAuditing andAssuranceStandardsBoardInternationalAccountingEducationStandardsBoardInternationalEthicsStandardsBoard forAccountantsInternationalPublic SectorAccountingStandardsBoardForumof FirmsPlanningand FinanceCommitteeGovernanceand AuditCommitteeNominatingCommitteeIFACRegulatoryLiaison GroupIFACCOUNCILIFACBOARDACCOUNTABILITYKEY
    22. 22. Page 22 | Confidential and Proprietary InformationOversight of IFAC PIACsTransnationalAuditorsCommitteeProfessionalAccountancyOrganizationDevelopmentCommitteeProfessionalAccountantsin BusinessCommitteeSmall andMediumPracticesCommitteeComplianceAdvisory PanelInternationalAuditing andAssuranceStandardsBoardInternationalAccountingEducationStandardsBoardInternationalEthicsStandardsBoard forAccountantsInternationalPublic SectorAccountingStandardsBoardForumof FirmsPlanningand FinanceCommitteeGovernanceand AuditCommitteeNominatingCommitteePublicInterestOversightBoardIFACRegulatoryLiaison GroupIFACCOUNCILIFACBOARDACCOUNTABILITYKEYOVERSIGHT
    23. 23. Page 23 | Confidential and Proprietary InformationIFAC Oversight and ConsultationTransnationalAuditorsCommitteeProfessionalAccountancyOrganizationDevelopmentCommitteeProfessionalAccountantsin BusinessCommitteeSmall andMediumPracticesCommitteeComplianceAdvisory PanelInternationalAuditing andAssuranceStandardsBoardInternationalAccountingEducationStandardsBoardInternationalEthicsStandardsBoard forAccountantsInternationalPublic SectorAccountingStandardsBoardConsultativeAdvisoryGroupConsultativeAdvisoryGroupConsultativeAdvisoryGroupForumof FirmsPlanningand FinanceCommitteeGovernanceand AuditCommitteeNominatingCommitteePublicInterestOversightBoardIFACRegulatoryLiaison GroupMonitoringGroupIFACCOUNCILIFACBOARDACCOUNTABILITYOVERSIGHTCONSULTATION/ADVICEKEY
    24. 24. Page 24 | Confidential and Proprietary Information• In accordance with IFACConstitution, IFACmembers and associatesare required to complywith the SMOs• Member and associateshave to identify and takeactions to fulfill therequirements set out inthe SMOsWhat are the SMOsIFAC SMOs – International Soft Law
    25. 25. Page 25 | Confidential and Proprietary Information• Clear benchmarks forPAOs• Enable high qualityperformance byprofessional accountants• Encourage continuousimprovement• Drive sustainabledevelopment of theaccountancy professionPower to GrowWhat are SMOs
    26. 26. Page 26 | Confidential and Proprietary InformationSMO 7:IFRSSMO 3:ISASMO 5:IPSASSMO 2: EducationSMO 4: EthicsBuilding BlocksWhat are SMOs
    27. 27. Page 27 | Confidential and Proprietary Information• Serve the public interest• Drive adoption andimplementation ofinternational standards• Clarify• Reflect international goodpractice• Increase effectiveness ofIFAC ComplianceProgramWhy Revise?2004 vs. 2012 SMOs
    28. 28. Page 28 | Confidential and Proprietary Information• Shall = requirement• Applicability Framework• Comply or explain• Best endeavors• Compliance ProgramKey ConceptsSMOs
    29. 29. Page 29 | Confidential and Proprietary InformationUnderstanding DiversityKey ConceptsRegulatoryframeworksSectors ofprofessionDifferentdegree ofresponsibility
    30. 30. Page 30 | Confidential and Proprietary InformationDegree of responsibility for an SMO areaDirect SharedNoResponsibilityImplement all therequirements of theSMOIn exceptional situationsdepartures are possibleif can be justified fromthe public interestperspective and need tobe documentedFor the elements forwhich Member Bodyhas directresponsibility followthe approach for"Direct"ANDFor the elements forwhich Member Bodyhas no directresponsibility followthe approach for"No Responsibility "Use best endeavors to:a. Encourage thoseresponsible for therequirements to followthis SMO inimplementing them;ANDb. Assist in theimplementation whereappropriateSMO Applicability Framework
    31. 31. Page 31 | Confidential and Proprietary InformationIFAC Compliance AssessmentRequirements and Application GuidanceApplicability FrameworkScopeObligationStructure of the SMOsRevised SMOs
    32. 32. Page 32 | Confidential and Proprietary InformationAdoptionSMOs 2, 3, 4, 5, 7DecisionActionto makethe decisioneffective
    33. 33. Page 33 | Confidential and Proprietary InformationAdoptionTranspositionDifferent Approaches – One GoalSMOs 2, 3, 4, 5, 7
    34. 34. Page 34 | Confidential and Proprietary InformationEducation andtrainingRaisingawarenessDisseminationof standardsImplementationguidanceImplementationSMOs 2, 3, 4, 5, 7
    35. 35. Page 35 | Confidential and Proprietary Information• Assess priorities andchallenges• Is there a need oftranslation to ensureproper adoption andimplementation• Process for timely,accurate and completetranslationTranslationSMOs 2, 3, 4, 5, 7
    36. 36. Page 36 | Confidential and Proprietary InformationExtension of the scope to ALL audits of financialstatements (priority for PIE audits)Consider QA performed by another authority to avoidoverlapEnsure sufficient resourcesRefer to I&D if no corrective actionConsideration of public oversightReview of implementation and effectivenessQuality AssuranceSMO 1
    37. 37. Page 37 | Confidential and Proprietary Information• Review and understandrevisions• Consider actionsnecessary to addressrevisions• Plan and execute actions• Cooperate within RO/AG• Reflect actions in the nextupdate of the SMO ActionPlanWhat PAOs Need To DoRevised SMOs
    38. 38. Page 38 | Confidential and Proprietary InformationStrong Global Accountancy ProfessionIt All Fits Together
    39. 39. Page 39 | Confidential and Proprietary InformationWhy Quality Assurance?InternalQualityControlsExternalQualityAssuranceReviewsConfidenceCredibilityReputationQuality Assurance
    40. 40. Page 40 | Confidential and Proprietary Information• Protects publicinterest• Enhances reputation• Reduces risk of errorsand omissions• Reflected in enhancedservice to clients• Improves the standardof audit work• Generates referrals fornew business• Increases profits• Meets regulatoryrequirementsBenefitsQuality Assurance
    41. 41. Page 41 | Confidential and Proprietary InformationScope• Consider efficiency & don’t reinvent the wheel• ALL audits of financial statements– But priority to PIEs’ audits• Other services?• Mandatory or voluntary?• Criteria & risk factorsQuality Assurance
    42. 42. Page 42 | Confidential and Proprietary Information• ISQC 1• ISA 220• Guidance– Awareness building– Manuals– CPD– Start small (voluntary programs)• Trust the market and play to the marketQuality Control Standards & GuidanceQuality Assurance
    43. 43. Page 43 | Confidential and Proprietary Information• Subject– Firm or engagement partner• Criteria– Suitable– Respectful of and aligned with the national regulatory framework– What needs to be considered to conclude that the QC system is adequateand the firm/partner complies• Guidance– Awareness building– Manuals– CPD– Start small (voluntary programs)• Trust the market & play to the marketDesignQuality Assurance
    44. 44. Page 44 | Confidential and Proprietary Information• Cycle approach• Risk-based approach• Mixed approach• Other considerationsReview CycleQuality Assurance
    45. 45. Page 45 | Confidential and Proprietary Information• Procedures• Documentation• Quality– Resources– Skills & competence– Quality of team leader– Ethical requirements• ConfidentialityReview TeamQuality Assurance
    46. 46. Page 46 | Confidential and Proprietary Information• Conclusion– Is the firm’s system designed to meet requirements?– Is the partner subject to the system?– Does the firm/partner comply with internal QC system?• Reasons for conclusion• Recommendations for improvement• What if the review was unsatisfactory?Reporting & Corrective ActionsQuality Assurance
    47. 47. Page 47 | Confidential and Proprietary Information• IFIAR principles• Cooperate closely & share information and expertise• Consider how to contribute to the regulation of theprofession• IFAC PPP 1, Regulation of the Accountancy ProfessionPublic Oversight ConsiderationsQuality Assurance
    48. 48. Page 48 | Confidential and Proprietary InformationReview of Implementation and EffectivenessQuality AssuranceConsiderPlanExecuteReviewImprove
    49. 49. Page 49 | Confidential and Proprietary Information• Rwanda• Malta• Bahamas• PolandExamples from Around the WorldQuality Assurance
    50. 50. Page 50 | Confidential and Proprietary InformationQuality in the performanceof Auditing Engagementsby ICPAR members is thegoal of the Audit QualityReview Programme.The Programme seeks toachieve its goal througheducation and remedial,corrective actions. Thisgoal serves the publicinterest and, at the sametime, enhances thesignificance of ICPARmembership.The Programme is based on the principlethat a systematic monitoring andeducational process is the most effectiveway to attain and maintain the envisagedquality of professional work throughout theprofession. Thus, it depends on mutualtrust and cooperation. The reviewedpractice unit is expected to takeappropriate actions in response todeficiencies in either design of itssystem of quality control, or itscompliance with that system, or both.These actions will be positive andremedial. Matters touching on theprofessional conduct of a member will beinvestigated within the Disciplinary Processas provided for in the Laws of the Land.RwandaExamples from Around the World
    51. 51. Page 51 | Confidential and Proprietary InformationMaltaExamples from Around the World
    52. 52. Page 52 | Confidential and Proprietary Information
    53. 53. Page 53 | Confidential and Proprietary InformationFeedback from Firms• I would also like to take this opportunity to thank both of you forthe professional but friendly way you approached our visit andyour practical findings which will enable us to focus on ourweaknesses in the practice so that they can be rectified to bringall areas up to the required standard• In the meantime, we would like to thank you for the professionaland courteous manner in which you carried out the review andfor your honest and open approach. Your review has proved tobe very constructive and has outlined valid improvements thatneed to be made in our quality control proceduresQuality Assurance
    54. 54. Page 54 | Confidential and Proprietary InformationFeedback from Firms cont.• We would like to thank you for your very helpful andconstructive comments during your visit which we found tobe a very productive review and a useful process carriedout in a supporting manner• It is very encouraging to see that the BICA are usingmonitoring compliance officers who are realistic andunderstanding in their approach and have good solidactual background practice experience and appreciatemore fully the real life problems and difficulties facingpractitionersQuality Assurance
    55. 55. Page 55 | Confidential and Proprietary InformationFree Tools and ResourcesHow IFAC assists
    56. 56. Page 56 | Confidential and Proprietary InformationFree Tools and Resources• www.ifac.org/SMP• web.ifac.org/clarity-center/index• www.ifac.org/ComplianceProgram• www.ifac.org/about-ifac/professional-accountancy-organization-development-committee• www.ifac.org/Ethics/Resources.php• www.ifac.org/Translations• www.ifac.org/issues-insights/public-policy-regulationHow IFAC Assists?
    57. 57. Page 57 | Confidential and Proprietary InformationTHANK YOUwww.ifac.org/ComplianceProgramwww.ifac.org

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