Presentation by Stathis Gould at the ACCA SNAI CFO Conference, New York, USA, September 24, 2013

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The Accountancy Profession
and Accountants in Business
Stathis Gould
ACCA SNAI CFO Conference
New York, USA
24 September, 2013

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IFAC’s Focus
• Global organization of the accountancy profession
• 173 member bodies and associates in 129 countries
• Public interest mandate and vision:
“The global accountancy profession will be recognized
as a valued leader in the development of strong and
sustainable organizations, financial markets, and
economies.”
IFAC

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Defining “in business”
IFAC
Public
Practice
•Audit/Assurance
•Large & small
firm
In Business
•Commercial
•Public sector
•Not-for-profit
2.5m
Professional accountants in business include commerce, industry, financial
services, the public sector, education, and the not-for-profit sector

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What IFAC Does
• Establish high quality global standards
• Adoption and implementation of standards
• Support the capacity development of the accountancy
profession
• Provide a global voice and representation
• Support professional accountants in business
IFAC and its PAIB Committee

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Overview of IFAC Service Delivery (1)
Standards & Guidance (2012: US $17 million)
– Developing international standards:
• Auditing, assurance, and quality control
• Ethics
• Public sector accounting
• Accounting education
– Representation & Guidance:
• Professional accountants in business (PAIBs)
• Small and medium practices (SMPs)
IFAC and its PAIB Committee

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Overview of IFAC Service Delivery (2)
Adoption & Implementation (2012: US $2 million)
• Promoting adoption of international standards and
guidance
• Providing high-level advice on technical and legal
approaches to adoption
• Facilitating availability and accessibility of international
standards and guidance, including translations
• Developing / facilitating sharing of implementation material
and tools
• Assessing the effective implementation of new
international standards
IFAC and its PAIB Committee

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Overview of IFAC Service Delivery (3)
Quality & Development (2012: US $4 million)
• Implementing Member Body Compliance Program
• Advocating / supporting capacity-building initiatives to
strengthen professional accountancy organizations
• Increasing awareness of PAIBs, and supporting Member
Bodies in enhancing PAIB competence
IFAC and its PAIB Committee

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Overview of IFAC Service Delivery (4)
Representation of the Profession (2012: US $4 million)
• Commenting on issues relevant to the profession
• Developing / maintaining relationships with stakeholders
• Developing policy positions addressing issues relevant to
the profession
IFAC and its PAIB Committee

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Professional Accountants in Business Objectives
• Increase awareness of important role professional
accountants play in creating, enabling, preserving and
reporting value for organizations and their stakeholders
• Supporting member organizations in enhancing the
competence of their members through development and
sharing of good practices and ideas.
IFAC

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Areas of Importance
• Roles, Domain and Competency of PAIBs
• Governance and ethics
• Risk management and control
• Sustainability and corporate responsibility
• Financial and performance management
• Business reporting
IFAC
all areas of critical importance to professional
accountants in private and public sector organizations

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• Awareness raising
• Ensuring that professional
accountancy organizations and
employers support relevant
knowledge acquisition
• Helping accountants in business to
acquire the skills and mindset
needed
What is the Profession’s Role?

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Preparing & Promoting Professional Accountants
• The Role and Expectations of CFOs
• Preparing professional accountants for finance leadership
– Individuals
– Professional accountancy organizations
• Encouraging regulators and organizations to ensure
professional accountants fulfill CFO roles
IFAC

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• What does it require to
be a leader?
• What does it take to
balance stewardship
and partnership?
• How does the CFO
integrate & navigate?
• Why is a professional so
important in the CFO
role?
What are the Expectations of a CFO?

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The CFO as a Professional
• The CFO should be a professional and bring
professional qualities to the role and the organization.
• Strong ethical leadership
– Tone at the top
– Applying their ethical principles of integrity, objectivity, professional
competence and due care, confidentiality and professionalism
• Applying professional qualities, such as professional
judgment, can involve reconciling conflicting commercial,
financial, sustainability, and stakeholder interests
IFAC

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Recommendations for Institutes and Employers
• Understand and meet organizational needs
• Ensure scope of qualification and training of professional
accountants incorporates broader professional and
managerial capabilities and skills
• Foster and encourage a commitment to lifelong learning
among professional accountants
• Flexible HR strategies that deal with
– Cultural and geographical differences
– Offering broad business experience
– Flexible approaches to development and training
IFAC

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Global Financial Crisis
• Governance in name but not in spirit; ethical flaws
• Regulatory overload, leading to legalistic compliance
• Risk & control systems too narrowly focused on only
financial reporting controls
Conclusions:
• Appropriate application of governance, risk management
and internal control standards and principles is often the
main problem
• PAIBs should support their organizations in taking a
broader approach in governance, risk management and
internal control

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IFAC Response
• Encouraging better governance, risk management and
internal control
• Encouraging alignment of global risk and control
guidelines through liaison with COSO & ISO 31000
• Developing additional International Good Practice
Guidance, particularly in governance, risk management
and internal control, and financial management
IFAC

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Global Survey on Risk Management & Internal Control
• Received over 600 responses from around the globe,
including 117 (20%) from public sector organizations
Main conclusions:
• More awareness of the benefits of risk management and
internal control systems should be created
• Risk management and internal control should be better
integrated into organizations’ overall governance, strategy,
and operations
• Risk management and internal control requirements and
guidelines should be further aligned internationally

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Global Survey on Risk Management & Internal Control
> Proposed Next Steps
• Bringing various risk management and internal control
standard setting organizations (such as ISO 31000,
COSO, and Risk Oversight & Governance Board) and
their guidelines closer together through active participation
• Collaborating with experts on development of guidance for
PAIBs on risk management and internal control
• Engaging in dialogue with issuers of governance codes
around the globe (OECD, G20, UNCTAD, World Bank)

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Evaluating and Improving Internal Control in
Organizations
• Highlighting areas where practical application of internal
control standards often fails in many organizations
• Designed to establish a benchmark for good practice in
maintaining effective internal control in response to risk, and
help PAIBs and their organizations create a cycle of
continuous improvement for their internal control
• For all types of organizations, as all organizations—whether
private or public—should have appropriate internal control
• Being used in e.g., New Zealand as part of overall internal
control assessment for the government

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Next Steps
• Contributing to OECD review of its corporate governance
principles
• Influencing better governance in the public sector
• Promoting the role of accountants in good governance
• Further guidance in Integration of Risk & Control:
• In practice, risk management and internal control are often silos managed in a
disjointed and unconnected way
• Principles on how PAIBs can support their organization with better integration of
risk management and internal control into the organization’s overall governance
system
• Integrated reporting

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IFAC Framework for Public Sector Organizations (1)
What are the main challenges for good governance in
public sector organizations?
• Sovereign debt crisis
• Shortage of funding / rationalization
• Short-termism
• Internationalization/technology/complexity
• Corruption
• Application of good governance practices

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IFAC Framework for Public Sector Organizations (2)
What can a governance framework accomplish?
• Establish benchmark for good governance in public sector
• To help public sector organizations create a cycle of
continuous improvement for their governance systems
• Emphasizing how critical public financial management and
accountability is to any public sector governance system

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IFAC Framework for Public Sector Organizations (3)
Openness
and full
stakeholder
engagement.
Defining outcomes:
Determining and
delivering
outputs, to
optimize
achievement of
intended
outcomes
Developing
capacity of
organization, and
capability of its
leadership and
individuals within
Managing risks
and performance
through robust
control and
strong public
financial
management
Implementing
good
practices in
transparency
and reporting
Strong commitment to integrity, ethical values, the rule of law, and working in the public interest.

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IFAC Framework for Public Sector Organizations (4)
Collaborating in International Reference Group
• World Bank (chair)
• OECD
• IMF
• INTOSAI
• UNCTAD
• GAO
• IPSASB
• CIPFA
• IFAC
OECD Public Sector Integrity Network

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A Journey Through Business Reporting
Accountability
Financial and
Regulatory
Reporting
Transparency
++
Sustainability
Reporting
Overall
business value
story
Integrated
Reporting
INTEGRATED THINKING & MANAGEMENT

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Financial Reporting and a Sustainable Economy
Enhancing Transparency Through Reporting
• Financial statements are the core but do not tell the whole
performance story
• Reflecting environmental/social issues in financial
reporting standards, e.g., disclosure of financial results
related to pollution emissions; environmental
opportunity/risks in management commentary/MD&A
• Concern with financial reporting is not new and various
initiatives have attempted to deal with the challenges

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Sustainability Reporting and a Sustainable Economy
Enhancing Transparency Through Reporting
• Sustainability reporting growing; involves the support of
the profession at various levels
• Provides the structure for transparent reporting covering
environmental, social, economic and governance (ESG)
areas
• Provides preparation for integration by increasing maturity
and understanding of ESG areas

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Integrated Reporting and a Sustainable Economy
The Opportunity of Integrated Reporting
• How an organization’s strategy, governance, performance
and prospects lead to the creation and preservation of
value
• Business model and capitals focused so covering all non-
financial business drivers of performance
• Complements rather than replaces

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NGOs
Companies
Investors
Accounting
Standard
setters
Regulators
Chair: Prof Mervyn King
CEO: Paul Druckman
The International Integrated Reporting Council

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More than Financials

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strategy, governance,
performance,
prospects
Financial
reporting
Other
reporting
concise communication about value
A New Focus

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Discussion
Paper
Prototype
Framework
December 2013
The Framework
Framework
(2013)
Emerging <IR>
Database
Behaviour
Change
Summary of
comments
Background
Papers
Pilot Programme
Yearbook
2014
Work
Plan
The Journey So Far

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Integrated Thinking and Reporting
• What comes first: integrated management (the chicken), or
reporting (the egg)?
• Both reinforce each other. Reporting drives behavior within
an organization; transformational change derives from
integrated thinking
• A big opportunity for the accountancy profession and
accountants to influence sustainable value creation

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• Guidance on business reporting
processes
• Professional accountants in
business: Embedding
sustainability practices and
accounting for sustainability
Recent IFAC Initiatives (1)

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Recent IFAC Initiatives (2)

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• For further information please contact:
• Stathis Gould at stathisgould@ifac.org
• Visit www.ifac.org