Unearthing the Power of                     Professional Accountancy                     Organizations (PAOs)    Presentat...
Unearthing the Power of PAOsOverview • Introduction to IFAC • IFAC Structure, Oversight and Consultation • What are Profes...
Unearthing the Power of PAOsIntroduction to IFAC                               Page 3 | Confidential and Proprietary Infor...
Unearthing the Power of PAOs Introduction to IFAC • Serves the public interest • Establishes and promotes adherence to hig...
An Overview of IFAC  IFAC Structure, Oversight, and ConsultationKEYACCOUNTABILITYOVERSIGHTCONSULTATION/ADVICE             ...
Unearthing the Power of PAOsWhat are Professional Accountancy Organizations? Professional Accountancy Organizations (PAOs)...
Unearthing the Power of PAOsThe Power of PAOs in the Economy When PAOs function properly to fulfill their role in the econ...
Unearthing the Power of PAOsChallenges to the Power and Impact of PAOs                                     1. Lack of     ...
Unearthing the Power of PAOsIFAC’s Activities to Assist PAOs in OvercomingChallenges    Compliance                        ...
Unearthing the Power of PAOsIFAC Member Body Compliance Program IFAC members are required to participate in the Compliance...
Unearthing the Power of PAOsIFAC Member Body Compliance Program• Description of                                   Phase 2 ...
Compliance Program: Purpose• Encourage continuous improvement and development• Evaluate the extent to which members are me...
Unearthing the Power of PAOsCompliance Program: SMO HighlightsSMO1: Quality Assurance • A Member PAO should ensure…      –...
Unearthing the Power of PAOsCompliance Program: SMO HighlightsSMO2: Education, Certification and CPD                      ...
Unearthing ther Power of PAOsCompliance Program: SMO HighlightsSMO6: Investigation and Discipline • Member Bodies should i...
Unearthing the Power of PAOsCompliance Program: SMO HighlightsSMO6: Investigation and Discipline (Cont’d)                 ...
Unearthing the Power of PAOsThe PAO Development Committee The overall objective is to enable PAOs to be capable of: • Prod...
Unearthing the Power of PAOsThe PAO Development Committee      Developing the capacity of the accountancy profession      ...
Unearthing the Power of PAOsThe PAO Development Committee                                                  Regional Implem...
Unearthing the Power of PAOsTHANK YOU! For more information please feel free to visit IFAC website at:                    ...
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Unearthing the Power of Professional Accountancy Organizations (PAOs) - Presentation to the Board of Directors Kuwaiti Association of Accountants and Auditors (KAAA)

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Presentation by Gabriella Kusz, IFAC Technical Manager, to the Board of Directors of the Kuwait Association of Accountants and Auditors in February 2012. The presentation explains the connection between strong professional accountancy organizations and a strong, stable economy and IFAC's activities to support organizations and the global economy.

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  • Global organization for the accountancy professionComprised of 167 Members and Associates in 127 countriesMembers and Associates are Professional Accountancy OrganizationsRepresents 2,5 millions accountants in public practice, business, government, and academia
  • Going to focus on Compliance Program and PAO Development specifically.
  • They contribute to the professionProtect the public interest as proponents of good corporate governance and consistent global standardsPromote and develop knowledge, skills and competence through education, certification and CPD programs. Produce capable professionals.Through adoption and implementation of international professional and ethical standards they set the bar for behavior and practice of accountancy professionals, enhancing public trustAssist with sound public policy guidance and advice on accountancy related topics by acting as a center of knowledge and expertiseFurther the quality of financial reporting through review, investigation, and discipline of professionals.
  • They contribute to the economy (the bigger picture)Attract Foreign Direct Investment (FDI) – The development of capital markets requires credible and reliable financial information to build investor confidence, further sound economic and financial management, and increase the attractiveness of a country’s investment climate, which facilitates FDI and business development. Promote Growth and Development of the SME Sector – According to the Organisation for Economic Cooperation and Development (OECD), small- and medium-sized entities (SMEs) account for over 60% of gross domestic product (GDP) and 70% of total employment in low-income countries. These businesses require high-quality financial information to support business planning, facilitate access to credit, and expand operations; thus, enhancing their ability to thrive and grow. Enhance Transparency and Accountability in theUse of Public Funds – High-quality financial information in the public sector enables assessment of the impact of fiscal and monetary policy decisions; assists external reporting by governments to electorates, taxpayers, and investors; and aids internal management decisions in resources allocation (planning and budgeting), monitoring, and accountability.  Improve the Design and Delivery of Vital Public Services – Utilizing the information provided through high-quality financial reporting, policymakers and others in positions of authority can improve the efficiency and effectiveness of government programs, better achieve the objectives of their design, and successfully deliver vital public services to those in need.  
  • Lack of Awareness:There is often a lack of awareness and understanding on the part of the governments and other key stakeholders regarding the role of professional accountants and the positive impacts of a strong PAO. This can hinder the creation of clear legislative frameworks – which support government recognition of PAOs, the legal establishment of a system for educating, certifying, and continuing trainings for competent professionals, and effective independent oversight of the profession.PAO Internal Weaknesses:When there is a lack of awareness of the benefits and value of the accountancy profession, attracting individuals to the profession becomes more difficult. Weak (low) membership reduces an organization’s technical capacity and deiveraity of thought, resulting in a lack of ability to function as a resource for donors, government departments, lawmakers, and stakeholders involved in financial policymaking and regulation. It inhibits strategic planning and governance and can result in an inability to provide educational opportunities, guidance, and assistance to accounting and auditing professionals.Lack of Capacity:Without strong membership and access to adequate technical and financial resources, vital activities such as the translation of international standards and official publications, creation and provision of training and education programs, development of quality assurance programs, and investigation and disciplinary systems becomes difficult – if not impossible for PAOs. This only reinforces the lack of awareness of the value of accountancy and the role of PAOs in the economy.
  • The Member Body Development team includes seven technical staff who support both the Compliance Program and PAO Development Committee strategy. They hold regional portfolios in Africa, Americas and Caribbean, Asia Australasia-Oceania, Middle East and Europe and Central Asia.Combined, the staff has proficiency in six languages including Arabic, French and Spanish.
  • Statements of Membership Obligations (SMOs) ?►Clear benchmarks to current and potential IFAC membersOverseen by Compliance Advisory Panel
  • The program is comprised of three phases and emphasizes compliance AS WELL AS Continuous improvement and development of the PAO in-line with the SMOs.Phase 1 Fact-based questionnaire on the regulatory and standard-setting framework in the member body’s country or jurisdiction Phase 2 Self-assessment of compliance with specific requirements of the SMOs Phase 3 Action plans developed by the member body to address areas identified in the self- assessment
  • Can be used as a basis for identifying donor collaboration / mentoring opportunities!
  • a description of the scope and design of QA program and related procedures to be followed by quality assurance review teamsQuality Assurance Review Team Procedure►The member body should require quality assurance review teams to follow procedures that are based on published guidelines.►These procedures should include reviews of engagement working papers and discussions with appropriate personnel.Isn’t Audit Documentation CONFIDENTIAL?As stated in the IESBA Code of Ethics for Professional Accountants or relevant national codes of ethics, the member body should exempt members from professional client confidentiality requirements concerning audit engagement working papers for the purpose.QA ReviewWritten Quality Assurance Review ReportCorrective & Disciplinary Measures
  • Individuals assisting in the investigation process must be…independent of the subject matter and of the individuals involved in the case.
  • How does the PAO Development Committee achieve this objective? Through three strategic activity streams:Developing the capacity of the accountancy profession to produce high-quality financial information and sound financial management systems capable of supporting financial stability, economic growth, and social progress. The Committee produces tools and guidance and conducts technical assistance to facilitate capacity development at both the national and regional levels. Increasing awareness building and knowledge sharing around adoption and implementation of international standards. The Committee works to enhance the understanding of the importance that IFAC, PAOs, regional organizations and accountancy groupings, and the donor community play in international development. It also encourages and supports the mentoring of PAOs in developing and emerging economies by regional organizations, accountancy groupings, and more developed bodies. Engage and deepen development partnerships with the international donor community, regional organizations, and public/private sector stakeholders. The Committee shares resources, knowledge, and experience, and deliver guidance, advice, and assistance in an efficient and effective manner.
  • The Committee’s ongoing activities:Supporting implementation of MOSAICDevelopment and implementation of regional strategies Coordination of activities with ROs/AGsOutreach to support national PAOsInput into Mentoring Program
  • Unearthing the Power of Professional Accountancy Organizations (PAOs) - Presentation to the Board of Directors Kuwaiti Association of Accountants and Auditors (KAAA)

    1. 1. Unearthing the Power of Professional Accountancy Organizations (PAOs) Presentation to the Board of DirectorsKuwaiti Association of Accountants and Auditors (KAAA) Kuwait City, Kuwait February 19,2012 Page 1 | Confidential and Proprietary Information
    2. 2. Unearthing the Power of PAOsOverview • Introduction to IFAC • IFAC Structure, Oversight and Consultation • What are Professional Accountancy Organizations (PAOs)? • The Power of PAOs in the Economy • Challenges to the Power and Impact of PAOs • IFAC’s Activities to Assist PAOs in Overcoming Challenges – IFAC Compliance Program • IFAC SMO Highlights – IFAC PAO Development Committee Page 2 | Confidential and Proprietary Information
    3. 3. Unearthing the Power of PAOsIntroduction to IFAC Page 3 | Confidential and Proprietary Information
    4. 4. Unearthing the Power of PAOs Introduction to IFAC • Serves the public interest • Establishes and promotes adherence to high quality professional standards and furthers their adoption and implementation of such standards • Supports the global development of the accountancy profession, professional accountants in business and small and medium practices • Shares in the regulation of the profession • Speaks out on public interest issues where the profession’s voice is most relevant Page 4 | Confidential and Proprietary Information
    5. 5. An Overview of IFAC IFAC Structure, Oversight, and ConsultationKEYACCOUNTABILITYOVERSIGHTCONSULTATION/ADVICE Monitoring IFAC Group COUNCIL Public Audit Nominating Interest Committee Committee Oversight Board IFAC IFAC Regulatory BOARD Liaison Group Planning and Finance Committee Forum Consultative Consultative Consultative Consultative of Firms Advisory Advisory Advisory Advisory Group Group Group Group Professional Professional Small and International International International International Transnational Accountancy Accountants Medium Compliance Auditing and Accounting Ethics Public Sector Auditors Organization in Business Practices Advisory Panel Assurance Education Standards Accounting Committee Development Committee Committee Standards Standards Board for Standards Committee Board Board Accountants Board Page 5 | Confidential and Proprietary Information
    6. 6. Unearthing the Power of PAOsWhat are Professional Accountancy Organizations? Professional Accountancy Organizations (PAOs) are membership organizations of professional accountants which… • Act in the public interest; • Develop and produce capable and competent accountancy professionals; • Promote strong professional and ethical standards; • Further the quality of financial reporting through review, investigation, and discipline of professionals; and • Act as a resource to government, regulators and other stakeholders. Page 6 | Confidential and Proprietary Information
    7. 7. Unearthing the Power of PAOsThe Power of PAOs in the Economy When PAOs function properly to fulfill their role in the economy, they hold the power to enhance the production of high quality financial information. This is turn… • Attracts Foreign Direct Investment (FDI); • Promotes growth and development of Small and Medium Enterprises (SMEs) sector; • Enhances transparency and Accountability in the use of public funds; and • Improves the design and delivery of vital public services. Page 7 | Confidential and Proprietary Information
    8. 8. Unearthing the Power of PAOsChallenges to the Power and Impact of PAOs 1. Lack of Awareness of the Value of Accountancy Mutually Reinforcing Challenges 3. Lack of 2. PAO Capacity to Internal Provide Vital Weaknesses Activities Page 8 | Confidential and Proprietary Information
    9. 9. Unearthing the Power of PAOsIFAC’s Activities to Assist PAOs in OvercomingChallenges Compliance PAO Program Member Development Body Development Page 9 | Confidential and Proprietary Information
    10. 10. Unearthing the Power of PAOsIFAC Member Body Compliance Program IFAC members are required to participate in the Compliance Program to demonstrate that they are maintaining their good standing and addressing the requirements of IFAC membership. • Statements of Membership Obligations (SMOs) serve as the foundation: – SMO1:Audit Quality Assurance – SMO2: Accountancy Education, Certification and CPD – SMO3: International Standards on Auditing (ISA) – SMO4: Code of Ethics for Professional Accountants – SMO5: International Public Sector Accounting Standards (IPSAS) – SMO6: Investigation and Discipline – SMO7: International Financial Reporting Standards (IFRS) Page 10 | Confidential and Proprietary Information
    11. 11. Unearthing the Power of PAOsIFAC Member Body Compliance Program• Description of Phase 2 • Creation of Action country Plan developed legal, regulatory • Self-assessment by PAO to and standard of PAO address areas of setting framework compliance with weakness each of 7 SMOs Phase 1 Phase 3 Page 11 | Confidential and Proprietary Information
    12. 12. Compliance Program: Purpose• Encourage continuous improvement and development• Evaluate the extent to which members are meeting the SMO requirements• Assist members in adopting and implementing international standards and best practices• Demonstrate progress being made• Promote transparency through publication of responses on the IFAC website Page 12 | Confidential and Proprietary Information
    13. 13. Unearthing the Power of PAOsCompliance Program: SMO HighlightsSMO1: Quality Assurance • A Member PAO should ensure… – A mandatory QA review program exists – at a minimum for audits of listed companies – Establishment & publication of criteria for evaluating other audits of financial statements – Engagements meeting criteria are reviewed • Who is the subject of the audit? – Firm OR Partner Written QA Corrective QA Review Report Procedures • What is the cycle? – Cyclical OR Risk Based • Transparency in scope, design and procedures of QA Program Page 13 | Confidential and Proprietary Information
    14. 14. Unearthing the Power of PAOsCompliance Program: SMO HighlightsSMO2: Education, Certification and CPD Education Experience Education Entry Examination (Initial) in Practice (Continuing) Page 14 | Confidential and Proprietary Information
    15. 15. Unearthing ther Power of PAOsCompliance Program: SMO HighlightsSMO6: Investigation and Discipline • Member Bodies should include in their constitution and rules a system for the Investigation and Discipline (I&D) of misconduct, including breaches of professional standards and rules by their individual members. – This system should allow for the imposition of a range of penalties if laws permit. – Member Bodies should make members aware of all aspects of this system. • Where the Member Body has responsibility for I&D, its rules should, to the extent that local laws permit, include all powers necessary to enable authorized personnel to carry out an effective investigation. Page 15 | Confidential and Proprietary Information
    16. 16. Unearthing the Power of PAOsCompliance Program: SMO HighlightsSMO6: Investigation and Discipline (Cont’d) INITIATION OF THE CASE Complaints Information INVESTIGATION DISCIPLINARY PROCEEDINGS Composed of accountants and non-accountants SANCTIONS APPEALS Page 16 | Confidential and Proprietary Information
    17. 17. Unearthing the Power of PAOsThe PAO Development Committee The overall objective is to enable PAOs to be capable of: • Producing competent and capable professionals; • Furthering the adoption and implementation of international standards; • Acting as a voice for the profession; and • Assisting government, regulators and other stakeholders with sound public policy guidance and advice on accountancy related topics Page 17 | Confidential and Proprietary Information
    18. 18. Unearthing the Power of PAOsThe PAO Development Committee Developing the capacity of the accountancy profession Increasing awareness building and knowledge sharing around adoption and implementation of international standards Engaging and deepening development partnerships with the international donor community, regional organizations, and public/private sector stakeholders Page 18 | Confidential and Proprietary Information
    19. 19. Unearthing the Power of PAOsThe PAO Development Committee Regional Implementation Support of PAFA launch ADVANCE Initiative IO Collaboration Joint PAO workshop with CAPA in Vietnam Ambassadors Key issues discussion at PAODC meeting Regional Collaboration Mentoring Baltic/CIS States standard- setter event CReCER Page 19 | Confidential and Proprietary Information
    20. 20. Unearthing the Power of PAOsTHANK YOU! For more information please feel free to visit IFAC website at: www.ifac.org For any questions, please contact Ms. Gabriella Kusz, Technical Manager for Member Body Development for Middle East region at gabriellakusz@ifac.org Page 20 | Confidential and Proprietary Information

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