IFAC and Support for Capacity Building

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Presentation by Warren Allen , IFAC President at the
Pan African Federation of Accountants Pre-General Assembly Conference, May 8, 2014

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  • Thank you, Professor Assad, for your kind introduction and welcome to Cameroon. And thank you Vickson Ncube, for inviting IFAC and me to your Congress and this pre-assembly conference.
  • Unlike many of the groups I speak to, I don’t need to start my presentation off today by explaining who IFAC is or why accountancy matters to global economic growth and stability and sustainable businesses. No one in this room would be involved with PAFA and your national PAO if you didn’t already know, and believe, that message.
    Accountancy matters.
    International standards matter.
    Working together to strength accountancy and PAOs matter.
    You know the importance of these issues.
    So today I am going to dive a little deeper into what is just down the road for our organization, and possibly yours.
  • Since most of you are familiar with IFAC, you might have seen this map before. We use it to introduce newcomers to the global accountancy profession and to IFAC.

    And it works for that purpose. But what we don’t always have a chance to talk as much about is all that is going on in some of these gray places on the map. We know the map only tells part of the story—there is a great deal going that you can’t see here.
  • When you dig a little deeper, the map of Africa and PAO development really looks more like this.
    As many of you are aware, there is a great deal of activity going on regionally in Africa—PAOs being established, PAOs mentoring each other, collaborating, cooperating, sharing knowledge.
    For example, Ordre National des Experts Comptables et Comptables Agréés du Sénégal, which just became an IFAC member, is helping L’Ordre des Experts Comptables agréés de Guinée in its capacity building and growth initiatives.
    The Institute of Chartered Accountants (Ghana) worked hand in hand with Ordre National des Experts-Comptables et Comptables Agréés du Togo on its application with IFAC—resulting in ONECCA becoming an IFAC associate last November.
    In all parts of the world this idea of like helping like is important to growth and development; this is certainly true in accountancy and certainly true in Africa.
    But we also know there is more to be done and quite a few PAOs that need more help before they are ready to make the commitments embodied in the IFAC Statements of Membership Obligations.
    And there are countries in Africa who don’t yet have an established PAO—where the accountancy profession is still in fledgling stages.
    All of which is to say, at IFAC, we are fully aware of the growth and development already going on in Africa.
    But we are also aware of the areas that need assistance – at all stages of PAO development - as much as we are aware of the areas with successes. We know there is more we can help get done, and we stand ready to do so.
  • One of the ways IFAC addresses PAO capacity building and development globally is by working closely with donor agencies and other international organizations through MOSAIC, the Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration.
     
    MOSAIC was born of a need to improve collaboration between IFAC and the accountancy profession and the international development community. MOSAIC seeks to increase the capacity of PAOs in partner countries to improve the quality of public and private sector accountancy and financial management, all with a view toward enhancing the effectiveness and efficiency of donor assistance, contributing to economic growth, and reducing poverty.

    Last year, MOSAIC published the PAO Global Development Report, which provides an assessment of PAO development at the global, regional, and national levels. Through its 10 key findings, the report also established the success factors and challenges associated with building a strong, sustainable accountancy profession supported by an effective PAO. Through MOSAIC, IFAC is working with the World Bank to develop a section covering the Middle East.
  • With 13 signatories from around the world, MOSAIC provides the foundation for an aligned approach to improve the quality of accounting and financial management in emerging economies.
  • As many of you know, just a few weeks ago IFAC received a grant from the UK Department for International Development (DFID), a MOSAIC signatory, for £4.935m over seven years.
    One of the reasons we were successful in persuading DFID to help the global cause of strengthening capacity building in the accountancy profession is because we were able to show the clear connections between strong PAOs, high-quality financial reporting, economic growth, and the aid effectiveness agenda.
    This is the case IFAC has been making for years, a case you are all familiar with. But even though DFID has been involved with MOSAIC for the last two years, this was new to some.
  • We explained that there are 60 nations across the world that don’t have a PAO that is developed enough to join IFAC, 27 of which are in Africa. And, within the ranks of IFAC, there are some PAOs that need additional support in order to continue to grow, establish quality assurance measures, encourage adoption and implementation of high-quality standards – to fully support the economy and businesses in their nation.

    We explained that IFAC, working with our partners, has developed the expertise to be the conduit for support and development. We know how to build capacity around the world because we have been working with you and through you for years. Our expertise comes from our work with you.

  • One of the other key aspects we successfully explained to DFID is how important an integrated concept and plan is to making capacity building work.
    IFAC uses a methodology that enables all PAO development needs to be incorporated into a capacity building program.
    IFAC is committed to the quality of PAOs.
    PAOS are committed to the competency and capability of accountancy professionals (preparers and auditors) in collaboration with local stakeholders
    Accountancy professionals are committed to the integrity of public and private sector organizations and the quality of financial information in their local jurisdiction.

    IFAC strongly supports PAOs being recognized as the “go to” resource in this method of capacity building.

  • The integrated concept categorizes PAOs into three dimensions based on where they are in their development and evolution as a PAO to help them focus on what the most pressing issues are for their growth.

    Three dimensions
    PAO Sustainability – the strategic and financial viability of a PAO in the professional environment
    PAO Standards and enforcement – the technical, intellectual aspects of international professional standards in the context of adoption and implementation
    PAO Relevance – the ability of the PAO to achieve recognition of the relevant stakeholders in the macro- and micro-environment in the jurisdiction, both in the private and public sector.

    Helping PAOs focus on what is most relevant for where they are in their evolution as a PAO helps them growth efficiently and logically. It helps them move from an ad hoc organization to a PAO with informal practice to one with good practice to strong practice to best practice.
  • Capacity building in four regions
    Development of PAOs in all 10 DFID-focus countries

    The key to success in all of this is engagement with IFAC members, regional PAOs, accountancy groupings, and other stakeholders so we can clearly build evidence and demonstrate the role of the PAO being assisted and the impact on the economy.
  • DFID/IFAC: clarifying expectations, process, requirements

    Management systems and program team

    Country selection

    Informing interested and qualified PAO (consultants)

    Communications
  • Lest you think our work in development, capacity building, and with DFID, is the only thing IFAC is focused on, let me reassure you it is only one of our current initiatives.
  • 14
  • Accountability Now!

    High-quality financial information can help governments make better decisions.

    IFAC, in collaboration with others, is working to improve government financial transparency and accountability through the adoption and implementation of high-quality accrual-based accounting standards, i.e., IPSASs.
  • As accountants, we know that financial reporting is important, but increasingly investors and other stakeholders are demanding more.

    Integrated reporting has emerged as a major initiative to promote transparency and accountability and enhance investor/stakeholder confidence.

    As IFAC president, I serve on the International Integrated Reporting Council (IIRC) and former IFAC CEO Ian Ball is continuing his role as IIRC Working Group chair on IFAC’s behalf.

    We strongly support the IIRC in its efforts to integrate financial and non-financial disclosures. In addition, IFAC has signed a Memorandum of Understanding with the IIRC to promote cooperation, coordination, and alignment.

    We also recognize that multiple models exist, and global consistency is important. We must have robust international reporting frameworks and high-quality international assurance standards.

    Our initiatives in this field build on the International Integrated Reporting Council’s efforts, and underscore the accountancy profession’s important role in reporting and assuring this information.





  • Another key IFAC activity is improving the credibility of financial reporting.

    High-quality financial information makes a nation’s or region’s investment climate more attractive and facilitates business development.

    Compiling, auditing, and disseminating high-quality financial information is what we do as accountants. We serve as the foundation for that information.

    Unfortunately, debate and commentary on the quality of financial reporting often fails to recognize the complexity of the process.

    But as we know, all components of the “financial reporting supply chain”—the people, systems, processes, standards, mandated and voluntary requirements, behaviors, and interactions—need to be high quality to support strong and credible financial reporting.

    Critical analysis and potential changes are necessary at all points along the chain, with all participants having important roles to play.

  • IFAC also provides knowledge and support to accountants around the world, especially for professional accountants in business and small- and medium-sized practices, which support small- and medium-sized entities. IFAC has long supported initiatives that benefit these constituencies, developing relevant resources and guidance and working with them to raise their profiles and represent their interests.

    Recently, IFAC launched the Global Knowledge Gateway, a platform designed to bring together news, views, resources, and thought leadership for the worldwide accountancy profession.

    The Gateway
    Newly minted global hub
    Content from IFAC, our member organizations, and other notable groups and individuals
    The result of a year-long project to answer the call to better leverage IFAC’s position as the global accountancy organization
    Designed to serve IFAC’s member organizations and the profession by sharing the valuable resources members produce with a broader, global audience of professional accountants

    Allows professionals to
    access resources from around the world
    learn about emerging areas of the profession
    stay connected to the most pressing accountancy issues and news of the day
    interact by exchanging views, making recommendations, and sharing information and resources.
     
  • Nine topic areas:
    Business reporting
    Ethics
    Financial leadership & development
    Governance
    Performance and financial management
    Risk management & internal control
    Sustainability
    Audit & assurance
    Practice management
  • And of course, at IFAC we are always focused on the continuing work to support the development of high-quality, internationally accepted standards that add value to the accounting profession because they are the foundation of high-quality performance.

    We believe the public interest is best served by their consistent adoption and implementation, which is why IFAC supports the work of the independent standard-setting boards:

    International Auditing & Assurance Standards Board
    International Public Sector Accounting Standards Board
    International Ethics Standards Board for Accountants
    International Accounting Education Standards Board

    Standards ensure that clear and transparent financial information is produced while enhancing comparability, credibility, consistency, and stability. In the private sector, they promote confidence in the markets among investors. And in the public sector, they enhance management, transparency, and accountability.

    They also facilitate the comparison of financial information globally, attract investment, foster cross-border activity, and further support economic growth.

    Clients and stakeholders benefit because there is a minimum level of requirement, and consistency over time. In addition, all work is done within a particular ethical framework. They are a strategic differentiator for the profession. The processes and rigor involved in their development distinguish them from guidelines used by other service providers.
  • In closing, I would like to emphasize that IFAC understands that in order to make the positive changes the accountancy profession wants to make in the world, we must all seek to share knowledge, partner with one another, and support global, regional, and national efforts.

    IFAC will continue to support your efforts to strengthen the profession, grow national, regional, and global capacity, and develop strong and vibrant economies.

    Thank you again for inviting me to speak with you today.
  • IFAC and Support for Capacity Building

    1. 1. Page 1 | Confidential and Proprietary Information IFAC and Support for Capacity Building Warren Allen IFAC President Pan African Federation of Accountants Pre-General Assembly Conference May 8, 2014
    2. 2. Page 2 | Confidential and Proprietary Information • The global organization for the accountancy profession • 179 member and associate Professional Accountancy Organizations (PAOs) • Work in the public interest to build sustainable organizations and economies • Support independent standard-setting boards Strengthening Organizations, Advancing Economies
    3. 3. Page 3 | Confidential and Proprietary Information Strengthening Organizations, Advancing Economies
    4. 4. Page 4 | Confidential and Proprietary Information Strengthening Organizations, Advancing Economies IFAC Member Bodies IFAC Associates PAO established No PAO
    5. 5. Page 5 | Confidential and Proprietary Information • Improve collaboration between donor agencies, development community, IFAC • PAO Global Development Report – Middle East section under development MOSAIC Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration
    6. 6. Page 6 | Confidential and Proprietary Information MOSAIC Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration • African Development Bank • Asian Development Bank • Australian Agency for International Development • Finland Ministry of Foreign Affairs - Development Cooperation • GAVI Alliance • Global Fund to Fight AIDS, Tuberculosis, and Malaria • Inter-American Development Bank • IFAC • New Zealand Aid Programme • Swedish International Development Cooperation Agency • UK Department for International Development • US Agency for International Development • World Bank
    7. 7. Page 7 | Confidential and Proprietary Information IFAC and the UK Department for International Development (DFID)
    8. 8. Page 8 | Confidential and Proprietary Information Global Need for Capacity Building • 60 nations without a PAO sufficiently developed, ready to join IFAC • 27 in Africa
    9. 9. Page 9 | Confidential and Proprietary Information IFAC is committed to the quality of PAOs Capacity Building through an Integrated Approach PAOs are committed to competency, capability, & performance of accountancy professionals • In collaboration with local stakeholders, authorities Accountancy professionals are committed to: • the integrity of public & private sector organizations and representatives • the quality of financial information
    10. 10. Page 10 | Confidential and Proprietary Information • PAO Sustainability • PAO Standards and Enforcement • PAO Relevance Capacity Building through an Integrated Approach
    11. 11. Page 11 | Confidential and Proprietary Information • Capacity building in four regions • Development of PAOs in 10 DFID-focus countries • Key to success: engagement leading to evidence, impact on economy What Does the DFID Funding Mean?
    12. 12. Page 12 | Confidential and Proprietary Information • DFID/IFAC: clarifying expectations, process, requirements • Management systems and program team • Country selection • Informing interested and qualified PAO • Communications Next Steps for DFID and Capacity Building
    13. 13. Page 13 | Confidential and Proprietary Information Additional Global Initiatives
    14. 14. Page 14 | Confidential and Proprietary Information Global Representation and Advocacy in the Public Interest • Convene interested stakeholders • Stimulate discussion • Promote profession's interests
    15. 15. Page 15 | Confidential and Proprietary Information • Encouraging governmental transparency, accountability • Advocating adoption, implementation of high quality, accrual-based accounting standards – International Public Sector Accounting Standards (IPSASs) Accountability Now!
    16. 16. Page 16 | Confidential and Proprietary Information Enhancing Organizational Reporting Non-financial reporting is important for: • Decision making • Promoting transparency • Discharging accountability
    17. 17. Page 17 | Confidential and Proprietary Information Strengthening the Links in the Financial Reporting Supply Chain All components of the “financial reporting supply chain” need to be of a high quality to support strong and credible financial reporting.
    18. 18. Page 18 | Confidential and Proprietary Information • News, views, resources, thought leadership – Access global resources – Learn about emerging areas – Stay connected to pressing news – Exchange views, make recommendations, share information and resources Global Knowledge Gateway Support for Professional Accountants
    19. 19. Page 19 | Confidential and Proprietary Information • Business reporting • Ethics • Financial leadership & development • Governance • Performance and financial management • Risk management & internal control • Sustainability • Audit & assurance • Practice management Support for Professional Accountants Global Knowledge Gateway
    20. 20. Page 20 | Confidential and Proprietary Information Supporting Standards Development • Foster high-quality financial information • Promote confidence in markets • Enhance public resource management • Facilitate regional and international economic integration
    21. 21. www.wcoa2014rome.com Will you join the global accountancy community in Rome in November 2014? www.ifac.org

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