The Framework: International Standards, SMOs, and Policy Statements
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Presentation by Szymon Radziszewicz, IFAC Senior Technical Manager, regarding the context of international standards on accounting and auditing and IFAC's Statements of Membership Obligations and policy statements.
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The Framework: International Standards, SMOs, and Policy Statements
- 1. The Framework: International Standards, SMOs, Policy Statements Szymon Radziszewicz Senior Technical Manager Member Body Development Team Leader Realizing the Power of PAOs Hà Nội, Việt Nam August 17, 2012 Page 1 | Confidential and Proprietary Information
- 2. The Framework The Structure KEY ACCOUNTABILITY OVERSIGHT CONSULTATION/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 2 | Confidential and Proprietary Information
- 3. The Framework IFAC Perspective on Regulation • Global regulatory convergence – IFAC’s position; importance of high-quality globally accepted standards and consistent adoption, implementation and oversight • Balancing shared regulation – Policy Position Paper (PPP) 1 and the role of professional accountancy organizations • Statements of Membership Obligations (SMOs) – A framework for credible and high quality professional accountancy organizations Page 3 | Confidential and Proprietary Information
- 4. Finding the Balance Regulation of the Accountancy Profession • “Regulation of individual professional accountants is primarily conducted at a national level, with professional accountancy organizations playing an important role in working with governments to ensure that such regulation is effective, efficient, and in the public interest.” • Characteristics of (and threats to) effective regulation • A shared approach to regulation – roles for government and professional accountancy organizations Page 4 | Confidential and Proprietary Information
- 5. The Framework 7 Statements of Membership Obligations SMO1 Quality Assurance SMO2 International Education Standards SMO3 International Standards on Auditing SMO4 International Code of Ethics SMO5 International Public Sector Accounting Standards SMO6 Investigation and Discipline SMO7 International Financial Reporting Standards Page 5 | Confidential and Proprietary Information
- 6. Understanding the SMO Applicability Framework Degree of responsibility for an SMO area No Direct Shared Responsibility For the elements for Use best endeavors to: Implement all the which Member Body requirements of the has direct a. Encourage those SMO responsibility follow responsible for the the approach for requirements to follow In exceptional situations "Direct" this SMO in departures are possible implementing them; if can be justified from AND the public interest AND perspective and need to For the elements for be documented which Member Body has no direct b. Assist in the responsibility follow implementation where the approach for appropriate "No Responsibility " Page 6 | Confidential and Proprietary Information
- 7. The Framework Building Blocks Page 7 | Confidential and Proprietary Information
Editor's Notes
- To accomplish these goals IFAC has the following Boards and Committees . . .Going to focus on Compliance Program
- 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.
- The SMOs are alignedwith the underlying International Standards and providekey focus areas for the profession
- To understand how the SMOs can work for each organization, you must first understand the applicability framework
- Once you understand what are the specific responsibilities for each SMO area you can use SMOs as the building blocks defining the PAOs. While the priorities and emphasis on each SMO area can be different for each PAO, the basic ideas are the same. The accountancy profession needs to: Have solid base of education (experience, examination) and focus on lifelong continuous professional development [click] Focus on adoption and implementation of international standards [click] With strong ethical standards as the cornerstone AND [click] Quality assurance and investigation & discipline as mechanisms to maintain and continuously improve high quality practice by professional accountants.