International Federation of Accountants Organizational Overview and Update

International Federation of Accountants Organizational Overview and Update April 2002

IFAC Overview IFAC Mission IFAC’s mission is the worldwide development and enhancement of the profession with harmonized standards to enable it to provide services of consistently high quality in the public interest.

IFAC Overview IFAC Today IFAC currently has 156 member bodies in 114 countries, representing more than 2. 5 million accountants.

IFAC Overview Current Environment The current and anticipated environment demands that the international profession: • Respond to globalization • Address investor and regulator needs • Meet expanding needs of business • Rebuild public confidence in the accountancy profession

IFAC Overview Current Action Plan Strengthening activities in five key areas: • Standard Setting and Guidance • Regulation of the Profession • Development of the Profession • Meeting Needs of Accountants • Communications

Standard Setting and Guidance New International Auditing and Assurance Standards Board (IAASB) • Comprised of 10 member body representatives, 5 from Fo. F and 3 public members • Strengthen internal technical resources • Develop high-quality auditing standards • Increase transparency in auditing-standard setting process • Obtain endorsement of ISAs from IOSCO

Standard Setting and Guidance Code of Ethics for Professional Accountants • Serves as a benchmark for codes of conduct of accountants worldwide • Approved stronger independence rules last November - Conceptual framework approach (not prescriptive) - Highlight factors that pose threat to independence - Focus on safeguards to minimize threat

Standard Setting and Guidance Public Sector Accounting Standards (IPSAC) • First authoritative international financial reporting standards for public sector (OECD, World Bank, etc. ) • Designed to strengthen financial reporting and accountability of public sector • 17 standards issued to date

Standard Setting and Guidance Education Standards • Action initiated to elevate education “guidelines” to “standards” • “Standards” designed to promote compliance (not only consideration) • Address pre- and post-qualification education requirements and emerging topics such as IT • New standards to be exposed for comment in June; Final issuance December 2002

IFAC Overview Current Action Plan Strengthening activities in five key areas: • Standard Setting and Guidance • Regulation of the Profession • Development of the Profession • Meeting Needs of Accountants • Communications

Regulation of the Profession Regulatory Initiatives Regulatory regime comprised of 4 primary bodies • Forum of Firms (Fo. F) • Transnational Auditors Committee (TAC) • Compliance Committee • Independent Oversight Board

Regulation of the Profession Forum of Firms Objective • To promote consistently high standards of financial reporting and auditing worldwide in the interest of the users

Regulation of the Profession Forum of Firms Fo. F members will work to achieve this objective by: • Comply with Fo. F Quality Standard • Subject policies, methodologies, and work to periodic external quality assurance review • Promote use of international auditing and assurance standards • Involve in IFAC activities

Regulation of the Profession Transnational Auditors Committee (TAC) • IFAC Committee and executive arm of FOF • Responsibilities include: - Connect Fo. F and IFAC Board - Develop, maintain and administer the Quality Assurance Review program - Develop guidance regarding transnational audits

Regulation of the Profession Compliance Committee Objective Encourage improvement and enhancement of standards within IFAC member bodies through greater compliance with standards, rules and guidelines issued by IFAC

Regulation of the Profession Compliance Committee Responsibilities include: • Evaluate potential member applications for Board consideration • Review member bodies’ harmonization of IFAC pronouncements with local rules • Help member bodies comply with IFAC requirements • Work closely with TAC to monitor Fo. F member

Regulation of the Profession Independent Oversight Board • Preserve and strengthen public confidence in financial reporting and the integrity of the audit process • Review Fo. F quality control process and IFAC activities • Draft charter was exposed for comment • Revisit framework in light of recent environmental changes.

IFAC Overview Current Action Plan Strengthening activities in five key areas: • Standard Setting and Guidance • Regulation of the Profession • Development of the Profession • Meeting Needs of Accountants • Communications

Development of the Profession International Forum on Accountancy Development (IFAD) • IFAD was created in 1999 to improve financial reporting, auditing practice and corporate governance • Currently comprised of over 30 public and private institutions • Developing and implementing country action plans

Support for Accountants Meeting the Needs of a Diverse Profession • SMP Task Force established to address needs of Small and Medium-Sized Practices • Working group established to focus on meeting the needs of accountants in business, industry and commerce • IFAC’s web site provides a wide range of mostly free guidance for the world’s accountants

Communications Responding to Public Concern Establishing international task force to study and recommend principles of best practice in the areas of …… • • Financial and business reporting Corporate governance Auditor performance Interim report expected in November 2002 Final report to be issued in March 2003

Communications Increased Spokesmanship • Represent the profession to international bodies • Express profession’s view to IOSCO and other international institutions • Explain the profession’s role with respect to public interest and other responsibilities

IFAC Summary Current Action Plan Strengthening • Standard Setting and Guidance • Regulation of the Profession • Development of the Profession • Meeting Needs of Accountants • Communications

International Federation of Accountants