A&IS/CAP/DNC Report

1. A&IS/CAP/DNC Report Russell Guthrie Executive Director, Quality and Member Relations IESBA Meeting New York City, New York February 17, 2009

2. Topics to be Covered • What we know today • Adoption and Implementation Support • Compliance Program • Status • Developing Nations initiatives • Specific matters for IESBA consideration • Adoption and Implementation • SMO Revisions

3. Developing Nations Committee Challenges • Lack of stakeholder engagement • Outdated legal frameworks • Weak accountancy professional organizations • Widespread non-compliance with standards • Weak monitoring/enforcement mechanisms • Lack of access to (translated) international standards and related implementation guidance • Inadequate training and curricula/poor linkage with academia Weak Capacity

4. Adoption and Implementation Support IFAC – Beyond Standard Setting • Adoption • Advocacy • Policy Advice

5. Adoption and Implementation Support IFAC – Beyond Standard Setting • Implementation Support • Availability • Accessibility (Translations) • Application Support • Core Training and Education Materials (currently deferred due to resource constraints)

6. Member Body Compliance Program Statements of Membership Obligations (SMOs) • SMO 1 Quality Assurance • SMO 2 International Education Standards • SMO 3 International Standards on Auditing • SMO 4 International Code of Ethics • SMO 5 International Public Sector Accounting Standards • SMO 6 Investigation and Discipline • SMO 7 International Financial Reporting Standards

7. Member Body Compliance Program Assessing Compliance • Part 1 – Fact-based questionnaire on the regulatory and standard-setting framework in a member’s home country • Part 2 – Self-assessment of compliance with specific requirements of the SMOs • Part 3 – Members and associates develop action plans to address gaps

9. Member Body Compliance Program Status of Preparation of Action Plans as of February 1, 2010 • 76 – Published Action Plans • 39 – Drafts received and under review • 40 – In progress but no submitted draft • 3 – Suspensions • 1 – Expulsion to be considered by Board – Feb

10. Member Body Compliance Program Monitoring of Published Action Plans • Soft updates • Completed after six months • Based on interviews with key individuals • Obtain understanding of current progress • Encourage continuing communication • Offer to be of further assistance • Memorandum prepared for archives and CAP review

11. Member Body Compliance Program Monitoring of Published Action Plans • 20 completed as of February 1, 2010 • Overall member bodies generally remain on track • Some delay caused by changes in regulatory environment or change in priorities • Also noted a number of positive developments • Annual progress reports • Include submission of updated Action Plans • 10 completed or actively in progress

12. Member Body Compliance Program Need for Financial and Technical Resources to Achieve Desired Actions • Meaningful execution of Action Plan depends on: • Ability of developing bodies to clearly communicate their challenges, required actions, and need for resources • Willingness of national government and donor agencies to provide support and financial resources • Development of useful implementation tools by the DNC and standard setters • Support of regional organizations and developed bodies serving as mentors/partners

13. Member Body Compliance Program Program to Review the SMOs (2010-2012) • Clarification and increased consistency including • “No less stringent standards” SMO 4 (Ethics) • Statement of applicability in SMO 7 (IFRS+IFRS-SMEs) • Member body governance practices • Corporate governance (OECD principles)? • Review of QA and I&D • Public oversight for auditors of PIEs?

14. Developing Nations Committee Key activities • Tools and Guidance • Establishing and Strengthening Professional Accountancy Organizations • Technicians Guidelines • Mentoring Guidelines • Advocacy and Liaison with Donor Community • Capacity building to support Public and Private sector Financial Management

15. Developing Nations Committee Key activities • Mentoring/Twinning by Developed Bodies • Outreach • Professional Accountancy Organizations • Governments • Firms

16. Code of Ethics – Specific Matters • Compliance Program • Limited to self assessment and limited external validation • Adoption challenges • Principles and rules at a national level often embedded in legislation, regulation and member body governance documents • Implementation challenges • Overcoming cultural barriers

17. Code of Ethics – Specific Matters • Definition of “Professional Accountant” • SMO 4 Revision – other considerations • Consistency – convergence, translation, etc. • IFAC Member Obligations • CoE applicable to a wide group of stakeholders • SMO establishes member body obligations • “No less stringent standards”

18. Adoption and Translation Adoption/Translation/Advocacy Activity • Netherlands • Nigeria • Romania • Russia • Scotland • Slovakia • Spain • South Africa • Swaziland • Tanzania • Ukraine • Zambia • Australia • Cambodia • France • Finland • Germany • Hong Kong • Iceland • Ireland • Kenya • Latvia • Macedonia • Mauritius

19. International Federationof Accountants www.ifac.org