Definition of Professional Accountant

1. Definition of Professional Accountant Bob Rutherford IESBA Meeting New York, USA October 2011

2. Definition of Professional Accountant Existing Definition “An individual who is a member of an IFAC member body” • Use of definition: • IESBA – defined term, which is further sub-divided into “professional accountant in public practice” (Part B) “professional accountant in business” (Part C) • IAASB Glossary • IAESB - Framework

3. Definition of Professional Accountant Concerns With Existing Definition • Too simplistic – does not convey understanding of roles, functions and competence demonstrated by a professional accountant • Does not recognize that professional accountants not necessarily members of IFAC member bodies (e.g. some professional accountants in business and public sector) • Does not recognize that professional standards are adopted and enforced at the national/regional level • Not helpful in the public’s understanding of the term professional accountant

4. Definition of Professional Accountant Elements of a New Definition • Provide an understanding of the breadth of competence, roles and functions demonstrated by professional accountants • Embrace those professional accountants not members of member bodies that are subject to qualification and oversight • Provide help in identifying users of IFAC standards and the publics understanding of the term professional accountant

5. Definition of Professional Accountant Proposed Definition of IFAC Task Force The term professional accountant describes a person who has expertise in the field of accountancy, achieved through formal education and practical experience, and who: • Demonstrates and maintains competence; • Complies with a code of ethics: • Is held to a high professional standard; and, • Is subject to enforcement by a professional accountancy organization or other regulatory mechanism

6. Definition of Professional Accountant Proposed Revisions to Task Force Definition 1st Bullet: Demonstrates and maintains competence • Working Group (WG) agreed a PA “maintains competence” through CPD • IESs defines CPD as Learning and development that maintains and develops capabilities to enable professional accountants to perform their roles competently • WG recommends delete 1st bullet and insert: “and maintained through continuous learning and development” • “Expertise” in lead-in sentence covers “demonstrates competence”

7. Definition of Professional Accountant Proposed Revisions to Task Force Definition 2nd Bullet: Complies with a code of ethics 3rd Bullet: Is held to a high professional standard • To ensure PAs who are not members of IFAC member body follow robust code of ethics and held to a “high professional standard,” WG recommends: • Delete 2nd and 3rd bullets; and • Insert “high professional standards equivalent to IESBA Code of Ethics for Professional Accountants and IAESB International Education Standards”

8. Definition of Professional Accountant Proposed Revisions to Task Force Definition 4th Bullet: Is subject to enforcement by a professional accountancy organization or other regulatory mechanism • WG recommends revise to state that “compliance with such standards” is subject to enforcement • PA may be subject to discipline, but it is the PA’s compliance with standards that is subject to enforcement

9. Definition of Professional Accountant Proposed Definition of IESBA Working Group Professional Accountant - A person who has expertise in the field of accountancy, achieved through formal education and practical experience and maintained through continuous learning and development; is held to high professional standards equivalent to the IESBA Code of Ethics for Professional Accountants and IAESB International Education Standards, and whose compliance with such standards is subject to enforcement by a professional accountancy organization or regulatory mechanism.

10. Definition of Professional Accountant Considered Alternate Definition Professional Accountant – An individual who i) is a member of an IFAC member body or ii) has expertise in the field of accountancy, achieved through … • WG does not recommend alternate definition • May be associate member bodies of IFAC whose education standards are not as robust as IESs • Some IFAC member bodies have affiliate memberships that allow for non-accountants and students who do not meet PA qualifications • Could be misleading to public • Definition of PA should be based on “high standard”

11. Definition of Accountancy Proposed Edits to Definition of Accountancy A field of practice in which a professional accountant provides the measurement, recognition, preparation, analysis, and/or disclosure of financial and relevant nonfinancial information, or auditing of or provision of assurance and advisory services on financial information and, where applicable, nonfinancial information. Such information assists managers, investors, tax authorities, and other decision makers in resource-allocation decisions.The field of accountancy involvesincludesthe study of accounting, auditing, finance, management consulting, financial management, and/ortax.

12. Definition of Accountancy Comments Submitted by Others • WG considered comments of CAP, IAASB, IAESB, IAESB CAG, PAIB, SMP Committee, IFAC Translation Dept. • WG concluded that many of the comments have already been addressed in the proposed definitions • WG does not believe any further revisions to the definitions are necessary

13. Questions?