Welcome .

2. Welcome.

3. Professional Accountancy Organisations and Regulators: Experiences and Expectations.

4. Sha Ali Khan: Director – Practice Monitoring.

5. AGENDA • Which regulators are relevant to PAOs? • What is oversight? • Oversight of the accountancy profession • Oversight of ACCA

6. AGENDA (continued) • UK FRC and ACCA • PAOs approach to oversight bodies • Other ACCA relevant regulators • Concluding remarks

7. Regulators relevant to PAOs.

8. Regulators relevant to PAOs Accounting and audit oversight bodies (a.k.a. “lead regulators”) Governmental departments and agencies Other PAOs: national and international Standard setters (?)

9. Regulators relevant to PAOs Law enforcement agencies: • police • tax authorities • anti-money laundering agencies Other PAOs Intelligence services

10. What is oversight?.

11. What is oversight?. Regulation vs oversight Profession is regulated, regulators are overseen Oversight of regulators regulatory activities Different degrees of oversight scrutiny Powers of oversight boards: naming and shaming, recommendations, orders, fines and de-recognition

12. What is oversight?. US Public Company Accounting Oversight Board (PCAOB) - regulator Malta Accountancy Board – oversight board UK Financial Reporting Council – both oversight board and regulator

13. Oversight of the accountancy profession.

14. Oversight of the accountancy profession Concept of public oversight Public interest of paramount importance in professional regulation “Chaps regulating chaps” e.g. Jordan and Stone Composition of oversight boards European Union Statutory Audit Directive

15. Oversight of ACCA UK Financial Reporting Council: UK audit Irish Auditing and Accounting Supervisory Authority: Irish audit HM Government’s Insolvency Service: UK insolvency UK Financial Conduct Authority: UK investment business Central Bank of Ireland: Irish investment business

16. Oversight of ACCA: limited oversight Australian Tax Practitioners Board (Tax agents scheme) South Africa Revenue Service (Tax agents scheme)

17. Oversight of ACCA by the UK Financial Reporting Council.

18. UK FRC oversight of ACCA: interaction ACCA’s annual plan covering regulatory activities and other strategic moves ACCA to notify FRC of major events immediately Annual return of regulatory activities

19. UK FRC oversight of ACCA: interaction Annual inspection of all four UK audit regulators – same annual “theme” Overly prescriptive recommendations: Not only what we do but how we do it FRC acquired powers in 2012 to fine audit regulators and instruct them on regulatory conduct and procedures All of the above funded by the PAO audit regulators

20. UK FRC requirements of ACCA’s annual plan Regulatory objectives Governance arrangements Key priorities for the year Detailed plans for the year

21. UK FRC requirements of ACCA’s annual plan Key targets Resources Regulatory costs Risks Rulebook and regulation changes Progress on prior year recommendations

22. UK FRC requirements: immediate notification Changes in senior ACCA management Mergers and acquisitions Major fraud or financial loss Loss of integrity and reputation of examinations

23. PAO’s approach to oversight bodies.

24. ACCA’s approach to (and expectation of) oversight bodies Cooperation Technical and regulatory competence Challenge regulatory “creep” Challenge inappropriate recommendations (e.g. one size fits all or cost/benefit) Constructive engagement is ACCA’s objective

25. Examples of PAO experiences of poor oversight Cooperation between PAO and Oversight Board Excessive costs of oversight recharged to PAO (blank cheque syndrome) Public oversight body composition controlled by government

26. Examples of PAO experiences of poor oversight or poor regulation Technical and regulatory competence of oversight staff Disproportionate focus on some activities (e.g. approval of all rules and regulation changes) Named and shamed for not following own procedures Inappropriate use of regulatory gateways

27. Other relevant regulators.

28. Other relevant regulators: key relationship features • Common objectives (usually exchange of regulatory information) • Cooperation essential • Cooperation restricted to relevant matters • Regulatory gateways required

29. Other ACCA relevant regulators • Government agencies: • UK Department for Business, Innovation and Skills • Irish Director of Corporate Enforcement • Other PAOs: • Other UK/Irish PAOs regulating same activities as ACCA • International PAOs regulating ACCA members

30. Other PAOs : cooperation on investigation of dual members • Investigation protocol: • Identify primary regulator, based on licensing body for activity and jurisdiction of suspected offence • Primary regulator investigates and then disciplines if appropriate • Secondary regulator disciplines member on basis of primary regulators findings • ACCA always informs other regulators interested in ACCA members’ conduct

31. Other ACCA relevant regulators Law enforcement agencies: • police • tax authorities • anti-money laundering agencies • Intelligence services: • Financial Fraud Information Network

32. Concluding remarks Operating/regulating in isolation is not an option Cooperation essential to effective regulation Regulatory gateways essential for inter-regulator cooperation Oversight body’s recommendations should add real value to PAO’s regulatory processes Public interest is paramount

33. Food for thought: “Reputation is everything” • "In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward. Manufactured goods often can be evaluated before the completion of a transaction. Service providers, on the other hand, usually can offer only their reputations.” • Former Federal Reserve chairman, Alan Greenspan

34. Thank you.