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Evolution of the IFAC Member Compliance Program: Insights from Russell Guthrie's Update

In a compelling update, Russell Guthrie, Chief Financial Officer and Executive Director of Professional Relations, presents a comprehensive overview of the evolution of the IFAC Member Compliance Program. The program has undergone significant changes from its inception between 2001-2003 amid the Enron and Arthur Andersen crises to current methodologies and practices. Key developments include the introduction of Statements of Membership Obligations (SMO), self-assessments, and enhanced transparency through reporting. This report provides insights into ongoing challenges and strategies for continuous improvement in compliance standards worldwide.

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Evolution of the IFAC Member Compliance Program: Insights from Russell Guthrie's Update

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  1. Compliance Program Update Russell GuthrieChief Financial OfficerExecutive Director, Professional Relations

  2. Evolution of the IFAC Member Compliance ProgramAt a glance

  3. Evolution of the IFAC Member Compliance Program 2001-2003 • Enron • Arthur Andersen • Sarbanes-Oxley • IFAC Reforms

  4. Evolution of the IFAC Member Compliance Program 2004 • IFAC Member Compliance Program (CP) • Statements of Membership Obligations (SMO) and IFAC admission criteria as global benchmark

  5. Holistic approach considerations Level of development and capacity

  6. Holistic approach considerations Other environmental factors

  7. Evolution of the IFAC Member Compliance Program 2005-2007 • Self-assessments • Transparency – publication on IFAC website • Public Interest Oversight Board commences observation of Compliance Program as a public interest activity

  8. Evolution of the IFAC Member Compliance Program 2007-2014 • SMO Action Plans for continuous improvement • Monitoring of progress • Revised SMOs • G-20 adoption status reports

  9. Observations on the IESBA Code adoption • Tension between “adoption” (ISAs, IFRSs, IPSASs, IESs) and “adoption of no less stringent requirements” (IESBA Code) • IESBA’s different wording for the SMO authoritative statement seems less conducive for PAOs to adopt the “book” of the Code • The Code addressed to IFAC Member Bodies sometimes seen by other stakeholders as not their matter of interest • Lack of clear understanding of what it means to adopt the Code (IAASB has its Modifications Policy…)

  10. Observations on the IESBA Code adoption • More complex assessment of the adoption of the Code: • Aspects embedded in laws, PAO bylaws, sector specific regulatory requirements (banking, stock exchange, insurance, etc.) • Adoption not only national but also via Forum of Firms • ISAs or IFRSs tend to be adopted “en block” • Translation, culture and awareness building (both members and external stakeholders) also an issue

  11. Observations on the IESBA Code implementation • Assessing quality of implementation is even more complex • What process really exist and operate in practice (as opposed to on paper) • Challenges in implementing ongoing supporting activities (I&D, CPD, etc.) • Proxy observations are used (effectiveness of I&D process, cases heard, online ethics resources for members, etc.)

  12. Evolution of the IFAC Member Compliance Program Reporting on the status of adoption & SMO fulfillment Status of Adoption Status of SMO Fulfillment

  13. Evolution of the IFAC Member Compliance Program 2015 & Beyond • M&E methodology • Dashboard Reports on adoption status & SMO fulfillment • Guidance enabling enhanced self-assessment • Compliance Program 2.0

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