Accountancy organizations, regulatory bodies, standard setters, and other international organizations have developed guidance, articles, and resources on issues related to the global financial crisis. This section of the IFAC website serves as an international clearinghouse of programs, articles, speeches, and other initiatives undertaken by IFAC, its independent standard-setting boards, members and associates, and others that are relevant to professional accountants and to other stakeholders in the accountancy profession.

To assist professional accountants in addressing issues related to the global financial crisis, IFAC and the International Auditing and Assurance Standards Board (IAASB) have focused on three activities:

1. To increase awareness among preparers and auditors of existing and newly developed guidance that can assist them in reporting on financial instruments;
2. To encourage further convergence in reporting standards on financial instruments, while at the same time strongly supporting (the continuation of) fair value accounting since reducing transparency is not in the interests of investors; and
3. To participate in and promote discussions of best practice with respect to the audits of financial institutions and other organizations that are affected by the current crisis.

IFAC and the G20

IFAC submitted recommendations for the reform of the global financial system to the G20 Working Groups that met during the 2009 London Summit. IFAC's views are expressed in the letters below:   

• Recommendations for Working Group 1- Enhancing Sound Regulation and Strengthening Transparency
• Recommendations for Working Group 3 - Reforming the IMF
• Recommendations for Working Group 4 - The World Bank and Other Multilateral Development Banks (MDBs)

Relevant Guidance

Audit Practice Alert on Going Concern Assumptions

Audit Considerations in Respect of Going Concern in the Current Economic Environment (January 2009), deals with the effect of the credit crisis and economic downturn on an entity's ability to continue as a going concern and whether these effects ought to be described in the financial statements. It also raises awareness of issues surrounding liquidity and credit risk that may create new uncertainties for entities or exacerbate those already existing.

Audit Practice Alert on Auditing Fair Values

Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment (October 2008), was developed following consultation with the IAASB's Task Force on Fair Value Auditing Guidance, which is considering the need for new or modified guidance in light of current marketplace issues. The purpose of the alert is to highlight areas within the International Standards on Auditing (ISAs) that are particularly relevant in the audit of fair value accounting estimates in times of market uncertainty.

The alert directs auditors to the recently revised ISA 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, which was influenced by the changes in the credit markets during 2007. While not effective until audits of financial periods commencing on or after December 15, 2009, it includes guidance that is likely to be useful to auditors planning their 2008 engagements.

Further Auditing Guidance

The Task Force on Fair Value Auditing Guidance, chaired by IAASB Board member and Deputy Chair, John Fogarty, is exploring whether and how any further auditing guidance should be developed. As part of that process, it is undertaking consultations and discussions with relevant stakeholders on the subject.

Convergence in Fair Value Standards

IFAC has monitored the initiatives of the International Accounting Standards Board (IASB). In response to their initiatives to remove differences in the application of fair value accounting in different jurisdictions, IFAC issued a press release expressing support for convergence in reporting on financial instruments. The release also indicated IFAC's opposition to attempts within Europe and the United States to change more radically the use of fair value accounting without adequate due process.

Discussions of Best Practices

Credit Crisis Session at IFAC Council Meeting

At the IFAC Council meeting in Rome, November 12-13, 2008, a session was devoted to the credit crisis. Keynote speakers included: René Ricol, former IFAC President and author of a Report on the Financial Crisis to the President of the French Republic on the financial crisis in September 2008; Tommaso Padoa-Schioppa, President of Notre Europe; and Pauline Wallace, Partner, PricewaterhouseCoopers.

• Report on the Financial Crisis by René Ricol
• Audio Recordings of the Credit Crisis Session
  • Tommaso Padoa-Schioppa
  • René Ricol
  • Pauline Wallace
  • Panel Discussion

Remarks of IFAC President

In a video interview with the American Institute of Certified Public Accountants (AICPA), IFAC President Robert Bunting discusses how the global financial crisis has demonstrated the interconnectedness of global markets and the need for common sets of accounting and auditing standards.

During the IFAC 2008 Council meeting, IFAC President Robert Bunting commented on how IFAC is dedicated to working with other organizations to be part of the solution in addressing issues related to the credit crisis.

Forum of Firms Symposium

At a symposium on the audits of financial institutions held in October over 60 partners from 21 international networks of accounting firms shared their experiences, industry insights and current practices for audits of financial institutions. Participants commented on the importance of strong risk management and transparent disclosure for restoring market confidence as well as heightened sensitivity to going concern issues.

If you have thoughts on best practices for accountants or others in the financial reporting supply chain, please share them on our Discussion Board.