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    Jul 15, 2010

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    SMP Committee

     

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    SMP/SME

    SMP eNews

    In This Issue:

    Feature:
    1) IFAC Board Approves Recommendations to Assist SMPs

    IFAC News
    2) New and Updated Free Resources from the SMP Committee
        a. Practice Management Guide Issued
        b. QC Guide (Second Edition) Planned for July
        c. ISA Guide (Second Edition) Slated for August
        d. International Center for SMPs Continues Expansion
        e. SMP Committee Twitter Launched
    3) SMP Committee Provides Input into the IESBA's and IAASB's Strategies
    4) SMP Committee Analysis Highlights the Expanding Role of SMPs in Advising SME Clients
    5) IFAC Issues Letter to G-20 Leaders: Governments Should Practice What they Preach
    6) IFAC Releases 2009 Annual Report

    Other SMP News from Around the World
    7) Private Company Financial Reporting Update
        a. "Train the Trainers" Workshop in Cairo, Egypt
        b. Selection of Members for the SME Implementation Group
        c. Report Released on Future of Standard Setting for US Private Companies
    8) EC Consultations on IFRS for SMEs and ISAs
    9) FEE/CNDCEC Congress Venice 2010 Presentations
    10) Share SMP eNews with Your Colleagues

    Feature

    1) IFAC Board Approves Recommendations to Assist SMPs

    The International Federation of Accountants (IFAC) has approved a set of recommendations designed to expand support to member bodies in their work to assist small and medium practices (SMPs). The recommendations were approved by the IFAC Board at its June 2010 meeting, and are the culmination of a strategic review initiated by the Board at its February 2009 meeting.

    The recommendations are intended to give SMPs the additional practical support needed to provide high-quality professional services to their main clients: small- and medium-sized entities (SMEs). IFAC considers the health of the SME sector, which accounts for the majority of private sector employment and gross domestic product (GDP) worldwide, to be crucial to global economic growth and financial stability, as well as the public interest. Through these recommendations, IFAC also seeks to enhance SMP participation in international standard-setting and regulatory and policy development.
     
    The recommendations can be categorized into the following areas:

    • Increase the visibility, voice, and profile of SMPs - for example, by communicating and advocating the importance of the SME sector and the role of SMPs in supporting this sector;
    • Expand the monitoring of global regulatory reform to ensure its suitability for SMEs and SMPs;
    • Develop guidance, resources, and tools-in collaboration with member bodies-that help promote and build the capacity of SMPs to deliver high-quality accounting, assurance, and business advisory services; and,
    • Enhance the extent and effectiveness of participation of SMPs in the development of IFAC's standards through increased SMP representation on certain independent standard-setting boards and other activities where SMP contributions are essential.

    The strategic review leading to the recommendations was carried out by a task force drawn from the Board, the International Auditing and Assurance Standards Board (IAASB), and the IFAC Small and Medium Practices (SMP) Committee. The recommendations are the outcome of a consultative process that included an online survey-sent to recognized regional organizations, other accountancy groupings, and all IFAC member bodies-which resulted in responses from a broad cross-section of IFAC stakeholders. In addition, at the IFAC-convened Chief Executives Strategy Forum, over 40 chief executives representing a diverse group of IFAC member bodies discussed the review results and provided suggestions which helped to shape the final recommendations.

    While the SMP Committee will play the lead role in implementing the recommendations, and has been given an expanded mandate to do so, contributions from many areas of IFAC, its member bodies, and the independent standard-setting boards will be critical to their successful implementation. IFAC members can make the greatest contribution at this stage of the implementation process by increasing the voice and visibility of their SMP constituencies, seeking greater SMP representation, and sharing resources with IFAC to help with the training and development of SMPs globally. IFAC's independent standard-setting boards and other groups (such as the PAIB Committee and others) will be encouraged to further embed SMP and SME considerations into their work programs-for example, through increased involvement of SMPs in projects and by adopting a "Think Small First" approach to tackling complexity.

    IFAC President Robert Bunting noted this review during a speech before the AICPA Council on June 25, 2010. In addition to the review, Mr. Bunting addressed a number of topics related to SME and SMP issues as well as IFAC's work to address these issues. The speech can be accessed here.

    IFAC News

    2) New and Updated Free Resources from the SMP Committee

        a. Practice Management Guide Issued

    The committee issued in June 2010 the Guide to Practice Management for Small- and Medium-sized Practices. The guide discusses strategies for SMPs to better manage their practices and ultimately operate in a safe, profitable, and professional manner. It is comprised of eight stand-alone modules that contain practice management principles and best practices on a comprehensive range of topics, from starting the business to succession planning. It also features case studies, an office manual, checklists and forms, and a list of further reading.  It can be downloaded free of charge from the link above, and is available in a PDF for printing and an interactive version with internal links aiding navigation. The press release can be found here.

         b. QC Guide (Second Edition) Planned for July

    At its June meeting the committee also approved the second edition of its Guide to Quality Control for Use by Small- and Medium-sized Practices, which is scheduled for release in late July 2010. This implementation guide is designed to help SMPs understand and efficiently apply the redrafted International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements. The revised guide will conform to the revised and redrafted Code of Ethics for Professional Accountants and include improvements based on feedback from users of the first edition. The current edition of the guide can be found in the SMP section of the IFAC Publications and Resources page.

         c. ISA Guide (Second Edition) Slated for August

    The committee approved at its June meeting the second edition of its Guide to Using International Standards on Auditing in the Audits of Small- and Medium-sized Entities. This new edition, slated for launch in early August 2010, will conform to the International Standards on Auditing (ISAs) redrafted by the International Auditing and Assurance Standards Board for the Clarity Project. It will also include improvements based on feedback from users of the first edition. The new edition will consist of two volumes: the first describing the basic concepts of a risk-based audit conducted in conformance with the ISAs, and the second providing practical guidance for audits of small- and medium-sized entities (SMEs). The current edition of the guide can be found in the SMP section of the IFAC Publications and Resources page.

         d. International Center for SMPs Continues Expansion

    The Center continues to expand its resources section and now provides access to the following:

    • Relevant Links to free resources and tools from IFAC member bodies and other organizations (including categories devoted to practice management, implementing international standards and business advice)
    • The SMP/SME Discussion Board, where readers may submit their views on such subjects as practice management issues
    • Links to other IFAC resource centers such as the IAASB Clarity Center and a Database of Translations of IFAC publications

         e. SMP Committee Twitter Launched

    The SMP Committee is piloting Twitter as a vehicle for communicating and engaging with SMPs, member bodies and others. The SMP Committee Twitter will keep users up-to-date with global developments in the SMP/SME sector. Please visit http://twitter.com/IFAC_SMP and start following us.

    3) SMP Committee Provides Input into the IESBA's and IAASB's Strategies

    The International Ethics Standards Board for Accountants (IESBA) issued an exposure draft (ED) on its proposed strategy and work plan for the next three years. The SMP Committee's response to the ED expressed the need for the IESBA to do more to help SMPs implement the revised and redrafted Code of Ethics for Professional Accountants.

    The SMP Committee is also providing input into the International Auditing and Assurance Standards Board's (IAASB) strategy and work program for 2012-14. As a first step in the 18 month development process, the IAASB issued an online questionnaire in April, the results of which will be used to develop a formal Consultation Paper, outlining the IAASB's strategic focus and potential projects, to be issued in December 2010. The SMP Committee plans to respond to this paper and calls on member bodies, SMPs, SMEs, and others to do the same.

    4) SMP Committee Analysis Highlights the Expanding Role of SMPs in Advising SME Clients

    The SMP Committee published an analysis of research on the business advisory services provided by SMPs. The paper, titled The Role of Small and Medium Practices in Providing Business Support to Small- and Medium-sized Enterprises, includes a review of global research ranging from academic studies and practitioner surveys to interviews of SMP partners. The analysis suggests that, due to increased regulatory complexity and a lack of in-house capacity, there is an increased demand from SMEs for business advisory services, including developing business plans and financial forecasts, identifying and managing risk, providing information technology, and conducting business valuation. The study finds that accountants are seen as competent and trustworthy advisors and are therefore well-positioned to fulfill this increased demand from SMEs. The press release is available here.

    5) IFAC Issues Letter to G-20 Leaders: Governments Should Practice What they Preach

    In a letter issued in advance of the Toronto G-20 Summit, held June 26-27, IFAC called for broad and swift action by the G-20 leaders to greatly improve government transparency and accountability as a means toward global fiscal sustainability. The letter also urges the adoption of international standards to improve the quality of financial information. The complete letter and recommendations is accessible here.

    6) IFAC Releases 2009 Annual Report

    IFAC recently released its annual report for 2009. This report highlights IFAC's response to the global financial crisis as well as initiatives that have positioned the organization as a more influential voice for the global accountancy profession. Featuring messages from IFAC President Robert Bunting, Chief Executive Officer Ian Ball, and Public Interest Oversight Board Chair Stavros Thomadakis, the annual report provides a detailed account of all the services delivered by IFAC in 2009 including those for SMPs. The annual report, which was developed digitally for the first time this year, also provides noteworthy interactive features. The annual report can be accessed here.

    Other SMP News from Around the World

    7) Private Company Financial Reporting Update

    The following developments relating to private company financial reporting are worth noting:

        a) "Train the Trainers" Workshop in Cairo, Egypt

    In June 2010, the International Accounting Standards Board (IASB) and the International Accounting Standards Committee Foundation (IASCF) conducted their fourth three-day "Train the Trainers" workshop to educate instructors to teach other professionals on the implementation of the International Financial Reporting Standard for Small- and Medium-sized Entities (IFRS for SMEs) in Cairo, Egypt. The workshop was sponsored by the World Bank, with the IASB providing the training materials. Participants came from countries such as Algeria, Colombia, Egypt, Italy, Jordan, Lebanon, Morocco, Palestine, Tunisia, and Yemen. Similar IASB/IASCF workshops are scheduled for Rio de Janeiro (August 2-4, 2010) and Panama (October 2010). For more information contact Michael Wells at mwells@iasb.org. Copies of the IFRS for SMEs in English, Spanish, Italian and Romanian, as well as presentations for the "Train the Trainer" workshops and training materials in PDF form, can be accessed here.

        b) Selection of Members for the SME Implementation Group

    The Trustees of the IASCF expect to select the 12-20 members of the IFRS for SME Implementation Group (SMEIG) at their meeting in July 2010. The SMEIG will have two main responsibilities:  to develop and publish, after clearance by the IASB, Q&A guidance on implementation issues identified by IFRS for SMEs users; and to make recommendations to the IASB on the need to amend the IFRS for SMEs

        c) Report Released on Future of Standard Setting for US Private Companies

    The chair of the Blue Ribbon Panel on Private Company Financial Reporting, created by the American Institute of Certified Public Accountants (AICPA) and the Financial Accounting Foundation, with support from the National Association of State Boards of Accountancy, to make recommendations on the future of standard setting for U.S. private companies, presented a preliminary report to the AICPA Council. The chair said that smaller companies have been struggling to understand and implement complex standards. As a result, more companies have been taking generally accepted accounting practices exceptions. Moreover, he said, there is a growing belief that differential standards may better meet the needs of private company financial reporting users.

    8) EC Consultations on IFRS for SMEs and ISAs

    The European Commission (EC) has published a summary report of the 210 responses it received during its consultation of European Union (EU) stakeholders regarding the IFRS for SMEs. The EC has posted the summary report, all of the responses, and the November 2009 consultation document, here. In addition, the minutes from a stakeholders' meeting on the review of the EU Accounting Directives and the IFRS for SMEs held on May 25, 2010 are also available.

    In a similar exercise, the EC received 89 responses to its public consultation on the adoption of the International Standards on Auditing (ISAs) from a range of stakeholders. The overwhelming majority of respondents to the consultation favor adoption of the ISAs at the EU level. A significant majority of the respondents support the application of the ISAs to the statutory audit of all companies, including small companies for which an audit is required. The consultation document, the responses and a report summarizing the responses can be found here. The EC has decided to defer a decision on ISA adoption until after the issue of a Green Paper on the subject later this year.

    9) FEE/CNDCEC Congress Venice 2010 Presentations

    The FEE SME/SMP Congress was held on April 15-16, 2010 in Venice in cooperation with the national Italian institute Consiglio Nazionale dei Dottori Commercialisti e Degli Esperti Contabili. The event featured plenary sessions and a series of parallel sessions that focused on practical experience, lessons learned and the use of tools. The sessions covered subjects such as EU and international developments, SMEs' expectations from their accountants, auditing standards and guidance, cross-border activities, and services beyond auditing. The closing keynote speech was delivered by IFAC President Robert Bunting - his speech and video interviews from the event are available here. All presentations and other documents related to the event, including those of Sylvie Voghel, SMP Committee Chair, can be downloaded here.

    10) Share SMP eNews with Your Colleagues

    The SMP Committee issues regular eNews updates to keep you current on its activities and recent publications. Please forward this eNews to any interested colleagues and let them know that they can subscribe to this and other eNews bulletins at the eNews sign-up page at www.ifac.org/e-news.

    ACCOUNTANTS: SUSTAINING VALUE CREATION
    The 18th World Congress of Accountants, hosted by the Malaysian Institute of Accountants and IFAC, is November 8-11, 2010.  The Congress will offer more than thirty panel discussions and speakers from The World Bank, Transparency International, the Financial Stability Board, the European Commission, IFIAR, and the IASB, among others. Thousands of delegates representing the profession from around the world will attend.

    Register now!

    For more information about any of the items mentioned above or other information about the SMP Committee, please contact
    communications@ifac.org.

    About IFAC
    IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 159 members and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. Through its independent standard-setting boards, IFAC sets international ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high-quality performance by professional accountants in business.

     

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