SMP eNews: February 2012

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    Feb 29, 2012
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    SMP eNews: February 2012

    Thank you for signing up to receive eNews from the IFAC Small and Medium Practices (SMP) Committee.

    In This Issue:

    1.  Year-End SMP Quick Poll Reveals Regulatory Burdens, Economic Uncertainty as Top Challenges

    Resources and Reports
    2.  Global Accountancy Leaders Identify Addressing the Needs of SMPs and SMEs as Key Concern
    3.  Practice Management Guide and Companion Manual Now Available
    4.  Greening Small Business: The Role of SMPs

    Meetings and Events
    5.  Upcoming Small and Medium Practices Forum
    6.  SMP Committee Members Speak at International Events
    7.  European SME Envoys Discuss Increased Access to Credit, Reduced Regulatory Burden for SMEs

    Standards and Guidance
    8.  Member Bodies Support Implementation of Clarified ISAs
    9.  IAASB Approves Auditor Reporting Project
    10. Update on IESBA
    11. Update on IFRS for SMEs


    1. Year-End SMP Quick Poll Reveals Regulatory Burdens, Economic Uncertainty as Top Challenges

    Burden of regulation and economic uncertainty were tied for the top challenge faced by practitioners’ small- and medium-sized (SME) clients, with nearly 30% of respondents choosing each in the fourth quarter SMP Quick Poll. Similarly, for accountants within small practices, keeping up with new standards and regulations (41%) ranked as the top challenge, followed by attracting and retaining clients (25%). Tell us what regulatory change/measure you think would most help ease the regulatory burden for SMPs and their clients by replying on the SMP/SME Discussion Board (to respond, register here or log in if you already have an account).

    Economic outlook varied widely from region to region. Only 29 percent of the respondents globally reported that business was better in 2011 than 2010, while nearly 50 percent of those from North and South America said that business was better.

    Looking forward, over one-third of respondents globally expect an improvement in business performance in 2012 over 2011, giving grounds for cautious optimism in the year to come. The most important policy development issues facing the profession in 2012 are micro-entity financial reporting and global regulatory convergence, according to the largest portion of respondents. See these and additional results broken down by size of practice and region in the IFAC SMP Quick Poll: 2011 Round-Up. IFAC wishes to thank those member bodies and regional organizations that translated and/or helped promote the poll to their members. IFAC is considering polling semi-annually in 2012 with the next poll conducted April–May.


    Resources and Reports

    2. Global Accountancy Leaders Identify Addressing the Needs of SMPs and SMEs as Key Concern

    IFAC recently released the results of its 2011 IFAC Global Leadership Survey of the Accounting Profession, which showed that IFAC members value all of IFAC’s service areas—and in particular, IFAC’s support of the SMP sector, as well as IAASB and IESBA standards. Furthermore, addressing the needs of SMPs and SMEs was among the top three issues of particular concern to the profession in 2012, along with the difficult global financial climate and enhancing the reputation/credibility of the profession. SMEs and SMPs are engines or economic growth and development that could be instrumental in improving the world’s economies, according to IFAC CEO Ian Ball in the press release.

    The results of the 2011 IFAC Global Leadership Survey include data from 123 officers (generally presidents and chief executive officers) of IFAC’s member bodies and recognized regional accountancy organizations and groupings in 71 countries and jurisdictions.


    3. Practice Management Guide and Companion Manual Now Available

    IFAC has released the second edition of the Guide to Practice Management for Small- and Medium-Sized Practices (the Guide), which aims to help SMPs better manage their practices and ultimately operate in a safe, profitable, and professional manner. Consisting of eight standalone modules, the Guide features checklists and forms, lists of further readings, and case studies to illustrate the concepts, which range from strategic planning and managing staff to client relationship management and succession planning. The SMP Committee welcomes feedback on the Guide via its SMP/SME Discussion Board (to respond, register here or log in if you already have an account). See also the newest edition of the Companion Manual to help member bodies and other professional accountancy organizations make the best use of the Guide.

    The Guide has been translated into a number of languages. Look for new translations of the Guide into Chinese and Spanish in the first half of 2012. For these, as well as translations of the SMP Committee’s two implementation guides (QC and ISA Guides), see the Translations Database or visit SMP Guidance and Support Tools and filter by language.


    4. Greening Small Business: The Role of SMPs

    Developed by former SMP Committee Chair Sylvie Voghel and SMP Committee staff, The Role of SMPs in Greening Small Business discusses the growing trend toward small businesses adopting environmentally sustainable business practices and the resulting importance of environmental reporting to investors and other stakeholders. As small businesses themselves, SMPs are the natural business advisors of this sector and have an important role to play in helping their SMP clients embrace the green agenda, from strategy and planning to communicating and integrated reporting. The article includes links to resources and tools that small practices can use to help SMEs green their business. Look for the next article on SMPs adapting to the changing economic landscape in May.

    The SMP Committee is actively participating in the development of standards and guidance to facilitate integrated reporting. See the SMP Committee’s response to the International Integrated Reporting Council (IIRC)’s Discussion Paper, Towards Integrated Reporting – Communicating Value in the 21st Century. The IIRC expects to publish a summary of comments in late March.


    Meeting and Events

    5. Upcoming Small and Medium Practices Forum

    The next IFAC SMP Forum will be held in Singapore on March 19, 2012. At this annual event, leaders of the accounting profession from around the world meet to discuss how to address the unique challenges and opportunities facing SMPs and their SME clients. Co-hosted with the Institute of Certified Public Accountants of Singapore (ICPAS), this year’s event will feature speakers from the World Bank, the Accounting and Corporate Regulatory Authority of Singapore, and the Association of Small & Medium Enterprises (Singapore). While registration for this event is now closed, speakers’ presentations will be available under SMP News & Events in early April. Presentations, videos, and highlights from the 2011 Forum are also available on our website.


    6. SMP Committee Members Speak at International Events

    SMP Committee representatives recently spoke at several key international events. Committee Chair Giancarlo Attolini spoke at the Institute of Chartered Accountants of India in January. See his speech on the SMP Committee and its activities related to the development of SMEs in the current environment: Competency Building of SMEs in Emerging Milieu. He also addressed IFAC’s Chief Executives Strategic Forum in New York on February 27, 2012. See his speech: The Changing Face of Auditing and Ethics: Implications for SMPs.

    Committee member Florin Toma spoke at the OTOC-EFAA conference in Portugal in December. See his presentation, The Future of Micro-Entity Financial Reporting.


    7. European SME Envoys Discuss Increased Access to Credit, Reduced Regulatory Burden for SMEs

    In late January, SME delegates from European Union Member States convened at the second meeting of the Network of SME Envoys, where progress was reported in key areas including access to finance, the average time needed to register a new company, and public procurement. In a report, the European Commission called for reducing the regulatory burden, especially for micro-entities and SMEs, in future legislation. Delegates agreed to address improving access to markets and boosting entrepreneurship in future meetings.


    Standards and Guidance

    8. Member Bodies Support Implementation of Clarified ISAs

    Many jurisdictions around the world (see Basis of ISA adoption table) have either adopted, or are in the process of adopting, the clarified International Standards on Auditing (ISAs) released by the International Auditing and Assurance Standards Board (IAASB). Proportionate application of the ISAs is key to their efficient and effective implementation, particularly in the SME/SMP sector. Therefore, it is vital that practitioners receive appropriate support in using these standards. Do you agree? Tell us on the SMP/SME Discussion Board (to respond, register here or log in if you already have an account).

    IFAC member bodies have developed a range of initiatives to help their members implement the clarified ISAs effectively and proportionately, in some cases working collaboratively with other IFAC members bodies outside their own jurisdictions. See some examples of such initiatives in Implementing the Clarified ISAs: IFAC Member Body Initiatives to Support SMPs. For more support, see links to additional implementation resources and tools for SMPs and the IAASB’s ISA Module video series.


    9. IAASB Approves Auditor Reporting Project

    In light of responses received to the May 2011 Consultation Paper, Enhancing the Value of Auditor Reporting: Exploring Options for Change, the International Auditing and Assurance Standards Board (IAASB) recently approved a proposal to commence a project on auditor reporting on a high-priority basis. The aims of this project are to: enhance the communicative value and relevance of auditor reporting to users of audited financial statements; and explore how auditor reporting can accommodate evolving national financial reporting regimes and facilitate enhanced approaches in corporate financial reporting, while at the same time ensuring that common and essential content is communicated. The project will include revision of ISA 700, Forming an Opinion and Reporting on Financial Statements, and, as appropriate, further amendments to other related requirements (for example, ISA 260, Communication with Those Charged with Governance). The project will be featured at the next meeting of the IAASB on March 12–16. See the agenda papers. The SMP Committee welcomed, and responded to, the public consultation, advocating a proportionate approach to any changes in the auditor reporting model in order to meet the needs of SMEs and SMPs. The committee will continue to follow this project throughout its development.

    Meanwhile, the staff of the IAASB recently released a question-and-answer publication, Professional Skepticism in an Audit of Financial Statements


    10. Update on IESBA

    At its February meeting, the International Ethics Standards Board for Accountants (IESBA) considered a number of recommendations made by its SME/SMP Working Group, which was formed to help address the unique and challenging issues faced by SMEs and SMPs in complying with the IESBA Code of Ethics for Professional Accountants. See the related meeting agenda for more details.

    The outcomes of the meeting will appear in the Meeting Summary in the coming weeks.

    The IESBA has also recently released for public comment proposed changes to the definition of “engagement team” in the IESBA Code of Ethics for Professional Accountants. The SMP Committee encourages SMPs and SMEs to submit comments, which are due by May 31, 2012.


    11. Update on IFRS for SMEs

    In late January, the SME Working Group of the European Financial Reporting Advisory Group (EFRAG) met with Paul Pacter, member of the International Accounting Standards Board (IASB), in Brussels to discuss the upcoming review of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) and other related matters, including the IASB’s program for publishing question-and-answer (Q&A) publications. See the status report on IFRS for SMEs. What changes do you think the IASB should make to the IFRS for SMEs? Tell us by posting a response on the SMP/SME Discussion Board (to respond, register here or log in if you already have an account).

    The SME Implementation Group published two final Q&As in December and is currently considering comments on several others (see Progress on SME Q&As or the latest edition of the IFRS for SMEs Update).


    For more news on global developments in the SMP/SME sector, follow the SMP Committee on Twitter.



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