Leveraging IFAC Guidance to Navigate the New Business Environment
Manuel Arias Senior Technical Manager, Quality & Development, IFAC & Marta Russell Senior Technical Manager, Quality & Development, IFAC | July 20, 2020
Professional accountancy organizations (PAOs) are centers of excellence that promote the relevance and importance of the accountancy profession and serve as advisors to business and government worldwide. They are the cornerstone of the accountancy profession. COVID-19’s impact on the accountancy profession, including individual accountants as well as PAOs, has uniquely affected each has uniquely affected each country. In turn, the priorities, needs, and service delivery of PAOs have been affected differently.
Responding to the needs of our members: PAO-specific guidance
One of the primary learnings from IFAC’s engagement with our members during the pandemic is the need for specific frameworks or guidance that can help navigate the new business environment. This includes elements such as governance, crisis management, business continuity planning, risk assessment, communications, technology, and stakeholder management. Our learnings have brought an opportunity to highlight the wide variety of existing guidance to support PAOs during these challenging times, and beyond.
IFAC’s PAO Capacity Building Series, developed with the support of IFAC’s PAO Development & Advisory Group, aim to guide PAOs in their growth process, providing widely-applicable guidance on key PAO activities. The series includes:
- Establishing Governance: focuses on the key elements of a PAO’s governing structure, operations, and business planning.
- Finding Your Voice: PAOs, Advocacy, and Public Policy: assists PAOs in the early stages of development to establish or advance their advocacy and public policy efforts.
- Engaging Professional Accountants in Business: provides recommendations for PAOs on how to engage with this key category of professionals—starting with incorporating professional accountants in business into the PAO’s governance and decision-making structures and developing a formal engagement plan.
- Counting on Each Other: offers practical insights on how to approach knowledge-sharing partnerships between PAOs.
- Making Regulation Work: supports PAOs in their efforts to adapt to regulatory evolutions, and actively influence key stakeholders.
- Focusing on Performance: building upon Establishing Governance, this publication offers a range of good practices in PAO governance and encourages PAOs to reflect on their current governance arrangements.
- Information and Communications Technology (ICT): enables PAOs to develop ICT roadmaps that meet the individual needs of each PAO based on their infrastructure, level of development, regulatory obligations, and number of stakeholders, and consider external and environmental factors that may impact ICT planning.
Leveraging IFAC’s SMP guidance to benefit PAOs
One of the key constituents of IFAC are small- and medium-sized practices (SMPs), which provide audit, assurance and other services to a wide range of organizations, including, small- and medium-sized entities (SMEs). The precise definition of an SMP will vary from one country to another. IFAC describes SMPs as practices that:
- have mostly SME clients;
- use external sources to supplement limited in-house technical resources; and
- employ a limited number of professional staff.
How different are SMPs and SMEs from PAOs? Just like any business, PAOs are established as legal entities under national laws governing the establishment of businesses/organizations. Generally, they are subject to regulations on associations or law on non-profit organizations. PAOs, SMPs, and SMEs all need to manage staff, develop strategic plans, use technology, manage risk, establish, and maintain member/client relationships, among others. When viewed through a PAO lens, IFAC’s SMP related materials can apply to PAOs. Some of these are:
- IFAC Guide to Practice Management for SMP: Provides comprehensive guidance to help small- and medium-sized practices operate more efficiently in the increasingly complex and competitive global marketplace for professional services.
- Planning for Your Firm: describes business and strategic planning processes, and more detailed policies that govern the implementation of these plans.
- Building and Growing Your Firm: covers issues such as developing a growth strategy, coping with increased regulation and competition, marketing, pricing, managing your client portfolio, enhancing the “culture” of your firm, and financial management considerations.
- People Power: Developing a People Strategy: explores staffing issues a firm has to address as it grows and outlines how the management team’s ability to attract, retain, motivate, and lead your employees will be pivotal to your success.
- Leveraging Technology: examines contemporary practice issues related to leveraging technology within a firm and emerging technologies as SMPs are heavily reliant on technologies to provide efficient, cost-effective, high-quality, and profitable services for their clients.
- Client Relationship Management: provides high-level considerations in client relationship management.
- Risk Management: covers the component parts of establishing a risk management culture.
- Practice Transformation Action Plan: IFAC-developed thought leadership on practice transformation, focused on how SMPs can embrace change, leverage technology, manage talent, and have a renewed emphasis on providing relevant and value-added services.
- Small Business Continuity Checklist: helps small businesses navigate today's crisis and plan for tomorrow's "new normal".
We encourage you to explore these publications as you work to maintain a sustainable and relevant PAO.
Additional useful guidance
There are further IFAC publications that can help PAOs in their strategic planning and sustainability. These include:
- Rethinking Value Creation: resources and latest thinking from the global accountancy profession and beyond on rethinking value creation
- Creating Value for SMEs through Integrated Thinking: produced by IFAC and the International Integrated Reporting Council, the publication helps SMEs, including non-profits, adopt integrated thinking and reporting and realize its benefits.
- Sustainable Development Goals Disclosure Recommendations: offers a new approach for businesses and other organizations to address sustainable development issues aligned to the three most influential and popular reporting frameworks. The recommendations aim to establish a best practice for corporate reporting on the SDGs and enable more effective and standardized reporting and transparency on climate change, social and other environmental impacts.
- Make Way for Gen Z: Identifying What Matters Most to the Next Generation: Generation Z, those born from the mid-1990's to the mid-2000's, are soon to enter the workforce. A survey of 3,300+ Gen Z'ers across G20 countries examines their views on public policy and the workplace.
- Regulatory Divergence: Costs, Risks and Impacts: IFAC and Business at the OECD (BIAC) surveyed over 250 regulatory and compliance leaders from major global financial institutions to estimate that a piecemeal approach to financial sector regulation costs the global economy USD $780 billion a year.
- Data Analytics: An Information Resource for IFAC Members: provides an overview of the different types of data analytics and their applications to financial reporting and audit, as well as usage in business, to uncover valuable insights.
We know it can be challenging for PAOs to work through the range of guidance, including the dedicated section in gateway, and determine how it applies in their particular context. Please don’t hesitate to reach out to your IFAC contact within the Quality and Development department to talk through your unique needs and challenges and we can help point you in the right direction.