Driving Future Performance: From Outdated Legislation to Bright Opportunities
Darnell Osborne | June 19, 2018 |
In January 2018, IFAC released a new publication, Focusing on Performance, which is designed to raise awareness of the importance among PAOs of good corporate governance practices and principles. This new blog series features stories from professional accountancy organizations (PAOs) across the globe as they reflect upon and highlight the importance of adapting governance arrangements to drive performance while considering their current and past governance arrangements.
A conversation with Darnell Osborne, Former President of Bahamas Institute of Chartered Accountants (BICA).
IFAC: Establishing good governance practices is essential for all PAOs. Can you share what pushed the Bahamas Institute of Chartered Accountants (BICA) to decide it was time to implement new governance standards and policies?
DO: In today’s financial world, most organizations find it difficult to capitalize on their past to build opportunities for the future. At BICA, we knew we needed to do just that. Our Rules for Professional Conduct were significantly outdated and were hobbling the institute’s ability to fulfill its public interest mandate.
In the mid-2000s, BICA found itself at a watershed moment—the institute had been suspended from IFAC membership, largely as a result of deficiencies in our legislation. We reached a moment where the global community was watching; a moment when our people were demanding more from their leaders; a moment when transparency and accountability were not just buzz words, but also an expectation of our people.
IFAC: What were the regulatory arrangements up to that point in the Bahamas?
DO: Prior to 2015, the founding legislation of the accountancy profession was the Public Accountants Act of 1991 and the Rules of Professional Conduct of 1993. This legislation required application of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) for the preparation of financial statements but was otherwise outdated when compared to global standards. As the BICA President from 2014—2017, I was keen to help steer the institute through a chapter of modernization and growth, while ensuring that the profession remained relevant and integral to the economy.
These two pieces of legislation were replaced by The Bahamas Institute of Chartered Accountants (BICA) Act of 2015 and its accompanying regulations. The new Act empowered BICA to promote the best standards of practice in financial reporting and auditing and fully regulate the accountancy profession. With this new responsibility, BICA stood ready to serve in a greater leadership capacity on national issues impacting the economy, accountability, transparency, and development of The Bahamas for the benefit of future generations.
IFAC: What changed in respect to the regulation of the profession with the passage of the 2015 BICA Act?
DO: This new legislation strengthened BICA’s regulatory oversight and empowered it to define standards for professional accountants. Some of the changes we have undertaken include:
- establishing requirements for entry into the profession;
- promoting the best standards of practice in financial reporting and auditing;
- establishing ethical requirements that meet the IESBA Code of Ethics; and
- carrying out investigation and disciplinary processes for our members, as well as quality assurance reviews for licensees.
There remain important issues that must be carefully and competently addressed by the policymaking and lawmaking branches of the government. These include but are not limited to, the implementation of International Public Sector Accounting Standards (IPSAS), financial reporting reform, and tax reform. In its new regulatory oversight capacity, BICA is committed to transform these areas.
The Bahamas remains one of the few countries where the accounting profession is strictly self-regulating. BICA must protect this privilege. While it is sometimes difficult, not always pleasant, and often unpopular, BICA must be willing to choose the courses of action necessary to ensure that our esteemed profession continues to be respected, not only on a national scale, but also internationally. Accountability and transparency must continue to be BICA’s mantra. We serve a dual-role as watchdogs and regulators, protecting the public interest.
IFAC: How did passing new legislation and attending to conformance issues support a change in governance focused on performance?
DO: Under the previous laws, BICA Council officers were only able to hold terms of one-year which consequently disrupted the learning and continuity of board members and limited our ability to pursue the implementation of initiatives that would enable us to fulfill our mandate and meet IFAC Statements of Membership Obligations. While one-year terms did not prevent us from considering good governance principles that support performance, we knew that we needed to update the governance arrangements to provide for the continuity of Council membership. For example, enabling the President to be appointed for a two-year term and along with the appointment of a President-Elect for succession planning. We also knew that changing legislation would be a cumbersome process and forging relationships with key stakeholders within the government would be essential. Therefore, the Board formed a Legislative Reform Committee and joined forces with the Attorney General’s Office to update the required policies and plans.
With this challenge solved, BICA is now well-positioned to focus on its performance abilities in order to meet its commitment to manage the organization in the long-term interest of all stakeholders. This includes revamping policies—like formally adopting the IESBA Code of Ethics for members—and procedures to better utilize its resources and achieve its strategic goals. Since our Board clearly understands how the PAO creates and optimizes sustainable stakeholder value, we are able to explore many avenues tailored towards serving the public interest while meeting our members’ needs.
IFAC: Can you share examples?
DO: One example is that BICA provides recommendations on standards to policy and lawmaking branches of the government for financial reporting and tax reforms. This not only illustrates BICA’s value and services to key stakeholders but demonstrates its overall commitment to the adoption and implementation of international standards.
We have also worked with the government to fulfill a specialized training need—through a formal partnership with the Ministry of Finance, we developed training for accountants and other interested industry partners regarding the implementation of the Value Added Tax.
Another example is our efforts to develop the next generation of accountants and improve education opportunities for current members. Attracting and cultivating young talent and generating interest in the accountancy profession is key to building future generations of professional accountants. Providing continuing education to current members is just as important. We therefore embarked on offering more e-learning and webinars which we discovered were popular avenues for obtaining continuing professional development credit. We also partnered with the American Institute of Certified Public Accountants (AICPA) to implement an e-self-study and webcast program offered via the BICA website. This on demand self-study program contains a catalog of courses covering accounting, auditing, behavioral ethics, regulatory ethics, finance, management and specialized knowledge and applications.
These are just a few examples of how BICA is building opportunities for the future in order to accommodate our members, especially our millennials.
IFAC: What is next for BICA?
DO: To grow, we must look beyond today to foresee how our profession can sustain and enhance its relevance tomorrow. We must also continue to create an environment that upholds integrity and strives for excellence. BICA’s Board members remind themselves that our policies, our internal processes, our actions and the actions of our members must be above reproach.
We look forward to seeing the work that began 45 years ago evolve with the changing demands of the profession. If I might leave you with a few final thoughts, consider this: a small group of people in The Bahamas was able to achieve changes that impacted the accounting profession and the wider financial services industry of a country. I would encourage other member associations to not wait until forced to take action, but to always be proactive in doing what is necessary for the betterment of your institutes. A good starting point is by establishing strong governance procedures which will inevitably help PAOs to sustain relevance and deliver on their respective missions and visions.