IFAC believes that establishing an integrated and effective system of governance, risk management, and internal control is desirable for all types of organizations and can make an invaluable contribution to achieving sustained organizational success. When organizations fail, the costs to society can be considerable.1 This was illustrated during the global financial and sovereign debt crises, when the failure of organizations—irrespective of size or structure, or whether in the private sector or public sector—led to a variety of adverse consequences.

The International Public Sector Accounting Standards Board (IPSASB) welcomed the recent release of the International Monetary Fund (IMF) paper, Fiscal Transparency, Accountability, and Risk, and its support for International Public Sector Accounting Standards (IPSASs), the globally accepted, high-quality, accrual-based standards issued by the independent standard-setting body.

Many governments, jurisdictions, and international institutions have already adopted IPSASs, while others are working toward their implementation.

The IPSASB advocates for better financial reporting by governments worldwide and the need for improvements in the management of public sector resources. Since 1997, the IPSASB has developed and issued a suite of accrual standards and a cash-basis standard for countries moving toward full accrual accounting. IPSASs promote greater transparency and accountability in public sector finances and allow for enhanced monitoring of government debt and liabilities.

The IMF paper highlights the seriousness and extent of the current inadequacies in governments’ fiscal reporting and accountability and underscores the immense risks associated with these shortcomings.

Fiscal Transparency, Accountability, and Risk also calls for other measures supported by the IPSASB, including: 

• Updating fiscal transparency standards to address gaps in, and inconsistencies between, individual jurisdictions’ standards;
• Including all entities that have fiscal implications for governments (including central banks, public entities, and corporations outside of the general governments) in fiscal forecasting, budgeting, and financial reporting;
• Evaluating countries’ compliance with fiscal transparency standards using, for instance, auditing and assurance as a means for assessing compliance with standards;
• Strengthening incentives for improvements in fiscal transparency practices;
• Aligning the methodologies and standards for fiscal forecasting, budgeting, and financial reporting to reinforce the links between fiscal transparency and long-term sustainability; and
• Strengthening fiscal transparency and public sector financial management in all nations and, in particular, in developing and emerging nations.

IPSASB Chair Andreas Bergmann said the IPSASB agrees with the IMF that the requirements of accounting standards and the statistical framework should be harmonized, as far as the different purposes of the two frameworks permit, adding that it is critical for transparency and accountability that governments around the world have unambiguous guidance. He said the IPSASB also concurs that the efforts to monitor and enforce compliance with international standards, including IPSASs, need to be reinvigorated.

“The IMF paper underlines the need for strong and transparent financial reporting, which has the potential to improve public sector decision making and make governments more accountable to their constituents,” Bergmann said. “As we have witnessed with the sovereign debt crisis, when governments do not properly manage their finances, the consequences can include a loss of democratic control, social unrest, and the failure to meet their current and future commitments.”

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, and the governments of Canada, New Zealand, and Switzerland.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

#   #   #

The International Federation of Accountants (IFAC), the global organization for professional accountants with members and associates in 129 countries, today released the Statements of Membership Obligations (SMOs) 1-7 (Revised), The SMOs—which are globally recognized as a framework for credible and high-quality professional accountancy organizations (PAOs)—form the basis of the IFAC Member Body Compliance Program and are also of relevance to regulators, educators, the donor community, and others with responsibilities for developing the accountancy profession and promoting the value of professional accountants worldwide.

“We revised the SMOs to clarify IFAC members’ obligations when they have varying degrees of responsibility for the adoption and implementation of international standards and to enhance the requirements for quality assurance and investigation and discipline,” said Manuel Sánchez y Madrid, retiring chair of the IFAC Compliance Advisory Panel (CAP), which led the revisions. “IFAC members will consider the revised requirements and develop appropriate strategic plans to continue strengthening the profession in their countries by equipping professional accountants to meet the challenges and grasp the opportunities of our rapidly transforming world.”

“Professional accountancy organizations are critical to the production of high-quality financial information, public and private sector development, and economic growth,” said IFAC Chief Executive Officer Ian Ball. “They have the ability to adapt to the ever-changing business and economic landscape and, thus, can lead the way in addressing critical issues, such as building capacity, regulatory changes, and enhancing the focus on public sector financial reporting and financial management. With the revised SMOs, PAOs now have a clear framework for the technical aspect of their agenda to better serve the public interest—thereby maintaining the best the profession has to offer.”

IFAC technical staff have also developed A Comparison Guide to the 2012 SMO Revisions, which provides further explanation of the revisions and serves as a tool for IFAC member organizations to identify and understand them.

About the IFAC Member Body Compliance Program
The IFAC Member Body Compliance Program is recognized as the global platform supporting adoption and implementation of international standards and best practices. It shapes agendas and actions with a goal of developing strong professional accountancy organizations and strengthening the accountancy profession around the world. The Program is the responsibility of the IFAC Compliance Staff, reporting to the chief executive. It is overseen by the Compliance Advisory Panel, which—as one of IFAC’s public interest activities—is overseen by the Public Interest Oversight Board.

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. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

#   #   #

The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC), the global organization for the accountancy profession, today released for comment proposed International Good Practice Guidance (IGPG), Project and Investment Appraisal for Sustainable Value Creation. This principles-based guidance will help the accountancy profession to facilitate sustainable organizations, financial markets, and economies by taking into account economic, environmental, and social considerations for project appraisal and investment decisions.

“The time was right to update the 2008 guidance to reinforce the importance of rigorous project and investment appraisal, with a specific emphasis on facilitating long-term decision making and incorporating sustainability related impacts,” said Roger Tabor, chair of the PAIB Committee. “The revised guidance also sets out the critical role professional accountants in business play in advising on the application of financial principles and theory that are being tested during this current period of market instability.”

More than half of all professional accountants in the world work in business and the public and not-for-profit sectors. They play a crucial role in helping organizations ensure a systematic and analytical approach to project and investment appraisal that incorporates wider external impacts by including relevant costs and benefits into the decision process. External impacts include social impacts, like health and safety and labor practices, the economic impacts of decisions, such as in communities and for suppliers, and environmental impacts, such as biodiversity and pollution.

“Through a better understanding of these wider impacts and externalities, an organization and its stakeholders will have a more complete picture of sustainable value creation,” said Vittorio Lusvarghi (Italy), outgoing chair of the PAIB Committee’s Sustainability Task Force. Mr. Lusvarghi is being succeeded by Athalanallur Natarajan Raman (India).

How to Comment
IFAC and the PAIB Committee invite all stakeholders to comment. To access the Exposure Draft and submit a comment, visit the PAIB Committee section of the IFAC website. Comments on the Exposure Draft are requested by February 28, 2013. You must register on the IFAC website to submit a comment.

About International Good Practice Guidance
International Good Practice Guidance (IGPG) issued by the PAIB Committee cover areas of international and strategic importance in which professional accountants in business are likely to engage. In issuing principles-based guidance, IFAC seeks to foster a common and consistent approach to those aspects of the work of professional accountants in business not covered by international standards. IFAC seeks to clearly identify principles that are generally accepted internationally and applicable to organizations of all sizes in commerce, industry, education, and the public and not-for-profit sectors. Previously issued IGPGs are available on the IFAC website, including Preface to IFAC’s International Good Practice Guidance.

About the PAIB Committee
The PAIB Committee serves IFAC member bodies and professional accountants worldwide who work in commerce, industry, financial services, education, and the public and the not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business by increasing awareness of the important roles professional accountants play, supporting member bodies in enhancing the competence of their members, and facilitating the communication and sharing of good practices and ideas.

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. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

#   #   #

The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 129 countries and jurisdictions, today welcomed the recent release of the International Monetary Fund (IMF)’s paper, Fiscal Transparency, Accountability, and Risk. The paper highlights the seriousness and extent of the current inadequacies in governments’ fiscal reporting and accountability. It also underscores the immense risks associated with these shortcomings.

In particular, IFAC welcomes the IMF’s support for the International Public Sector Accounting Standards, the globally accepted, high-quality accrual-based standards issued by the International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting body. These standards promote greater transparency and accountability in public sector finances and allow for enhanced monitoring of governments’ fiscal positions.

“The current sovereign debt crises have starkly revealed the deficiencies in many governments’ reporting practices and consequently their understanding of their actual fiscal positions,” said Ian Ball, IFAC CEO. “IFAC believes that governments around the world must implement necessary institutional reforms to strengthen governmental financial management, and thereby protect the public, as well as investors in government bonds. This will better allow governments to anticipate and manage fiscal shocks, and also help reduce the risk of future debt crises. IFAC applauds the IMF’s work in this area to support the aim, which we share, of strengthening public sector financial reporting and financial management.”

IFAC supports the key positions presented in this paper. Specifically, IFAC recognizes the importance of:

• Updating fiscal transparency standards to address gaps in, and inconsistencies between, individual jurisdictions’ standards;
• Complying with international standards for public sector financial reporting, including reporting all assets and liabilities by, for example, using IPSASs;
• Including all entities that have fiscal implications for governments (including central banks, public entities, and corporations outside of the general governments) in fiscal forecasting, budgeting, and financial reporting;
• Evaluating countries’ compliance with fiscal transparency standards using, for instance, auditing and assurance as a means for assessing compliance with standards;
• Strengthening incentives for improvements in fiscal transparency practices;
• Strengthening the institutional relationships among international standard-setters;
• Aligning the methodologies and standards for fiscal forecasting, budgeting, and financial reporting to reinforce the links between fiscal transparency and long-term sustainability;
• Building the capacity of professional accountancy organizations and promoting the role they play in improving government financial reporting practices; and
• Strengthening fiscal transparency and public sector financial management in all nations and, in particular, in developing and emerging nations.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

#   #   #

The Notice of the Call for Nominations for Boards and Committees in 2014 was issued today, along with its companion guide, Developing a Nominations Strategy. These in-depth documents, located on the IFAC website, are designed to help stakeholders identify the most qualified nominee for each available position on the boards and committees. They contain strategic and practical advice for nominating organizations and individuals, allowing them to make more informed decisions in their selections and to understand the requirements and expectations of nominees.

All vacancies on the independent standard-setting boards* are open for nominations by the public including, for the first time, the International Public Sector Accounting Standards Board. The Nominating Committee follows an open and transparent process in selecting the best candidates for the available positions, while also aiming to achieve gender, regional, and professional balance.

Each year, approximately one-third of the 155 positions on the boards and committees have openings, though serving members may be reappointed for some of those positions. For more information about the Nominating Committee, its due process, or guidance in selecting the best candidate, please visit www.ifac.org/about-ifac/structure-governance/nominating-committee.

The official Call for Nominations for Boards and Committees in 2014 will be issued on January 15, 2013, and nominations may be submitted from January 15 to March 15, 2013. All applications should be submitted electronically via the IFAC nominations database; instructions on how to submit a nomination will be included in the Call for Nominations.

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. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

*The independent standard-setting boards are the International Auditing and Assurance Standards Board (IAASB), International Accounting Education Standards Board (IAESB), International Ethics Standards Board for Accountants (IESBA), and International Public Sector Accounting Standards Board (IPSASB).

#   #   #

Mr. Sylph discusses IFAC, the global accountancy landscape, the MOSAIC initiative, and sovereign debt.

Welcome to International Auditing and Assurance Standards Board (IAASB) eNews.

In This Issue: 

1. Focus on Auditor Reporting—Feedback on June 2012 Invitation to Comment
2. IAASB Proposes Standard Enhancing Auditor Responsibilities for Disclosures Beyond the Financial Statements
3. IAASB Staff Q&A Publication Addresses Proportionate Application of ISQC 1
4. Directions in Auditing and Assurance: Challenges and Opportunities
5. Upcoming IAASB Meeting
6. Other Relevant IFAC Initiatives
7. Share IAASB eNews with Your Colleagues

1. Focus on Auditor Reporting—Feedback on June 2012 Invitation to Comment

Auditor reporting continues to be the IAASB’s foremost priority, and significant resources will be dedicated to the topic during 2012–2014. To solicit feedback on its June 2012 Invitation to Comment (ITC): Improving the Auditor’s Report, the IAASB held three well-attended global roundtables in North America, Europe, and Asia Pacific. More than 190 investor, analyst, regulatory and oversight, preparer, academic, those charged with governance, standard-setter, and firm representatives from more than 20 countries participated in the roundtables. Information, including audio recordings, is available on the IAASB’s Auditor Reporting Roundtables page.

To date, more than 160 comment letters have been received on the ITC. The IAASB’s discussion of these comments will commence at its December 2012 meeting, followed by an additional IAASB meeting planned for February 2013 to enable continued rapid progress toward an exposure draft of revised auditor reporting standards in 2013. To access the ITC comments, please visit the IAASB’s ITC web page.

2. IAASB Proposes Standard Enhancing Auditor Responsibilities for Disclosures Beyond the Financial Statements

The IAASB has released for public comment proposed International Standard on Auditing (ISA) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor’s Report Thereon.

The proposed standard clarifies and enhances the scope and focus of auditor efforts on “other information”—that is, information included in documents containing or accompanying the entity’s audited financial statements. The proposals recognize that significant changes in financial reporting have occurred over the last two decades regarding the information issued in connection with an entity’s financial statements and the manner in which it is shared with users. The proposals extend the scope of the extant standard and the auditor’s responsibilities and include suggested auditor reporting responsibilities.

The deadline for comments is March 14, 2013. To submit a comment, click here.

3. IAASB Staff Q&A Publication Addresses Proportionate Application of ISQC 1

IAASB Staff released a Questions & Answers (Q&A) publication titled Applying ISQC 1 Proportionately with the Nature and Size of a Firm. The publication highlights how the design of International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, enables it to be applied in a proportionate manner.

ISQC 1 applies to firms of all sizes that provide services covered by the IAASB’s international standards, including International Standards on Auditing (ISAs), International Standards on Review Engagements (ISREs), International Standards on Assurance Engagements (ISAEs), and International Standards on Related Services (ISRSs).[k1] 

While ISQC 1 applies to all firms, the Q&As focus on matters that are likely to be of particular relevance to the application of ISQC 1 in the context of smaller firms. Smaller firms, as well as smaller public sector audit organizations, should find the publication helpful in achieving an effective and efficient implementation of ISQC 1.

This initiative follows the 2009 IAASB Staff Q&A publication, Applying ISAs Proportionately with the Size and Complexity of an Entity.

4. Directions in Auditing and Assurance: Challenges and Opportunities

IAASB Chairman Prof. Arnold Schilder recently was a guest speaker at a seminar in Melbourne, Australia, hosted by the Australian Auditing and Assurance Standards Board. His presentation–Directions in Auditing & Assurance: Challenges and Opportunities–focused on the impact of the global environment on the relevance of an audit, and included the response of the IAASB to these challenges. Particular topics included the IAASB’s Invitation to Comment on auditor reporting, the IAASB’s projects on audit quality and disclosures, and alternatives to audits aimed at meeting the needs of small- and medium-sized entities (SMEs).

Other challenges and opportunities to enhance relevance were also discussed, including how to reinforce and support professional skepticism, and how to deal with emerging developments, such as integrated reporting.

5. Upcoming IAASB Meeting

The IAASB will meet in New York, USA, December 10–13, 2012. As a reminder, all meeting agenda materials are publicly available and posted on the IAASB's website in advance of IAASB meetings.

Topics that will be discussed include: auditor reporting, audit quality, disclosures, using the work of internal auditors, and the revision of International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

In addition, meeting highlights, a summary podcast, and complete audio recordings are posted after each meeting. Visit the IAASB Meetings page.

6. Other Relevant IFAC Initiatives

Initiatives of IFAC committees and other independent standard-setting boards supported by IFAC may be of interest to those who follow the work of the IAASB, including the following:

International Education Standard (IES) 6, Initial Professional Development – Assessment of Professional Competence (Revised)

Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Elements and Recognition in Financial Statements

Responding to a Suspected Illegal Act―IESBA Proposes Changes to Code of Ethics to Address Illegal Acts

PAIB Committee Response to the IAASB Invitation to Comment: Improving the Auditor’s Report

IFAC and the IIRC Sign MoU on Cooperation, Collaboration For IR

7. Share IAASB eNews with Your Colleagues

The IAASB issues regular eNews updates to keep you apprised of the board's activities and recent publications. Please forward this eNews to any interested colleagues and let them know they can register and subscribe to this and other eNews bulletins.

The SMP Committee submitted this comment letter to the International Auditing and Assurance Standards Board (IAASB)'s Invitation to Comment: Improving the Auditor's Report. 

The PAIB Committee submitted this comment letter to the Committee of Sponsoring Organizations of the Treadway Commission (COSO) on its Internal Control over External Financial Reporting: Compendium of Approaches and Examples and Illustrative Tools for Assessing Effectiveness of a System of Internal Control.