Good afternoon, ladies and gentlemen. I am truly delighted to be here today to participate in this important event. Many thanks to Mr. Ádám Balog, Deputy State Secretary, Ministry for National Economy, and Dr. János Lukács, President, MKVK, for hosting the meeting and inviting me to participate.

As we stand here today, the world is still affected by the financial crisis and the economic environment. Here in Hungary, the government is making strides to cut the budget deficit—and that is very positive. But of course there are countries within the EU and all over the world that are still being affected by the broader global slowdown.

So what can we—what should we—do?

Certainly, significant financial reforms are being considered in different parts of the world. IFAC’s view is that we need to build a sustainable business environment and a strong financial architecture.

Financial infrastructure—in the form of high quality, recognized standards in auditing and assurance, ethics, education, public sector accounting, and related regulation—is the only way that we can achieve broad-based, sustainable economic development.

CPA Australia and the Institute of Chartered Accountants in Australia, together with the Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC), hosted a forum for local professional accountants this week. The focus of the forum was on how professional accountants in business can support their organizations to improve governance practices through the integration of financial and non-financial information into their reporting, including a focus on environment, social, and governance (ESG) factors.

The forum and subsequent PAIB Committee meeting, held in Melbourne, included speakers from National Australia Bank, VicSuper (a retirement/pension provider), Macquarie Securities, KPMG, the University of Melbourne, the Water Accounting Standards Board (Australia), and the International Integrated Reporting Committee's content working group. A key focus of the discussions was how integrated reporting can drive good governance practices, including new systems and processes to measure, analyze, and report an organization’s environmental, social, and economic performance.

“Professional accountants help their organizations recognize the importance of incorporating ESG factors into functions and processes—from strategic planning and goal setting to external communications and reporting,” said Roger Tabor, chair of the PAIB Committee. “The speakers at the PAIB Forum and subsequent committee meeting served to help us better understand how organizations and their investors are managing ESG issues, and incorporating ESG into valuations and decision making.”

The forum was attended by approximately 150 delegates and the main conclusions were:

• Integrated reporting needs to reflect an organization’s strategy and values, as well as how it is managed in all social, environmental, and economic dimensions of performance;
• The process of integrated reporting, in turn, is a powerful tool to help drive an organization’s strategic agenda, providing management with key drivers of performance;
  Integrated reporting has to be open and transparent by reflecting both improvements in performance as well as weaknesses; and
• Pension fund investors, as well as some other institutional investors, are increasingly looking for financial implications of ESG factors to understand how an organization’s strategy and operations are affecting the numbers and key measures of performance.

The International Integrated Reporting Committee (IIRC), of which IFAC is a participant, is moving quickly and with wide stakeholder support to develop a globally accepted international framework for integrated reporting that brings together the various ESG reporting dimensions. The framework will be designed to make reporting more relevant for organizations, their shareholders, and their other stakeholders, to reduce the cost and complexity of reporting, and to provide a better basis to determine the cost of capital. The IIRC’s discussion paper is expected in 2011 and will be available at on the IIRC website.

Integrated Reporting and Sustainability Resources

• CPA Australia
• The Institute of Chartered Accountants in Australia
• International Federation of Accountants

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 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. IFAC is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

Stathis Gould, IFAC, calls on the accountancy profession to step up and do its part to address the sustainability crisis.

The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has significantly updated its Sustainability Framework (the Framework), a tool to support professional accountants and their organizations as they integrate sustainability into their strategy, operations, and reporting. The Framework highlights the important roles that professional accountants play in facilitating the sustainable development of their organizations, as well as the importance of adopting an integrated approach to business reporting.

Embracing sustainability and corporate responsibility from three perspectives—strategy, operations, and reporting—is critical to gaining the trust of stakeholders and the wider public, and ultimately ensuring sustainable value creation. Through key considerations, as well as examples from major international corporations, smaller firms, professional accountancy organizations, and leaders from around the world, the Framework provides a comprehensive view of some of the current best practices globally in each of these areas, and is applicable to entities of all sizes and levels of complexity.

“Professional accountants are already doing much to help organizations minimize waste, create efficiencies, and cut costs, which is undoubtedly the biggest driver for embracing sustainability,” said Roger Tabor, chair of the PAIB Committee. “However, accountants also need to be prepared to take on new and expanded roles, activities, and skills as they support their organizations in charting a more sustainable path. The Framework can help them on this journey.”

“To successfully embed sustainability within an organization, business leaders and professional accountants must recognize the importance of incorporating environmental, social, and governance factors into all functions and processes—from strategic planning and goal setting, to external communications and reporting. And, each of these areas is interconnected: to produce high-quality sustainability and integrated reports, these factors must be embedded into an organization’s culture and decision making,” said Ian Ball, CEO of IFAC.

Presented in a digital magazine format, and available in PDF, the Framework contains numerous internal links to allow professional accountants to easily navigate to the sections of most relevance to their particular roles. All sections include key considerations for professional accountants, including examples and references to other sources of information and guidance. The Sustainability Framework is available on the IFAC website.

About the PAIB Committee
The PAIB Committee serves IFAC member bodies and the more than one million professional accountants worldwide who work in commerce, industry, financial services, the public sector, education, and the not-for-profit sector. 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. IFAC is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The updated Sustainability Framework consolidates the important aspects of embedding sustainability into the DNA of an organization and can be applied to entities of all sizes and complexities. This edition focuses on the integration of sustainability factors from three perspectives--business strategy, operational, and reporting--and highlights the important roles that professional accountants play in facilitating the sustainable development of their organizations.

The International Auditing and Assurance Standards Board (IAASB) today released for comment proposed new International Standard on Assurance Engagements (ISAE) 3410, Assurance Engagements on Greenhouse Gas Statements.

“The monetary value of carbon trading transactions around the world is in the billions and continuing to increase exponentially. This has led to a strong and growing need for mechanisms to enhance the reliability of the underlying information used in these transactions—and this proposed standard is an important part of fulfilling that need,” said Prof. Arnold Schilder, IAASB chairman. “Disclosure of emissions information is also increasingly being required by regulation or presented on a voluntary basis to inform investors, consumers, and others,” Schilder added. “For example, it is becoming more common to include detailed emissions information in company sustainability reports. Providing assurance to enhance the reliability of information for regulatory and voluntary reporting is also important.”

Proposed ISAE 3410 has been developed through a robust program of consultation, including a series of global roundtables and feedback received on an earlier Consultation Paper. The proposed standard addresses the practitioner’s responsibilities in identifying, assessing, and responding to risks of material misstatement, and contains illustrative assurance reports on greenhouse gas statements. The proposed requirements and guidance also recognize that most engagements will be undertaken by a multidisciplinary team, so they address the need for the assurance practitioner to integrate experts—in engineering or environmental science, for example—into various stages of the engagement.

“The proposed standard can be applied to a broad range of circumstances, including emissions from electricity used at a single office; emissions from complex physical or chemical processes at several facilities; or emissions calculated using information from multiple entities in a supply chain,” explained IAASB Technical Director James Gunn. He noted, “Importantly, the proposed standard covers both ‘reasonable assurance’ and ‘limited assurance’ engagements for both of which demand is increasingly evident in the marketplace.”

How to Comment
The IAASB invites all stakeholders to comment on its proposals. To access the exposure draft or submit a comment, visit the IAASB’s website at www.iaasb.org/ExposureDrafts.php. Comments on the exposure draft are requested by June 10, 2011.

About the IAASB
The IAASB (www.iaasb.org) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

About IFAC
IFAC (www.ifac.org) 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 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

Accountancy leaders from around the world met in Geneva on October 12 to discuss next steps for global corporate governance reforms. With an eye to helping prevent future financial crises, they collectively supported the following points:

• The accountancy profession has a key role to play in strengthening corporate governance and facilitating the integration of governance and sustainability into the strategy, operations, and reporting of an organization.
• Boards should be focused on the long-term sustainability of their businesses. As such, corporate governance reform must include strengthening board oversight of management, positioning risk management as a key board responsibility, and encouraging remuneration practices that balance risk and long-term (social, environmental, and economic) performance criteria.
• Governance is more than having the right structures, regulation and principles in place—it is about ensuring that the right behaviors and processes are in place.
• Governance mechanisms need to be strengthened at banks and other companies to ensure better oversight of risk management and executive compensation.
• More dialogue is needed between policy makers, the accounting profession, and other financial industries to consider how we can work together effectively on a global level.

The conference, hosted by the International Federation of Accountants (IFAC) and the United Nations Conference on Trade and Development (UNCTAD), took place at the United Nations Office in Geneva, Switzerland.

Professor Mervyn King, author of the King Code on Corporate Governance, was the keynote speaker. Participants from more than 50 countries were on hand to address key questions including: What lessons has the financial crisis revealed about corporate governance? What corporate governance reforms should be developed on a global basis? And what role should the accountancy profession play?

“Professional accountants can serve as a critical link to ensure that good corporate governance is practiced,” said IFAC President Robert L. Bunting. “Accountants provide strategic direction to boards and governing bodies, aiming to ensure that risks are managed appropriately and resources are used responsibly—all key processes for facilitating sound corporate governance.”

The IFAC/UNCTAD conference was designed to allow professional accountants, corporate governance experts, and other participants to challenge current practices, exchange views on essential elements of corporate governance, and discuss best practices that will improve the current and future business and economic climate.

Mervyn King, professor at the University of South Africa, who specializes in corporate citizenship, said: “Our businesses impact society, the economy, and the environment. We are no longer distant bystanders of these organizations, but we are the stakeholders, because business impacts our society, environment, and economy.”

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 159 members and associates in 124 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

About the United Nations Conference on Trade and Development (UNCTAD)

UNCTAD is the focal point of the United Nations for the integrated treatment of investment and enterprise development. Since its founding in 1964, UNCTAD has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development. UNCTAD is the host for the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR). For more than 25 years, ISAR has been the focal point within the UN system for issues of corporate transparency and accounting. Through ISAR, UNCTAD works to promote international best practices in financial reporting and corporate governance disclosure and to assist developing countries to build their technical capacity in this area.

The Prince’s Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) announced today the formation of the International Integrated Reporting Committee (IIRC). The IIRC brings together a cross section of representatives from the corporate, accounting, securities, regulatory, NGO, and standard-setting sectors. Ian Ball, CEO of IFAC, will serve as co-chairman of the Working Group.

The objective of the IIRC is to create a globally accepted framework for accounting for sustainability that brings together financial, environmental, social, and governance information in a clear, concise, consistent, and comparable format. The intention is to help with the development of more comprehensive and comprehensible information about an organization’s total performance, prospective as well as retrospective, to meet the needs of the emerging, more sustainable, global economic model.

Please see the attached press release issued and briefing notes. For further information regarding the IIRC, please see www.integratedreporting.org.

The International Federation of Accountants (IFAC) and The Prince's Accounting for Sustainability (A4S) Project have entered into a memorandum of understanding to support the global accountancy profession's role in developing sustainable organizations.

Organizations are increasingly seeking new ways to maintain their economic performance and contributions to society in the face of challenge and crisis. Perhaps the most critical challenge facing business and society generally is to live within our ecological limits, while continuing to enjoy economic prosperity. IFAC and A4S believe that an essential part of the answer lies in going beyond traditional ways of thinking about performance and embedding sustainability into strategy, governance, performance management, and reporting processes.

Key priorities to support the work of professional accountants in embedding sustainable practices include:

• Raising awareness and facilitating sharing and collaboration across the global accountancy community, for example, through the development of a community website for professional accountancy organizations, business leaders, academics, and other experts to exchange ideas and share good sustainability practice;
• Establishing an international integrated reporting committee to develop a new reporting model that will better reflect the interconnected impact of financial, environmental, social, and governance factors on the long-term performance and condition of an organization; and
• Incorporating accounting for sustainability within professional training and education.

Professional accountants in organizations support the sustainability efforts of the organizations they work for in leadership roles in strategy, governance, performance management, and reporting processes. They also oversee, measure, control, and communicate the long-term sustainable value creation of their organizations.

Paul Druckman, Chairman of the A4S Executive Board, states, "We will only be able to achieve a sustainable future if all organizations, and all individuals within those organizations, recognize the role that they can and need to play. Effective action by the accounting and finance community to better account for sustainability is an essential part of the response. The collaboration between IFAC and A4S will help to make this a reality."

"Professional accountants play a vital role in helping to create sustainable organizations and markets, especially in the areas of accountability and measurement of results," says Robert Bunting, President of IFAC. "I am delighted that our two organizations are working together to advance the role of sustainability leadership and reporting at a global level, fostering collaboration with key stakeholders and developing best practices for integrating sustainability issues in the way we do business."

About IFAC
IFAC (www.ifac.org) 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.

About the A4S Project
The Prince's Accounting for Sustainability Project works with businesses, investors, the public sector, accounting bodies, NGOs and academics to develop practical guidance and tools for embedding sustainability into decision-making and reporting processes. To date, the project has involved the collaboration of more than one hundred and fifty public and private sector organizations.