Terms of Reference
- 1.0 Purpose
The mission of IFAC is to serve the public interest and strengthen the accountancy profession by: supporting the development of high-quality standards; promoting the adoption and implementation of these standards; building the capacity of professional accountancy organizations; and speaking out on public interest issues.
In pursuing this mission, the IFAC Board has established the Compliance Advisory Panel (CAP) to oversee the implementation and operation of the IFAC Member Compliance Program (Program) which is the responsibility of the IFAC Quality and Membership (Q&M) staff reporting to the Chief Executive. The Compliance Advisory Panel is subject to the oversight of the Public Interest Oversight Board (PIOB).
- 2.0 Objective
The CAP and the Program share the objective to serve the public interest by promoting the adoption and support of implementation of international standards on private and public sector accounting, auditing, ethics, education as well as the establishment of related quality assurance review systems and enforcement mechanisms through the Statements of Membership Obligations (SMOs). The Program influences the actions and drives the behaviors of IFAC member organizations around the world by focusing attention and resources on the role of the professional accountancy organizations (PAOs) in improving the quality of the accountancy profession, thereby supporting the IFAC mission and strengthening public confidence in the global accountancy profession.
- 3.0 Pronouncements
In fulfilling the above objective, the CAP and IFAC Q&M staff review the relevance, sufficiency and efficacy of the SMOs, and make related recommendations to the IFAC Board.
The IFAC Board has the authority to issue the SMOs. The CAP and Q&M staff may recommend to the IFAC Board the issuance of or changes to the SMOs with an affirmative vote of a simple majority of the CAP.
- 4.0 Responsibilities
In addition, the role of the CAP is to oversee and advise the IFAC Q&M staff with regards to:
- Membership activities:
- Assessing applications for membership to IFAC and the related recommendations to the IFAC Board. All membership and application matters which may result in a staff recommendation to the IFAC Board will be considered by the CAP before such recommendation is made to the IFAC Board; and
- Undertaking periodic reviews of the criteria for admission to IFAC membership and related recommendations to the IFAC Board.
- Program activities:
- Implementing an assessment process to determine whether IFAC members and associates comply with applicable SMOs;
- Reviewing action plans prepared by IFAC members and associates to address required improvements in their compliance with the SMOs;
- Disclosing compliance assessments and action plans, as appropriate, for each IFAC member and associate via publication on the IFAC website;
- Preparing recommendations to the IFAC Board for suspension or expulsion of an IFAC member or associate for failure to adequately participate in the Compliance Program; and
- Reporting to the IFAC Board and IFAC Council on the compliance program and the results thereof.
- Activities related to regional organizations and accountancy groupings:
- Assessing applications for the recognition of Regional Organizations and the acknowledgement of Accountancy Groupings and related recommendations to the IFAC Board;
- Preparing recommendations to the IFAC Board for withdrawal of recognition or acknowledgement for Regional Organizations and Accountancy Groupings for failure to meet their obligations to IFAC; and
- Involving IFAC Recognized Regional Organizations and Acknowledged Accountancy Groupings in the implementation of the compliance program, as appropriate.
- 5.0 Membership
The CAP, including the Chair and Deputy Chair, shall be composed of not less than five members from IFAC member bodies appointed by the IFAC Board on the recommendation of the Nominating Committee and with the approval of the PIOB. Selection is based on the principle of “the best person for the job.” Additionally, the Nominating Committee shall properly consider that members of the CAP are experts in compliance matters and provide a broad geographic representation of member bodies.
CAP members are required to sign an annual statement at the first meeting of the panel in each calendar year declaring that they will act in the public interest and with integrity in discharging their roles within IFAC. Nominating organizations of members of the CAP and the employing organization (as applicable) of the chair of the CAP are asked to sign similar independence declarations.
- 6.0 CAP Chair
The Chair is selected by the Nominating Committee and recommended to the IFAC Board for its approval and to the PIOB for subsequent approval.
- 7.0 Terms of Office
The standard term for CAP members is three years, with approximately one-third of the membership rotating each year. A member may serve up to two consecutive terms, for an aggregate term of six years.
The Chair ordinarily may serve three consecutive terms (as Chair or as a member for one or two terms preceding the appointment as Chair), for an aggregate of nine years. In exceptional circumstances, to be specified by the Nominating Committee, the Chair may serve for one additional consecutive term, for an aggregate term of twelve years.
- 8.0 Meeting Procedures
Each CAP meeting requires the presence, in person or by simultaneous telecommunications link, of at least two-thirds of the appointed members.
CAP meetings shall be chaired by the Chair or, in his or her absence, by the Deputy Chair. In the event of the absence of both, the members present shall select one of their number to take the chair for the duration of the meeting, or of the absence of the Chair and Deputy Chair.
Each member of the CAP has one vote, which can be exercised only by the appointed member. The affirmative vote of a simple majority of the members present at the meeting or by simultaneous telecommunications link is required to approve any decision. The meetings and agenda papers are in English which is the official working language of IFAC.
The PIOB has the right to attend, or be represented at all meetings of the CAP.
- 9.0 Due Process
In developing its strategy and work program, as well as recommendations to the IFAC Board for revisions to and issuance of SMOs, the CAP is required to be transparent in its activities, and to adhere to due process as approved by the PIOB.
In setting its strategy and work program, the CAP consults with the PIOB as to whether CAP’s strategy and work program has been developed with proper regard for the public interest.
- 10.0 Other
The CAP will annually report on its work program, activities and progress made in achieving its objectives during the year. This report should normally be included as part of the IFAC annual report.
IFAC will review the terms of reference and processes followed by the CAP at least every three years.