STRATEGIES FOR THE 21ST CENTURY
Fermín del Valle, President
International Federation of Accountants
Speech to the IFAC Council
Istanbul, Turkey – November 10, 2006
Thank you for giving me the privilege of serving as IFAC President and for the
confidence you have placed in me. As IFAC President, over the next two years my
objective will be to continue working in the same direction, advancing the course set
by Past Presidents René Ricol and Graham Ward. It is a course that has enabled us to
make significant progress in building public trust in our profession.
However, while I do not believe that we need to change our strategic direction, I
would ask all of you here to help me to move farther and faster down the course, to
come closer to achieving our ultimate goal: enhancing societies around the world by
contributing to their social and economic development.
As Chairman of the Planning and Finance Committee, I have had the opportunity to
work very closely and directly in the elaboration of IFAC’s strategic plan. I believe
we have a good plan – a plan that is both relevant and achievable. We have to
continue building upon it and designing the strategies that will allow us to meet the
expectations of our constituencies and those of society in general with respect to the
contribution our profession can make to the public good.
November 10, 2006
The critical thing now is to execute this strategy. The objectives are there for us to
reach, and I am confident that together we are going to reach them and even supersede
them.
I love this institution that I have had the chance to be a part of and contribute to over
the last 9 years. I had the privilege to collaborate not only with René and Graham, but
also with Presidents such as Frank Harding and Aki Fujinuma, and I had the honor of
sharing the IFAC Board with exceptional colleagues.
I believe IFAC is a great organization, not because of its size or its budget, that we
would wish to be higher in some areas, but fundamentally because of its mission, its
objectives, its spirit, its convictions, and its seriousness as an institution.
I firmly believe in and admire the member bodies that comprise IFAC. Each one, in
its environment and its specific field of action are, in many cases, model institutions
in their respective societies and, in all cases, entities dedicated to their members and
to the mission of IFAC.
This is your organization. It is your child that, next year, will be celebrating its 30th
birthday.
This unique, global accountancy organization is, because of the unity we represent, a
great force, a respected authority, and a valued institution; we should, I believe, take
great pride in this and protect it.
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IFAC’s potential is even greater if we align efforts and resources with and among
member bodies to achieve synergy and efficiency in areas of common interest. Our
commitment should be to focus ourselves on those areas in which IFAC can achieve
greater value for the public.
I have complete confidence in the capacity and commitment of the members of our
Board to direct this organization in fulfilling its strategic objectives. They serve as an
exemplary model of good practice in corporate governance, and do much to generate
enthusiasm, participation and consensus to help IFAC achieve its mission.
I want to congratulate Robert Bunting, who will be my Deputy President. IFAC
should be proud to have an officer with his professional and personal qualities. I know
that I will count on him and we will work as a team serving from our respective roles
for this institution.
Our institution also benefits from the invaluable work of our Chief Executive, Ian
Ball, with his capacity, character, expertise, and his dedication to IFAC. Together
with the entire staff, all of whom I have had the opportunity to work on different tasks
over these years, they make up a talented management team that is dedicated to the
organization.
Looking to the future, we can identify two areas that we should work on with similar
decisiveness and commitment. On one hand, we should continue to work steadfastly
on strengthening public confidence in the profession and in IFAC. On the other hand,
we should encourage innovation and flexibility so that our profession can readily
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respond to the future demands that society will place on it. We must position
ourselves to remain relevant and effective, no matter how times change.
As we look ahead, I believe that public confidence in the profession and in IFAC’s
work can and will be strengthened, if we remain focused on our key current
initiatives:

Standard setting;

The Member Body Compliance Program;

The development of the profession; and

Being the global voice of the profession.
In the area of standard setting, the International Standards on Auditing (ISAs), issued
by the International Auditing and Assurance Standards Board (IAASB), have received
increasing support from international and national regulators, including the European
Commission, and are being adopted in many countries around the globe. We must
continue the momentum.
The revised independence standard should convert into an international benchmark
and an appropriate reference to facilitate global convergence on this issue.
A new standard on whistle blowing, that will have significant implications for
professional accountants in business, is anticipated as well.
Looking ahead, we should focus on ensuring that ISAs and the IFAC Code of Ethics
are incorporated in the standards of the profession in every major capital market and
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are endorsed by those regulators and other organizations whose stature and influence
can help significantly to advance the convergence process.
Over the past year, the standards of the International Public Sector Accounting
Standards Board (IPSASB) also received increased recognition, especially in light of
their adoption by the United Nations this year.
Governmental financial reporting is an element of vital importance to the
development of countries. Clarity and transparency of public accounts is the key that
can lead to necessary accountability. Broad and successful adoption and
implementation of International Public Sector Accounting Standards (IPSASs) is, in
part, dependent upon IFAC’s efforts to support and promote the work of the IPSASB.
If IFAC does not properly promote and support IPSASs, we can jeopardize the
credibility of the standards and fail to maximize the large investment in them that has
been made by IFAC, external supporters and member bodies.
IFAC’s role as a standard setter and as a representative of the global accountancy
profession is dependent upon the quality of the standards produced and the credibility
of the organization. We should protect the standard-setting processes that we have
developed and that today can be presented as examples at a global level. We should
also make a commitment to ensuring that we have permanently put in place the
appropriate human resources.
For the benefit of our profession and the public that we serve, we will continue to
listen closely to the recommendations of the Public Interest Oversight Board (PIOB).
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The PIOB is already a highly regarded international body. We will work to strengthen
both the processes for setting standards and the quality of those standards. I am
personally committed to supporting the PIOB in all that they do, implementing the
changes necessary to meet the public interest tests of good regulation. We must, I
believe, build on the reform process that contributed to the renewal of public
confidence in this great profession of ours. We can do so by continuing to focus on
strengthening our standards and ensuring that their due processes meet the PIOB’s
expectations.
We should continue to promote convergence, which I believe is an achievable goal
and one that is in the best interests of the public. The more quickly we move on this,
the greater the chance for success.
The policy position issued by the International Auditing and Assurance Standards
Board and the guidelines that will surely be issued by the rest of the Public Interest
Activity Committees will provide an orientation to the meaning and scope of
convergence for each set of standards.
The IFAC Member Body Compliance Program is an essential initiative. It is an
effective program to both strengthen and support the member bodies. It also
represents a unique contribution to the public interest by making available information
about the global profession that is not available in another single source and is
difficult to collect. This demonstrates the operational capacity of our organization and
its potential for activities like this that truly reflect our global position.
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The Compliance Program should continue to be the engine for driving ongoing
improvements in the quality and consistency of the financial management practices
and auditing. We should position the Compliance Program as an effective tool to
monitor and secure transparency of the financial reporting systems’ characteristics. Its
implementation over the past year, and the unprecedented support it received from
IFAC members, sends a loud and clear signal of your commitment to promoting high
standards and quality performance by the world’s accountants. Looking ahead, we
must leverage what we have learned. We have collected very rich information. Now
we must consider effective ways to communicate this information. In meeting our
goal of transparency, it is important for the public to know that they can easily obtain
information on the financial reporting systems in the private and public sectors in
countries around the globe.
Additionally, we should move from data collection to action. Under the leadership of
the Compliance Advisory Panel and staff, we will begin the process of developing and
monitoring action plans to help those countries whose standards were not yet of IFAC
caliber.
In this process, we will align the activity with the World Bank and other multilateral
credit agencies and aid organizations, trying to avoid unnecessary duplication of
efforts while making the most efficient use of available resources.
Where possible, we will also try to engage the accounting firms, through the
Transnational Auditors Committee or TAC, to secure their support for the
Compliance Program in terms of collaboration with the member bodies in the
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implementation of the action plans, especially in those countries where resources of
the member bodies are insufficient.
Another critical area for IFAC is working to develop the profession. The work
initiated this year by the Developing Nations Committee has set the tone and the pace
for the future. We have made it known that we are dedicated to helping all countries,
no matter how large or small, no matter where they are located, no matter what their
political climate. To be true to our mission of protecting the public interest through
the development of stable economies, we must continue to be proactive in our
approach to developing nations. We must offer help before we are asked for it. We
must propose solutions before the questions have been formed.
Development of the profession in emerging countries is crucial for the sustainability
of the profession and also for the sustainable development of those countries.
Accountancy and auditing are essential for the functioning of the economy and the
existence of an organized profession is essential to the functioning of accounting and
auditing. We should promote the creation of professional bodies in those countries
where there are none, attaining an organized accountancy profession in every country.
Another area in which we should continue to work intensely is on the development of
the professional firms, whatever their size may be.
We recognize the potential strengths and influence of the TAC and its role as
spokesman for how firms should and are improving audit quality. We should also
encourage new firms to join the Forum of Firms.
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We will also continue our work through the Small and Medium Practices Committee.
There should be no doubt with respect to IFAC’s commitment to meet the needs and
serve the interests of professional practices of all sizes. IFAC should continue to be
the vehicle through which the SMPs can channel their collaborative efforts, trying to
identify and implement solutions that help them grow and develop.
IFAC must also continue to provide resources for and support the development of
professional accountants in business. These professionals play a key role in the
financial reporting supply chain, contribute to a business’s economic growth and
development and are often involved in the implementation of good governance. The
vast number of professional accountants in business and the diversity and scope of
their work are testimony to their potential influence not only on their employers, but
on society in general.
IFAC’s reputation as a valid, reliable leader of the accountancy profession and its
related stakeholders is dependent upon consistent, clear, high quality public messages
and maintaining respect and strong relations with internal and external audiences. We
should continue our proactive attitude in the relationships with firms, regulators,
independent auditor oversight authorities, and investors.
As we look to the future, we should also recommit to and communicate the work of
the IFAC Regulatory Liaison Group (IRLG). This group will continue to meet
periodically with the Monitoring Group of regulators, and we will also plan a higher
level of activity for the IRLG. Through this mechanism, we will also establish regular
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and open contact with the recently created International Forum of Independent Audit
Regulators as well as with any new regulatory organizations that emerge.
IFAC supports the oversight mechanisms that protect the public interest. Quality is
ultimately the final and principal objective, and as much a focus for our profession as
for the oversight bodies. The auditor should focus on the effectiveness and efficiency
of his or her specific task: to perform a quality audit. Meeting the requirements of the
independent audit regulator will then be a natural consequence.
The audit regulator, for its part, should comply with its obligation in the public
interest and should recognize that the measure of its success will finally be the level of
quality reached by the auditors it supervises.
Without diminishing the focus on other key activities that I have just referred to,
IFAC, as the globally organized profession, must continue to give attention to the
future. How are we to meet the challenges that lie ahead? And how can we
accomplish our mission of improving the global economy? We know the world does
not stand still.
The profession should continue looking to the markets it serves – both within
organizations and from public practice – and to the needs of those markets. We need
to be prepared to operate in the new technology environment, to take a leadership role
in the preparation and assurance of non-financial information, and to identify and
design more efficient ways to deliver our services or to generate new services that
respond better to the changing demands of the market.
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Like the world around us, we cannot stand still. We should continue to be players. We
should take the initiative.
Here we have a clear link to education. Our profession can only meet the global
challenges of the 21st century if we are prepared to deal with an increasing quantity of
financial reporting, governance and related audit requirements, greater complexity in
business transactions, the ongoing emergence of new technology and the new
demands of the market. Education provides the means to meet these challenges. If we
do not see education as a priority, then we will be making a serious mistake.
As we strive to meet all these goals, we must be inclusive, encourage collaboration,
and lead by example.
We must be willing to embrace each and every culture. We must recognize their
strengths and understand their weaknesses. We must accept the diversity of this great
profession of ours and consider how we can best benefit from it. We must be willing
to receive and respect comments from every region and country. We must work to
better understand their needs and those of their members. To be inclusive, we must
create an environment conducive to communication and participation.
As part of our commitment to be inclusive, we must strive to overcome the language
barriers that exist. I encourage member and regional bodies to continue their work on
translations of our standards and guidance. I also urge you, where possible, to
translate any of the speeches that we present and which are posted on the IFAC
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website. IFAC will continue to do its part as well. We will make sure that the
availability of such translations is promoted on the IFAC website and in other
materials that are distributed globally. We are translating development materials,
including our developing nations toolkit, to make sure it is accessible to those most in
need of it. Now we will also consider the feasibility of translating portions of the
IFAC website into selected languages.
In addition to inclusiveness, we must make a strong commitment to collaboration.
Collaboration is what got us here today. It is what enabled IFAC to develop new
guidance and resources such as the IFAC KnowledgeNet for Professional
Accountants in Business. It has enabled us to develop a stronger voice and to have
that voice heard. Collaboration with all of you, as well as with others such as the
World Bank, regional development banks, national standard setters, and organizations
like the Financial Stability Forum, has enabled IFAC to more effectively accomplish
its mission. We should promote and facilitate the collaboration between member
bodies in projects where it is merited, using IFAC as the vehicle to make global
projects viable and effectively add value.
Finally, let me share with you what I believe is a personal challenge for all of us. That
is, the challenge to lead by example, to live our values of integrity, transparency, and
expertise. We must demonstrate to our members, to investors, to regulators, and to
global leaders that our values and ethics are indeed at the core of all that we do.
If we want to continue to enhance the ethical quality of our profession and to help
improve the ethical quality of business and society in general, I believe we must, in all
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cases, do more than we are required to do. As leaders of the accountancy profession, it
is our role to demonstrate how our organizations work to put the public interest first
and how we inspire members to do the same. Our challenge is to lead by example.
Dear friends, the accountancy profession is standing strong and looking ahead. We
have a clear vision. We are committed. We must act to give effect to that vision.
Together, through IFAC, we can work to become a better, stronger and more effective
profession, one that is more capable of achieving its goal of enhancing societies
around the globe.
We must strive to manage the future and not allow it to manage us. Together, we can
shape a future that protects the public good and that makes the world, plain and
simply, a better place.
Thank you.
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