International Federation of Accountants
IFAC Small and Medium Practices Committee
Paul Thompson, Senior Technical Manager, IFAC SMP Committee
World Bank Fiduciary Forum
Recent Developments in Corporate Financial Reporting
Leesburg, USA, March 27 2008
Content
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Overview of IFAC
IFAC SMP Committee
Guide to Using International Standards on
Auditing in the Audit of Small- and Medium-sized
Entities (ISA Guide)
Future Implementation Initiatives
Conclusion
How the World Bank Can Help?
Overview of IFAC
Today
• IFAC celebrated its 30th anniversary in 2007
• Membership has expanded from 63 professional
bodies in 1977 to 155 members and associates in
118 countries today
• Represents 2.5 million accountants in public
practice, education, government service, industry
and commerce
Overview of IFAC
Mission
• To serve the public interest, IFAC will continue
to strengthen the worldwide accountancy
profession and contribute to the development of
strong international economies by…
Overview of IFAC
Mission cont…
• Establish and promote adherence to high quality
professional standards (auditing & assurance,
ethics, education, & public sector accounting)
• Further the international convergence of such
standards
• Speak out on public interest issues where the
profession’s voice is most relevant
Overview of IFAC
International Auditing and Assurance Standards
Board (IAASB)
• Over 100 countries use International Standards on
Auditing (ISAs):
– adopted as written
– locally adapted
– convergence process
• Clarity project to redraft standards
• Need for implementation assistance, especially for
SMPs & those in developing nations (see later)
IFAC SMP Committee
Overview
• Finland
• Germany
• Italy
• Malta
• Spain
• Israel
• UK
• Turkey
• Canada
• USA
• Nigeria
• Tunisia
• Brazil
• China
• Hong Kong SAR
• India
• Malaysia
Chair – Sylvie Voghel (Canada)
18 members
Resources – one full-time senior technical manager
Budget of US$ 475k (2008)
IFAC SMP Committee
Strategy
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Strategic and Operational Plan 2007-2010
Regulatory burden falls most heavily on SMP/SME
Two-pronged approach to helping SMP/SME
efficiently converge on international standards:
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2.
Increase relevance - help shape form and content of
standards (IFAC & IASB) through input to standard
setting; and
Increase capacity - help SMPs perform high quality
work and be profitable through practical support
(implementation guides and web-based resources)
Guide to Using ISAs in the Audit of SMEs (ISA
Guide)
Overview
• Objective: to help practitioners perform effective,
efficient and economic SME audits
• Published December 13, 2007
• 400 pages
• Developed by CICA with IFAC quality review
• IFAC has full copyright
• PDF downloadable free at http://www.ifac.org/Store/
• Member bodies & others can use as is or adapt
ISA Guide
Attributes
• Content structured according to audit process:
– Risk assessment
– Risk response
– Reporting
• Written in plain English
• Suitable for use in:
– developing, transition, emerging & developed economies
– common & civil law jurisdictions
ISA Guide
Attributes cont…
• Non-authoritative implementation guide
≠ SME audit standard
• Includes all ISA requirements
≠ Substitute for ISAs
• IFAC SMP Committee publication
≠ Approved/endorsed by IAASB
• Integrated case study and some practice aids
≠ Full set of audit programs
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ISA Guide
Feedback & Updates
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Too early to gauge usefulness
Some positive general comments
Already being used by some firms for training
7,677 downloads (12/13-3/10) suggests high demand
Formal request for feedback in ISA Guide
Commitment to continuous improvement
Regular updates – Q4 2009 (for Clarity) and 2010
ISA Guide
Translations, Reproductions & Derivatives
• 5 translations/reproductions in process (e.g.
Spanish, Chinese)
• Germans (IDW) & Australians (AUASB) adapting
• CD version available on request
• Intended to be ‘platform’ product from which
derivative products can be logically developed
• IFAC to facilitate development & dissemination of
high quality derivatives (forms, checklists, software
etc.) at reasonable cost to users
Future Implementation Initiatives
Planned
• QC Guide – apply ISQC 1 in SMPs (Q4 2008)
• Practice Management Guide - help SMPs be efficient,
client-focused & profitable (H2 2009; subject to funding)
• Guide to Independence for SMPs (IESBA) - help
SMPs apply independence section of Code of Ethics (2009)
Future Implementation Initiatives
Possible
• Vision - suite of implementation materials (guides &
derivative products in many languages)
• Certification of products asserting compliance with
IFAC standards/guidance
• Criteria for IFAC developed products:
– where market failure
– where avoids duplication of effort
– where risk of inconsistent application
• ‘Train the trainer’ & other CPD materials
Conclusion
• IFAC recognizes implementation assistance is critical
to execution of consistently high quality services
• IFAC likely to take a leadership role in
implementation of its standards
• ISA Guide is first step in this direction
• For more information see http://www.ifac.org/SMP/
and/or contact paulthompson@ifac.org
How the World Bank Can Help?
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Promotion
Dissemination
Provide and elicit feedback
Facilitate translation
Facilitate development of derivatives