The Role of Auditors in
Economic development &
Social Justice
Jan. 2006
Dayarayan Auditing & Financial Services Firm
By: Gholam hossein Davani
Member of High Council of Iran Association of Certified Public
Accountants (IACPA)
IMA, AAA, BAA, EAA, IIA, CAAA, AAFM
1
Corporate Governance
Auditing
Accountability
Responsibility
Transparency
Supreme
Supreme thought on governmental resources &
consumption have been come from constitution that
culminate in establish public Accountants tribunal
and review of governmental accounts
Public accounts tribunal have been establish
according article 101,102,103 supplementary to the
constitution law
Law sovereignty
Justice & Fairness
Participate
Efficiency & Effectiveness
2
Role of Auditors in good
governance process
Information Transparency
Assurance
Culture
Accountability
Financial accountability of government & Privatation sec.
Management decision
Tax auditing
Financial evaluation of investment project
Stock Market
Reduce of Administrative
Banking, Commerce, Financial & Economic entity
3
Financial Supreme & Control Foundation in Iran
Type of Super & Control
Supreme of Funds &
Executive of Financial
regulation
Controller
Ministry of Finance
Control Budget &
Regulation Variance
Public accounts
tribunal
Irregularities Cases
Control
State Chief
inspectorate
Financial Audit, Tax
Audit, operational
audit
*Audit organization
Financial Audit, Tax
Audit, operational
audit
Type of Institute
Ministries &
Governmental
Institute
Government & Public
economic entity
Iranian Association
of Certified Public
Accountants
Private Economic
entity
Management Control
Special Audit
Financial Audit, Tax
Audit, operational
audit
Shareholders
Mofid Rahbar Auditing
Firm**
Islamic Revolution
Foundation
Audit Organization
Iranian Association of
Certified Public Accountants
Municipalitities
* Audit Organization= Biggest Governmental Audit Firm in Middle East
** Mofid Rahbar = Affiliated to Islamic Leader Office
4
Effected law on Governmental Co.
State Chief
inspectorat
e
The
customers &
producers
protection
Org. (CPPO)
Punishmen
t
organizatio
n
Constitutio
n Law
Budgets
Law
Economic
development
plan
Public
Account
s
tribunal
Iranian
Association
of Certified
Public
Accountant
Banking
&
Marketing
regulation
Tehran
Stock
Exchange
Law
Audit
Organizatio
n Law
Tax Act
Commercia
l Law
Social
Securitie
s Law
Commerc
e Law
5
Task of Auditors in Development Process
Tax Incomes
Anti-Money Laundry
Supreme on Budget
Auditing
Anti-corruption
Comply Public Interest
Privatization
Financial Assessment of
Investment project
Tax is development instrument
* * *
Auditing is collection tax instrument
6
Role of Auditors on Foundation Supreme Governmental
Tax Instrument
Financial Supreme in Capital Market
Financial Supreme in Money Market
Performance supervision on budget of
governmental Co.
Financial Supreme in E-Governance
7
Auditors Social Responsibilities in
Development Process
Social responsible
Professional responsible
Legal responsible
8
Auditors’ Social responsibilities
in Globalization
Comply with Law & Regulation
(Governor of Law)
Other
governmental
duties
Labour &
Social law
Tax
Comply with professional rules
Supreme in human right
Supreme in Comply Environmental natural
law & regular
Supreme on ISO & Others
Quality Control Standards
Supreme on world bank &
IMF Loan
Supreme on executive of
Management Accountability
Financial International Court
Struggle with Corruption
& Money Laundry
9
Table of Professional
Accountants in UK & USA 2005
CPA
ACCA
CIMA
CIPFA
ICAEW
ICAI
ICAS
TOTAL
130,343
238,425
81,117
2,927
10,019
3,240
2,626
475,697
Table of Graduate of Chartered Accountants & ACCA 2005
Affiliated
Member &
Student
Member
Total
Africa
43,327
4,907
47,234
USA
18,050
5,309
23,359
South East Asia
70,411
31,323
101,734
North Europe
9,423
2,571
11,994
Middle East
3,494
490
3,984
South Asia
18,067
479
18,546
UK & West Europe
78,969
59,534
138,503
Total
240,741
104,613
345,354
Location
10
Table of AICPA’s Graduation
1999-2005
1999
2000
2001
2002
2003
2004
2005
Total AICPA Membership
(excluding student and other
affiliates)
336,635
337,454
336,081
337,867
335,111
334,635
327,135
Public Accounting
39.5%
39.4%
38.9%
38.8%
38.4%
39.0%
39.2%
Business & Industry
46.2%
46.4%
46.6%
47.4%
47.7%
41.6%
42.8%
Education
2.4%
2.3%
2.3%
2.3%
2.4%
2.3%
2.4%
Government
4.3%
4.2%
4.1%
4.0%
4.1%
3.9%
3.9%
Retired & Miscellaneous
7.6%
7.7%
8.1%
7.5%
7.7%
13.2%
11.6%
Membership in Public Practice
133,036
132,943
130,870
130,995
128,730
130,343
128.292
Firms with one member
22.8%
21.8%
21.6%
21,3%
21.4%
22.6%
23.0%
Firms with 2-9 members
34.7%
34.1%
34.1%
33.9%
34.1%
29.9%
31.6%
Firms with 10 or more members,
except the 25 largest firms
21.6%
22.8%
22.8%
24.0%
24.5%
26.0%
24.7%
25 Largest Firms
20.9%
21.3%
21.5%
20.8%
20.0%
21.5%
20.7%
CPA in the world
Country
No. Firm
Office
USA
World
3670
297
5808
636
Total
3967
6444
11
Table of Iranian Association of Certified Public Accountants (IACPA)
Active Partner
Activate in
Public
Active in
Audit
Organization
Non-Active
Individual
Total
424
64
296
358
220
1,368
Estimate of
Audit Market
Share of
Private
Public
Accountants
Share of
Audit
Organization
Market
Value of
Accounting
Total
Personal in
Public
Accountants
No of Public
Accounting
Firms
150,000,000$
20,000,000 $
30,000,000 $
50,000,000 $
3,475
139
Big Ten Accounting Fee Income 2005
Total Market 100($B)
BDO
KPMG
ERNEST &
YOUNG
DELOITTE
PWC
3.3
15.6
16.9
18.2
20.3
Moores
Harwath
Baker tilly
Grant
thornton
RSM
1.9
2
2.1
2.4
2.5
Table of World Accounting Services 2005
Other
Management
Consulting
Tax Services
Audit
Accounting
17%
11%
23%
49%
12
Big Ten revenue per partner 2005 (M$)
Firm
Amounts
Firm
Amounts
PWC
3,055,000
RSM
1,100,000
DT
3,005,000
Harwath
1,007,000
EY
3,011,000
Baker tilly
970,000
KPMG
2,920,000
Moors
Rowland
1,350,000
Grant
thornton
1,990,000
Overall Fee split 2005 (MS)
Tax
services
Audit &
Accounting
Managing
Consulting
Others
27
43
21
9
USA Accounting Firm Fee 2005
Delloitte
Ernst &
Young
PWC
KPMG
7,810
6,337
6,167
4,700
RSM
Grant
Thornton
BDO
1,213
828
440
13
Overall Market Share 2005
Mid time
KPMG
Ernst &
Young
Deloitte
PWC
%34
%12
%17
%21
%16
Ranking Big Four in The World
Country
Firm
Fee income ($M)
USA
Deloitte
7,8
UK
PWC
3,2
Germany
PWC
1,372
Canada
Deloitte
1,151
France
KPMG
834
Netherland
DT
829
Australia
PWC
761
Spania
DT
296
Korea
PWC
289
Denmark
DT
286
Switzerland
KPMG
284
South Africa
PWC
261
Belgium
PWC
233
Sweden
E&Y
232
Italy
PWC
203
Ireland
PWC
182
Mexico
PWC
152
Japan
DT
652
Norway
DT
93
14
Global Eight
•The UN Global Compact
•ILO conventions
•The OECD Guidelines for Multinational Enterprises
•ISO 14000 Series
•Account Ability 1000
•The Global Reporting Initiative
•The Global Sullivan Principles
•Social Accountability 8000
•Audit & Accounts Standards
Comply World Standards
•Principles (Global Compact and Global Sullivan Principles
•Standards (GRI, OECD Guidelines, SA8000, AA1000S, ILO Conventions)
•Foundation (ILO Conventions, AA1000S)
•Process (SA8000, AA1000S, ISO 14000S)
•Performance (SA8000, OECD Guidelines, ILO Conventions)
•Audit & Accounting Standards GAAP, IAS, IFRS
15
ILO Law & Regulation
•Freedom of association (Convention 87)
•Right to collective bargaining (Convention 98)
• Prohibition on forced labour (Convention 29 and 105)
•An environmental policy
•An assessment of environmental aspects
•An assessment of legal and voluntary obligations
•A management system
•A series of periodic, internal audits and reports to top management
•Prohibition on child labour
•Freedom from discrimination (Convention 111)
16