ACTION PLAN AS IFAC PRESIDENT
Fermín del Valle, President
International Federation of Accountants
Fédération des Experts Comptables Européens Annual Assembly
Brussels, Belgium – December 4, 2006
Thank you very much for your kind introduction. I am delighted and honored to speak
before this FEE Assembly, among so many leaders of our profession. Your President
David Devlin and your Secretary General Henri Olivier have been great supporters of
IFAC and its work and for that I am very grateful for this. The more we collaborate,
the more we can achieve. I am very much looking forward to working with your
incoming President, Jacques Potdevin, and with your new Chief Executive, Olivier
Boutellis-Taft.
FEE constituents are very much a part of IFAC and contribute greatly to all aspects of
our work. Eight individuals from FEE member bodies serve on the IFAC Board, and
Henri Olivier has attended and contributed much to our meetings in the past as well.
In addition, 31 individuals from FEE bodies are currently serving on IFAC standardsetting boards and another 17 serve on our Compliance Advisory Panel, Developing
Nations Committee, Professional Accountants in Business Committee, and Small and
Medium Practices Committee.
Dear friends, the accountancy profession is standing strong and looking ahead. We are
in front of and on top of the issues that are most important to the profession and to the
public we serve. We are facing our future with confidence, with integrity and with an
open mindedness that enables us to embrace new thinking, new ideas and new ways
of operating. We are aware of the challenges and opportunities that lie ahead and we
know that accountants from every part of this world are ready, willing, and
increasingly able to meet these challenges.
Indeed, there are two areas that we must concentrate on with a shared decisiveness
and commitment: On the 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 respond
to the future demands that society is placing on it.
As we look ahead, I believe that public confidence in our profession and in IFAC’s
work can and will be strengthened if IFAC, with the support of regional accountancy
organizations and its member bodies, remains focused on our current four key
initiatives:

Standard setting;

The Member Body Compliance Program;

The development of the profession; and

Being the global voice of the profession.
These initiatives are all interrelated. Time does not permit me to discuss all of these
areas; I will, therefore, concentrate on the first one: standard-setting.
Clearly, to encourage adoption of IFAC standards we must demonstrate that they are
of the highest quality, that they are responsive to the public interest, and that they will
lead to high quality performance of professional accountants.
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Over the past several years, the International Auditing and Assurance Standards
Board (IAASB) has undertaken significant initiatives that have earned it the respect of
other standard setters and regulators as a standard-setting board that operates with the
utmost transparency and with a clear focus on the public interest. In fact, IFAC has
worked intensely on supporting the IAASB’s good governance and independence – as
well as that of the other IFAC independent standards setting boards – so that each of
these boards will satisfy the requirements of the European Commission and other
regional and national standard setters. That work has resulted in the Public Interest
Oversight Board’s (PIOB) approval of the terms of reference and due process for each
of these boards.
For the benefit of our profession and the public that we serve, IFAC will continue to
listen closely and respond to the recommendations of the PIOB.
I am personally committed to building on the reform process that contributed to the
renewal of public confidence in this great profession of ours. IFAC’s boards will
continue to focus on strengthening our standards and ensuring that their due processes
meet the public’s expectations, and our leadership will continue to liaise with
regulators and others to better understand how they view our public interest
responsibilities.
IFAC will 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. Our aspirations should be beyond the scope of
equivalence and mutual recognition. I know this can be a controversial issue and that
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the first priority now could be to remove the need of reconciliations, but the objective
of achieving full convergence should not be replaced. The attitudes of Europe and the
US towards this issue will influence the positions of many other countries. Both
Europe and the US should lead by example.
To foster convergence, the IAASB has undertaken a significant project to improve the
clarity and structure of its standards. Beginning in October 2005, it issued four
exposure drafts (EDs) of proposed standards re-drafted using its new drafting style.
An additional three EDs were approved at the IAASB’s October 2006 meeting, and it
is anticipated that six more EDs will be issued in the new style by the end of this year.
You should see a steady stream of additional exposure drafts throughout 2007, and it
is expected that all the final standards, which will have a common effective date, will
be issued before the end of the third quarter of 2008.
Europe can play a critical role in encouraging greater momentum in global
convergence. As the 8th Company Law Directive on statutory audit is implemented,
and as I confidently assume that International Standards on Auditing will be adopted
by the European Union, we will have the opportunity to move even more swiftly to
convergence. This will not only be beneficial to Europe, it will also be instrumental in
encouraging other developed and developing nations to adopt these standards.
The European Commission has also rightfully focused its attention on independence
issues, and this is another key area in which we must strive to achieve international
convergence. Changes to the current IFAC independence standard will be exposed for
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public comment this month. It will cover important matters and I urge all of you to
comment on this very important exposure draft.
IFAC’s International Accounting Education Standards Board has also made
convergence a priority and outlined how it intends to accomplish this in its proposed
Strategic and Operational Plan, which is posted on the IFAC website.
The European Commission has expressed confidence in the transparency of IFAC’s
standard-setting processes and can have confidence that all of IFAC’s standards are
addressing relevant public interest issues and concerns. Each standard-setting board
has public members as well as an independently chaired Consultative Advisory Group
comprised of various stakeholders. In addition to communication on technical issues,
this group provides comments on the work programs of each of their respective
boards and draws its attention to significant public interest concerns. This structure,
along with the current due process and the PIOB’s oversight, makes these standardsetting boards exemplary international models.
To strengthen public sector financial reporting and financial management, IFAC is
also striving to increase convergence to its International Public Sector Accounting
Standards (IPSASs). This also is an area in which FEE has been active and, in the
context of European economic and monetary relationships, is an area where
convergence is of particular value. We are certainly pleased that, along with the
United Nations and others, the European Commission has adopted the IPSASs for its
own financial reporting. We look forward to continued and enhanced collaboration in
this field.
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Another important area of focus for IFAC is the need to provide guidance materials
for audits of small- and medium-sized entities (SMEs). While we at IFAC believe
firmly that an audit is an audit, we also recognize that for SMEs there is a need to
balance the pursuit of high quality with the cost of compliance. To assist practitioners
who audit SMEs, IFAC has commissioned the development of implementation
guidance, which should be ready by mid 2007. It is also in the process of requesting
proposals for the development of quality control guidance.
To ensure that the voice of the small and medium practices (SMPs) and SMEs is
heard, the IFAC SMP Committee provides input to the standard-setting processes of
the IAASB and the International Accounting Standards Board (IASB) and encourages
them to “think small first” when developing international standards.
In terms of accounting standards, Europe has taken a fundamental step by adopting
the International Financial Reporting Standards for the consolidated financial
statements for listed entities. The profession must now continue to pay special
attention to the needs of SMEs for financial reporting requirements appropriate to
their circumstances. Both we at IFAC and you at FEE must continue to follow closely
and contribute effectively to the IASB project. It is our responsibility to work in order
to get a good final product.
Whether providing input to the IASB and other standard setters, developing our own
standards or implementing other guidance and programs for the world’s accountants,
it is vital that we keep our eyes on the future.
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As much as possible, we must anticipate changes that are needed, rather than just
respond to environmental demands.
In addition, I believe we must continue to be flexible in addressing the needs of all
segments of our profession and of the various constituencies we serve. And we must
both seek and be open to innovation.
As a profession, we must be willing to move ahead, to work together and to
collaborate in new areas to build a better future. We should keep looking to our
markets, from the perspectives of both our members working in organizations and
those in public practice. We must, together, continue to identify and to design more
efficient ways to deliver our services and to develop new services that better respond
to the changing demands of the market.
We need to be prepared to provide relevant services within the new technology
environment, for example, taking a leadership role in the preparation and assurance of
non-financial information.
This is our profession. We should continue to be players, not spectators, in its
development. And as we build confidence and embrace innovation. We must also
keep in mind that it is, ultimately, values and not rules that drive behavior.
This should be what distinguishes our profession and what provides the ultimate
foundation for what we all do.
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IFAC and FEE are united in their shared commitment to the highest ethical values. I
urge all of us here not only to promote these values, but also to live them, so that we
may continue to lead by example. It will make our profession stronger and public
confidence in us greater.
Thank you very much for your attention.
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