THE INTERNATIONAL ACCOUNTANCY PROFESSION: PROVIDING THE
FOUNDATION FOR ECONOMIC GROWTH AND DEVELOPMENT
Fermín del Valle, President
International Federation of Accountants
South Asian Federation of Accountants CEO/CFO Forum
Colombo, Sri Lanka – January 16, 2007
Good morning ladies and gentlemen. It is a pleasure to be here with you for
this CFO/CFO forum. I would like to thank the new President of the South
Asian Federation of Accountants (SAFA), Mr. Indrajith Fernando, for his kind
invitation to address you this morning.
Since its founding in 1984, SAFA has been an example of how regional
integration and collaboration can help to strengthen the global profession. so
that together we can more effectively contribute to the integral development
around the world. When I speak about integral development, I refer to a
development that reaches both the economic, the social and the cultural
spheres.
The accountancy profession here in South Asia also has a long history of
collaboration at the international level. All eight of SAFA’s member institutes
are members or associates of the International Federation of Accountants
(IFAC), and 15 members of SAFA member institutes, including Mr. Fernando,
currently serve on IFAC boards and committees. I would like to thank them for
their service and contributions.
With the support of these volunteer members, IFAC’s boards and committees
serve all sectors of the accountancy profession, from professional auditors, to
accountants working in government and the public sector, to professional
accountants in business and industry. Professional accountants in business
are a major constituency of professional accountancy institutes here in South
Asia. SAFA’s eight member institutes represent approximately 50,000
professional accountants working in industry and business. This comprises
about half of their total membership. Recognizing not simply the number of
professional accountants worldwide, but even more importantly, the
expanding scope of responsibilities of professional accountants, IFAC has
expanded its support and guidance to assist them in delivering high quality
work.
Here in South Asia, your region is currently enjoying some of the highest rates
of economic growth in the world, exceeding the average rates for most
developing countries around the world. The challenge now is to sustain this
growth. As indicated by the title of this session – “The International
Accountancy Profession: Providing the Foundation for Economic Growth and
Development” – the accountancy profession has a key role to play in this
process.
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How do we meet this challenge? I believe we meet it in four fundamental
ways:
By embracing and learning from other cultures; by making a commitment to
adhere to high values; by focusing on sustainability; and by supporting the
development of entities of all sizes.
Let me first explain what I mean by embracing new cultures. I am convinced
that one of the keys to true and sustainable development of the profession
worldwide is that we open our minds to learn from every culture. This implies
not only that we have the right attitudes and necessary channels to learn from
one another so that every contribution can be taken into consideration, but
also that each country and each region is both prepared and willing to make
their distinct contributions. I urge the profession here in South Asia to continue
to share its own culture with the rest of the worldwide profession and also to
embrace the cultures of others. As individuals, committed to our profession,
we must continually be open to new ways of strengthening the profession.
It is important to remember that we are a global profession and that there are
distinct benefits that arise from this -- including the ability to learn from one
another. This will, I believe, help us to clarify and strengthen our role with
respect to contributing to economic development worldwide.
The second way in which we can meet our responsibility to laying a
foundation for strong growth is by making a commitment to strong values.
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As organizations expand their global activities to take advantage of
competitive opportunities, businesses large and small are coming under
increasing scrutiny. Organizations will only be able to build the trust of a range
of stakeholders through greater openness, transparency and accountability.
The challenge, then, for professional accountants in business is to serve as
an ethical gatekeeper – to be a champion of integrity, transparency and
expertise – the three core values of IFAC. IFAC’s Code of Ethics for
Professional Accountants, which is applicable to all professional accountants,
including those in business, industry, government, academia, and public
practice, embraces these core values.
Let me take a moment to explain what I mean by these values and their
relationship to the profession’s role in contributing to economic development.
Expertise implies knowledge and experience and, consequently, permanent
education. It is a necessary condition for the provision of professional
services.
Integrity is the coincidence between word and action. To have integrity is to
honor commitments: to promise that which one truly proposes to do and to do
what one promises.
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Finally, where transparency exists, corruption is not possible. Corruption is
one of the largest obstacles to development. If the accounting profession is
committed to development, then it should commit itself to combat corruption.
Corruption is development’s worst enemy. It hampers any form of economic
growth. Corruption affects the economies of all countries. Those most likely to
suffer the most, however, are developing and emerging economies.
The accountancy profession has a significant role to play in anti-corruption.
Accountants work in many aspects of business. As public practitioners,
accountants are auditors and business advisors in a number of areas. They
also hold positions as tax advisors. In addition, accountants – like many of
you’re here today -- serve in key internal positions in organizations in the
public and private sector. Your roles may be diverse by you all share a
common responsibility to combat corruption.
What the accountant should do when confronted with corruption is covered in
IFAC’s professional guidance. It requires that we act decisively in the best
interests of the public. We should recognize, however, that the perception in
some minds is that accountants do not do enough to fight corruption. To
counter this misperception, we must never compromise our values. And we
must never compromise our character by even appearing to be associated
with a corrupt activity, on any level, in any way.
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The profession, here in Sri Lanka, throughout South Asia and around the
world should foster an environment in which corruption cannot exist. For those
of you that serve in top management positions, that means creating an ethical
“tone at the top” and lead by example.
That leadership role, however, must extend to other elements of government
and civil society. The accountancy profession is but one of many elements
that must participate in the fight against corruption. Nevertheless, if the
profession can demonstrate its own commitment, it can very effectively
demand participation by the other groups, whether they are other professions,
governments, regulators or other private sector organizations.
The third issue I would like to address is sustainability. Sustainability is an
over-arching concept which seeks to promote long-term growth in all the
various forms of capital available to us – financial, natural and social.
Professional accountants in business (PAIBs), in particular, need to recognize
that individuals, societies, and governments are increasingly focused on
sustainability and in the environmental, social and economic impacts of
enterprises. Sustainable development is also high on the agendas of a wide
range of consumer organizations and non-governmental organizations for the
simple reasons that failures to engage with the challenges of sustainable
development poses serious strategic, business and reputational risk.
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The PAIB, directly or in a supportive capacity, can help organizations embed
sustainability issues into strategic planning and its execution. They can also
help overcome the various cultural, organizational and economic impediments
to sustainability.
The enterprise drivers of sustainability—accountability and transparency,
governance and reporting, risk management and finding sources of
competitive advantage—all impact the work of the PAIB and will continue to in
the years ahead.
It is important to keep in mind that many of the issues raised by the quest for
sustainable development are business risk issues --- as a result, more and
more PAIBs will be involved in these issues. This presents a challenge but
also an opportunity for PAIBS to not only contribute to the financial well-being
of a business, but, as importantly, to the fiscal well being of the country. To
assist PAIBs in addressing this issue, IFAC has two information papers on
sustainability available on its website.
The last issue I want to discuss with you is the need to support enterprises of
all sizes. We cannot overlook the importance of the role of the small and
medium enterprise in contributing to the economic growth of both developed
and developing nations. For those of you that lead, work in, or consult with
SMEs, I urge you to never underestimate the value of this role.
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Because of their sheer scale, when taken as a whole, and the dramatic effect
that successful SMEs can have on national and international economies, all of
us must keep their issues at the forefront of our priorities.
For IFAC’s part, we have been focused on the financial reporting needs of
SMEs, seeking their views at public forums and other events. In addition, we
have contributed to the exposure draft of the SME standard that the
International Accounting Standards Board is developing and give SMEs a
voice in the development of auditing and ethics standards. The end result, we
hope, will be an acknowledgement of the unique role and needs of SMEs and
the development of standards or guidance to apply the standards, so they can
be relevant, timely and cost-effective from the SME and SMP perspective.
This, I believe, is in the best interests of SMEs and of the societies in which
they operate. IFAC is further supporting SMPs through the development of an
implementation guide for International Standards on Auditing and a quality
control guide, to be issued within the year.
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In conclusion, I think it is self evident that professional accountants play an
essential role in society, providing reliable and transparent information, both in
the public sector and in the private one. The accountancy profession
facilitates and makes economic activity possible at any and every level. And it
does this in a way that protects the public interest, serves the common good
and contributes to the integral development of society. We should be very
proud of this role of ours and remember to carry it out with integrity. I thank
you for your attention this morning and look forward to answering any
questions you may have.
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