VISION AND CHALLENGES FOR THE INTERNATIONAL ACCOUNTANCY
PROFESSION
Fermín del Valle, President
International Federation of Accountants
World Bank Financial Management Staff
Washington, D.C. – January 19, 2007
Good morning and thank you for the invitation to speak to you today. It is a pleasure to meet with staff of the World Bank, with whom we are working ever more closely on the development of the global accountancy profession. One of the reasons for our visit today is to explore with the Bank whether there are areas in which this cooperation could be extended or deepened. Our organizations share a mutual aspiration to contribute to the integral development of the countries 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 .
Both IFAC and the World Bank share, I believe, the view that professional accountants play an essential role in society, providing reliable and transparent information, both in the public sector and in the private one. In fact, we all know that 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.
IFAC and the World Bank have a long and productive relationship. The Bank was instrumental in the establishment of the International Public Sector Accounting Standards

Program which was launched more than 10 years ago to develop financial reporting standards for the public sector. Today, we now have 24 accrual-based international accounting standards for the public sector and a comprehensive cash basis standard.
These standards, which are very largely based on International Financial Reporting
Standards issued by the International Accounting Standards Board, are now the benchmark for high quality financial reporting in the public sector and are increasingly being adopted by governments and public sector entities worldwide. Not only did the
Bank support the development of this program, it also supports the adoption by its client countries of these standards. I would like to thank you for this support and also acknowledge the Bank’s Observer to the IPSASB, Simon Bradbury.
The World Bank’s involvement in IFAC standard-setting and other activities extends beyond the public sector. I will highlight some of the key ways in which we work together as I discuss IFAC’s vision for meeting the challenges that lie ahead of us.
IFAC’s challenge for the future – indeed, the challenge facing the global profession in general – is maintaining and enhancing public confidence. 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 and convergence;

The Member Body Compliance Program; and

The development of the profession worldwide.
2

I believe, too, that this work can only be effectively accomplished with the cooperation and, where appropriate, collaboration, with institutions such as the World Bank.
In addition to setting standards in the public sector, IFAC sets standards in three other key areas: auditing and assurance, ethics and education. In developing these standards, we follow a high quality and transparent due process, in which the World Bank also has a role. John Hegarty, the Bank’s manager of Financial Management, serves as the Bank’s representative on the CAGs of both the International Auditing and Assurance Standards
Board and the International Ethics Standards Board for Accountants. Through its involvement in these two CAGs, the World Bank provides important input to the respective board’s standard-setting activities and work programs.
In the area of standard setting, the IAASB’s International Standards on Auditing (ISAs), have received increasing support from international and national regulators, including the
European Commission, and are being adopted in many countries around the globe.
The IAASB has focused on enhancing the clarity of its standards in order to facilitate translation, adoption and adherence by professional accountants worldwide.
Based on input from the regulatory community and other international organizations, the profession and the public, it has moved forward rapidly in implementing the clarity conventions.
3

The implementation approach distinguishes revision and redrafting. The IAASB currently has 32 ISAs in issue. Of these:

11 are under full revision and will be issued in the clarity form;

Nine have been revised in the last few years and are in no need of further revision but will be redrafted in the clarity form; and

The other 12 have not been recently revised but are considered acceptable, and they will be re-drafted in the clarity form without revision for any other matters.
The IAASB anticipates the completion of final ISAs by September 2008.
IFAC is also actively promoting convergence to the Code of Ethics for Professional
Accountants. The challenge of our ethics board is to keep the Code relevant and up to date. Just three weeks ago, it issued an exposure draft of a new independence standard.
You can review the proposed new standard on the IFAC website and, of course, we welcome any comments you have on this exposure draft.
IFAC believes that the revised independence standard should convert into an international benchmark. IFAC is focused on ensuring that ISAs and the IFAC Code of
Ethics are incorporated in the standards of the profession in every country and would also wish to see them endorsed by those regulators and other organizations whose stature and influence can help significantly to advance the convergence process. The World Bank is a key player in this regard.
4

IFAC is also focused on the education and continuing professional development of all professional accountants and well recognizes that education is central to the profession’s ongoing ability to fulfill its public interest responsibilities. Through its International
Accounting Education Standards Board (IAESB) it develops International Education
Standards and other guidance. Most recently, the IAESB has issued several exposure drafts of proposed new guidance on such topics as practical experience, ethics education, and information technology .
The Public Interest Oversight Board (PIOB) oversees IFAC’s public interest activities, including our auditing and assurance, ethics, and education-standard setting processes. It also oversees the IFAC Member Body Compliance Program, about which I will speak more in a few minutes. Your Controller and Vice-President, Fayez Choudhury, is a member of the PIOB, as I am sure you are aware.
The World Bank has, of course. been an important partner in implementing the public interest reforms that resulted in the creation of the PIOB in 2005 and the formation of the
Monitoring Group of regulators, which serves as an important connection between the international accountancy profession and international regulatory community. The Bank is a member of the Monitoring Group, which engages in direct dialogue with IFAC on public interest issues through IFAC’s Regulatory Liaison Group.
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. IFAC is
5

committed to supporting the PIOB in all that they do, implementing the changes necessary to meet the public interest tests of good regulation.
Let me turn now to one of the key programs that the PIOB oversees: the IFAC Member
Body Compliance Program. This program helps to support the development of the accountancy profession worldwide by encouraging IFAC members and associates to incorporate international standards into national standards, or better still, simply to adopt international standards, and to establish quality assurance and investigation and discipline programs for their individual members, as specified in IFAC’s Statements of Membership
Obligations. As part of the Compliance process, IFAC members and associates were required to complete self-assessments about the work they have done to address membership requirements.
Their responses are being posted on the IFAC website as they are completed and signedoff. I urge you to take a look at this section of the site to gain a better understanding of the significance of this process.
The IFAC Member Body Compliance Program is an essential initiative. It is designed to both strengthen and support the member bodies. It also represents a significant contribution to our knowledge of the state of the profession around the world.
Looking ahead, we must leverage what we have learned. We have collected a very rich set of information. Now we must consider effective ways to communicate this
6

information. Importantly, we should move from data collection to action. We have just begun the process of developing action plans to assist those countries whose standards require further development.
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. IFAC also wishes to consider with the Bank whether, in this specific area, there are ways that we can work even more closely together.
We will certainly wish to align our activity with that of the World Bank and other multilateral credit agencies and aid organizations, seeking to avoid unnecessary duplication of efforts while making the most efficient use of available resources.
Where possible, we will also seek 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 implementation of the action plans, especially in those countries where resources of the member bodies are insufficient.
One of IFAC’s goals is to establish a member body in every country around the globe.
We are led in these activities by the IFAC Developing Nations Committee, which has members from developed and developing countries around the world and on which Tony
7

Hegarty, chief financial management officer and Head of the Financial Management
Sector Board, has also participated.
We also will work with the Regional Organizations and Regional Groupings in order to align the efforts and coordinate the actions to get effective results in this regard.
Last September, IFAC and the World Bank, together with the African Development
Bank, sponsored a learning workshop.
This workshop brought together representatives of government, the private sector and the accountancy profession from nations across Africa, along with representatives of development agencies and the international profession, to discuss the challenges and opportunities facing the accountancy profession in Africa. Significant outcomes of the learning workshop included the establishment of an Africa Focus Group and the signing of the Nairobi Declaration, which calls for greater pan-African integration and cooperation. A similar regional event is being planned for Latin America and the
Caribbean and will be held in Mexico City in June of this year.
These workshops represent just one aspect of IFAC’s efforts to develop the accountancy profession worldwide. IFAC is further supporting the profession by making available a toolkit describing how to organize and maintain an accountancy profession body. The toolkit, currently available in English and Spanish, will be available in French by early
February.
8

Another area in which we should continue to work intensely is on the development of the professional firms, whatever their size may be. Through the Small and Medium Practices
(SMPs) Committee, IFAC strives to meet the needs and serve the interests of professional practices of all sizes. Our goal is to be the vehicle through which SMPs can channel their collaborative efforts, trying to identify and implement solutions that help them grow, develop and deliver quality.
We have taken an active interest in the IASB project on SME accounting and look forward to receiving and commenting on the exposure draft, which is due out very shortly.
It is also important to 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.
Finally, 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.
9

While I believe that IFAC’s vision for the future is clear, and our focus on quality and the public interest is right, I know with certainty that we cannot meet the challenges that lie ahead without the support of stakeholders such as the World Bank. I thank all of those individuals from the World Bank whom I have mentioned throughout the speech for their commitment and contributions to IFAC.
Over the coming years, I envision our relationship as continuing to strengthen as we work together to build a profession that is a model to others for its quality, for its integrity, for its transparency and for its expertise.
Thank your for you attention. I will be happy to answer any questions you may have.
10