A Definition of the Public Interest
Ian Ball, Chief Executive Officer, IFAC
IESBA Meeting
New York, New York
December 12, 2012
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The Term “Public Interest” at IFAC
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Mission
Constitution and Bylaws
Standard-setting Boards’ Terms of Reference
Policy Position Papers
If we are serious – we talk about it often and therefore
should know, and be able to tell people, what it means. We
can’t just refer to it and use it as justification for what we do.
• Also, referenced throughout the accountancy profession,
and beyond…….
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The Term “Public Interest” is Used by Others
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Policy Position Paper 5:
A Definition of the Public Interest
• Issued in June 2012, following an exposure draft in
November 2010
– The final paper was responsive to the feedback received from over
30 respondents
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Developed in response to a 2005 Board decision
Developed in the context of IFAC’s mission
Developed after review of broad range of literature
Able to be applied to IFAC and the accountancy profession
To enable IFAC to assess its actions, decisions, and
policies
• To engender discussion and debate
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IFAC’s Definition of the Public Interest
“The public interest is the net benefits derived for,
and procedural rigor employed on behalf of,
all society in relation to any action, decision or policy.”
It is both:
• An outcome (the net benefits derived for society after
all costs are considered)
and
• A process (the procedures used to consider actions,
decisions, and policies).
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Policy Position Paper 5 has been Referenced
in IFAC Member Body Publications
ICAEW
ACCA
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Policy Position Paper 5 - Features
• The “public” varies depending of the action, decision, or
policy, but is inclusive of:
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Consumers and suppliers
Investors, shareholders, and business-owners
Taxpayers, electorates, and citizens
Future generations
• The may be tension between the two assessments,
which may not always be met to the same degree
– There may be a balance, or trade-off, required between the
two assessments
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Policy Position Paper 5 - Features
• Proportionality
– With respect to the importance of the matter under
consideration
• The private interest and public interest are not
inherently opposite concepts
– The distinction is often seriously misunderstood
– They are not opposing concepts – all things being equal
(especially in a market setting) they should be aligned
– In the absence of other evidence, a profitable private
company would typically be generating public benefit (acting
in the public interest)
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Applying IFAC’s Definition of the Public Interest:
Examples
• When conceptualizing the need for new or revised
professional standards and guidance as well as their
impacts on society
• When formulating IFAC’s strategic planning, policy
positions, and budget considerations
• When developing new relationships with organizations,
and communicating to stakeholders and the public at
large
• Choosing the appropriate issues to advocate for when
speaking out
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How do Others View the Public Interest?
• PIOB – 2011 Annual Report
– “The PIOB believes that accountancy services are in the
public interest if they create net benefit for the public.”
• IASB Conceptual Framework – to which some have
referred IFAC
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The benefit: cost test should be the central objective of
standard setting, not a constraint in the way it is depicted in
the current framework
The manner in which the benefit: cost test is incorporated into
the IASB conceptual framework will create an inappropriate
bias in its standard setting
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The Next Steps for the Policy Position Paper
• All PPPs are “dynamic” documents that are subject to
review and revisions, as thinking on topics evolves, as
circumstances change, and as feedback is received.
• In light of the range of diverse views on the public
interest, and the expectation of considerable comment,
IFAC has undertaken to review and reissue this paper
two years after being issued (i.e., June 2014), and to
consult with those affected by its public interest
activities.
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