Unearthing the Power of Professional Accountancy Organizations (PAOs) - Presentation to the Board of Directors Kuwaiti Association of Accountants and Auditors (KAAA)
Presentation by Gabriella Kusz, IFAC Technical Manager, to the Board of Directors of the Kuwait Association of Accountants and Auditors in February 2012. The presentation explains the connection between strong professional accountancy organizations and a strong, stable economy and IFAC's activities to support organizations and the global economy.
Semelhante a Unearthing the Power of Professional Accountancy Organizations (PAOs) - Presentation to the Board of Directors Kuwaiti Association of Accountants and Auditors (KAAA)
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Unearthing the Power of Professional Accountancy Organizations (PAOs) - Presentation to the Board of Directors Kuwaiti Association of Accountants and Auditors (KAAA)
1. Unearthing the Power of
Professional Accountancy
Organizations (PAOs)
Presentation to the Board of Directors
Kuwaiti Association of Accountants and Auditors
(KAAA)
Kuwait City, Kuwait
February 19,2012
Page 1 | Confidential and Proprietary Information
2. Unearthing the Power of PAOs
Overview
• Introduction to IFAC
• IFAC Structure, Oversight and Consultation
• What are Professional Accountancy Organizations
(PAOs)?
• The Power of PAOs in the Economy
• Challenges to the Power and Impact of PAOs
• IFAC’s Activities to Assist PAOs in Overcoming
Challenges
– IFAC Compliance Program
• IFAC SMO Highlights
– IFAC PAO Development Committee
Page 2 | Confidential and Proprietary Information
3. Unearthing the Power of PAOs
Introduction to IFAC
Page 3 | Confidential and Proprietary Information
4. Unearthing the Power of PAOs
Introduction to IFAC
• Serves the public interest
• Establishes and promotes adherence to high quality
professional standards and furthers their adoption and
implementation of such standards
• Supports the global development of the accountancy
profession, professional accountants in business and
small and medium practices
• Shares in the regulation of the profession
• Speaks out on public interest issues where the
profession’s voice is most relevant
Page 4 | Confidential and Proprietary Information
5. An Overview of IFAC
IFAC Structure, Oversight, and Consultation
KEY
ACCOUNTABILITY
OVERSIGHT
CONSULTATION/ADVICE Monitoring
IFAC
Group
COUNCIL
Public
Audit Nominating Interest
Committee Committee Oversight
Board
IFAC IFAC
Regulatory
BOARD Liaison Group
Planning
and Finance
Committee
Forum Consultative Consultative Consultative Consultative
of Firms Advisory Advisory Advisory Advisory
Group Group Group Group
Professional Professional Small and International International International International
Transnational Accountancy Accountants Medium Compliance Auditing and Accounting Ethics Public Sector
Auditors Organization in Business Practices Advisory Panel Assurance Education Standards Accounting
Committee Development Committee Committee Standards Standards Board for Standards
Committee Board Board Accountants Board
Page 5 | Confidential and Proprietary Information
6. Unearthing the Power of PAOs
What are Professional Accountancy Organizations?
Professional Accountancy Organizations (PAOs) are
membership organizations of professional accountants
which…
• Act in the public interest;
• Develop and produce capable and competent
accountancy professionals;
• Promote strong professional and ethical standards;
• Further the quality of financial reporting through
review, investigation, and discipline of professionals; and
• Act as a resource to government, regulators and other
stakeholders.
Page 6 | Confidential and Proprietary Information
7. Unearthing the Power of PAOs
The Power of PAOs in the Economy
When PAOs function properly to fulfill their role in the
economy, they hold the power to enhance the production of
high quality financial information. This is turn…
• Attracts Foreign Direct Investment (FDI);
• Promotes growth and development of Small and Medium
Enterprises (SMEs) sector;
• Enhances transparency and Accountability in the use of
public funds; and
• Improves the design and delivery of vital public services.
Page 7 | Confidential and Proprietary Information
8. Unearthing the Power of PAOs
Challenges to the Power and Impact of PAOs
1. Lack of
Awareness of
the Value of
Accountancy
Mutually
Reinforcing
Challenges
3. Lack of
2. PAO
Capacity to
Internal
Provide Vital
Weaknesses
Activities
Page 8 | Confidential and Proprietary Information
9. Unearthing the Power of PAOs
IFAC’s Activities to Assist PAOs in Overcoming
Challenges
Compliance PAO
Program Member Development
Body
Development
Page 9 | Confidential and Proprietary Information
10. Unearthing the Power of PAOs
IFAC Member Body Compliance Program
IFAC members are required to participate in the Compliance
Program to demonstrate that they are maintaining their good
standing and addressing the requirements of IFAC
membership.
• Statements of Membership Obligations (SMOs) serve as
the foundation:
– SMO1:Audit Quality Assurance
– SMO2: Accountancy Education, Certification and CPD
– SMO3: International Standards on Auditing (ISA)
– SMO4: Code of Ethics for Professional Accountants
– SMO5: International Public Sector Accounting Standards (IPSAS)
– SMO6: Investigation and Discipline
– SMO7: International Financial Reporting Standards (IFRS)
Page 10 | Confidential and Proprietary Information
11. Unearthing the Power of PAOs
IFAC Member Body Compliance Program
• Description of
Phase 2 • Creation of Action
country Plan developed
legal, regulatory • Self-assessment by PAO to
and standard of PAO address areas of
setting framework compliance with weakness
each of 7 SMOs
Phase 1 Phase 3
Page 11 | Confidential and Proprietary Information
12. Compliance Program: Purpose
• Encourage continuous improvement and development
• Evaluate the extent to which members are meeting the
SMO requirements
• Assist members in adopting and implementing
international standards and best practices
• Demonstrate progress being made
• Promote transparency through publication of responses on
the IFAC website
Page 12 | Confidential and Proprietary Information
13. Unearthing the Power of PAOs
Compliance Program: SMO Highlights
SMO1: Quality Assurance
• A Member PAO should ensure…
– A mandatory QA review program exists – at a minimum for audits of listed
companies
– Establishment & publication of criteria for evaluating other audits of
financial statements
– Engagements meeting criteria are reviewed
• Who is the subject of the audit?
– Firm OR Partner Written QA Corrective
QA Review
Report Procedures
• What is the cycle?
– Cyclical OR Risk Based
• Transparency in scope, design and procedures of QA
Program
Page 13 | Confidential and Proprietary Information
14. Unearthing the Power of PAOs
Compliance Program: SMO Highlights
SMO2: Education, Certification and CPD
Education Experience Education
Entry Examination
(Initial) in Practice (Continuing)
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15. Unearthing ther Power of PAOs
Compliance Program: SMO Highlights
SMO6: Investigation and Discipline
• Member Bodies should include in their constitution and
rules a system for the Investigation and Discipline (I&D) of
misconduct, including breaches of professional standards
and rules by their individual members.
– This system should allow for the imposition of a range of penalties if laws
permit.
– Member Bodies should make members aware of all aspects of this
system.
• Where the Member Body has responsibility for I&D, its
rules should, to the extent that local laws permit, include
all powers necessary to enable authorized personnel to
carry out an effective investigation.
Page 15 | Confidential and Proprietary Information
16. Unearthing the Power of PAOs
Compliance Program: SMO Highlights
SMO6: Investigation and Discipline (Cont’d)
INITIATION OF THE CASE
Complaints Information
INVESTIGATION
DISCIPLINARY PROCEEDINGS
Composed of accountants and non-accountants
SANCTIONS
APPEALS
Page 16 | Confidential and Proprietary Information
17. Unearthing the Power of PAOs
The PAO Development Committee
The overall objective is to enable PAOs to be capable of:
• Producing competent and capable professionals;
• Furthering the adoption and implementation of
international standards;
• Acting as a voice for the profession; and
• Assisting government, regulators and other stakeholders
with sound public policy guidance and advice on
accountancy related topics
Page 17 | Confidential and Proprietary Information
18. Unearthing the Power of PAOs
The PAO Development Committee
Developing the capacity of the accountancy profession
Increasing awareness building and knowledge sharing
around adoption and implementation of international
standards
Engaging and deepening development partnerships with
the international donor community, regional
organizations, and public/private sector stakeholders
Page 18 | Confidential and Proprietary Information
19. Unearthing the Power of PAOs
The PAO Development Committee
Regional Implementation
Support of PAFA launch
ADVANCE Initiative
IO Collaboration Joint PAO workshop with
CAPA in Vietnam
Ambassadors
Key issues discussion at
PAODC meeting
Regional Collaboration
Mentoring
Baltic/CIS States
standard- setter event
CReCER
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20. Unearthing the Power of PAOs
THANK YOU!
For more information please feel free to visit IFAC website at:
www.ifac.org
For any questions, please contact Ms. Gabriella Kusz, Technical Manager for Member Body
Development for Middle East region at gabriellakusz@ifac.org
Page 20 | Confidential and Proprietary Information
Notas do Editor
Global organization for the accountancy professionComprised of 167 Members and Associates in 127 countriesMembers and Associates are Professional Accountancy OrganizationsRepresents 2,5 millions accountants in public practice, business, government, and academia
Going to focus on Compliance Program and PAO Development specifically.
They contribute to the professionProtect the public interest as proponents of good corporate governance and consistent global standardsPromote and develop knowledge, skills and competence through education, certification and CPD programs. Produce capable professionals.Through adoption and implementation of international professional and ethical standards they set the bar for behavior and practice of accountancy professionals, enhancing public trustAssist with sound public policy guidance and advice on accountancy related topics by acting as a center of knowledge and expertiseFurther the quality of financial reporting through review, investigation, and discipline of professionals.
They contribute to the economy (the bigger picture)Attract Foreign Direct Investment (FDI) – The development of capital markets requires credible and reliable financial information to build investor confidence, further sound economic and financial management, and increase the attractiveness of a country’s investment climate, which facilitates FDI and business development. Promote Growth and Development of the SME Sector – According to the Organisation for Economic Cooperation and Development (OECD), small- and medium-sized entities (SMEs) account for over 60% of gross domestic product (GDP) and 70% of total employment in low-income countries. These businesses require high-quality financial information to support business planning, facilitate access to credit, and expand operations; thus, enhancing their ability to thrive and grow. Enhance Transparency and Accountability in theUse of Public Funds – High-quality financial information in the public sector enables assessment of the impact of fiscal and monetary policy decisions; assists external reporting by governments to electorates, taxpayers, and investors; and aids internal management decisions in resources allocation (planning and budgeting), monitoring, and accountability. Improve the Design and Delivery of Vital Public Services – Utilizing the information provided through high-quality financial reporting, policymakers and others in positions of authority can improve the efficiency and effectiveness of government programs, better achieve the objectives of their design, and successfully deliver vital public services to those in need.
Lack of Awareness:There is often a lack of awareness and understanding on the part of the governments and other key stakeholders regarding the role of professional accountants and the positive impacts of a strong PAO. This can hinder the creation of clear legislative frameworks – which support government recognition of PAOs, the legal establishment of a system for educating, certifying, and continuing trainings for competent professionals, and effective independent oversight of the profession.PAO Internal Weaknesses:When there is a lack of awareness of the benefits and value of the accountancy profession, attracting individuals to the profession becomes more difficult. Weak (low) membership reduces an organization’s technical capacity and deiveraity of thought, resulting in a lack of ability to function as a resource for donors, government departments, lawmakers, and stakeholders involved in financial policymaking and regulation. It inhibits strategic planning and governance and can result in an inability to provide educational opportunities, guidance, and assistance to accounting and auditing professionals.Lack of Capacity:Without strong membership and access to adequate technical and financial resources, vital activities such as the translation of international standards and official publications, creation and provision of training and education programs, development of quality assurance programs, and investigation and disciplinary systems becomes difficult – if not impossible for PAOs. This only reinforces the lack of awareness of the value of accountancy and the role of PAOs in the economy.
The Member Body Development team includes seven technical staff who support both the Compliance Program and PAO Development Committee strategy. They hold regional portfolios in Africa, Americas and Caribbean, Asia Australasia-Oceania, Middle East and Europe and Central Asia.Combined, the staff has proficiency in six languages including Arabic, French and Spanish.
Statements of Membership Obligations (SMOs) ?►Clear benchmarks to current and potential IFAC membersOverseen by Compliance Advisory Panel
The program is comprised of three phases and emphasizes compliance AS WELL AS Continuous improvement and development of the PAO in-line with the SMOs.Phase 1 Fact-based questionnaire on the regulatory and standard-setting framework in the member body’s country or jurisdiction Phase 2 Self-assessment of compliance with specific requirements of the SMOs Phase 3 Action plans developed by the member body to address areas identified in the self- assessment
Can be used as a basis for identifying donor collaboration / mentoring opportunities!
a description of the scope and design of QA program and related procedures to be followed by quality assurance review teamsQuality Assurance Review Team Procedure►The member body should require quality assurance review teams to follow procedures that are based on published guidelines.►These procedures should include reviews of engagement working papers and discussions with appropriate personnel.Isn’t Audit Documentation CONFIDENTIAL?As stated in the IESBA Code of Ethics for Professional Accountants or relevant national codes of ethics, the member body should exempt members from professional client confidentiality requirements concerning audit engagement working papers for the purpose.QA ReviewWritten Quality Assurance Review ReportCorrective & Disciplinary Measures
Individuals assisting in the investigation process must be…independent of the subject matter and of the individuals involved in the case.
How does the PAO Development Committee achieve this objective? Through three strategic activity streams:Developing the capacity of the accountancy profession to produce high-quality financial information and sound financial management systems capable of supporting financial stability, economic growth, and social progress. The Committee produces tools and guidance and conducts technical assistance to facilitate capacity development at both the national and regional levels. Increasing awareness building and knowledge sharing around adoption and implementation of international standards. The Committee works to enhance the understanding of the importance that IFAC, PAOs, regional organizations and accountancy groupings, and the donor community play in international development. It also encourages and supports the mentoring of PAOs in developing and emerging economies by regional organizations, accountancy groupings, and more developed bodies. Engage and deepen development partnerships with the international donor community, regional organizations, and public/private sector stakeholders. The Committee shares resources, knowledge, and experience, and deliver guidance, advice, and assistance in an efficient and effective manner.
The Committee’s ongoing activities:Supporting implementation of MOSAICDevelopment and implementation of regional strategies Coordination of activities with ROs/AGsOutreach to support national PAOsInput into Mentoring Program