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What arE YoU Practicing?
3. co nTecTs
Volume 43 Issue 3 JUlY-SEP 2010
The mosT
imporTanT issue
publications committee facing The
profession in
chairman and chief editor
Adnan Zaman, FCA 2009 is
addressing The
members
Abdul Rashid, FCA needs of smes
Abdul Wahid, FCA and smps
Aijaz Ahmed, ACA
Altaf Noor Ali, ACA
Asad Feroze, ACA
Heena Irfan Ahmed, ACA
Jehan Zeb Amin, ACA
M. Amir Afzal Rana, ACA
M. Fahim A. Rauf, FCA
Muhammad Rehan Razzak, ACA
Mutee-ur-Rehman Mirza, FCA
Omer Mustafa Ansari, FCA
Raheel Abbas Rizvi, ACA
16
The council
president
Shaikh Saqib Masood, FCA
By way of
Vice presidents
Hafiz Mohammad Yousaf, FCA puBlic
Zahid Iqbal Bhatti, FCA accounTing
pracTice
members
Abdul Rahim Suriya, FCA
Adnan Zaman, FCA
Ahmad Saeed, FCA
Nazir Ahmad Chaudhri, FCA
Khalid Rahman, FCA
Mohammad Abdullah Yusuf, FCA
Nadeem Yousuf Adil, FCA
Naeem Akhtar Sheikh, FCA
Pervez Muslim, FCA
Rafaqat Ullah Babar, FCA
Rashid Rahman Mir, FCA
Salman Ali Shaikh
Shaikh Saqib Masood, FCA
Sohail Ahmad
Waqar Masood Khan 4 Adnan Ahmad Mufti, FCA
Yacoob Suttar, FCA
Strategic Decisions During Recession 28
secretary M. Amir Afzal Rana, ACA
Shoaib Ahmed, ACA
Something Beyond Financial 32
publication coordinator
Asad Shahzad
Zehra Hassan
Corporate Governance 37
The Pakistan Accountant
July-Sep 2010
Page 1
4. ediTor’s lETTER
Editor’s Letter
whaT are you pracTicing? Evolution and transformation are perhaps the most remarkable
processes that create simultaneously excitement as well as
apprehension. In today’s rapidly changing environment stagnancy is
the first step towards decline, anyone who does not move with the
change gets left behind.
Diversifying and expanding the area of expertise is the
new mantra for the decade, the complete amalgamation
of technology in even mundane practices has increased
consumer’s awareness, with their needs changing and
demanding more, smart providers who are able to
anticipate and match their needs move ahead.
Historically, the SMP-SME relationship is regarded as
being underpinned with the need for SMEs to have
statutory audit and this necessary relationship provided
a foundation for subsequent advice and support. From
the SME relationship, the factors underpinning a strong SMP-SME
relationship include competency, trust and proximity.
However now the equation is changing, with the incessant changing
environment, the role of Accountants has also drastically undergone
transformations, no more are accountants just confined to auditing. With
the needs of the SMEs expanding they expect more from SMPs. SMPs
need to match the growing demand and in order to do so they need to
develop capacity and overcome the challenges lying ahead. There is a
changing regulatory environment; growing competition from new
entrants to the advice marketplace; and the capability of SMPs
themselves to provide specialist advice. Opportunities and challenges
come hand in hand; while the diversification of role of accountants
presents a great opportunity for the SMPs it also brings forth the
challenges of capacity building and threats of competitiveness.
I feel that SMPs need a platform where they can collaborate and learn
together to overcome the competitive challenges ahead. I feel the time
is now when we have to nurture our practice, realizing that the beauty of
a garden lies in the different varieties of flowers and like flowers no two
practices offer the exact same, they each bring a unique and distinctive
color to the canvas of accounting. I feel that the new way forward for
the SMPs particularly for building capacity lies in capitalizing on their
uniqueness while being open to adaption and change.
I feel Wayne Dyer’s “Transformation literally means going beyond your
form.” appropriately shows the way to strive for continuous
improvement, meet the increasing expectations and paves the way to
the road leading to a brighter future.
Adnan Zaman
The Pakistan Accountant
July-Sep 2010
Page 2
5. presidenT’s PAGE
President’s Page
whaT are you Experts and economists unanimously hail assurance services principally but not
the development of small and medium exclusively to clients who are small and
pracTicing? enterprises as a crucial factor in medium entities (SMEs) and other
strengthening Pakistan economy. accountants to the extent that they
According to the Small and Medium support SMEs.
Enterprises Development Authority
(SMEDA), “SMEs constitute nearly 90% The SMP committee formed as a part of
of all the enterprises in Pakistan; employ ICAP’s initiative to provide a platform for
80% of the non-agricultural labor force; SMPs to come together and jointly work
and their share in the annual GDP is towards identifying problems and issues
40%, approximately.” faced by the SMPs. The committee
reviews international and regional best
The recent times have practices for consideration of adoption by
witnessed a gradual the SMPs after affecting suitable changes
change in the mindset with in the context of the business
the role of the Accountants requirements and local environment as
widening considerably, well as the relevance and proportionality
According to a research of professional standards and provides
conducted by the recommendations on the extent of their
International Federation of applicability to SMPs/SMEs.
Accountants (IFAC) a shift
is seen in the needs and A critical factor is effective networking. I
the expectations of Small feel the solution lies in collaborations and
and Medium Enterprises (SMEs) from sharing of resources, SMPs should
Small and Medium (accountancy) collaborate while not compromising their
Practices (SMPs) from being focused individuality and uniqueness. In order to
primarily for audits to a much wider match to the growing needs of SMEs,
continuum of business advisory services. SMPs have to specialize as well as work
on the capacity building to be able to
I feel this expansion in role presents an cater to the increasing competitive
opportunity for SMPs; they must evolve to environment. I must acknowledge the role
match the expectations and meet the of SMP committee which coordinates with
growing needs. The opportunity ICAP for issuance of consultation papers,
presented is huge but so are the initiating debates or discussion on issues
challenges. Information Technology has affecting the SMPs in bridging the gap
drastically changed the environment; I between the SMPs as well as with other
classify Information Technology as entities.
possibly the greatest tool as well as a
challenge for the SMPs. It is imperative In order to strengthen the understanding
that its impact is analyzed and assessed. and application of International
In order to match to the growing Standards, the Institute has embarked
expectations SMPs need to be updated upon an awareness program, focusing on
with the emerging Information Technology the SMPs. The Institute is mindful of the
techniques and adoption in the conduct of problems that might arise in
their professional practice. understanding the implementation of
ISCQ1 and is imparting the required
The definition of Small and Medium training to educate and support the
Practices varies from one jurisdiction to practicing members.
another. There is no precise globally
recognized definition of Small and
Medium Practices, because what is
considered small or medium-sized in one
jurisdiction may be quite larger in another.
However, certain general parameters are
used to help determine what constitutes Shaikh Saqib Masood
an SMP; they provide accounting and
The Pakistan Accountant
July-Sep 2010
Page 3
6. Join THE DISCOURSE
Join thE This issue’s topic is:
Ready to manage the
DiScoUrSE Generation Y?
The Generation Y has arrived and is here to stay. Is
your organization ready to manage the new generation?
“Children and young adults born during the 1980s and
1990s are known as Generation Y. Generation Y
professionals are in their 20s and are just entering the
workforce. With numbers estimated as high as 70
million, Generation Y is the fastest growing segment of
today’s workforce.”
commenTs
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I fee l in the ha t matte ,
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CA (R #
S ana, A
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S harajah rateoffice@s
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sana.c
No question not to welcome Generation Y. They are I am the only one in my organization falling into this
already in mainstream. While being more educated, generation, therefore having none to manage. I think my
intelligent and joining practical life in an advanced high ups know better how to manage me:)-
technological era as compared to two decades back’s
generation, it is sad that a peaceful, high growth oriented Arshad Khan, ACA (R # 6215)
atmosphere essential for opportunities could not be Peshawar
provided to them. Good luck Generation Y. arshad.yousufzai@hotmail.com
Tameez-ul-Haque, FCA (R # 0973) ‘Generation Y has created a need for a cultural overhaul
Karachi for which most organizations, including mine, are yet not
tameezul.haque@adamjeeinsurance.com ready. One reason could be Generation Y being a high-
maintenance generation which requires their managers to
set clear expectations from them, offer flexibility, respect
The Pakistan Accountant
July-Sep 2010
Page 4
7. Join THE DISCOURSE
and communicate with them in their language. However n Development and mentoring: Continue to invest in
this generation, can prove to be most high-performing one personal development and training-explore expanding
if organizations are able to leverage on the information, coaching/mentoring programs to younger workers.
creativity and technological skills which they bring to the Provide variety and fresh challenges - consider
workplace with them’. promoting cycles of experience in mentoring programs
to younger workers.
Zeeshan Khurram, ACA (R # 6056) n Brand your Organization: The Generation Y expects
Dammam, Saudi Arabia more from their employer and is not afraid to ask for
zeeshan.khurram@aqpci.net more!! Articulate your employer brand—communicates
internally and externally what it means to work for your
organization. Have clear goals, statements and be
committed to deliver the promise.
I feel before being able to effectively manage it is
important to understand the people. Naveed Abdul Hameed, ACA (R # 5905)
Karachi
The main difference in Generation Y and previous naveed.a.hameed@pk.pwc.com
generations is their confidence and ambitions. These
Generation Y qualities along with their familiarity with
information technology have resulted in Generation Y
having high expectations of the employers, seeking out A key to managing people is realizing that every
new challenges and not being afraid of questioning generation brings its unique set of values and
authority. expectations to workforce. Organizations need to
understand the expectations of the Generation Y and
A recent study conducted in UK showed the priorities of meet them accordingly.
Generation Y regarding employment, being completely
different from their predecessors. Career development and I feel that following tips can be useful to manage the
learning opportunities topping the list followed by generation Y effectively.
compensation package, the nature of job and job security.
n They need to be treated respectfully.
Career development is the top most priority of Generation n They are goals driven; they need clear goals and
Y, organizations should ensure that all the available career objectives.
paths are understood and are clearly communicated to n They expect and should be awarded with challenging
prospective employees. Further, for learning aspirations of jobs for better performance.
Generation Y to be met the organization should employ n Involvement in decision making enhances their morale
job rotation and formal and informal training techniques. leading to better output.
n Allowing a little fun at the job significantly enhances
Shah Rukh Memon, ACA (R # 5913) their productivity.
Doha, Qatar
shahrukhmemon@hotmail.com Muhammad Abrar, ACA (R # 6126)
Sialkot
abrarmuhammad@hotmail.com
Before Organizations get ready to manage the Generation
Y, they need to understand what they want. Studies show
that the millennials crave International experience, prefer YES……because we have to!
development opportunities to cash bonuses, Experience,
sustainability and career planning is a major factor for Since we are the people who stand ahead of Generation Y
them. According to Peter Sheahan, Generation Y is not in the row of managers, we are responsible to manage not
just about demographics- it’s about mindset! only them but also ourselves. I feel it does not surmount to
be an uphill task for us as Generation Y has already
Some tips to manage millennials could be: adopted most of our thoughts, knowledge and styles, as
n Know what they want: Use market research in order to major psychological theories suggest by now hence there
understand what millennials want and how these is no major chance of difficulties, clashes or hurdles
desires might differ from older workers. emanating from the process of management of
n Motivation: Think creatively when rewarding Generation Y.
millennials, is it time to shift focus from cash bonuses
and company cars to other things? What we need to do is to keep an open mind to their
n Grow Globally: The Generations Y rates international positive thoughts and be ready to understand their psyche
exposure highly and is more technologically inclined, towards development and humanity.
border and boundaries are no limitations. Consider
global working opportunities-how might this Muhammad Rehan, ACA (R # 5547)
enthusiastic generation support your global mobility Khanewal
needs? mdrn@live.com
The Pakistan Accountant
July-Sep 2010
Page 5
8. coVer STORY
The most important issue
facing the profession in
2009 is addressing the
needs of SMEs and
SMPs
(Source: IFAC Global leadership Survey 2008)
Small and medium sized definition for the SMPs also act as an integral
enterprises and practices had not been prescribed. component in SME’s
must be considered as a However IFAC has chosen financing need. The SME
main driver for innovation, to define SMPs as – SMP relationship can be
employment as well as “accounting practices regarded as a necessary
social and local integration whose clients are mostly relationship. SMPs
around the globe. They SMEs, external sources perform a large number of
are playing a vital role in are used to supplement important tasks of SMEs.
the economic activities limited in-house technical Most important among
around the globe and can resources, and contain a them is the financial
Usman Akbar Manda, ACA never be ignored in the limited number of reports or annual reports.
worldwide conferences professional staff. What So they always turn to
and agendas. SMEs are constitutes an SME differs SMPs to produce these
now crucial to most depending on the country.” statements. Also SME-
developed and developing (IFAC 2010) SMP relationship is also
economies. For instance, prominent because of the
in the European Union, SMPs are uniquely meant compliance work being
SMEs contribute to over for helping the SME’s. provided to SMEs by
99% of all enterprises and They help SME’s to SMPs in common
100 million jobs. This perform in a more efficient business world.
represents almost 67.1% and effective way,
of private sector assisting in compliance In the credit crunched
employment. For the with the rules and world, SME’s are playing a
survival of SME’s, SMP’s regulations and business very important role as
run as a blood. A unique support services. They world big giants are in
The Pakistan Accountant
July-Sep 2010
Page 6
9. coVer STORY
doldrums and cannot Bringing improvement and in this credit crunched for ensuring the quality of
employ more labor force. strength in the work and world economy and in work in the SME’s and
Instead big corporations structure of SMP’s shall future business world. They SMP’s sector, there is a
are in the move towards bring the same effect in need to develop more dire need for the
firing and layoff. In this SME’s. SMP’s in today’s effective communication improvement in financial
scenario, SME’s provide a world offer a wide range of networks with clients, reporting. The framework
platform for the provision of services to SME’s. They coworkers, government for reporting on financial
job facility and hence put range from payroll instrumentalities, legal and statements of SME’s need
some healing effect on the processing, forecasts and other professionals. In improvement so that the
injured worldwide projections, litigation taking initiative towards interests of the
economy. In my opinion, support, personal financial advisory role, they need to stakeholders can be
roles and work of SMP’s planning, business involve themselves in protected and present
and SME’s have a direct valuation, mergers and strategic decision making
co-relation between them. acquisitions, financial including proficiency in
In financial terms, we can management, assurance forward thinking and
say that there is a perfect and related services, enhancing the ability
positive co-relation co- reporting, strategic to weigh alternatives.
efficient of 1 between the planning, tax planning, a They also need to
two arms of the economy. few of them to be focus on sharpening
So SMP’s should focus on mentioned. In the recent the analytical skills for
improving the quality of trends of the business analyzing the potential
work and concentrate on world, range and quality of opportunities and
more areas for the advisory advice to be provided to projects and
to SME’s. This is quite SMEs by SMPs has been continually striving for
evident from a survey growing at an exponential the devises to bring
conducted in different rate. This is due to the improvement in both
continents. information needs of methods and
owner-managers of SMEs effectiveness. This
According to a survey who are in a need to fulfill can be very effective
conducted in UK, Australia their regulatory obligations for the SMPs are this
and Canada, SME’s think and day-to-day and shall strengthen to
that SMP’s provide them strategic challenges. absorb the shocks of
the in the following ways: economic downfalls.
Before discussing on how At the sametime
l practitioners most SMEs redefine themselves managing, motivating
popular source of in this credit crunched and inspiring their own
business advice for world, let’s have a look on professional
SMEs; what is the main Motivation personnel so that
l practitioners most and Reason for SMEs’ Use quality and competent
trusted source of of Accountants or SMPs as workforce is available
business advice for Business Advisers. Broadly all the time. SMPs
SMEs; and there are three main issues also need to develop
l practitioners most because of which SMES strength to
highly rated source of rely on SMPs as business acknowledging and
business advice for advisors; recognizing people for
SMEs their contributions and
l Competency performance within
In this perspective, SMP’s l Trust their working
have to act as a very l Proximity and environment without
responsible segment of the responsiveness considering the
economy and in helping personal interests.
the medium sized SMPs should consider This factor is often
enterprises. They have to them and keep them as a lacked very much in
improve and broaden the focal point before taking most of the corporate
extent of their services for any change or redefining world and especially
their own safety and for themselves. in Pakistan.
protecting the SME’s which
rely heavily on them. They There are some very Now referring to some
are a key business important roles which specific issues for the
advisors to the SME’s. SMEs are required to play initiatives for SMPs,
The Pakistan Accountant
July-Sep 2010
Page 7
10. coVer STORY
information in a way that is SME’s. In addition to this, lending activity to the accurate and reliable
useful to the decision audit quality control SME’s. provision of information,
makers. Now SME’s need standards also need to be Internet centers for SMP’s
a lot of attention by the implemented in the SME’s. l Obtaining financial and SME’s should be
regulatory bodies for the Again this objective can be statements of the small developed. Centers for
reporting standards setting achieved if SMP’s step clients, information sharing can be
bodies. In this regards, forward and take the l Time taken in gathering developed and
SMP’s can take an initiatives. They can also information to make the membership
initiative to identify the use accounting information decision for lending facility created in
loopholes and defects in to achieve sound financial l Timeliness of the order to get the
the current prevailing management. information provided funds for the
framework. They can take maintenance of
all the stakeholders in this Another important role, the Source: Micro-Entity Financial
ambit and identify the accountants are supposed Reporting: Some Empirical the center. Any
Evidence on the Perspective of
problematic area and share to play is the assistance of Preparers and Users (IFAC SMP information which
them with the standard SME’s in obtaining bank Committee Information Paper, Oct. is to be shared in
setting bodies. One of the finance and other financing 2007, draft) the center should
problems due to ineffective facilities. As discussed be accurate. A
financial reporting is the earlier, SME’s face For obtaining financial checklist for the reliable
SME’s also face problem in problems while obtaining statements and information should be
getting financing activity loan or other financing from consistency in the fulfilled by the data before it
due to this which is the financial institutions. presentation, this can be can be entered in the
discussed in detail in the lending organizations are best overcome by using internet center for sharing.
following paragraphs. more inclined for lending computerized packages. As a more proactive
Improvements to financial facilities towards large Today, IT has become approach, a dedicated
reporting can increase the corporations, SME’s face integral component in search engines can be
confidence of investors and difficulties in obtaining financial reporting and developed for SME’s and
users of these reports can them. This bridge can be consistency cannot be SMP’s. This shall bring in
give an impetus to the best covered with the help brought without using the the quality of work not only
economy which is badly of SME’s. The main clutches of IT and its for SMP’s but in the work of
hurt by the blow of global problem that is faced in this related facilities. SME’s and other
economic crisis and credit respect is the non Computerized packages stakeholders as well.
crunch. availability of information to can be helpful in order to
the lender or in the required ensure that the consistency In the era of globalization,
Reliance on the financial format. SMP’s can help is achieved in the the sharing of knowledge
statements can be SME’s to develop a presentation of information. and experience across the
improved by applying ISA’s framework in consultation world is very important for
on audits of SME’s. Till with the lenders and SME’s In order to counter the the improvement in quality
now, no auditing standards for provision of information problem of time lag in of work and provision of
for the small and medium and subsequent help in obtaining information for good service in every nook
sized enterprises have decision making for the financial institutions, and corner of the
been developed. This is a extending financing facility facilities need to be continents. The
big vacuum for the SMP’s to the SME’s by financial developed for the sharing improvement in the quality
to step forward and perform institutions. According to a of knowledge. Again to of work by SMP’s can be
their role. SMP’s should study conducted, financial achieve this objective, brought about by sharing of
endeavour to develop institutions face the reliance is on the IT knowledge and experience
auditing standards for following problems in facilities and internet. For on a platform. This can be
The Pakistan Accountant
July-Sep 2010
Page 8
11. coVer STORY
a very effective quality demand for advice. This in some relaxation in and at the same time be
initiative by the SME’s. It is turn brings new challenges some corporations for profitable. This can be
imperative to get in touch for SMPs. The major the statutory financial done by introducing tax
with the fellow accountants challenges are: audits but a rise in incentives. Along with that
around the world. Seminars compliance linked to on the recommendations of
should be conducted for l consolidation within the environment, health SMP’s, develop national
SMP’s for achieving this. accountancy industry: and safety and and international standards
The geographical scope of Big giant firms are employment. This that are easy for
service can be extended always ready and in a reduces the market for application and tailored
beyond the boundries of stronger position to the SMEs. according to the
the home country to other acquire small requirements of SME’s and
countries as well. practitioners. They l reluctance of some stakeholders. SMPs also
Accounting, auditing and often present golden SMPs: Some cannot work in an effective
consulting services can be offer to the SMPs, customers are not able manner and provide quality
provided through especially when to the pay the required work until and unless
networking at far furlong entering in the foreign fee as desired by the quality labor force is
distances. This shall help market to get local SME. So there is available in the market. For
SME’s as well for the representative and market but still no the supply of quality
growing globalization market as well. So with service is provided. advisors and accountants,
needs in the upcoming a growth merger and Also with some SMEs, institutes and professional
future business world. acquisition there is a their heterogeneity of body too shall have to play
decline in sole need makes SMPs their very sensitive role.
One fact to be practitioners. reluctant to provide the Ensuring that the
worth mentioned services. professional and members
here is that SME l rise in the provision of of their respective bodies
market is very services by larger Such changes for the remain competitive and
dynamic. The practitioners: large demand of services by more supply is entered in
The market conditions and regulatory environment within which SMEs
operates is constantly changing. With this background, it is imperative
for the advisors of SMEs to respond to the market demands and
requirements. If SMPs do not cope with the changes and devise
strategies for them, it can pose a serious threat to their position as key
providers of advice and support to SMEs.
practitioners are in a SMPs and their clients’ the market after ensuring
market conditions better position to environment have that they are competitive
and regulatory capture market. significant implications for and able to provide good
environment Although their rates are SMPs. If SMPs do not cope quality work.
within which comparatively high but with the changes and
SMEs operates is with the recent financial devise strategies for them,
constantly changing. With crises and reduction in it can pose a serious threat
this background, it is the clientage, large to their position as key The author is
imperative for the advisors corporations have providers of advice and Senior Business Consultant
of SMEs to respond to the reduced their fees and support to SMEs. in IBM Italia S.p.a
market demands and hence grabbing the Global Business Services
requirements. Among them market of SMEs. Neverthless, national and Department.
the most important is the international institutions
requirement of statutory l shift in the regulatory also have to play a very
audit which is increasing environment: As important part to achieve
and also bringing changes discussed earlier, all the above aims. They
within it in almost every regulatory environment shall have to provide
country. But other factors has been constantly practical support to SMP’s
are also affecting the changing. Now there is to provide high quality work
The Pakistan Accountant
July-Sep 2010
Page 9
13. coVer STORY
thE LaW oF thE corPoratE JUngLE –
SUrViV oF thE
aL
FittESt Saira Shamsie, ACA
As the socio economic dynamics are human element helps in reducing treating the other SMPs as a support
changing with shrinking boundaries, turnover and ensures stability. In fact group rather than a business rival.
ever changing technology, this is an attraction for people joining This change in attitude can help in
uncertainty, survival is only for the any organisation in the current broadening resources and
fittest. scenario of instability. harnessing opportunities. With the
internet age sharing intellectual data
As the world stage is set for change The million dollar question is how do latest professional developments and
this gives empowerment to the SMPs with limited resources and guidelines is possible more than ever
middle tier the Small and Medium financial constraints manage to before. A strong intellectual data
Practices (SMPs) and Small and provide the enabling environment base of case studies, guides,
Medium Entities (SMEs). The game is needed to sharpen the softer skills of illustrative and presentations can help
of making the right choices, to make their staff to have the cutting edge. in training the SMP staff to bring
efficient use of resources, be tech them at par to the big four
savvy, use net working and last but The only answer is to build an professional standards.
not least be open to change. environment of trust and mutual
sharing. It is essential to use net Further, round tables and experience
To evolve and to gain market share working and pooling of resources. sharing sessions can be invaluable in
the importance of a proactive human SMPs need to foster change by sustaining development. The Institute
resource equipped to of Chartered
face the challenge Accountants of
cannot be over Pakistan (ICAP) has
emphasized. The Sidat was been playing a key
Ebrahim Yacoob
SMPs need to build ing Session with role in this front by
Ex perience Shar
ne 30, 2009
on their cash knowledge of arranging workshops
held on Ju perience and
generating asset - ed his vast ex He said the to
p on varied subjects and
Mr. Sidat shar his audience.
their staff by providing g issues with eir bu siness also inviting seasoned
the accountin ere growing th
career growth, MPs faced w logy. members from the
training, mentoring challenges S d keeping current techno profession to
ity an
and the spirit and and productiv share their rich
ider the
need to cons
environment for
He emphas ised that firms best the firm experience in practice.
who want the
tackling challenges. of their clients that the need
for
expectations so recognize
Providing an enabling rm s must al rvices is There is need for
has to offer. Fi lue added se
environment with
client specia lization and va networking among
ample training firms as more firms
opportunities and the growing. globally are becoming
The Pakistan Accountant
July-Sep 2010
Page 11
14. coVer STORY
members of professional networks to IFAC BOARD APPROVES Small First” approach to tackling
serve the specialized needs of RECOMMENDATIONS TO ASSIST complexity.
clients. SMPS
The recommendations can be
To give the competitive edge the The IFAC has approved a set of categorized into the following areas:
International Federation of recommendations designed to
Accountants (IFAC) has been expand support to member bodies in n Increase the visibility, voice, and
providing full support to the SMPs by their work to assist SMPs. The profile of SMPs - for example, by
developing material especially for recommendations are intended to communicating and advocating
their needs. Some of the latest aids give SMPs the additional practical the importance of the SME sector
are Practice Management Guide, QC support needed to provide high- and the role of SMPs in
Guide, ISA Guide to name a few. quality professional services to their supporting this sector;
Further, for informal interaction SMP main clients: small- and medium- n Expand the monitoring of global
Committee twitter has also been sized entities (SMEs). IFAC considers regulatory reform to ensure its
launched. the health of the SME sector, which suitability for SMEs and SMPs;
accounts for the majority of private n Develop guidance, resources, and
sector employment and gross tools-in collaboration with member
domestic product (GDP) worldwide, to bodies - that help promote and
be crucial to global economic build the capacity of SMPs to
growth and financial stability, as well deliver high-quality accounting,
as the public interest. Through these assurance, and business advisory
recommendations, IFAC also seeks services; and,
to enhance SMP participation in n Enhance the extent and
The SMP Committee is piloting Twit- international standard-setting and effectiveness of participation of
ter as a vehicle for communicating regulatory and policy development. SMPs in the development of
and engaging with SMPs, member IFAC’s independent standard-setting IFAC’s standards through
bodies and others. The SMP Commit- boards and other groups will be increased SMP representation on
tee Twitter will keep users up-to-date encouraged to further embed SMP certain independent standard-
with global developments in the and SME considerations into their setting boards and other activities
SMP/SME sector. Please visit work programs - for example, through where SMP contributions are
http://twitter.com/IFAC_SMP increased involvement of SMPs in essential.
projects and by adopting a “Think
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The Pakistan Accountant
July-Sep 2010
Page 12
15. coVer STORY
SMAll AND MEDIUM SIZED reduce the reporting burden for SMEs
ENTITIES (SMES) revisions to the IFRS will be limited to
once every three years.
In Pakistan the SMEs make up a
major portion of the documented In particular, the IFRS for SMEs:
Comparison to full IFRS:
economy representing the private
sector. It was generally felt that in the It covers most of the full IFRS
n provide improved comparability requirements, but includes
case of small and medium-sized for users of accounts relaxations for SMEs:
entities, the cost of compliance with
complete set of IAS as notified by the n enhance the overall confidence in The following topics have been
Securities and Exchange the accounts of SMEs, and excluded:
Commission of Pakistan (SECP) was
considerably more than the benefits n reduce the significant costs n earnings per share
accruing from the use of such involved of maintaining standards n interim financial reporting
standards. In order to address this on a national basis. n segment reporting
issue, the Institute (ICAP) developed n special accounting for
the accounting framework that could The IFRS for SMEs has to date been assets held for sale
be used for the preparation of the adopted by over 60 jurisdictions
general purpose financial statements The following options have
worldwide. been disallowed:
by the Small and Medium-Sized
entities. The decision of which entities these n financial instrument
standards may apply to has, however, options, including
Although, the International been left to the individual jurisdictions available‐for‐sale,
Accounting Standards Board (IASB) discretion. held‐to‐maturity and fair
was working on a project to develop value options
IFRS for Small and Medium-sized Currently the Institute is in the n the revaluation model for
Entities, it was expected that it may process of adoption of IFRS for SMEs property, plant and
take a few years for finalizing this equipment, and for
for Medium Sized entities (excluding
standard. To fill the gap during the intangible assets
small size entities for which
transitory period the Institute had n proportionate consolidation
compliance to these standards is for investments in
taken the initiative to formulate the considered not practicable). jointly‐controlled entities
Standards for Accounting and
n for investment property,
Financial Reporting for Small and With the IFRS for SMEs the SMEs measurement is driven by
Medium-sized Entities. On the have a tool for greater transparency circumstances rather than
recommendation of the ICAP the and comparability of financial allowing an accounting
SECP vide SRO No. 860(I)/2007 statements in the global market. policy choice
dated August 21, 2007 had notified Hence giving an opportunity to n between the cost and fair
the Accounting and Financial expand and reach out to markets value models
Reporting Standards for MSEs and beyond the geographical borders. n Various options for
SSEs issued by ICAP under Section government grants.
234(3) of the Companies Ordinance,
1984. The following areas have been
The author is simplified:
Manager Technical Services
IFRS FOR SMES at ICAP, Karachi. n Financial instruments
The IASB issued on July 9, 2009 an measurement
IFRS designed for use by SMEs, n Goodwill amortization
which are estimated to represent n Borrowing cost expensed
more than 95 per cent of all n Investments in associates
and Jvs can be measured
companies. The standard was a
at cost
result of a five-year development
n PPE useful life review
process with extensive consultation of
n Defined benefit plans
SMEs worldwide. measurement
n Simplified tax approach
The IFRS for SMEs is a self- n No separate held for sale
contained standard of about 230 assets
pages tailored for the needs and n Biological assets FV not
capabilities of smaller businesses. necessary
Many of the principles in full IFRSs for n Equity settled share based
recognising and measuring assets, payment measurement
liabilities, income and expenses have
been simplified, topics not relevant to
SMEs have been omitted, and the
number of required disclosures has
been significantly reduced. To further
The Pakistan Accountant
July-Sep 2010
Page 13
16. coVer STORY
By Way of Public
accounting
Prelude:
Practice took the idea of being a fish in a tiny pound of my
own, and applied for a practicing certificate. The
The coming year 2011 will mark the Golden Jubilee idea flourished when a dear friend in practice
of this august Institute. On a humble note, it will also encouraged me to get rolling and I seized the
mark completion of my first decade in public moment.
accounting practice. Here is what this journey has
been like…..... Verily, the first sacrifice my new venture required
was the prospect of giving up whatever pittance I
How it started? was assured towards the end of the month, as a
salaried employee throughout my professional
It must be a proverbial sunny day of my life when I
career.
Altaf Noor Ali, ACA
The Pakistan Accountant
July-Sep 2010
Page 14
17. coVer STORY
The ideal way to end up as for a fresh qualified person to set up I would find it difficult to have a go.
somebody notable in a public practice an office without any seed money on
goes through audit training in a his own and ofcourse without any On the way there was some comic
relatively larger audit firm, and option of external finance? relief as well. It was in the form of my
ultimately gaining partnership, after interaction with symbolic cool and
qualifying and serving in managerial A related step was to set aside colourful professional clowns, two of
capacity for some time. My case was enough to get the practice going to which I describe below. I believe
different. Yes, my audit training was settle financial commitments in time, every practitioner gets to meet them.
from one such firm, but I was whether of paying monthly rent or How they are responded depends on
tempted by the glamour of the other expenses for maintaining the the individual.
‘industry’, and eight years later the office. It looked as if I complete the
conventional route was not there for full cycle from being a month end One day, a gentleman walked in my
me. payee to the payer. From now office and asked me if I would be
onwards, on every first of the month interested in doing an audit of his
With practicing certificate in my hand instead of myself receiving a salary, I small business. He wanted it done to
a month later, I felt privileged and would be paying rent and the rest of obtain visa for the U.S. As the
happy. That day a new firm bearing the stuff. discussion progressed, I came to
my name came into being. know that he was in import export
Paraphernalia and financing: business of which he had not
The Silent Vow: maintained any books. He went on to
As the firm started rolling, I add what he wanted me to ‘show’ in
I remember holding the practicing appreciated how important it is to his financial statements.
certificate with reverence. When my have some kind of financial
father (a physician) saw it, he asked arrangement available to achieve the The next one was a semi-qualified
when I will be taking the oath. He expansion but who’s there to finance accountant who walked into my office.
shared my faint disappointment when it? This is true for a green field office His purpose of meeting me was to
conveyed that the chartered like my own or an established firm. I find out if I would be interested in
accountants do not take a ceremonial have not heard of any bank providing ‘thapafy’ (certify without verification)
oath like physicians, though both finance, possibly because a statements prepared by him for
professions hold the element of practitioner like myself would not applicants of consumer loans from
public interest supreme. have a collateral to offer. That may be commercial banks. Easy money for
one reason why the growth of most one signature but guess not my type
My first reading was the bulky code professional firms is so retarded. The of work!
of ethics for the practitioners. I fact is any start-up firms goes through
reflected on its application and a painful period during the initial In the times ahead, some good
silently vowed never to let my years. Guess too much to expect our opportunities also came by going
commercial interests come above the Institute to have some arrangements through press advertisements. Good
professional ones. I felt a worthy in place to ease the process? to see that reading newspaper
burden of trust and a collective became more interesting. It became
responsibility placed on my shoulders Not to be deterred, my first act in a source for searching organizations
in this new role, something I never office was to place a small portrait of searching for auditors. For example, I
felt all the while I was serving as an a young and handsome Mr. was keen about developing audit
employee. Mohammad Ali Jinnah, with brilliance expertise in educational institutions
and inspiration radiating from it, on from schools to university, compatible
Energising the firm: my desk. I have been a great admirer with my appointment in a panel of
of his character and ability…wishing monitoring consultants by the Institute
My first step towards my practice was to emulate it in my own humble way. for inspecting and reporting on
to secure suitable rented premises.
selected academic and financial
Fortunately, the search came to a In action: aspects of private education
fruitful end. I got a fine office at
institutions registered for tutoring
reasonable terms from an I remember my first audit job well. It
students of first four modules.
acquaintance. I wish I had the came as an audit of an employee
financial prudence of saving enough provident fund scheme of a non-
Even today, the newspapers continue
in my earlier career to have bought banking financial institution. The next
to be a valuable source. However, as
the premises and save the rent. one was something similar from a
software company. These kinds of a practitioner I found negotiating a fair
The process of setting up an office audits became my principal expertise audit fee to be a major hurdle in most
invariably involves higher funds than in years ahead. The issue was that such cases. This may be so because
one would estimate; items required to these audits are annual events most clients do not see an audit as a
make the office functional keep on lasting for less than a month. What value adding business activity, and in
adding up, so does the cost. From should I be doing in the meanwhile? my opinion rightly so because an
office fittings, furniture and computer audit is primarily a compliance
to electric kettle all is necessary. I I started actively looking for more activity. Our only contribution as
had to draw upon my savings to get it opportunities as external auditor. I auditors to the financial statements
done but imagine what it must be like was aware that without quality ratings appears to be a
The Pakistan Accountant
July-Sep 2010
Page 15
18. coVer STORY
one-page standard audit report, which match those paid to an individual. The last audit when you start the audit for
in principle is also correct. The emoluments of a ceo exceed those of the current year. Similar sob stories
behind-the-scene endless hours of an auditor, without any exception, in from my network and one wonders if
the auditor that goes into bringing the all cases I studied. The board of payment of audit fee is a priority at all
rag-tag financial statements handed directors appear to be more generous for the client.
over initially to bring it to the point than the shareholders who appoint
where that to him and one-page- auditors in the general meetings. With time as the most precious
standard-report appears respectable irreplaceable commodity a
largely remains unacknowledged. Graceful reputable firms, with global professional has, there is no time to
affiliations, who are in best position to waste on following up clients to pay
The issue of audit fee and of its not command audit fee of their liking, if their dues. I decided to get paid in
being paid: they find themselves often in such a advance. Some of my colleagues
position, what would be the level of argued with me on charging fee in
With only one in five chartered audit fee for the rest of us? In short, advance, even going on to suggest
accountants in public practice and the minimum hourly rates, provided in that it is not permitted, but failed to
they being only ones providing audit ATR-14, apply to the listed show me where it says so. Instead,
service, the context is right for
booming public practices. In addition
there is ATR-14 that prescribes the
minimum hourly rate for computing
audit fee for accepting audits of
companies only. However, the way
the profession has evolved over last
fifty less one year, its caretakers
clearly failed to capitalize on its
strengths. Many questions have
remained unattended. For example,
what about the audit fee of the
entities other than companies? These
concerns affect small and medium
size and it practices most and have
only cumulated over a period of time,
resulting in unbelievably low audit
fee.
The severity of how low the audit fees
are can be gained from studying the
giants of the profession - from those
who are in the best position to
command a fair audit fee. let us do
so by comparing the emoluments of companies only and even there it is as a counter-attack they would ask
an external auditor and a chief not applied in majority of cases. I am me to show them where it is permitted
executive officer of a listed company yet to hear any professional firm ever to charge audit fee in advance, or
and see who’s getting a better deal. being reprimanded on this count to even half of it. The fact is that our
convince me that the Institute while technical literature is completely silent
Essentially we are profiling a awarding quality ratings considers if on the issue.
professional firm, maintaining the audit fee is commensurate with
international affiliation and technical the number of hours on-the-job. Beyond audits:
human resource base, giving an Undercutting audit fee has become a
independent opinion about the favourite pass time in which the Apart from audit, I did interesting due
financial statements of a listed professional firms appear to be diligence assignments for acquirers.
company and an individual who is the contributing or is it an indication that One such assignment was on behalf
highest executive officer of a listed they are finding it increasingly difficult of a freight forwarding company for
company. As to responsibilities, the to reach a break-even point. equity injection in a trucking venture
auditor is bound by a code of conduct with another company. It turned out
and follows certain technical Add to the issue of low level of fee the that major recasting and reformatting
standards in giving his audit opinion. issue of not being paid for the of the key financial information was
On the other hand, ever heard about services rendered in a reasonable required and about 50% more
a code of conduct applying to the time. Clients somehow tend to go resources, for validating agreed-upon
ceos in general or any ceo ever short on memory and priority about parameters. The Hobson’s choice
being held responsible for whether the audit fee is paid, once was in doing a mediocre job and
professional negligence? Given this, the audit report is signed. Infact, one attaining the standard I had in mind
the sad fact is that the emoluments colleague shared that his clients are when accepting it. I concluded the
paid to the audit firm do not even so spoilt that they pay the fee for the assignment with a financial loss but
The Pakistan Accountant
July-Sep 2010
Page 16
19. coVer STORY
with a professional consolation. research for individual clients. My first with latest technical developments in
break through came from a accounting and auditing, specially as
At this point my clients included discussion with a former colleague the practitioner ages. That the
businesses where owners appointed who virtually became a victim of number of listed companies being
me to act as a consultant and internal financial scam involving placing an audited by sole practitioners has
auditors. Sometimes, I was applying amount with an individual for a high gone down is cited as evidence.
my knowledge to present the most return. He was lucky to escape it and There is a limited amount of truth in it
pressing business issues to the made it a point never to trust as well but you cannot ignore the
owner independently, or analyzing individuals and was looking for some character of auditor out of this
area sales receivables, or assistance in setting up an picture. Enron was not audited by a
documenting year-end closing of the investment account with a broker, sole practitioner.
accounts. advice on acquiring investments, and
doing the keeping book-keeping. As a practicing member, it is also
Meanwhile, extra effort in developing important to take charge of your own
good rapport with fellow professionals We got the ball rolling by setting up professional development. There is a
started paying off. I collaborated with an account with a stock broker of noticeable improvement in the
stellar repute. Meanwhile, we technical literature coming out from
defined his risk profile, the international standard-setters.
The practice of auditing has become expected returns and However, the Continuing Professional
sophisticated over last many years. investment strategy. We Development program of the Institute
agreed upon certain has not shown much improvement in
Regulators have started believing
fundamentals, the foremost terms of relevance, contents, delivery
that most sole practitioners find it being that we will not be and evaluation of participants. A clear
increasingly difficult to be updated trading securities in short- exception to this general trend was a
with latest technical developments in term. We will build his CPD program in which Mr. Ibrahim
investment portfolio on a long- Sidat, FCA was invited to share his
accounting and auditing, specially as term basis, buying experiences as a practitioner. I wish
the practitioner ages. That the pre-determined equities at a such “tea sessions” can be a regular
number of listed companies being reasonable cost with the monthly feature to groom
objective of enjoying a steady practitioners.
audited by sole practitioners has return with protection of
gone down is cited as evidence. There capital as objective. The web offers most fantastic of
is a limited amount of truth in it as opportunities to learn in your own
Another avenue that time. In my case, I find myself
well but you cannot ignore the
somehow shaped during frequently visiting and commenting
character of auditor out of this these years was imparting on the exposure drafts of the
picture. Enron was not audited by a training. It started with a International Accounting Standards
sole practitioner. session on ‘international Boards (www.ifrs.org) and
auditing framework’ for junior International Auditing and Assurance
joint directors at the State Standards Board (www.iaasb.org).
other firm of chartered accountants Bank of Pakistan at the National
on management consultancy Institute of Banking and Finance Meanwhile, my quest for fresh
assignments, which kept my precious (NIBAF). I found myself designing learning took me to a post-graduated
financial analysis and reporting skills courses for NIBAF in corporate diploma in Islamic Banking and
crisp and relevant. governance, internal auditing, Insurance, clear the exams of
international accounting, licensed International Financial
One such assignment was to monitor consolidation, corporate valuation etc. Analyst, US and go for a law
and report to a banking syndicate on This stream further developed when I graduation. I served uninterrupted as
the cashflows of corporate entity on did a two day work shop for internal a humble worker in some committees
monthly basis that had defaulted on a auditors of commercial banks as an of the Institute and also contributed a
huge facility. The challenging part open-enrollment course. It is hard few articles for this magazine as well.
was to wade our way through a work but much fun conducting an
plethora of information, validating and activity as a facilitator than a Conclusion:
presenting it in a manner that quickly participant and gaining CPD hours.
informs the syndicate about the story Since then the training has been a looking back the past decade, being
behind the numbers. Within six favourite activity. in practice gave me a new dimension
months of this assignment the debt to look at life. Most experiences
was renegotiated and the syndicate Professional Development: bought me immense satisfaction as a
was able to claim most of the struck practitioner and an individual.
amount. The practice of auditing has become looking forward, I see a realistic
sophisticated over last many years. potential for the public practices all
Sometime during this exciting period, Regulators have started believing that over Pakistan to grow well in the
I started exploring the area of most sole practitioners find it coming decade.
investment book-keeping and increasingly difficult to be updated
The Pakistan Accountant
July-Sep 2010
Page 17
20. coVer STORY
The evoltion of smps
International Federation of Accountant’s President Robert l Bunting says
“SMPs Should Evolve to Satisfy
SMEs’ growing needs.”
Small- and medium-sized practices (SMPs) today can no empathise with their clients’ resource constraints. This
longer rely strictly on compliance work to pay the bills. The contrasts with very large practices where the focus is on
reason why is simple: SMEs (small- and medium-sized large companies and SME clients may have to deal with
enterprises) – the traditional client of the SMP – several departments.
increasingly need a broad range of competencies beyond
the core skill set of the small practice. At the same time, Building Trust
the threshold for mandatory statutory audits has risen in But the assumption that SMEs nearly always choose an
some countries and increases are under consideration in SMP is not correct. A significant proportion of the clients of
many others. A fast-changing and complex regulatory large accounting practices – the Big Four and second-tier
environment means that SMEs want their SMP to provide practices in most countries – are SMEs. These are more
proactive business advisory services. SMEs need advice likely to have the resources and the benefits of economies
that will help them generate business plans and financial of scale to offer services and products to meet their
forecasts, identify and manage risk, define and implement clients’ accounting and other specialised support needs; in
IT systems, and value the business. SMPs must evolve to fact, they often position themselves as ‘professional
meet these growing needs or face dwindling clients and services supermarkets’. Many SMPs actually use larger
revenues. A new study by the International Federation of firms to provide limited speciality services to their SME
Accountants (IFAC) makes clear that smaller accountancy clients or as a technical backstop for their own client
practices need to address their skills base, their working service work. While compliance work will remain hugely
methods and their referral models if they are to meet the important for SMPs – accounting services and tax are
evolving needs of the SMEs that are their lifeblood. The core services at all levels in public practice – technical
study – The Role of Small and Medium Practices in competency and timely delivery in compliance work build
Providing Business Support to Small- and Medium-sized trust and usually lead to requests for non-compliance
Enterprises, written by professors Robert Blackburn and advice and support. This is a time-proven formula driven
Robin Jarvis – points out that accountants are still SMEs’ in part by the nature of most small business owner-
most frequently used source of advice. According to a managers, many of whom are determined to make all their
study last year by the UK’s Open University, trade own decisions and avoid advertising any managerial
connections, the media, family and friends are all weakness. In this kind of ‘fortress enterprise’ culture, many
important, but none ranks as highly as the accountant. SMEs do not request advisory services until the expert
SMPs are usually highly experienced in dealing with has already provided a specific demonstration of their
SMEs and, as small enterprises themselves, can competency.
The Pakistan Accountant
July-Sep 2010
Page 18
21. coVer STORY
Becoming Knowledge Professionals provision of compliance services wins them ‘competence’
Business consulting services represent a crucial growth trust.
area for SMPs. As mentioned at the start, the raising of
the statutory audit threshold has diminished a key Responsiveness/ proximity: SMEs rate SMPs’
revenue stream for many SMPs and the market is responsiveness to their demands so highly that it can be
increasingly competitive. As a result, if they are to thrive regarded as more important than a qualification or
rather than merely survive, SMPs must diversify and competency. The geographical proximity of SMPs to their
focus on other advice requirements for SMEs (or provide SME clients is also important. Many owner-managers
audit services to larger companies). They must develop prefer face-to-face meetings with their advisers, and value
their skills base beyond bookkeeping, tax preparation and ease of access.
audit. In short, they must move from being accounting
technicians to knowledge professionals. So how can Robert l Bunting
SMPs overcome the unavoidable resource constraints in- became
house and provide a range of services to their clients? president of the
The most common model is to expand the technical and International
soft skills of existing personnel. Some accountants can Federation of
make the transition from ‘accounting expert’ to Accountants
management adviser through experience and self (IFAC) in
development. Others may need training or coaching to November 2008.
grasp the necessary flexibility and an understanding of the He is a partner at
context and cultural environment of the SME. For Moss Adams
example, accountants might need to hone their where he served
interpersonal skills or make time to discuss a client’s as chairman and
succession planning (or other business advisory needs). chief executive
Another common model is to focus on a specific industry officer from 1982
sector or speciality linked, for example, to the music to 2004. Moss
industry or environmental legislation. This model usually Adams is a
works best in large cities or where a particular industry is member of
highly concentrated. But there have been successful Praxity (formerly
cases where SMPs are willing to travel further to serve Moores Rowland
their clients. A third model, which can be a standalone International)
strategy or one that complements the first two, involves where Bunting
the SMP participating in a high-quality referral network. served as
Before using one, SMP owners should analyse the chairman from
different types of networks and carefully consider how 1998 to 2004. From 2004 to 2005, Bunting was chairman
they will monitor service quality and timelines for the of the Board of Directors of the American Institute of
clients they refer. But referral networks offer SMPs many Certified Public Accountants (AICPA). Go to
potential advantages: they are an effective way to satisfy http://ifac.org/SMP for more about the SMP Committee.
the increasing breadth of demands from SME clients.
They also offer the opportunity to gain clients through The Role of Small and Medium Practices in Providing
referrals from other network members or to win new ones Business Support to Small and Medium-sized Enterprises
due to their more extensive service capabilities. – by ACCA’s head of small business Professor Robin
Jarvis and Professor Robert Blackburn of Kingston
Why SMEs Use SMPs University and published by IFAC –is available for
Competency: SMEs often lack the full range of download at http://web.ifac.org/publications/small-and-
managerial expertise. Most outsource their financial medium-practices-committee/information-papers-3.
management to SMPs with their required technical
competencies and expertise in statutory audit and This article originally appeared in the ACCA's
taxation. Accountancy Futures.
Trust: As members of a regulated profession with codes
of conduct, accountants enjoy ‘institutional’ trust. Their
The Pakistan Accountant
July-Sep 2010
Page 19
23. coVer STORY
An Interview with
sylvie Voghel
chair, small and
medium practices
committee
international federation
of accountants
Q Q
How does IFAC support Small- and While IFAC can do little to help SMEs How does the IFAC SMP Committee
Medium-Sized Entities (SMEs) and directly - IFAC is not, after all, an operate and how is it resourced?
Small and Medium Practices association of SMEs - IFAC
(SMPs)? recognizes their importance and The IFAC SMP Committee was
provides invaluable indirect support formed in 2004, and is now a
A thriving SME sector is a vital part of to them. First, IFAC supports SMPs committee of 18 members from all
job creation, social cohesion, (primarily through their member across the globe, with a wealth of
innovation and economic growth. In bodies) so that they can provide experience in the SMP and SME
many – if not most – countries around better services to their SME clients – sectors. We have formal working
the world, SMEs represent the vast services that meet the SMEs’ needs procedures, project teams, a strategic
majority of entities as well as the and are of high quality; this in turn and operational plan, a
communications plan, and a full-time
majority of private sector employment helps SMEs prosper. And second,
senior technical manager. Our
and Gross Domestic Product. IFAC supports professional
strategy is two-fold. Firstly, we help
According to the Organisation for accountants in business (again
shape international standards –
Economic Co-operation and primarily through their member
primarily auditing and assurance,
Development (OECD), SMEs account bodies), many of who work in SMEs.
ethics and accounting – by providing
for over 95% of enterprises and 60– Much of the support that IFAC
input into the standard-setting
70% of employment in OECD provides for SMPs and SMEs comes
process. We do this to ensure that
countries. from the work of the SMP Committee these standards are relevant to SMPs
that I chair. and SMEs and can be cost effectively
applied.
The Pakistan Accountant
July-Sep 2010
Page 21