The IFAC Small and Medium Practices (SMP) Committee participated in the International Ethics Standards Board for Accountants' Strategy Survey, which sought early input into the key issues the board should address that might impact its Code of Ethics for Professional Accountants.

The IFAC Small and Medium Practices (SMP) Committee submitted this comment letter to the International Ethics Standards Board for Accountants in response to its Exposure Draft, Proposed Application Material Relating to Professional Skepticism and Professional Judgment.

The IFAC Small and Medium Practices (SMP) Committee submitted this comment letter to the International Ethics Standards Board for Accountants (IESBA) in response to its Exposure Draft, Improving the Structure of the Code of Ethics for Professional Accountants—Phase 2.

Navigating the national regulatory environment is a crucial part of establishing and developing an effective professional accountancy organization (PAO). The right accountancy regulation model is vital to ensuring a well-functioning profession that produces high-quality financial information, supports economic growth and development, and is relevant to professional accountants and their clients. This publication is designed to support PAOs in their efforts to adapt to recent regulatory evolution, and actively influence stakeholders and influencers.

Navigating the national regulatory environment is a crucial part of establishing and developing an effective professional accountancy organization (PAO). The right accountancy regulation model is vital to ensuring a well-functioning profession that produces high-quality financial information, supports economic growth and development, and is relevant to professional accountants and their clients. In light of regulatory evolution in recent years and the ongoing need for PAOs to adapt to, and actively influence, their environment, the International Federation of Accountants (IFAC) today released new guidance to support PAOs in these efforts.

“There is no ‘one-size-fits-all’ solution for accountancy regulation; there are many different models in place around the world that work effectively,” said IFAC Executive Director Alta Prinsloo. “Understanding the key principles of accountancy regulation, and how they function in practical terms, helps PAOs and their key constituents ensure the profession’s long-term sustainability, and their ability to continue to function in the public interest.”

Making Regulation Work: Principles and Models for the Accountancy Profession explores the scope of accountancy regulation, why it is needed, and key principles for consideration, as highlighted in IFAC Public Policy Position 1, Regulation of the Accountancy Profession and From Crisis to Confidence: A Call for Consistent, High-Quality Global Regulation. It also provides regulatory model examples used in a number of countries, with further information available in country profiles on the IFAC website.

The guidance is part of the PAO Capacity Building Series, which includes guidance on PAO governance, advocacy and public policy, partnerships, and engaging professional accountants in business. It also builds on one of the key findings of the MOSAIC PAO Global Development Report, which cites strengthening PAOs’ legal and regulatory foundations and internal capacity as a critical need for the global accountancy profession.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

Thinking beyond the financial elements of an organization to other key areas of value creation can help small- and medium-sized entities (SMEs) develop a better understanding of their business and provide key insights for the future. Today, it is critical for organizations to think broadly about performance and strategy, and improve communication to shareholders, investors, customers and suppliers on what drives value for the organization.

Creating Value for SMEs through Integrated Thinking: The Benefits of Integrated Reporting, published today by the International Federation of Accountants (IFAC) and the International Integrated Reporting Council (IIRC), highlights how SMEs—and the professional accountants serving them—can benefit from integrated thinking and reporting.

“As the engines of economic development, SMEs are critically important to the world’s economy,” said Sylvia Tsen, IFAC Executive Director. “They have significant value beyond the financial, which integrated thinking and reporting helps uncover. An integrated approach can help SMEs, including not-for-profits, increase their impact because it encourages an inclusive view of operations, risks and opportunities, and future outlook.”

Integrated reporting embraces the six capitals established by the IIRC’s International Integrated Reporting Framework: financial, human, intellectual, manufactured, natural, and social and relationship. Considering each holistically, organizations can build a clearer understanding of the factors necessary to build value over the short, medium, and long term, including how the business uses and effects its resources.

“Integrated reporting is well underway to becoming the global norm, so it has to work for all businesses, large and small,” said Richard Howitt, IIRC Chief Executive Officer. “I am delighted how this new publication shows the considerable benefits for smaller organizations. The IIRC’s principles-based framework is deliberately flexible so that SMEs can apply it to their own specific circumstances.”

Whether advising an organization or working within it, professional accountants are equipped with the skills and understanding to apply integrated reporting, help discover important insights, and provide stakeholders with a broader picture of how the business meets its strategic objectives. Additional resources to help professional accountants improve integrated thinking are available on the Global Knowledge Gateway, including Creating Value with Integrated Thinking: The Role of the Professional Accountant.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

Integrated reporting enhances the way organizations think, plan, and report their business’ story. It is used as an opportunity to communicate a clear, concise, integrated story explaining how value is created within the organization. It can help businesses think holistically about their strategy and plans, make informed decisions, manage key opportunities and risks to build investor and stakeholder confidence, and help manage the organization’s performance.

The IFAC Professional Accountants in Business Committee agrees with the International Ethics Standards Board for Accountants that there is a need to strengthen the concept of professional skepticism in the Code of Ethics for Professional Accountants based on clarifying how the fundamental principles support the exercise of professional skepticism in the audit and assurance context.

At the Chartered Institute of Public Finance and Accountancy (CIPFA)’s 2017 Conference in Manchester, UK, the International Federation of Accountants (IFAC) and CIPFA announced the launch of the Public Sector Financial Accountability Index.

Developed jointly by IFAC, as part of its Accountability. Now. initiative, and CIPFA, with the Zurich University of Applied Sciences as knowledge partner, the index will be the first of its kind to provide an accurate global picture of public sector financial reporting quality.

In particular, the index will provide a picture of the extent of accrual accounting and adoption of International Public Sector Accounting Standards. It will also aim to provide a better understanding of accounting and budgeting reform plans, and help stimulate public financial management (PFM) reforms.

The main output will be a regularly updated country-by-country public database. It will initially focus on central government, and expand over time to include state/provincial and local government.

The index will initially be populated with research data on individual countries and regions, collected by various international institutions. National standard setters will be invited to review, comment upon, and supplement the information, after which the first set of data will be made available in November 2017.

“The Public Sector Financial Accountability Index will provide better insight into the extent of global public financial reporting reform, and stimulate further reform,” said Fayez Choudhury, IFAC Chief Executive Officer.

“High-quality accrual-based information that captures the entire picture of a government’s finances and its funding commitments, both now and in the future, is the foundation for strong public financial management,” said Rob Whiteman, CIPFA CEO. “It strengthens economies, and, most importantly, builds trust with citizens. CIPFA is proud to be supporting the development of this index, which we believe will be a relevant and timely contribution to global PFM reform.”

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

About CIPFA
CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. Our 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed.

Accountability. Now. is an initiative of the International Federation of Accountants (IFAC) to promote high-quality financial accounting and reporting by governments to improve transparency and help strengthen public financial management and accountability in the public interest. Further information can be obtained via the Accountability. Now. brochure.