Last week, the International Federation of Accountants (IFAC) convened a meeting of more than 40 global representatives of the accountancy profession, including the chief executives of 30 national accountancy institutes, leaders of regional accountancy organizations, and firm representatives to discuss priorities for the international profession in light of recent high-profile corporate failures.
Discussions focused primarily on how IFAC's constituencies could continue to strengthen their public-interest initiatives and encourage others in the financial reporting supply chain to do the same. The group agreed to proceed with the following:
A global review of corporate governance practices, recognizing the need to strengthen key areas of corporate oversight. Building on other work done in this area by various international groups, the project would involve the review of current standards and guidelines adopted around the world to ensure that they reflect the role of the audit and the responsibilities of professional accountants in business.
Coordination of ongoing IFAC, Forum of Firms, and IFAC member body initiatives to improve the quality of auditing and accounting and enhance the credibility of financial reporting.
Encouragement of national accountancy institutes to develop action plans to implement recommendations in IFAC's independent Task Force Report, Rebuilding Public Confidence in Financial Reporting (The Credibility Report), issued in 2003.
Recognizing that the way IFAC standards are written significantly affects their use worldwide, the group of international leaders also indicated their support of the International Auditing and Assurance Standards Board's project to simplify the language in its standards.
So that those who retain auditors or rely on their work better understand the nature of international accountancy firms, the group supported firms' efforts to increase transparency and to develop meaningful guidelines on transparency.
In addition to this list of action items, IFAC received support from worldwide leaders of the profession for several initiatives that are already underway:
– A study of issues faced by members of IFAC member bodies in implementing international accounting and auditing standards;
– Modifications to IFAC's Code of Conduct to further clarify the ethical responsibilities of professional accountants in business;
– Supporting the work of small and medium practices and enterprises through sharing of member body resources; and
– The implementation of IFAC's new Member Body Compliance Program, designed to encourage convergence of and adherence to high quality professional standards.
President René Ricol stated, “We had a comprehensive, frank and productive discussion about the challenges the profession faces and its role in serving the capital markets and investors. We agreed that it is vital that IFAC and every professional accountancy body be willing to re-examine its role in encouraging the highest quality performance by accountants worldwide. At the same time, we recognized that it is incumbent upon the international accountancy profession to call upon each country and its regulators to vigorously support corporate governance procedures that are transparent, ethical and accountable. This is vital to protecting the public interest.”
“As the IFAC Credibility Report pointed out, improving the credibility of financial reporting requires action at all points along the information supply chain that delivers financial reporting to the market. Those who contribute to financial statements share a common duty to the public to promote the goals of clarity, integrity and transparency. All of us must continually strive to meet these responsibilities effectively and efficiently,” adds IFAC Chief Executive Ian Ball.
IFAC is dedicated to serving the public interest, strengthening the worldwide accountancy profession, and contributing to the development of strong international economies. Its current membership consists of 159 professional accountancy bodies in 118 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce.