By: JOSEFE C. SORRERA-TYPast PICPA National President (2012-2013)

AFA SECRETARY GENERAL

ASEAN INTEGRATION: IS THE ACCOUNTANCY PROFESSION READY?

Technical Session 2Regulator’s Forum (Joint with nACPAE)Grand Ballroom, Hotel Intercontinental

Manila, Makati CityJuly 15, 2015

ARE WE READY FOR THE ASEAN INTEGRATION?

(MEANING :

ADDITION, MIXING,

INCORPORATION,COMBINATION

AMALGAMATIONASSIMILATION)

ASEAN COMMUNITY ASEAN Political

Security Community

ASEAN Economic Community

ASEAN Socio-Cultural Community

OBJECTIVETransform ASEAN into a

stable, prosperous, and highly competitive region with Equitable economic

development Reduced poverty and Socio-economic

disparities

ASEAN Economic Community 2015

Regulatory harmonization Reduction of trade barriers Promotion of labour mobility

ROLE OF THE ACCOUNTANCY PROFESSION

•A properly functioning accountancy profession is•critical to:

•• Private sector development – investor•confidence and attracting FDI WB Report 2014

ROLE OF THE ACCOUNTANCY PROFESSION

•A properly functioning accountancy profession is•critical to:•• Public sector – sustainable public financial management reforms and improved governance,•accountability and transparency WB Report 2014

Key Challenges of the Guardians of the Treasure House of ASEAN

Most ASEAN countries have adopted and are implementing International Accounting and Auditing Standards in the private and public sectors.

But lesser developed countries face a daunting task in accounting and auditing reform given their capacity constraints.(WB 2014)

Key Challenges of the Guardians of the Treasure House of ASEAN

•• The significant ‘development gap’ across ASEAN countries will increasingly constrain economic development unless it is addressed.

Current Status of the Accounting and Auditing Profession in ASEAN Countries by

the World Bank Sept. 2014• snapshot of current status

• key areas of difference and constraints to closing the ‘development gap’

• regional harmonization and coordination of capacity building would be beneficial

What areas does the report cover?• Accounting Education• Entry Requirements for Professional Accountants and CPD• Professional Independence and Ethics Requirements• AFA’s Mandate and Role• National PAO Development

What are the key findings in Accounting Education?

Figure 2. Minimum credit hours to obtain an accounting degree / inclusion of international standards in the curricula

What are the key findings Accounting Education?

Figure 3. Accounting graduates per year, by country

What are the key findings in Entry Requirements?

Table 2. Comparison of entry and CPD requirements for the accounting profession

What are the key findings on Ethics?

Table 3. Ethics and rotation requirements for auditors

What are the key reporting requirements?

Table 4. Factors that affect a company’s accounting, audit, and financial reporting requirements

What are the key findings on Professional Accountancy

Organizations?

Figure 1. Approximate number of professional accountants by country

MANY PAOS DO NOT HAVE A MANDATE OR ANY AUTHORITY OVER THE PUBLIC SECTOR AND THE FOCUSOF WHAT THEY CURRENTLY DO IS SOLELY ON THE PRIVATE SECTOR. OFTEN PAOS DO NOT HAVE WELLDEVELOPED RELATIONSHIPS WITH THEIR PUBLIC SECTOR COUNTERPARTS RESPONSIBLE FOR FINANCIALMANAGEMENT, ACCOUNTING STANDARDS AND AUDITSTANDARDS.

Key Findings in Public Sector Accounting and Auditing:

What are the key recommendations?• Increased harmonization and coordination of capacity building at a regional level would be beneficial• Consensus needed on regional capacity development priorities necessary • AFA and PAO can play a key role in

facilitating increased harmonization in the areas particularly coordination of capacity building activities

• Quality of Accounting Education, PIE Accountability

and SME financial reporting are important areas• A key decision is the extent to which the Accountancy profession engagement in the PFM reform agenda• Sovereignty issues will need to be balanced with what is in the best interests of the ASEAN Economic Community

Key Findings on the Role of AFA:

•

AFA is clearly already a key regional accounting organization that has been formallyrecognized by the ASEAN Secretariat. It has also commenced discussions with IFACabout becoming a Recognized Regional Organization and recognizes the importance ofachieving such official international recognition.

OTHER IMPORTANT FACTORS TO CONSIDER IN OUR READINESS FOR INTEGRATION:

• LANGUAGE

• CULTURAL SENSITIVITY

Let us not follow the Little Prince’s Accountant who spends his days working over his books, counting everything up, claiming ownership of all that can fit in the ledger, and failing to see that we live in a whole, wild universe filled to the brim with stars somewhere in the midst of which one, unique rose lives on a planet and calls out for love.

MAY WE BE ABLE TO SEE BEYONDTHE ECONOMIC FIGURES……

MAY WE BE REMINDEND THAT THE ASEAN INTEGRATION IS ABOUT A CARING AND NURTURINGCOMMUNITY.

THANK YOU!