In t e r n a t io n a l F e d e r a t io n o f Ac c o u n t a n t s

Szymon RadziszewiczTechnical Manager, Compliance Program

IFAC

Beirut, 23 April 2009

Action Plans: Challenges and Success Factors

IFAC Compliance Program Workshop for AFAA Members

IFAC Compliance Program

Background and Status

Action Plans – Issues & Challenges

Key Success Factors

Why prepare?

Points for discussion

2

How it all started? 7 Statements of Membership Obligations

Self-Assessment through Parts 1 and 2

Where is it heading? Part 3, Action Plans for continuous improvement

IFAC Compliance Program

Part 3, Action Plans

All IFAC members and associates participate

All 7 Statements of Membership Obligations to be addressed: To achieve compliance

To maintain compliance

Part 3, Action Plans – Current Status

5

Status as of April 22, 2009 All IFAC AFAA

Published Action Plans 32 1

Draft Action Plans received•Complete, partial sections, local language•Review underway by staff and Compliance Advisory Panel

63 3

Working on Action Plans 47 3

Policy Recommendations in process of review 15 2

TOTAL 157 9

Issues – Adoption of ISAs and IFRS

Treated as a “one-time” process

Significant gaps remain (“local adaptation”)

No ongoing mechanism to keep up with

issuance of new standards

Insufficient resources

Translation challenges

6

Issues – Adoption of ISAs and IFRS

Adoption versus implementation

There is a huge difference between adoption

and implementation

Although many countries have formally adopted

IFRS and ISA, many lack the experience, skills,

training and basic tools to put them properly into

practice

7

Issues – Code of Ethics and I&D

Use of outdated Code of Ethics Not using the threats and safeguards framework

Applicability to both auditors AND accountants

in business

Investigation and disciplinary programs Mechanisms developed but no power or sufficient

resource to properly sanction

8

Issues – Quality Assurance and Quality Control

The structure of the program does not conform

with SMO 1, Quality Assurance

QA system may have been established, but: Not implemented

Not sustainable

Based on outdated standards

Quality control standards at the firm and

engagement level have not been mandated Need to adopt ISA 220 and ISQC 1

9

Issues – Education

Need for both academic education and practical

experience Real life experience in accounting and auditing

Applying ethical principles

University syllabus and final examination updates

CPD – number of hours and monitoring

compliance

10

Key Challenges

Lack of financial and technical capacity in many

professional accountancy bodies calls for:

Investment in the accountancy profession by national

governments and donor agencies

Support of regional organizations

More advanced bodies acting as mentors

Development of implementation tools

Ability of bodies to clearly communicate challenges,

required actions, and need for resources will be crucial to

obtain assistance 11

Establish or enhance existing processes to support adoption and implementation of international standards

Continuous updating of education and training programs

Solutions – Action Plan Objectives

Implement or improve external quality assurance programs

Keep watching brief on new and modified standards and regulatory changes and address them in a timely and effective manner

Establish or maintain good relationship with government and regulators

Meaningful actions, clear accountabilities and reasonable timelines

Solutions – Action Plan Objectives

Part 3, Action Plans - Example

Key Success Factors

Taking Ownership of the Action Plan:

Use technical committees to draft the

plan for each SMO

Discuss Action Plan at all levels of

organization’s governance structure

Involve key stakeholders: regulators and

government

Taking iterative approach: Frequent interactions with the Compliance staff Submit drafts / partial drafts for an early review Incorporate Compliance staff’s feedback and

suggestions

Key Success Factors

Key Success Factors

Identify resources needed to make thenecessary changes:

Internal: Staff

Volunteers

External: Funding sources / potential donors

Twinning partners / mentors

Available Supporting Materials

Guidance Notes

Action Plan Template

Published Action Plans

http://www.ifac.org/ComplianceAssessment/published.php

Way Forward

Action Plan is just the first step along the way…

“Evergreen” document that needs to be

continuously updated for future developments

Progress reporting and monitoring

IFAC to facilitate assistance and provide

valuable tools

Cooperation within AFAA – way to success

Important Developments to Address Now

IAASB Clarity Project

Revisions of the Code of Ethics

Need to be reflected in the Action Plan

Why Prepare?

“Participating in the Compliance Program has been truly meaningful and rewarding experience for CICPA, leading to important improvement in major areas of the development of the accounting profession in China.

Especially, the Policy Recommendation and Action Plan process have been very helpful for us to work out the convergence plan, enhance quality assurance program and communicate effectively with regulators and the government.”

China (CICPA)

Why Prepare?

“Completing the Action Plan was a very useful exercise for the CICA as it allowed us to consolidate and summarize in one place all that we were doing to fulfill our IFAC obligations and assists us in demonstrating to all of our stakeholders our strong commitment to quality.

 The Action Plan provides us with a useful tool for managing our commitment to SMOs and how we are performing as a member body, and we believe the process will prove equally useful to other IFAC members.”

Kevin Dancey, President and CEO CICA Canada

Why Prepare?

The Action Plan process helped:

“to accelerate our discussions around convergence”

– Brazil

“to organize our goals and steps to achieve them so

they can be clearly seen” – Russia

“in the process of becoming full member of IFAC” –

Romania

“to confirm that the we are heading in the right

direction” – Czech Republic

Points for Discussion

Key Priorities?

Key Challenges?

Relationship with government and regulators?

Standard-Setting: Responsibilities?

Legal Framework?

“Low hanging fruits”?

What can AFAA do to assist?

Turbulent Times – Times of Opportunity

S u c c e s s h a p p e n s w h e n

p r e p a r a t io n

m e e t s

o p p o r t u n it y

In t e r n a t io n a l F e d e r a t io n o f Ac c o u n t a n t s

Beirut, 23 April, 2009

Thank You

Please Visit www.ifac.org/ComplianceProgram

For Further Information