International Federation of Accountants

IFAC Member Body Compliance ProgramUpdate

Szymon Radziszewicz

Senior Technical Manager, Compliance Program

IAASB Meeting

New York

March 18, 2010

Compliance Program

• Background

• Where we are today

• Where are we heading

– Challenges & Success Factors

– Basis of ISA Adoption Chart

– SMO Revisions

Map for TodayMap for Today

Framework for Professional Accountancy Body

• SMO 1 SMO 1 Quality AssuranceQuality Assurance• SMO 2SMO 2 International Education StandardsInternational Education Standards• SMO 3SMO 3 International Standards on AuditingInternational Standards on Auditing• SMO 4SMO 4 International Code of EthicsInternational Code of Ethics• SMO 5 SMO 5 International Public Sector International Public Sector

Accounting StandardsAccounting Standards• SMO 6SMO 6 Investigation and DisciplineInvestigation and Discipline• SMO 7SMO 7 International Financial Reporting International Financial Reporting

StandardsStandards

Statements of Membership Obligations (SMOs)Statements of Membership Obligations (SMOs)

Benchmarking and Strategy

• Part 1 – Self-assessment: Overview of Part 1 – Self-assessment: Overview of regulatory and standard-setting framework in regulatory and standard-setting framework in a member’s jurisdictiona member’s jurisdiction

• Part 2 – Self-assessment: benchmarking Part 2 – Self-assessment: benchmarking against the 7 SMOsagainst the 7 SMOs

• Part 3 – Own Strategy: Action Plans for Part 3 – Own Strategy: Action Plans for continuous improvementcontinuous improvement

Assessing ComplianceAssessing Compliance

Sneak Peak into the Future

• Information Gathering Questionnaire

• Strategy for Ongoing SMO Compliance

• Monitoring

• Enforcement

Compliance Program 201XCompliance Program 201X

Status in Numbers

• 81 – Published Action Plans

• 36 – Drafts received and under review

• 39 – In progress but no submitted draft

• 2 – Suspensions

• 1 – Expulsion Recommendation

Status of Preparation of Action Plans as of Status of Preparation of Action Plans as of March 17, 2010March 17, 2010

Status in Pictures – Beginning of the Road

• Soft updates– Done after six months

– Based on interviews with key individuals

Obtain understanding of current progress Obtain understanding of current progress

Encourage continuing communication Encourage continuing communication

Offer to be of further assistanceOffer to be of further assistance

– Memorandum prepared for archives and CAP review

Monitoring of Published Action Plans

• 26 completed as of March 17, 2010

– Overall member bodies generally remain on track

– Some delay caused by changes in regulatory environment or change in priorities

– Also noted a number of positive developments

• Annual progress reports

– Include submission of updated Action Plans

– 11 completed or actively in progress

Monitoring of Published Action Plans

Challenges

• Member bodies operating in developing countries generally do not have the financial and technical means to achieve all desired actions

• Adoption of international standards and practices is relatively easy; successful implementation can be extremely difficult

• The basis of adoption of international standards can have an impact on the quality of implementation.

Overriding Lessons Learned

Key to Achieve Desired Actions

• Meaningful execution of Action Plan depends on:

– Ability of developing bodies to clearly communicate their challenges, required actions, and need for resources

– Willingness of national government and donor agencies to provide support and financial resources

– Development of useful implementation tools by the DNC and standard setters

– Support of regional organizations and developed bodies serving as mentors

Need for Financial and Technical Resources

http://web.ifac.org/isa-adoption/chart

Developments

• Clarification and increased consistency including

– “No less stringent standards” SMO 4 (Ethics)

– Statement of applicability in SMO 7 (IFRS & IFRS-SMEs)

• Member body governance practices

• Corporate governance (OECD principles)?

• Review of QA and I&D

– Public oversight for auditors of PIEs?

Program to Review the SMOs (2010-2012)

Thank you

www.ifac.org/ComplianceProgram

March 2010