NASBANASBA

Role of State Regulators in Global Role of State Regulators in Global Standards SettingStandards Setting

Bob Bunting, Deputy PresidentBob Bunting, Deputy President

October 29, 2008October 29, 2008

Obstacles to Common Standards and Uniform Quality

Obstacles

Competition Sovereignty and national prideChampion industriesPoliticsCost and inconvenienceRepresentationImplementation

Leading to a lack of Collaboration……..And, yet…….

IFRS & ISAsOver 110 countries require or permit the use of IFRS

Over 110 countries require or permit the use of IFRS

Benefits of a United Global Approach

Enhanced levels of production of

goods and services

Suppressing corruption

Enhanced transparency

Promotion of growth and efficiency in capital and

labor markets

Provision of high quality performance information

Enhanced level of

competence within the

accountancy profession

Strong organizational governance

and management

structures

Lower transaction

costs for cross-border capital flows

Consumer confidence in the integrity

and efficiency of the markets

Adoption of high quality international standards

Stable and robust

regulation that promotes

growth and efficiency

Reduction of poverty

Lower cost of capital

Improved economic

decision-making in the private and public sectors

High public confidence in

the accountancy profession and

its services

Strong ethical behaviors

demonstrated by professional

accountants

Standards & guidance

Promoting qualitySupport for Adoption

Support for ImplementationRepresentationCommunications

Strong legal frameworks

Strong professional accountancy

institutes

Enhanced corporate behavior

Improved legislation and regulation of professional

liability

Confidence in international standards

High quality financial

management and reporting practices by organizations

Enhanced attractiveness of the accountancy

profession

Enhanced credibility of and accessibility to financial and non-financial information

Assisting fair trade

Achieving social equity

Strong professional accountancy

firms

High quality audit

practices by firms

Effective implementation

and enforcement of international

standards

Enhanced governmental accountability

Enhanced Corporate

Social Responsibility

Improved Corporate

Social Responsibility

reporting

IFAC’s Role in Moving the Profession to the Next Level

Mission

To serve the public interest, IFAC will continue to strengthen the worldwide accountancy profession and contribute to the development of strong international

economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards, and speaking out on public

interest issues where the profession’s expertise is most relevant

Values:

Integrity Expertise

Transparency

IFAC Strategic ThemesIFAC Strategic Themes

1. Be recognized as the international standards setter in the areas of auditing and assurance, education, ethics and governmental financial reporting

2. Actively support the adoption of, and assist in, the implementation of international standards

3. Continually enhance the relevance of the profession

4. Be the international voice of the accountancy profession

KEY

ACCOUNTABILITY

OVERSIGHT

CONSULTATION/ADVICE

IFAC Organization

CONSULTATIVE ADVISORY

GROUP

Structure of the IAASBStructure of the IAASB

IFAC REGULATORY

LIAISON GROUP

MONITORING GROUP

INTERNATIONAL AUDITING AND

ASSURANCE STANDARDS BOARD

PUBLIC INTEREST OVERSIGHT BOARD

Liaison/Liaison/ConsultatioConsultationn

Consults/Consults/AdvisesAdvises

ProvidesProvides InputInput

Oversees Due Process/Oversees Due Process/Approves Appointments and Approves Appointments and

ToRToR

IFAC BOARD

Consults/Consults/AdvisesAdvises

Appoints Appoints Members/Members/Establishes Establishes ToRToR

ED RESPONDENTS AND OTHER

STAKEHOLDERS

INTERNATIONAL ORGANIZATION

OF SUPREME AUDIT

INSTITUTIONS

NATIONAL STANDARD SETTERS &

REGULATORS

SMALL AND MEDIUM

PRACTICES COMMITTEE

Checks and Balances

• Monitoring Group (Regulators)• Public Interest Oversight Board (Appointed by MG)• Independent Chair• Public Members• CAG members (Regulators, Users)• Transparent Process

– Minutes– Exposure drafts– Other observers

Regulation and the Public InterestRegulation and the Public Interest

• Professional accountancy bodies and Professional accountancy bodies and governments share common objective: governments share common objective:

ensuring accountants serve the public ensuring accountants serve the public interest and meet high standardsinterest and meet high standards

• And common goal: And common goal: regulation with benefits that exceed costs regulation with benefits that exceed costs

Shared Regulation

Shared Regulatory SystemShared Regulatory System

Self regulation and external regulation Self regulation and external regulation reinforce each other; combine to form a reinforce each other; combine to form a regulatory mix that is effective and efficient. regulatory mix that is effective and efficient.

Shared Regulation

Goals of Shared Regulation in IAASB Goals of Shared Regulation in IAASB Standard SettingStandard Setting• Protect and respond to the public interestProtect and respond to the public interest

• Maintain and strengthen legitimacy through:Maintain and strengthen legitimacy through:

– IndependenceIndependence

– PerformancePerformance

• ResponsivenessResponsiveness

• EfficiencyEfficiency

– AccountabilityAccountability

Shared Regulation

Standard Setting That Protects the Standard Setting That Protects the Public InterestPublic Interest

Shared Regulation

Independence Performance

Accountability

Legitimacy

A Balanced System of Standard SettingA Balanced System of Standard Setting

• Appropriately balances functions between Appropriately balances functions between public and private sectorspublic and private sectors

• Balance between technical and nontechnical Balance between technical and nontechnical roles roles

• Balance between formal and informal Balance between formal and informal consultation and communicationconsultation and communication

• Aim is overall system performanceAim is overall system performance

Shared Regulation

NASBA / State Board Roles

CONSULTATIVE ADVISORY

GROUP

Structure of the IAASBStructure of the IAASB

IFAC REGULATORY

LIAISON GROUP

MONITORING GROUP

INTERNATIONAL AUDITING AND

ASSURANCE STANDARDS BOARD

PUBLIC INTEREST OVERSIGHT BOARD

Liaison/Liaison/ConsultatioConsultationn

Consults/Consults/AdvisesAdvises

ProvidesProvides InputInput

Oversees Due Process/Oversees Due Process/Approves Appointments and Approves Appointments and

ToRToR

IFAC BOARD

Consults/Consults/AdvisesAdvises

Appoints Appoints Members/Members/Establishes Establishes ToRToR

ED RESPONDENTS AND OTHER

STAKEHOLDERS

INTERNATIONAL ORGANIZATION

OF SUPREME AUDIT

INSTITUTIONS

NATIONAL STANDARD SETTERS &

REGULATORS

SMALL AND MEDIUM

PRACTICES COMMITTEE

NASBANASBA

Role of State Regulators in Global Role of State Regulators in Global Standards SettingStandards Setting

Bob Bunting, Deputy PresidentBob Bunting, Deputy President

October 29, 2008October 29, 2008