In cooperation with IFAC Member Colegio de Contadores Públicos de Costa Rica (CCPCR), IFAC is hosting a Statements of Membership Obligations (SMOs) workshop in San Jose, Costa Rica, on February 13. The workshop will bring together leaders and representatives from 17 professional accountancy organizations in Central and South America and the Caribbean to address regional issues affecting the profession.

The event will also provide insights on the status of fulfillment of the IFAC SMOs in the region and provide the opportunity for a greater explanation and discussion of the Dashboard Reports methodology now used by IFAC. In addition, the event will be a key opportunity to share experiences, both successes and challenges, and identify opportunities for regional collaboration.

The event also supports the IFAC Member Compliance Program’s strategic objective of collaboration and seeks to help IFAC and the Compliance Advisory Panel more fully understand the challenges some jurisdictions face in adopting or implementing some of the SMOs.

The International Ethics Standards Board for Accountants^® (IESBA^®, the Ethics Board) today released for public comment the Exposure Draft, Limited Re-exposure of Proposed Changes to the Code Addressing the Long Association of Personnel with an Audit Client (the ED). The ED relates to the IESBA’s project to develop more robust and comprehensive provisions dealing with the long association of personnel with an audit or assurance client. It contains a basis for conclusions regarding proposals that have been finalized, as well as the limited re-exposure of three remaining issues.

The proposals being re-exposed are:

• An increase from two to five years in the cooling-off period for the engagement quality control reviewer (EQCR) on the audit of a listed entity, and to three years on the audit of a public interest entity (PIE) other than a listed entity;
• An alternative approach to the cooling-off requirements for PIE audits in the Code of Ethics for Professional Accountants (the Code) where jurisdictions have established different but robust legislative or regulatory safeguards to address the threats to auditor independence created by long association; and
• A revised approach to determining how long an individual should cool off after having served either as an engagement partner (EP) or as an EQCR, or in a combination of roles, for only part of the seven-year period they have served as a Key Audit Partner.

“In developing the new EQCR cooling-off proposal, the board has been particularly sensitive to public interest concerns about the need for a ‘fresh look,’ given the EQCR’s important role on the audit and proximity to the audit issues,” said IESBA Chairman Dr. Stavros Thomadakis. “At the same time, the board has found it also in the public interest to give appropriate weight to the practical consequences of implementation, given that the availability of individuals suitably qualified to act in an EQCR role tends to be more limited. The board believes that the proposal is balanced and, importantly, that its benefits to enhancing public trust in auditor independence outweigh the costs in terms of some added complexity in implementation in an already complex area.”

Included in the ED are revised provisions addressing other long association proposals that the IESBA has now finalized, including:

• An increase in cooling-off period for EPs from two to five years on audits of all PIEs; and
• Additional restrictions on activities that can be performed during the cooling-off period.

“Feedback on the first exposure draft in August 2014 indicated broad support for the IESBA’s intention to enhance the long association provisions in the Code,” noted IESBA Technical Director Ken Siong. “However, the diversity of views among commentators across different stakeholder groups on certain issues, and new stakeholder perspectives on the challenges of overlaying some of the proposals on pre-existing jurisdictional requirements, led the board to carefully review its proposals, reaffirming or recalibrating them as needed.”

To assist stakeholders in better understanding the re-exposed proposals, the ED includes a set of proposed IESBA Staff Questions and Answers, which will be issued with the final provisions to facilitate implementation.

How to Comment
The Ethics Board invites all stakeholders to comment on the ED. To access the ED and submit a comment, please visit the Ethics Board’s website at www.ethicsboard.org.

Comments on the Long Association ED are requested by May 9, 2016.

About the IESBA
The International Ethics Standards Board for Accountants is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information, and follow us on Twitter @Ethics_Board.

About IFAC^®
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

Nominations for the IFAC International Gold Service (IGS) award are now open. This prestigious award recognizes outstanding leaders for their contributions to the accountancy profession on the global level. These contributions should be unique, innovative, and recognized worldwide—beyond national professional accountancy organizations and IFAC.

Past recipients include Ian Ball in 2014, recognized for his many contributions to the global accountancy profession and his groundbreaking work in public sector accounting and transparency, as well as Professor Mervyn King in 2012, and Sir David Tweedie and Professor Stephen Zeff in 2011.

Please email a CV and letter of support, stating why the individual’s contributions to the global profession are worthy of recognition, to Anna Lee (AnnaLee@ifac.org) by March 15, 2016. The letter of support should be signed by the president and/or chief executive (or equivalents) of the nominating organization. IFAC members, associates, and affiliates may nominate candidates.

If awarded, the IGS Award will be presented at the annual Council meeting in Brazil in November 2016.

A report on global regulation issued today by the International Federation of Accountants^® (IFAC^®) calls for political leaders and governments around the world to follow ten principles for consistent, high-quality global regulation, to aid global economic growth.

The ten principles were identified by 30 senior executives and experts from regulatory agencies, financial markets, government, academia, listed companies, investment funds, and the accounting profession at a roundtable in Hong Kong convened by IFAC in partnership with the Hong Kong Institute of Certified Public Accountants (HKICPA).  The principles are intended to help guide regulators toward better decisions and protect the global economy from the dangers posed by a patchwork approach to regulation.

While business and finance are increasingly global, roundtable participants warned that important regulation is not. Instead, it is frequently focused on national interests, which can create barriers and impediments to inclusive growth and jeopardize global financial stability.

“This clear signal from a broad, non-partisan group in one of the world’s most important trading centers highlights the urgent need for a more globally consistent approach to regulation,” said Fayez Choudhury, IFAC Chief Executive Officer. “We need a clear change in the will—and resources available—for international regulatory cooperation.

“The current fragmentation is creating a regulatory environment that encourages more risky trading and financing activities in often unregulated domains, and allows for the exploitation of gaps in regulation globally,” Choudhury said.

Several actions were discussed to foster a more integrated global regulatory framework that can create a better environment for economic growth:

Stronger systems and incentives for cross-border regulatory collaboration and cooperation.

• Beyond consultation within the regulatory community, lack of resources and different national financial ecosystems make true collaboration with a broader set of stakeholders a challenge.
• Greater incentives are required before regulators can look beyond national interest, and consider long-term, global implications of regulation.

Systematic review of regulations to determine whether implementation and impact match expectations.

• Current regulatory systems often focus on writing regulation rather than evaluating effectiveness. Not all existing regulations are implemented in practice.
• Rapid change in business and financial markets requires continued flexibility. Much regulation is outdated by the time it is implemented, often years after originally proposed.
• Independent oversight of regulation would allow collaborative discussion and better analysis of costs and benefits.

10 clear principles for high quality financial regulation rather than a reactive response.

• To serve the public interest, regulation needs to be evidence-based, proportionate, appropriately resourced, collaboratively developed/implemented, consistent, subject to active oversight, systematically reviewed, have clear objectives, and be properly targeted and enforced to address intended issues.
• They must be developed in consultation with the public, and affected constituencies.

About IFAC
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of more than 175 members and associates in 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

While business and finance are increasingly global, regulation is frequently not. Often focused on ‘national interest’ – which can create barriers to inclusive growth and jeopardize the global economy – this report identifies ten key principles for consistent, high-quality, global regulation.

The principles are derived from a round table held in Hong Kong in December 2015, which brought together 30 key senior executives and experts from regulatory agencies, financial markets, government, academia, listed companies, investment funds and the accounting profession.