The International Federation of Accountants (IFAC) is seeking an exceptional individual for the fulltime position of Managing Director, Professional Standards (MD).

IFAC serves the public interest by contributing to the development of strong and sustainable organizations, markets, and economies. As part of its public interest mandate, IFAC contributes to the development of high-quality international standards by facilitating and resourcing standard-setting by the following independent Standard-Setting Boards (SSBs): the International Auditing and Assurance Standards Board (IAASB), the International Accounting Education Standards Board (IAESB), the International Ethics Standards Board for Accountants (IESBA), and the International Public Sector Accounting Standards Board (IPSASB).

The MD reports functionally to the chairs of the independent SSBs and administratively to IFAC’s chief executive officer. He/she is a key resource to the SSB chairs, and acts as a liaison between the SSBs and the Monitoring Group and Public Interest Oversight Board (PIOB). He/she maintains relationships with key stakeholders and is a spokesperson for the SSBs.

The MD is the SSBs’ primary liaison with IFAC’s chief executive officer and Board, and oversees the SSB senior management. He/she ordinarily is not involved in the day-to-day standard-setting activities and operations of the boards.

The position calls for a senior level individual who is prominent in the international standard-setting and regulatory community. The MD should have technical and standard-setting experience, as well as knowledge of and practical experience in a range of professional issues, with special emphasis on auditing, ethics, accounting education, and public sector accounting. He/she should be articulate, confident, and exercise sound political judgment in interactions with the press, members of the profession, and the regulatory community at both the national and international levels.

The position is based in the IFAC office in New York or Toronto—preferably New York. It is not required for the MD to be a professional accountant. Applications from individuals who have had a direct relationship with an audit firm are welcome; however, these individuals should be able to implement safeguards against any threats or perceived threats of their independence. The role requires extensive international travel.

This position has become available due to the retirement of Jim Sylph, Executive Director, Professional Standards and External Relations in June 2014. The position and title have been modified to reinforce further the independence of the SSBs.

For further information about the position, please see the job description on the IFAC website at www.ifac.org/careers. Applications are due by February 15, 2014.

*Notes to Editors

About the Independent SSBs

The independent SSBs serve the public interest as follows:

• IAASB: by setting high-quality international standards for auditing, assurance, and other related standards, and by facilitating the convergence of international and national auditing and assurance standards. In doing so, the IAASB enhances the quality and consistency of practice throughout the world and strengthens public confidence in the global auditing and assurance profession. For more information, go to www.iaasb.org, or click on the relevant link: Terms of Reference / IAASB Members / IAASB Annual Report
• IAESB: by strengthening the worldwide accountancy profession through the development and enhancement of professional accountancy education, which encompasses knowledge, skills, values, ethics, and attitudes. For more information, go to www.iaesb.org, or click on the relevant link: Terms of Reference / IAESB Members / IAESB Annual Report
• IESBA: by setting high-quality ethics standards for professional accountants, including auditor independence requirements, through the development of a robust, internationally appropriate code of ethics, and by facilitating the convergence of international and national ethics standards. In doing so, the IESBA enhances the quality and consistency of services provided by professional accountants throughout the world and strengthens public confidence in the global accountancy profession. For more information, go to www.ethicsboard.org, or click on the relevant link: Terms of Reference / IESBA Members / IESBA Annual Report
• IPSASB: by developing high-quality International Public Sector Accounting Standards (IPSASs), guidance, and resources for use by public sector entities around the world for preparation of general purpose financial statements. It issues and promotes benchmark guidance and facilitates the exchange of information among accountants and those who work in the public sector. For more information, go to https://www.ifac.org/public-sector, or click on the relevant link: Terms of Reference / IPSASB Members

The independent SSBs follow a rigorous due process to ensure that the views of those affected by their pronouncements are thoroughly considered.

The IAASB, IAESB, and IESBA each has a consultative advisory group (CAG). The CAGs are an integral part of the boards’ formal process of consultation, and provide valuable public interest input on the boards’ agendas, project timetables, priorities, and technical issues.

The Public Interest Oversight Board (PIOB) oversees the IAASB, IAESB, and IESBA (and their respective CAGs). The PIOB’s mandate is to ensure that these boards follow due process and are responsive to the public interest; ensure the completeness of their strategies and work programs; and oversee the process of nominations to the boards and their CAGs. IFAC and the Monitoring Group are currently in the process of determining the best approach to public interest oversight for the IPSASB.

About IFAC
IFAC is the worldwide 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’s current membership consists of over 179 professional accountancy bodies in 130 countries, representing approximately 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC supports the setting of auditing and assurance, ethics, education, and public sector accounting standards and develops guidance to encourage high-quality performance by professional accountants in business.

Good afternoon ladies and gentlemen. It is my pleasure to be here, certainly because of the opportunity to hear perspectives on the important and relevant topics on today’s agenda. However, it is also because this is my first visit to Baruch College—I must say how impressed I am by the cultural diversity of the college’s faculty and student base, and the broad range of countries they represent. Even more impressive, if I may say, is the college’s namesake, Mr. Bernard Baruch himself. At the end of his productive, 95 year life, he is quoted as saying, “I have had a long life, a good one and a full one. But above all I have had the opportunity to serve my country. This has meant most to me.” I am privileged to have such a fitting backdrop for my update on the activities of the IAASB.

The Changing Audit Environment

The speakers before me today already have rightly noted that there is a lot happening in today’s audit environment. Indeed, the environment is changing. The nature of financial reporting continues to evolve: now more complex, more areas of judgment, and more qualitative disclosures. There is changing demand from users, which can be summarized as “we want to hear more”—a call directed not only to preparers of financial statements but also to auditors and others involved in the financial reporting supply chain. Then, as a result of the global financial crisis, some key questions were raised: about the quality of auditing, its effectiveness, and the role of professional skepticism and judgment; and perhaps more fundamental, about the relevance of the audit. For example, if auditors did all that they were supposed to do, yet still did not warn of the risks leading to the financial crisis, what then is the relevance of the audit? I do not see this as a criticism per se. Rather, it is an important inquiry as to whether audit could deliver more – an essential question that must be considered in the wider context of trust in the profession.

As a result, there are many important debates on auditing now happening in Europe, North America, and elsewhere. These debates acknowledge—indeed, emphasize—the importance of ongoing and structured dialogue among, and between, many stakeholders. Audit regulators, for example, are further increasing their dialogue at an international level, and I am pleased to note the leadership of Lew Ferguson, Chairman of the International Forum of Independent Audit Regulators (IFIAR), and Deputy Chair Janine van Diggelen in this regard. These developments underscore the essential importance of interactions among participants as the basis for further improving audit quality.

Interactions

Let me to pause a moment to explore a little further the idea of interactions. This concept has received attention over many decades.

In the early 1930s we learned from the Dutchman Prof. Theodore Limperg, who referred to the relevance of interactions between stakeholders and to the accountancy profession serving a fundamental public interest need. I quote: “The place that accountants occupy in the community, and the confidence inspired by them, are the result of the interaction of the needs of the community and of the manner in which accountants meet those needs.”

Fifty years later this theme was picked up by a Scotsman, Prof. David Flint, who said: “Audit’s foundation in social need is a crucially important characteristic. In a changing and developing society the interpretation of the practical implementations of the audit concept must be the result of a constant interaction between the relevant groups and the auditors.”

In between, there was a monograph in the United States by Mautz and Sharaf, who also described these concepts and further emphasized the importance of interactions.

Throughout history, therefore, it is clear that there has been a strong call for professional accountants to act in the public interest and to take into account the expectations society places on them, and to understand these expectations and respond to them through meaningful interactions. Interactions, therefore, in my view, is more than a concept – rather, an essential and fundamental principal underpinning what we do.

With this backdrop, allow me to highlight some of the IAASB’s key responses to current developments.

Enhancing the Value of Audit

Audit Quality

At its meeting next week, the IAASB intends to finalize a new publication entitled A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality. Our simple but essential goals for this Framework are to: raise awareness of the key elements of audit quality; encourage key stakeholders to reflect on ways to improve audit quality; and facilitate greater dialogue between key stakeholders on the topic. The Framework is qualitative in nature, describing not only the different elements that create the environment for audit quality at the engagement, firm, and national levels, but also, importantly, their interrelationships. It elaborates on input, process, and output factors, as well as interactions in the financial reporting supply chain and contextual factors. The essence of the Framework is depicted below:

In considering audit quality, focus is often placed on input and process factors, such as standards, methodology, education and training, etc. These are certainly essential, but we should not stop there. Consider the importance of output factors: what users of financial statements see and read on which they base their perceptions and conclusions of audit quality. The current developments in auditor reporting, therefore, are very important. Also consider, for example, context factors such as culture, corporate governance, and the regulator regime and litigation environment. They have the potential to impact financial reporting and directly or indirectly audit quality, and auditors need to respond properly to them. Finally, consider all those involved in the financial reporting process—from the auditor, who is ultimately responsible for audit quality, to management, regulators and inspectors, audit committees, and users. Their roles, and the interactions they have, influence the environment in which audits are conducted, and their actions can meaningfully and positively contribute to audit quality.

We are certainly interested in the U.S. Public Company Accounting Oversight Board (PCAOB)’s efforts on the topic of Audit Quality Indicators, and we will continue to monitor developments. We are simply approaching the issue of audit quality from different, but complementary, perspectives. Our next steps will be to continue the dialogue on audit quality and stimulate organizations to use the Framework in exploring how best they might contribute to helping improve audit quality.

New Proposals for Auditor Reporting

Now, let me turn to the topic of the auditor’s report. Informed by international academic research, global outreach to stakeholders, and two consultation papers, the IAASB unanimously approved and released in July this year a comprehensive exposure draft of proposed new and revised International Standards on Auditing (ISAs) addressing reporting on audited financial statements.

I am pleased to note the degree of similarity between our auditor reporting proposals and those of the PCAOB, which were released shortly after the IAASB’s. The ongoing dialogue between the boards’ leadership and senior staff on this topic had, in my view, helped achieve this positive outcome. We have focused similar efforts in relation to developments in Europe, holding constructive meetings with senior representatives of the European Commission, European Parliament, and Council of the European Union. These actions supplement our broader outreach efforts on auditor reporting globally.

There are many important changes proposed to the auditor’s report—for example, clarification of the responsibilities of the auditor, and giving greater prominence to the auditor’s opinion within the report. But let me focus in on one of the more fundamental changes we propose: new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. This proposal involves a new section in the auditor’s report to communicate those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period.

Communicating key audit matters is not a tick in the box. It requires professional judgment, and a careful consideration of what is unique about the specific entity and the specific audit undertaken—and therefore the matters of relevance to users of the auditor report and the entity’s financial statements. The required thought process is inherently no different than that the auditor would go through when preparing for discussion with the entity’s audit committee—a focus on what is important and relevant.

The proposed standard directs the auditor to select key audit matters from those matters communicated with the audit committee. Some have expressed concern that this may prompt the auditor to not communicate certain matters to the audit committee if there is pressure from management against bringing further transparency to an issue, and therefore the standard should indicate a broader source from which the auditor would consider the matters to communicate in the auditor’s report. However, I believe we must continue to appeal to the ‘backbone’ of the auditor to not concede to any such pressure and to communicate what is necessary in the circumstances. In any event, irrespective of the starting point, when there is a key audit matter to be communicated the auditor will certainly inform the audit committee.

I am very pleased that many countries and firms already are preparing now in anticipation of the new standards. For example: the UK has introduced similar new standards; last week while I was visiting the professional and regulatory bodies in Vietnam there was much discussion on how best they may prepare; and several firms already are ‘field testing’ the proposals. As the IAASB moves forward, we will study and respond to comments on our exposure draft and maintain an active dialogue with stakeholders. We have heard the call for continued effort towards a global solution, and we will therefore stay in close contact with the PCAOB and others as developments progress.

The IAASB is fully committed to finalizing its new auditor reporting standards in 2014. I anticipate they will result in significant change to the way auditors communicate information about their audits. They will also be critical to improving the perceived value and relevance of the auditor’s report and the profession as a whole. It is therefore essential that the intentions of the auditor reporting proposals be achieved, and their full benefit realized. Our work on this important topic will therefore not end in 2014—we anticipate taking actions in 2015 and beyond to facilitate adoption and implementation of these standards, including a review after a period of implementation.

Further Enhancement of the Clarified ISAs

Today there are 92 jurisdictions already using the Clarified ISAs, or committed to using them in the near future, and we anticipate more in 2014. In light of this increasing global use of the Clarified ISAs, we seek to capitalize on opportunities to learn about the implementation experience, whether the standards are operating with the intended effects, and where further enhancements may be necessary. In this regard, we have continued our active dialogue with international and national regulatory and audit oversight bodies—strengthening our relationships with groups such as IFIAR, the International Organization of Securities Commissions, the World Bank and the Basel Committee on Banking Supervision. These groups, together with input from both larger firms and smaller practices, national standards setters and others, have been instrumental in providing feedback to the IAASB’s post-implementation review of the Clarified ISAs.

In this regard, the overall feedback has been positive: the Clarified ISAs are more understandable and better fit for purpose, and the revisions to their content a positive contribution to audit quality. Nevertheless, there were also some areas where future review may be appropriate: professional skepticism, quality control, and group audits. In addition, the IAASB has been encouraged to consider new developments in the environment of the audit, such as “big data” and data analytics, and emerging IT risks, and how these may affect standards addressing risk assessment and evidence gathering. Responding to this feedback on the other findings from the Clarity ISA post-implementation review will feature prominently in our future Strategy and Work Program.

Looking Ahead

This brings me to my last topic, the IAASB’s forward strategy.

At its meeting next week, the IAASB intends to finalize for public consultation our strategy for 2015-2019 and the related work plan for 2015-2016. The proposal will include action in a number of areas, including responding to the findings from our ISA implementation monitoring review, supporting the implementation of the new auditor reporting standards, and addressing auditing issues related to financial institutions, including fair value estimates and loan impairment.

Audits of financial statements, however, are not the only service provided by professional accountants for which there is a demand for international standards. I am therefore pleased that in September the board completed the revision of its umbrella assurance standard, ISAE 3000. This standard serves as an important platform for a wide range of assurance engagements by both large and smaller practices, and supports continued innovation in services. We also established our Innovation, Needs, and Future Opportunities Working Group to monitor emerging developments in assurance and related services. Our forward strategy, therefore, will also include efforts to monitor the adoption and implementation of IAASB’s other assurance and related services standards, and consideration of new assurance standards, e.g. in relation to Integrated Reporting.

In Conclusion

Our efforts need to continue to be focused and ambitious. All of us, in our individual capacities and collectively, need to seize the global momentum for stronger corporate and auditor reporting. There will be challenges, but they are not insurmountable.

There will continue to be critical comments with regard to the relevance and effectiveness of audit and assurance, in light of the financial crisis and findings from audit inspections across the world. However, underlying these comments are the positive expectations that many have of the contributions that professional accountants can make to this global, dynamic marketplace, and, in turn, to financial stability and trust. That is the public interest that all of us want to serve.

For me, the essence of our role has not been better expressed than through the compelling words of Mahatma Gandhi: “Be the change that you wish to see in the world.”

Thank you for your attention.

The International Public Sector Accounting Standards Board (IPSASB) has published Exposure Draft (ED) 54, Reporting Service Performance Information.

ED 54 builds on a consultation paper issued in 2011, and provides good practice guidelines on reporting service performance information. Development of this ED reflects the IPSASB’s commitment to addressing public sector-specific reporting issues, including those that relate to information additional to the financial statements.

“Service provision is the primary function of the vast majority of public sector entities,” said IPSASB Chair Andreas Bergmann. “Service performance information is essential for users’ evaluations of the services provided and the efficient and effective use of resources by public sector entities to deliver those services. ED 54 provides guidance that aims to support the quality of service performance information presently reported by entities and provide a useful framework for entities that have not yet started to report service performance information.”

 ED 54 provides principles applicable to the presentation of service performance information and definitions that aim to establish a standardized service performance information terminology. It allows that service performance information may be presented in either the same report as the financial statements or in a separate report, and provides factors to consider when making that decision. It addresses the reporting entity and reporting period for service performance information. ED 54 also provides guidance on the choice of performance indicators that show an entity’s achievements with respect to its service performance objectives, disclosures about the basis of the reported information, and service performance related narrative discussion and analysis.

How to Comment
To access the ED and the At-a-Glance summary of the ED, or to submit a comment, please visit the IPSASB website. Comments on the ED are requested by May 31, 2014. The IPSASB encourages IFAC members, associates, and regional accountancy bodies to promote the availability of these EDs to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland.

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 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

#   #   #

Thank you for signing up to receive eNews from the International Ethics Standards Board for Accountants (IESBA, the Ethics Board). This edition provides a summary of topics discussed and decisions made at the Ethics Board’s meeting held December 4-6, 2013, in New York, New York, USA. See the Meeting Page for the meeting highlights, including a podcast summary and agenda papers. Visit our podcast channel in iTunes to subscribe.

Did you know IFAC publishes additional sector-specific electronic newsletters? Sign up for additional publications in My Subscriptions and follow us on Twitter and Facebook for additional news.

The International Auditing and Assurance Standards Board (IAASB) today released for public comment its Proposed Strategy for 2015–2019 and Proposed Work Program for 2015–2016. The proposals emphasize the IAASB’s commitment to developing and maintaining high-quality International Standards on Auditing (ISAs) to be adopted and implemented globally.^[1] At the same time, they reflect the importance of the IAASB staying abreast of emerging developments to ensure its work remains relevant to its wide range of stakeholders.

Titled Fulfilling our Public Interest Mandate in an Evolving World, the strategy proposals set out the following objectives for the five-year period:

• Develop and maintain high-quality ISAs that are accepted as the basis for high-quality financial statement audits 
• Ensure the IAASB’s suite of standards continues to be relevant in a changing world by responding to stakeholder needs
• Collaborate and cooperate with contributors to the financial reporting supply chain to foster audit quality and stay informed

“Stakeholders internationally expect the IAASB to not only produce high-quality standards that enhance audit and assurance practices, but also to carry out its efforts in coordination and cooperation with key stakeholders so that the standards it develops can achieve global acceptance and work, and can be seen to work, internationally,” said Prof. Arnold Schilder, IAASB chairman. “Our strategic objectives help meet these important expectations and provide the basis upon which the IAASB can effectively identify and respond to the most pertinent public interest issues.”

Within the context of the proposed strategic objectives, the IAASB intends to focus its efforts in 2015–2016 on the topics of quality control, professional skepticism, and special audit considerations relevant to financial institutions. Also envisaged is work to support the effective implementation of the IAASB’s new and revised Auditor Reporting standards (which are expected to be finalized in 2014), further information gathering on potential future work topics such as group audits and assurance on Integrated Reporting, and development of a post-implementation review process for the IAASB’s assurance and related services standards. The IAASB consultation also set out the topics that it intends to prioritize in 2017 and beyond in support of its strategic objectives.

How to Comment
The IAASB invites all stakeholders to comment on the IAASB Consultation Paper, Proposed Strategy for 2015–2019 and Proposed Work Program for 2015–2016. To access the Consultation Paper or submit a comment, visit the IAASB’s website at www.iaasb.org/publications-resources. Comments are requested by April 4, 2014.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC).

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 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

#   #   #

This summary provides an overview of Exposure Draft (ED) 54, Reporting Service Performance Information.

The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) today released for public consultation its Proposed Strategy and Work Plan, 2014-2018. The proposed Strategy and Work Plan builds on the strong base established by the revised Code of Ethics for Professional Accountants (the Code) issued in July 2009, which clarified requirements for all professional accountants and significantly strengthened independence requirements for auditors.

The Consultation Paper was developed with input from a survey conducted earlier this year and other consultative activities. It lays out four proposed strategic themes to reflect the Ethics Board’s vision for the medium to longer term and to guide its work plan over the five-year period: maintaining a high-quality Code for application by professional accountants globally; promoting and facilitating the adoption and effective implementation of the Code; evolving the Code for continued relevance in a changing global environment; and increasing engagement and cooperation with key stakeholders.

“The board’s mandate is to develop high-quality ethics standards for the profession worldwide. Therefore, the board’s primary strategic priority should be to ensure that the Code continues to be a robust set of standards in the public interest,” said Jörgen Holmquist, chair of the Ethics Board. “The board also recognizes the strategic importance of advancing adoption and effective implementation of the Code to further contribute to public trust and confidence in the profession, and of broadening and deepening stakeholder engagement as an essential ingredient to the quality of its standards and their global acceptance. It is critical that the board hears from stakeholders as to whether the actions and activities it is proposing to prioritize appropriately support these objectives.”

The Consultation Paper includes four work streams that the Ethics Board agreed to pursue in early 2012 in response to a strategic review of external developments: a review of the Code provisions addressing long association of senior personnel with an audit client, and non-assurance services, both with respect to independence;  a review of the structure of the Code with a view to enhancing its usability and accessibility; and a review of Part C of the Code addressing professional accountants in business.

“The proposed Strategy and Work Plan reflects the Ethics Board’s goal of further reinforcing and promoting the Code as a leading set of ethics standards for the global profession,” noted IESBA Technical Director Ken Siong, adding, “Ultimately, this consultation aims to ensure that the board’s proposed strategic priorities are aligned with the needs of its stakeholders and that it is best utilizing and directing its resources to achieve its objectives.”

How to Comment
The Ethics Board invites all those with an interest in international ethics standards for the accountancy profession to respond to the Consultation Paper, which includes specific questions to guide responses. To access the Consultation Paper and submit a comment, please visit the Ethics Board website at www.ethicsboard.org. Comments are requested by February 28, 2014. The Ethics Board encourages national and regional professional accountancy organizations to share the Consultation Paper with and encourage participation from their members and employees.

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) 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.

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 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

#   #   #