This response to the International Financial Reporting Standards for Small- and Medium-Sized Entities (IFRS for SMEs) was prepared by the IFAC Small and Medium Practices (SMP) Committee in collaboration with IFAC public policy and regulation staff.

The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 129 countries and jurisdictions, today welcomed the recent release of the International Monetary Fund (IMF)’s paper, Fiscal Transparency, Accountability, and Risk. The paper highlights the seriousness and extent of the current inadequacies in governments’ fiscal reporting and accountability. It also underscores the immense risks associated with these shortcomings.

In particular, IFAC welcomes the IMF’s support for the International Public Sector Accounting Standards, the globally accepted, high-quality accrual-based standards issued by the International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting body. These standards promote greater transparency and accountability in public sector finances and allow for enhanced monitoring of governments’ fiscal positions.

“The current sovereign debt crises have starkly revealed the deficiencies in many governments’ reporting practices and consequently their understanding of their actual fiscal positions,” said Ian Ball, IFAC CEO. “IFAC believes that governments around the world must implement necessary institutional reforms to strengthen governmental financial management, and thereby protect the public, as well as investors in government bonds. This will better allow governments to anticipate and manage fiscal shocks, and also help reduce the risk of future debt crises. IFAC applauds the IMF’s work in this area to support the aim, which we share, of strengthening public sector financial reporting and financial management.”

IFAC supports the key positions presented in this paper. Specifically, IFAC recognizes the importance of:

• Updating fiscal transparency standards to address gaps in, and inconsistencies between, individual jurisdictions’ standards;
• Complying with international standards for public sector financial reporting, including reporting all assets and liabilities by, for example, using IPSASs;
• Including all entities that have fiscal implications for governments (including central banks, public entities, and corporations outside of the general governments) in fiscal forecasting, budgeting, and financial reporting;
• Evaluating countries’ compliance with fiscal transparency standards using, for instance, auditing and assurance as a means for assessing compliance with standards;
• Strengthening incentives for improvements in fiscal transparency practices;
• Strengthening the institutional relationships among international standard-setters;
• Aligning the methodologies and standards for fiscal forecasting, budgeting, and financial reporting to reinforce the links between fiscal transparency and long-term sustainability;
• Building the capacity of professional accountancy organizations and promoting the role they play in improving government financial reporting practices; and
• Strengthening fiscal transparency and public sector financial management in all nations and, in particular, in developing and emerging nations.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The Notice of the Call for Nominations for Boards and Committees in 2014 was issued today, along with its companion guide, Developing a Nominations Strategy. These in-depth documents, located on the IFAC website, are designed to help stakeholders identify the most qualified nominee for each available position on the boards and committees. They contain strategic and practical advice for nominating organizations and individuals, allowing them to make more informed decisions in their selections and to understand the requirements and expectations of nominees.

All vacancies on the independent standard-setting boards* are open for nominations by the public including, for the first time, the International Public Sector Accounting Standards Board. The Nominating Committee follows an open and transparent process in selecting the best candidates for the available positions, while also aiming to achieve gender, regional, and professional balance.

Each year, approximately one-third of the 155 positions on the boards and committees have openings, though serving members may be reappointed for some of those positions. For more information about the Nominating Committee, its due process, or guidance in selecting the best candidate, please visit www.ifac.org/about-ifac/structure-governance/nominating-committee.

The official Call for Nominations for Boards and Committees in 2014 will be issued on January 15, 2013, and nominations may be submitted from January 15 to March 15, 2013. All applications should be submitted electronically via the IFAC nominations database; instructions on how to submit a nomination will be included in the Call for Nominations.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

*The independent standard-setting boards are the International Auditing and Assurance Standards Board (IAASB), International Accounting Education Standards Board (IAESB), International Ethics Standards Board for Accountants (IESBA), and International Public Sector Accounting Standards Board (IPSASB).

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On October 16, 2012, the second steering committee meeting for the IFAC-Donor Community MOSAIC (Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration) was held in London, UK, hosted by the Chartered Institute of Public Finance and Accountancy.

A key focus for discussion was the draft Professional Accountancy Organization Global Development Report (GDR). This draft report, co-financed by the African Development Bank, Asian Development Bank, Inter-American Development Bank, and the World Bank, aims to provide a) a high-level report regarding the status of professional accountancy organization (PAO) development worldwide; b) a shared and mutual understanding of the development of these organizations; and c) direction to MOSAIC’s goal of increasing PAO capacity to improve the quality of public and private sector accounting and financial management and ultimately enhance economic growth and reduce poverty.

The content and completion of the draft GDR represents a collective effort on the part of MOSAIC signatories, observers, and key stakeholders and has allowed for a variety of perspectives on the subject of global PAO development. The draft GDR is available for comment online.

Any comments should be sent to the interim MOSAIC Secretariat by December 10, 2012. 

Mr. Sylph discusses IFAC, the global accountancy landscape, the MOSAIC initiative, and sovereign debt.

Welcome to International Auditing and Assurance Standards Board (IAASB) eNews.

In This Issue: 

1. Focus on Auditor Reporting—Feedback on June 2012 Invitation to Comment
2. IAASB Proposes Standard Enhancing Auditor Responsibilities for Disclosures Beyond the Financial Statements
3. IAASB Staff Q&A Publication Addresses Proportionate Application of ISQC 1
4. Directions in Auditing and Assurance: Challenges and Opportunities
5. Upcoming IAASB Meeting
6. Other Relevant IFAC Initiatives
7. Share IAASB eNews with Your Colleagues

1. Focus on Auditor Reporting—Feedback on June 2012 Invitation to Comment

Auditor reporting continues to be the IAASB’s foremost priority, and significant resources will be dedicated to the topic during 2012–2014. To solicit feedback on its June 2012 Invitation to Comment (ITC): Improving the Auditor’s Report, the IAASB held three well-attended global roundtables in North America, Europe, and Asia Pacific. More than 190 investor, analyst, regulatory and oversight, preparer, academic, those charged with governance, standard-setter, and firm representatives from more than 20 countries participated in the roundtables. Information, including audio recordings, is available on the IAASB’s Auditor Reporting Roundtables page.

To date, more than 160 comment letters have been received on the ITC. The IAASB’s discussion of these comments will commence at its December 2012 meeting, followed by an additional IAASB meeting planned for February 2013 to enable continued rapid progress toward an exposure draft of revised auditor reporting standards in 2013. To access the ITC comments, please visit the IAASB’s ITC web page.

2. IAASB Proposes Standard Enhancing Auditor Responsibilities for Disclosures Beyond the Financial Statements

The IAASB has released for public comment proposed International Standard on Auditing (ISA) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor’s Report Thereon.

The proposed standard clarifies and enhances the scope and focus of auditor efforts on “other information”—that is, information included in documents containing or accompanying the entity’s audited financial statements. The proposals recognize that significant changes in financial reporting have occurred over the last two decades regarding the information issued in connection with an entity’s financial statements and the manner in which it is shared with users. The proposals extend the scope of the extant standard and the auditor’s responsibilities and include suggested auditor reporting responsibilities.

The deadline for comments is March 14, 2013. To submit a comment, click here.

3. IAASB Staff Q&A Publication Addresses Proportionate Application of ISQC 1

IAASB Staff released a Questions & Answers (Q&A) publication titled Applying ISQC 1 Proportionately with the Nature and Size of a Firm. The publication highlights how the design of International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, enables it to be applied in a proportionate manner.

ISQC 1 applies to firms of all sizes that provide services covered by the IAASB’s international standards, including International Standards on Auditing (ISAs), International Standards on Review Engagements (ISREs), International Standards on Assurance Engagements (ISAEs), and International Standards on Related Services (ISRSs).[k1] 

While ISQC 1 applies to all firms, the Q&As focus on matters that are likely to be of particular relevance to the application of ISQC 1 in the context of smaller firms. Smaller firms, as well as smaller public sector audit organizations, should find the publication helpful in achieving an effective and efficient implementation of ISQC 1.

This initiative follows the 2009 IAASB Staff Q&A publication, Applying ISAs Proportionately with the Size and Complexity of an Entity.

4. Directions in Auditing and Assurance: Challenges and Opportunities

IAASB Chairman Prof. Arnold Schilder recently was a guest speaker at a seminar in Melbourne, Australia, hosted by the Australian Auditing and Assurance Standards Board. His presentation–Directions in Auditing & Assurance: Challenges and Opportunities–focused on the impact of the global environment on the relevance of an audit, and included the response of the IAASB to these challenges. Particular topics included the IAASB’s Invitation to Comment on auditor reporting, the IAASB’s projects on audit quality and disclosures, and alternatives to audits aimed at meeting the needs of small- and medium-sized entities (SMEs).

Other challenges and opportunities to enhance relevance were also discussed, including how to reinforce and support professional skepticism, and how to deal with emerging developments, such as integrated reporting.

5. Upcoming IAASB Meeting

The IAASB will meet in New York, USA, December 10–13, 2012. As a reminder, all meeting agenda materials are publicly available and posted on the IAASB's website in advance of IAASB meetings.

Topics that will be discussed include: auditor reporting, audit quality, disclosures, using the work of internal auditors, and the revision of International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

In addition, meeting highlights, a summary podcast, and complete audio recordings are posted after each meeting. Visit the IAASB Meetings page.

6. Other Relevant IFAC Initiatives

Initiatives of IFAC committees and other independent standard-setting boards supported by IFAC may be of interest to those who follow the work of the IAASB, including the following:

International Education Standard (IES) 6, Initial Professional Development – Assessment of Professional Competence (Revised)

Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Elements and Recognition in Financial Statements

Responding to a Suspected Illegal Act―IESBA Proposes Changes to Code of Ethics to Address Illegal Acts

PAIB Committee Response to the IAASB Invitation to Comment: Improving the Auditor’s Report

IFAC and the IIRC Sign MoU on Cooperation, Collaboration For IR

7. Share IAASB eNews with Your Colleagues

The IAASB issues regular eNews updates to keep you apprised of the board's activities and recent publications. Please forward this eNews to any interested colleagues and let them know they can register and subscribe to this and other eNews bulletins.

The SMP Committee submitted this comment letter to the International Auditing and Assurance Standards Board (IAASB)'s Invitation to Comment: Improving the Auditor's Report. 

The PAIB Committee submitted this comment letter to the Committee of Sponsoring Organizations of the Treadway Commission (COSO) on its Internal Control over External Financial Reporting: Compendium of Approaches and Examples and Illustrative Tools for Assessing Effectiveness of a System of Internal Control.

The International Federation of Accountants (IFAC), the global organization for the accountancy profession, today announced the election of Warren Allen, of New Zealand, as president for a two-year term ending November 2014. The IFAC Council also approved the nomination of Olivia Kirtley, of the United States, as deputy president, a role previously held by Mr. Allen.

“Ours is a global profession—in fact, probably the only truly global profession,” said Mr. Allen. “We have much to celebrate, but there are still many demands to be met. I am completely committed to meeting these demands—to working with the boards and committees, IFAC member bodies, and IFAC’s exceptional management team and staff to deliver on all of the priorities contained in the strategic plan.”

Mr. Allen has served on the IFAC Board for six years. He was elected deputy president in 2010, and served as chair of the Planning and Finance Committee, which leads the development of IFAC’s strategic plan. He is executive director and recently retired partner of Ernst & Young New Zealand and is a past president and Life Member of the New Zealand Institute of Chartered Accountants. He previously served on IFAC's Education Committee (now the International Accounting Education Standards Board) for over 10 years, including as chair from 1998 to 2004. 

Ms. Kirtley will serve as deputy president for a two-year term and also take the role of chair of the Planning and Finance Committee. She joined the IFAC Board in 2007, and has chaired the Governance and Audit Committee. Ms. Kirtley is a non-executive director for U.S. Bancorp, Papa John’s International, Inc., and ResCare, Inc. She has also served as chair of the American Institute of Certified Public Accountants (AICPA) and of the AICPA Board of Examiners. For more information on Olivia Kirtley, see her biography.

“As the world continues to face the effects of the sovereign debt and financial crises, and the accountancy profession continues to play its role as a valued leader in the development of strong and sustainable organizations, financial markets, and economies, the experiences Warren and Olivia bring to IFAC and to the accountancy profession are indispensable,” said Göran Tidström, outgoing president of IFAC. “Warren’s experience on the Education Committee and his service as deputy president and as chair of IFAC’s Planning and Finance Committee will serve IFAC well, and Olivia’s experience as a professional accountant in business and corporate director will bring new perspectives to the role. In addition, I am personally very gratified that we have appointed the first female deputy president of IFAC.”

New Board Members Elected
The IFAC Council meeting also included the election of six new members to the IFAC Board: Carol Bellringer (Canada), Norunn Byrkjeland (Norway), Dr. Yugui Chen (China), Pamela Monroe Ellis (Jamaica), Dr. In-Ki Joo (South Korea), and Russell Loubser (South Africa). The IFAC Council also re-elected Jacques Potdevin (France) and Marta Rejman (UK). These additions and re-elections add to the diversity of the IFAC Board—in gender, geography, and professional experience.

IFAC Admits New Members
Six new associates were admitted to the organization: the Albanian Institute of Certified Accountants, the Association of National Accountants of Nigeria, the Institute of Professional Auditors (Russia), the Ordre National des Experts Comptables et des Comptablies Agréés du Togo, the Institute of Certified Public Accountants of Rwanda, and the Ordem Dos Tecnicos Oficiais dos Contas (Portugal) were admitted as associates. Two existing associates were admitted to the organization as members: the Association of Accounting Technicians (UK) and the Mongolian Institute of Certified Public Accountants. Additionally, IFAC officially granted the Pan African Federation of Accountants Recognized Regional Organization status. For a full listing of IFAC members, see the membership section of IFAC’s website.

Approves Strategic Plan 2013-16
As part of the Council Meeting, IFAC’s strategic plan for 2013-16 was approved. The theme of the plan, Leading the Way, signifies IFAC’s intent to solidify its position as the global voice of the accountancy profession and to take on an increased leadership role on key global initiatives.

The plan highlights IFAC’s responsiveness to the major global regulatory shifts that will continue to shape the profession in the coming years. It will continue to focus on its core activity: development, adoption, and implementation of high-quality international standards. In addition, it will continue its focus on improved public sector financial reporting and integrated reporting, and enhance its focus on regulation and public policy. It will continue to take an inclusive approach, with an emphasis on capacity building. And finally, it will pursue a sustainable funding model.

To download the plan, see Strategic Plan for 2013–2016.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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Note to Editors – IFAC Board Members November 2012-November 2013:

Warren Allen (President)
Olivia Kirtley (Deputy President)
Carol Bellringer,* Canada
Jelil Bouraoui, Tunisia
Norunn Byrkjeland,* Norway
Ramon Casals, Spain
Dr. Yugui Chen,* China
Pamela Monroe Ellis,* Jamaica
Ana Maria Elorrieta, Brazil
Rachel Grimes, Australia
Ahmadi Hadibroto, Indonesia
Robert Harris, United States
Robert Hodgkinson, United Kingdom
Prof. In-Ki Joo,* Republic of South Korea
Japheth Katto, Uganda
Russell Loubser,* South Africa
Jacques Potdevin,** France
Ganapathy Ramaswamy, India
Marta Rejman,** United Kingdom
Makoto Shinohara, Japan
Masum Turker, Turkey
Steven Vieweg, Canada

* New IFAC Board members as of November 2012
** IFAC Board member reappointed for a second term in November 2012

IAASB Chair Prof. Arnold Schilder was a guest speaker at the Public Seminar in Melbourne, Australia, presenting Directions in Auditing & Assurance: Challenges and Opportunities. The presentation focused on the relevance of Clarified International Standards on Auditing (ISAs), the Challenges to the Relevance of Audit, Auditor reporting and the IAASB’s Invitation to Comment (ITC), titled Improving the Auditor’s Report, and the challenges and opportunities in setting international auditing and assurance standards.