The Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) today released the second edition of its Guide to Practice Management for Small- and Medium-Sized Practices (PM Guide). First released in 2010 and developed with CPA Australia, the new edition of the guide features guidance on several new topics, including cloud computing and updated resources for further reading.

“As trusted advisors and small businesses themselves, small practitioners need to be well-versed in all areas of operating a practice. The PM Guide can help SMPs achieve proficiency in a variety of areas to ensure their sustainable, long-term success,” said SMP Committee Chair Sylvie Voghel. “Only by properly managing their practices can SMPs successfully compete in today’s market for professional services.”

To help practitioners improve the management of their accounting practices, this guide includes an extended case study, a sample office procedures manual, and numerous checklists and other worksheets. The comprehensive guide is comprised of eight standalone modules that include developing a growth strategy, managing staff and client relationships, risk management, succession planning, and more. It is intended to help IFAC members support their SMP constituents, and can be used for education and training. An updated companion guide to help members make the best use of the PM guide will be released in early 2012.     

IFAC is grateful to its member bodies Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili and Certified General Accountants Association of Canada for providing some of the funding for the PM Guide’s development.

The updated PM Guide can be downloaded free of charge from the SMP Publications and Resources area of the IFAC website. Filter by language to find translations of the first edition. Visit the Small and Medium Practices web pages for access to additional resources, aligned with the topics in each module of the PM guide (see Relevant Links—Practice Management).

About the SMP Committee
The SMP Committee of the International Federation of Accountants represents the interests of professional accountants operating in small- and medium-sized practices and other professional accountants who provide services to small- and medium-sized entities (SMEs). The committee develops guidance and tools, and works to ensure the needs of the SMP and SME sectors are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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It is my pleasure to be here today at this important initiative of ESMA. It brings together international and European leaders responsible for standard setting, supervision and enforcement for today’s capital markets.

The International Auditing and Assurance Standards Board (IAASB) is a global independent standard-setting body. It serves the public interest by setting high-quality standards for auditing, review, other assurance, quality control, and related services. Through its standards, the IAASB seeks to enhance the quality and consistency of practice throughout the world and strengthen public confidence in the auditing and assurance profession at the global and local levels.

I was appointed IAASB Chairman in 2009, when work to establish the clarified International Standards on Auditing (clarified ISAs) was just completed. Many had thought the IAASB program would be much more subdued than it had been. Of course, that has not been the case.

The PAIB Committee submitted its Comment Letter for the International Integrated Reporting Council (IIRC)’s Discussion Paper, Towards Integrated Reporting: Communicating Value in the 21^st Century. The PAIB Comment Letter provides the perspective of a preparer of internal and external business reporting. Among other recommendations, it highlights the need for how-to guidance for preparers to help them develop or redesign their internal processes to ensure readiness, and suggests that materiality needs to be defined in relation to investors and wider stakeholders.

This an update on the initiative the IAESB has undertaken to revise and redraft its suite of eight International Education Standards (IESs).

The Board of the International Federation of Accountants recently approved proposed revisions to the Statements of Membership Obligations (SMOs) to be released for public comment. The SMOs form the basis of the IFAC Member Body Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.

The SMOs are issued under the IFAC Board’s authority, and the Compliance Advisory Panel (CAP), together with IFAC Compliance staff, is responsible for reviewing their continuing relevance and sufficiency.

“Since the SMOs were established seven years ago, the regulatory and standard-setting environments in which IFAC members and associates operate have further evolved. As a result, revisiting the SMOs was necessary to reflect those developments and their impact on the global profession,” explained Manuel Sanchez y Madrid, chairman of the CAP. “We redrafted the SMOs to clarify what is expected of IFAC members when they have varying degrees of responsibility for an SMO area. We also brought the SMOs in line with IFAC’s current strategic focus on adoption and implementation of international standards. In the revision project, we were guided by years of experience with the Compliance Program. We looked at how the SMOs have been interpreted and how the compliance assessment is performed by IFAC staff. As a result, I believe the proposed revised SMOs are easier to understand and apply.”

The SMOs and the Compliance Program are designed to assist IFAC in its mission of strengthening the global accountancy profession. The revised SMOs better articulate the obligations of IFAC membership, and the Compliance Program encourages IFAC members and associates in their ongoing efforts to achieve a higher quality of service.

How to Comment
The IFAC Board and the CAP invite all stakeholders to comment on the proposed revisions. To access the Exposure Draft and submit a comment, visit the IFAC website. Comments on the Exposure Draft are requested by March 5, 2012.

About the IFAC Member Body Compliance Program
IFAC members and associates are required to participate in the IFAC Member Body Compliance Program to demonstrate that they are maintaining their good standing and addressing the requirements of IFAC membership. The Program is the responsibility of the IFAC Compliance Staff, reporting to the Chief Executive. The program is overseen by the Compliance Advisory Panel, which—as one of IFAC's public interest activities—is overseen by the Public Interest Oversight Board (PIOB).

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 127 countries, today commented on the European Commission (EC)’s proposed legislation, issued this week.

IFAC supports initiatives to continually improve audit quality, enhance the role of audit, and safeguard auditor independence, and believes that innovation and evolution are essential for this vital service to maintain its relevance and meet the needs of investors and other stakeholders. As such, IFAC supports the following measures proposed by the EC, which we believe are consistent with views widely expressed in response to the Green Paper:

Compliance with International Standards on Audit (ISAs). This is a significant step forward in convergence to high-quality international standards, which facilitate transparency, consistency, economic growth, and financial stability. IFAC notes that ISAs are designed for audits of entities of all sizes, and are capable of being applied in a manner proportionate with the size and complexity of an entity.

Strengthening of audit committees. Mechanisms and processes required to provide greater roles and responsibilities for audit committees in the spirit of ensuring their independence and technical competence. 

Enhanced dialogue between auditors and regulators. Stronger two-way communication between statutory auditors and oversight bodies supervising public interest entities and regulatory institutions, particularly in the financial services sector, will help in identifying and managing key risks, including systemic risks, and address audit issues that may arise beyond the formal components of the reporting process.

Greater transparency in auditor selection. Greater transparency in the appointment of statutory auditors and firms will enable greater insight for stakeholders into the selection processes, requirements, and expectations.

Greater cross-border mobility for auditors. Legal mechanisms to enable auditors to practice in multiple jurisdictions, including the creation of the European passport, in line with the move toward global regulatory convergence.

Enhanced auditor report.  While the ideal future content and format is not clear, IFAC supports the need to review the auditor report. The International Auditing and Assurance Standards Board has recently issued a consultation paper seeking broad stakeholder views on enhancing the quality, relevance and communicative value of auditor reporting on an international basis. 

However, there are several proposals that IFAC does not support, because there is not sufficient evidence that they will have a positive impact on auditor independence and audit quality, and that the benefits will outweigh the risks and costs. IFAC believes that further research should be conducted to support their feasibility and impact. These include:

Mandatory firm rotation.  Firm rotation puts sustainable, established relationships at risk rather than encouraging trust, longevity, and knowledge capital between client and firm. However, for public interest entities, IFAC does support mandatory partner rotation after a fixed period of time.

Prohibition of non-audit services. Independence is critical, and IFAC supports the independence framework described in the Code of Ethics for Professional Accountants. IFAC’s view is that, in performing both audit and non-audit services, audit firms obtain complementary knowledge and competence that ensures each of these services—such as tax services—can be provided efficiently and to the expected quality.

Further, IFAC believes that the proposed legislation, if passed by Parliament in its current form, could have a negative impact on the audit profession and professional accountancy organizations (PAOs). In particular:

PAOs’ role in audit oversight arrangements. Currently, in many countries, PAOs have been delegated an important role in regulation, continuing education, discipline, and other areas, and there is an appropriate balance between independent oversight and PAO support. Expertise and infrastructure have been established to support these areas; changes are unnecessary and will require rebuilding infrastructure.

Extraterritorial impacts. IFAC is concerned that the proposals will provide significant problems for global public interest entities (PIEs) that require global audit services. IFAC does not believe that requiring firms of a certain size to provide only audit services will enhance global quality and service capability of the profession. It therefore urges that the Parliament consider the implications legislative changes will have for non-European Union states and the global market for audits of multinational companies. 

Finally, IFAC’s view is that a number of the proposals in the proposed legislation were not widely supported by the responses to the EC Green Paper earlier this year.

IFAC responded to the European Commission (EC) Green Paper on Audit Policy: Lessons from the Crisis in December 2010.

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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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