In a letter issued this week, the International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in more than 120 countries, calls for broad and swift action by the G-20 leaders at their June 26-27 meeting in Toronto, Canada, to greatly improve government transparency and accountability as a means toward global fiscal sustainability.

“Governments require that private sector companies report high-quality financial information to their investors and stakeholders. It’s time for the public sector to practice what it preaches,” said Ian Ball, CEO of IFAC. “The problems associated with public finance and government debt require a coordinated, international approach that global leaders have been slow to address. Sovereign debt concerns in European countries illustrate the stark implications and urgency of this issue – confidence in sovereign debt has been seriously damaged by accounting and auditing failures. These failures have occurred not only on the national level but also on the regional, state and local levels.” 

Taxpayers, investors and citizens in all nations are entitled to accurate and complete financial information about their governments, according to IFAC. They should demand that their governments provide a comprehensive picture of fiscal performance and position. This includes an accrual-based measure of surplus or deficit as well as full details of debt, other liabilities, contingent liabilities and guarantees, and future expenditures and the resources needed to support them.

IFAC’s letter contains several specific, actionable recommendations, including:

The G20 Should Encourage Governments to Adopt Accrual-Based Accounting 

Cash basis accounting, which is employed by governments in some of the world’s largest and most interconnected economies, lacks transparency and accountability. It does not measure many of the assets and liabilities necessary to assess fiscal policy and fiscal sustainability. Governments should instead adopt accrual-based accounting, which is required of public companies in all countries. This would provide a much better indication of all of a government’s liabilities, significantly improve the quality of financial management, and provide better information for all stakeholders.

“Despite the clear benefits of accrual-based accounting – and the fact that governments require it for public companies – many governments continue to use cash accounting,” continued Mr. Ball. “Politicians often criticize businesses for being focused on short term financial results, but the typical public sector financial report does not adequately reflect all assets and liabilities, some of which have significant long term financial implications. Indeed, many countries have substantial civil service pension liabilities that are not reflected in their financial reports at all. Accrual accounting will compel governments to take a longer term view and be honest with citizens about how today’s decisions will need to be paid for by future generations.”

Improve Transparency and Accountability of Stimulus Programs and Bailouts
The global financial crisis has forced governments to act quickly to alleviate the collapse of financial markets and prevent problems from spreading from one country to the next. Many governments have launched unprecedented stimulus programs, to provide jobs, economic activity and long-term investment in domestic industries, and bailout plans, to provide monies for banks, purchase “toxic” assets, and modify loans for mortgage-holders. These actions will result in new assets, liabilities, and contingent liabilities being assumed by governments, all of which have long-term economic implications.

These stimulus and bailout programs must have mechanisms for clear, comprehensive financial reporting so that their actual and intended outcomes can be understood by investors, taxpayers and other stakeholders, are measurable, and restore confidence in government fiscal transparency. These mechanisms will also help prevent inefficiency, mismanagement and corruption.

Adopt International Standards to Improve the Quality of Financial Information
Global accounting and auditing standards for both the public and private sectors will improve the quality of financial information around the world and make it more consistent. This, in turn, will facilitate the comparability of financial information, create a more level playing field for global investors, facilitate cross-border investment flows, and enhance economic and financial stability.

“We urge the individual G-20 governments to adopt and implement common global standards for public sector accounting – as well as for auditing, auditor independence and private sector accounting –as a demonstration of their leadership on these global issues,” Mr. Ball said.

Importantly, public sector accounting standards will provide better information regarding systemic risks associated with government debt and liabilities. While the use of international standards would not necessarily have helped avoid the current crisis, the financial information from such standards would help public officials and other groups assess the implications of governments’ fiscal decisions, and could have mitigated the current crisis and help prevent future crises.

“It is critical for taxpayers, investors and the general public to understand the full impact of decisions made by governments with respect to their financial performance, financial position and cash flows,” concluded Mr. Ball. “As the stewards of taxpayer funds, governments must be accountable for and transparent about the financial impact of their decisions on this and future generations. Anything less is a serious violation of the public trust.”

The letter to the G20 with the full recommendations is posted on the IFAC website (www.ifac.org/financial-crisis).

About IFAC
IFAC (www.ifac.org) 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 159 members and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce.

Good afternoon and thank you for that kind introduction.

Before I begin, let me first express my deep appreciation to IOSCO for inviting me to speak here today and for sponsoring this very important conference. 

I'd also like to take this opportunity to sincerely thank IOSCO's representatives for participating in the work of the IAASB in developing the International Standards on Auditing, or ISAs. 

As I'm sure many of you know, IFAC and IOSCO have a long-standing relationship. But I think our relationship has been especially meaningful over the past six to seven years. We were especially proud to receive IOSCO's letter last year in which it officially endorsed the IAASB's ISAs.

We have also been pleased to work with IOSCO as part of the Monitoring Group in its review of the IFAC reforms and look forward to responding to the consultation paper issued recently.

First may I say what a great pleasure it is to present on the work of the committee that I chair here in my home country. Today I will share with what the committee is doing, and plans to do, to support the SMP constituency--and in turn assist small- and medium-sized entities (SMEs). I will conclude this presentation with a look into the future in particular, the committee’s role in implementing the recommendations. 

IFAC today released for comment an exposure draft (ED) setting out its proposed 2010-2012 strategy and work plan prepared by its Professional Accountants in Business (PAIB) Committee.

The proposed plan outlines the direction and priorities of IFAC's services relevant to professional accountants in business. This public consultation is a first-time opportunity for IFAC member bodies and other key stakeholders to comment on the proposed vision, strategic direction, and corresponding work plan for this key constituency.

The proposed strategic direction focuses on enhancing the profile, influence, and relevance of professional accountants in business and identifies two specific objectives:

1. Increasing awareness of the important roles professional accountants play in creating, enabling, preserving, and reporting value for organizations and their stakeholders; and
2. Supporting the professional accountants in business within IFAC member bodies by facilitating the communication and sharing of good practices and ideas.

"Well over half of the total number of professional accountants is within enterprises, and these professional accountants in business play a wide range of roles," said PAIB Committee Chair Roger Tabor. "The proposed strategic direction provides a basis for IFAC to determine how best to serve this large, diverse constituency at a global level."

How to Comment
To access the exposure draft or submit a comment, please visit www.ifac.org/PAIB/ExposureDrafts.php. Comments on the exposure draft are requested by July 14, 2010.

About IFAC
IFAC (www.ifac.org) 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 159 members and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce.

This handbook contains the pronouncements on financial reporting for the public sector issued by the International Public Sector Accounting Standards Board (IPSASB). It also includes reference material on the IPSASB and background information about IFAC.

Parts I and II of the handbook are available to purchase as a three-volume set with the 2010 Handbook of the Code of Ethics for Professional Accountants.

The International Public Sector Accounting Standards Board (IPSASB) published today its 2010 Handbook of International Public Sector Accounting Pronouncements. In two volumes, the handbook contains all current IPSASB pronouncements, including 31 accrual-based standards and the IPSASB's cash basis standard. Five of these standards were approved by the IPSASB in 2009, including requirements and guidance for all aspects of accounting for financial instruments, as well as intangible assets and agriculture.

"The handbook represents the substantial completion of the IPSASB's convergence program and over a decade of work," said IPSASB Chair Andreas Bergmann. "It provides the only global and comprehensive set of accounting requirements and guidance developed specifically for preparers of public sector financial statements. It is also a strong foundation for the next phase of the IPSASB's work, including developing the IPSASB's Conceptual Framework- a set of principles that, following completion, will underpin the IPSASB's standard-setting activities for the long-term-and maintaining alignment with the International Accounting Standards Board's International Financial Reporting Standards (IFRSs)."

Under the convergence program, the IPSASB achieved substantial convergence with the IFRS requirements as of December 31, 2008, that are relevant for the public sector.

How to Order
The handbook can be downloaded in PDF format or ordered in print from IFAC's Publications and Resources site: web.ifac.org/publications. Print copies of parts I and II of the handbook are available as a three-piece boxed set with the Handbook of the Code of Ethics for Professional Accountants. The boxed set is being offered free of charge, however shipping and handling charges apply. Orders can also be placed by calling IFAC at +1 (212) 471-8722.

The IPSASB encourages IFAC members, associates, regional accountancy bodies, and firms to use these materials and to promote their availability to members and employees.

About the IPSASB
The IPSASB (www.ifac.org/publicsector) 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.

About IFAC
IFAC (www.ifac.org) 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 159 members and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. In addition to setting international public sector financial reporting standards through the IPSASB, IFAC sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high-quality performance by professional accountants in business.

The International Federation of Accountants (IFAC) and The Prince's Accounting for Sustainability (A4S) Project have entered into a memorandum of understanding to support the global accountancy profession's role in developing sustainable organizations.

Organizations are increasingly seeking new ways to maintain their economic performance and contributions to society in the face of challenge and crisis. Perhaps the most critical challenge facing business and society generally is to live within our ecological limits, while continuing to enjoy economic prosperity. IFAC and A4S believe that an essential part of the answer lies in going beyond traditional ways of thinking about performance and embedding sustainability into strategy, governance, performance management, and reporting processes.

Key priorities to support the work of professional accountants in embedding sustainable practices include:

• Raising awareness and facilitating sharing and collaboration across the global accountancy community, for example, through the development of a community website for professional accountancy organizations, business leaders, academics, and other experts to exchange ideas and share good sustainability practice;
• Establishing an international integrated reporting committee to develop a new reporting model that will better reflect the interconnected impact of financial, environmental, social, and governance factors on the long-term performance and condition of an organization; and
• Incorporating accounting for sustainability within professional training and education.

Professional accountants in organizations support the sustainability efforts of the organizations they work for in leadership roles in strategy, governance, performance management, and reporting processes. They also oversee, measure, control, and communicate the long-term sustainable value creation of their organizations.

Paul Druckman, Chairman of the A4S Executive Board, states, "We will only be able to achieve a sustainable future if all organizations, and all individuals within those organizations, recognize the role that they can and need to play. Effective action by the accounting and finance community to better account for sustainability is an essential part of the response. The collaboration between IFAC and A4S will help to make this a reality."

"Professional accountants play a vital role in helping to create sustainable organizations and markets, especially in the areas of accountability and measurement of results," says Robert Bunting, President of IFAC. "I am delighted that our two organizations are working together to advance the role of sustainability leadership and reporting at a global level, fostering collaboration with key stakeholders and developing best practices for integrating sustainability issues in the way we do business."

About IFAC
IFAC (www.ifac.org) 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 159 members and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce.

About the A4S Project
The Prince's Accounting for Sustainability Project works with businesses, investors, the public sector, accounting bodies, NGOs and academics to develop practical guidance and tools for embedding sustainability into decision-making and reporting processes. To date, the project has involved the collaboration of more than one hundred and fifty public and private sector organizations.

The International Auditing and Assurance Standards Board (IAASB) today released a proposed new assurance standard that addresses the process of compiling pro forma financial information included in prospectuses. Recognizing the increasingly integrated nature of global capital markets and the importance of pro forma financial information in the public's investment decisions, the newly proposed standard is designed to enhance public confidence in how such financial information is produced.

The proposed standard, Assurance Reports on the Process to Compile Pro Forma Financial Information Included in a Prospectus, deals with information-necessary in many forms of domestic and cross-border securities offerings-that illustrates the impact of an event or transaction on an issuer's financial information. It provides comprehensive guidance on the nature and extent of a practitioner's work when reporting on whether the process of compiling pro forma financial information has been properly followed. It also covers related engagement acceptance and reporting considerations, and provides an illustrative report arising from such an engagement.

"Our research indicates that many jurisdictions around the world need a common, high-quality standard that can be consistently, globally applied. Our goal, therefore, is to guide and contribute to the quality of practice in an area of great importance to capital markets," said Arnold Schilder, Chairman of the IAASB.

While all stakeholders are invited to comment on the proposed ISAE 3420, the IAASB recognizes that pro forma financial information is of particular interest and relevance to issuers, investors, analysts, professionals working at securities exchanges, and regulators. Accordingly, the IAASB invites respondents from these constituencies in particular to comment on the proposal, including the content of the illustrative practitioner's report.

"Internationally, investors, regulators, and other stakeholders want and expect consistent, quality work by assurance practitioners, as well as clear and understandable reporting. Over the years, however, different countries have developed different practices in relation to reporting on the process of compiling this type of information, and this is a situation that is not sustainable in the public interest," noted James Gunn, IAASB Technical Director. "The proposed standard seeks to address this issue by helping to create a level playing field for practitioners for such engagements, thereby enabling them to better meet the expectations of investors, regulators, and others."

How to Comment
To access the exposure draft or submit a comment, visit the IAASB's website at www.iaasb.org/ExposureDrafts.php. Comments on the exposure draft are requested by September 30, 2010.

About the IAASB
The IAASB (www.iaasb.org) 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 IFAC.

About IFAC
IFAC (www.ifac.org) 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 159 members and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Public Sector Accounting Standards Board (IPSASB) today released for comment exposure draft (ED) 44, Improvements to International Public Sector Accounting Standards (IPSASs).The International Public Sector Accounting Standards Board (IPSASB) today released for comment exposure draft (ED) 44, Improvements to International Public Sector Accounting Standards (IPSASs).

The release continues the IPSASB's improvements project, an annual undertaking intended to enhance the usability of IPSASs and thus facilitate global convergence. The IPSASB uses the improvements project to make non-urgent but necessary amendments to IPSASs.

ED 44 includes proposed improvements to existing IPSASs to maintain alignment with International Financial Reporting Standards (IFRSs), as well as other general improvements. The proposed amendments are related primarily to requirements for recognition, measurement, and disclosure and do not represent substantive revisions to the content of existing standards.

"Financial reporting in the public sector is dynamic," said Andreas Bergmann, IPSASB Chair. "The IPSASB must continually reassess the IPSASs to ensure that they are relevant and up to date and that they are easy to use by preparers of public sector financial statements."

How to Comment
To access the exposure draft or submit a comment, visit the IFAC website at www.ifac.org/Guidance/EXD-Outstanding.php. Comments on the exposure draft are requested by June 30, 2010.

The IPSASB encourages IFAC members, associates, and regional accountancy bodies to promote the availability of this exposure draft to their members and employees.

About the IPSASB
The IPSASB (www.ifac.org/publicsector) 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.

About IFAC
IFAC (www.ifac.org) 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 159 members and associates in 124 countries, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. In addition to setting international public sector financial reporting standards through the IPSASB, IFAC sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high-quality performance by professional accountants in business.

Thank you, Stephan. It's a pleasure to be here this afternoon and good afternoon to you. Like you, I'm contemplating a longer stay here than I anticipated, but it's OK. In fact, it's wonderful.

As you know, [and] as I'm sure speakers have mentioned earlier in this conference, Venice is the place where accounting was invented by Luca Pachioli. And, of course, Venice is famous for a Venetian merchant who opened up the Eastern routes of the trade: Marco Polo. But I'll come back to that in a minute.

First, I'd like to congratulate our host, CNDCEC [Consiglio Nazionale dei Dottori Commercialisti e Degli Esperti Contabili]. I'm sorry, Claudio, I can't say the whole name. I'm an American and Italian just does not flow from my lips. But I would like to thank you for your interest in SMP [small and medium practice] and SME [small- and medium-sized entity] issues.

I know that Italy is a hotbed of entrepreneurialism, where small companies manufacture very high-quality consumer goods and sell them throughout the world. Most of those companies are family owned and most of those companies are served by SMPs.

Italy contributes greatly to IFAC. We have a number [of members] from the [Italian] member body on the IFAC Board and, of course, we have a very important member on the SMP Committee. Italy has also done the translation of the ISAs into Italian, which [will be] critical for adoption of the ISAs by the European Union.

I'd also like to thank FEE [Fédération des Experts Comptables Européens]. I believe that FEE defines for IFAC what a regional organization ought to be. It's certainly the largest and, I believe, the best organized of all of the IFAC-recognized regional bodies. I congratulate you on holding this conference, and I believe that you are doing something very important for one of my pet projects.

Why is it one of my pet projects? I do not pretend to be an SMP. My firm has over 1,500 professionals in it. But, we serve SMEs. We serve a lot of SMEs . We believe they are critical to the functioning of the U.S. economy and critical to the functioning of almost all economies, and I will again come back to that.

Video Interviews from the Event

http://www.press.cndcec.it/Portal/WebTV/Evento.aspx?Id=e24fdc3c-cfc1-4056-83fa-62dcda1f5830

http://www.press.cndcec.it/Portal/WebTV/Evento.aspx?Id=106cea8b-75bc-4b8d-89e2-bab5e0d6a698