Over 60 partners from 21 international networks of accounting firms met yesterday to share their experiences, industry insights and current practices for audits of financial institutions at a symposium on the Audit of Financial Institutions organized by the Forum of Firms.  Several panels of experts were assembled with the support of the six large networks to lead discussions on various topics including valuation and impairment, liquidity, market confidence, and going concern.

"This event was an initiative by the Forum of Firms to examine current practice in addressing the auditing and financial reporting issues resulting from the current events in the market and to consider the International Auditing and Assurance Standards Board (IAASB's) latest guidance in this area," states David Devlin, Symposium Chair.

The symposium included a review of current accounting and auditing guidance issued in response to the credit crisis.  Symposium participants noted particularly the IAASB's new Staff Audit Practice Alert - Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment.  This is relevant to audits of all entities that have investments in financial instruments, especially those in illiquid markets.

The symposium concluded with a discussion of specific auditing responses appropriate in audits of financial statements of financial institutions.  These include the importance of strong risk management and transparent disclosure for restoring market confidence as well as heightened sensitivity to going concern issues.

 "This symposium was designed to disseminate good practice in an area of critical importance in today's environment and to support the Forum's members in providing the highest quality audit services to their clients and the public," points out David Maxwell, chair of the Forum of Firms.

About the Forum of Firms
The Forum of Firms is an association of networks of international accounting firms that perform transnational audits. Members of the Forum have committed to adhere to and promote the consistent application of high quality audit practices worldwide, including the use of International Standards on Auditing, and the maintenance of appropriate quality control standards in accordance with International Standards on Quality Control issued by the International Auditing and Assurance Standards Board. Through their organizations, members also conduct globally coordinated internal quality assurance reviews on a regular basis and have policies and methodologies that conform to the International Federation of Accountants' Code of Ethics for Professional Accountants. The Transnational Auditors Committee is the Executive Committee of the Forum of Firms and a committee of the International Federation of Accountants.

For additional details on the Forum of Firms, please visit: http://www.ifac.org/Forum_of_Firms/.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. The organization, through its independent standard-setting boards, sets international ethics, auditing and assurance, education, and public sector accounting standards. IFAC also issues guidance to encourage high quality performance by professional accountants in business.

To assist auditors in addressing the challenges of auditing fair value accounting estimates, the staff of the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released an audit practice alert. The alert was developed following consultation with the IAASB's Task Force on Fair Value Auditing Guidance, which is considering the need for new or modified guidance in light of current marketplace issues.

The purpose of the alert is to highlight areas within the International Standards on Auditing (ISAs) that are particularly relevant in the audit of fair value accounting estimates in times of market uncertainty.

James Sylph, Executive Director, Professional Standards, noted, "Recent events in some of the world's largest financial markets continue to call attention to the difficulties in establishing fair values. This Staff Audit Practice Alert responds to calls from the Financial Stability Forum and others for further guidance on the audit of fair value accounting estimates. I believe this alert will be relevant to auditors of entities of all sizes as they prepare for the next audit season."

The alert also directs auditors to the recently revised ISA 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, which was influenced by the changes in the credit markets during 2007. While not effective until audits of financial periods commencing on or after December 15, 2009, it includes guidance that is likely to be useful to auditors planning their 2008 engagements.

The practice alert, Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment, may downloaded free of charge from the IFAC website (www.ifac.org). For more information on the other IAASB initiatives with regard to fair value, please visit http://www.ifac.org/IAASB/ProjectHistory.php?ProjID=0080.

About the IAASB and IFAC
The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released seven International Standards on Auditing (ISAs) following the consideration and approval of due process by the Public Interest Oversight Board (PIOB). The ISAs are in the new style following the conventions developed in the IAASB's project to improve the clarity, and therefore the application, of its standards. Some of the standards released today have been substantively revised, while others have been redrafted to apply the new conventions. The standards will provide further momentum toward achieving convergence and contribute to enhancing understanding of the purpose and scope of audits, and their effective conduct.

The New Standards

The clarified ISAs include ISA 200 (Revised and Redrafted), Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. This fundamental ISA contains an overview of an audit to aid in understanding its purpose and scope; defines the respective authority of the requirements and guidance in ISAs; and contains the most fundamental requirements for auditors. It emphasizes the importance of sound and consistent professional judgment by the auditor, and the necessity for sufficient audit evidence to support the auditor's opinion.

John Kellas, IAASB Chairman, explained, "The issuance of ISA 200 (Revised and Redrafted) is a milestone for the IAASB in that it codifies the principles underpinning the interpretation of standards drafted using the clarity conventions. As the overarching standard to all other ISAs, ISA 200 (Revised and Redrafted) establishes the basic objective and obligations of the auditor, and sets out how the objectives, requirements and guidance in all ISAs are to be understood."

In addition to ISA 200 (Revised and Redrafted), the IAASB also released:

• ISA 320 (Revised and Redrafted), Materiality in Planning and Performing an Audit;
• ISA 450 (Revised and Redrafted), Evaluation of Misstatements Identified during the Audit;
• ISA 530 (Redrafted), Audit Sampling;
• ISA 610 (Redrafted), Using the Work of Internal Auditors;
• ISA 705 (Revised and Redrafted), Modifications to the Opinion in the Independent Auditor's Report; and
• ISA 706 (Revised and Redrafted), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report.

"In clarifying the ISAs, the IAASB aimed to eliminate any possible ambiguity within the extant standards and to drive more consistent application by auditors. The revisions released today in particular upgrade the standards in the important areas of materiality and misstatements and reporting by the auditor," noted Mr. Kellas.

These ISAs form part of the IAASB's program to redraft existing standards following the clarity drafting conventions. * To date, the IAASB has released 22 final clarity redrafted ISAs. The IAASB is on track to finalize its complete set of clarified ISAs by the end of this year. All clarified ISAs will be effective from a single date, for audits of financial statements for periods beginning on or after December 15, 2009.

The ISAs can be downloaded free-of-charge from the IFAC online bookstore at http://www.ifac.org/store.

About the IAASB and IFAC
The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

* Key elements of the clarity drafting conventions include: establishing an objective for the auditor with respect to the subject matter of each standard; clearly distinguishing requirements from guidance on their application; avoiding ambiguity through eliminating the present tense to describe actions by the auditor and using more imperative language where a requirement was intended; and other structural and drafting improvements to enhance the overall readability and understandability of the standards.

The International Federation of Accountants (IFAC) today issued a policy position titled IFAC's Support for a Single Set of Auditing Standards: Implications for Audits of Small and Medium-sized Entities. The paper sets out IFAC's view that International Standards on Auditing (ISAs) are designed to be applicable to audits of financial statements of entities of all sizes, and highlights the ways in which the International Auditing and Assurance Standards Board (IAASB) considers the needs and perspectives of small- and medium-sized entities (SMEs) in the development of those standards.

The paper emphasizes that the consistent use of the ISAs is essential to meeting the public interest expectations of an audit. If auditors intend to issue an ISA audit report, they must comply with the ISAs. This enables a consistent level of assurance to be associated with the word "audit," and allows users to make decisions in the light of a common understanding about the reliability of financial statements. The paper also emphasizes the importance of professional judgment in determining the most effective approach for a particular audit.

The paper points out that SMEs have an alternative to obtaining an audit; they may obtain a review of their financial statements. International Standard on Review Engagements 2400, Engagements to Review Financial Statements, requires a different level of work effort by the practitioner and results in a different and lower level of assurance. The IAASB will be considering changes to this standard in light of the current needs of the marketplace. A new consultation paper, commissioned by the IAASB and developed by staff of several national auditing standard setters, seeks input on the elements that would provide a relevant and cost-effective assurance service that is an alternative to an audit for SMEs in particular. IFAC encourages the broader accountancy community to assist the work of the IAASB by responding to this consultation paper.*

All IFAC policy positions may be downloaded from the IFAC website by going to http://www.ifac.org/Store/.

About IFAC
IFAC (http://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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. The organization, through its independent standard-setting boards, sets international ethics, auditing and assurance, education, and public sector accounting standards. IFAC also issues guidance to encourage high quality performance by professional accountants in business.

*The Consultation Paper, Matters to Consider in a Revision of International Standard on Review Engagements 2400, Engagements to Review Financial Statements, can be accessed at http://www.ifac.org/ED.

The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board of the International Federation of Accountants (IFAC), has issued for comment the first in a series of consultation papers focused on the development of an international public sector conceptual framework. Entitled Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities, the consultation paper represents a landmark achievement for the public sector financial reporting community.

The consultation paper identifies the IPSASB's preliminary views on the objectives and scope of financial reporting, the qualitative characteristics of information included in general purpose financial reports and the characteristics of public sector reporting entities. 

 "Our ultimate goal is to develop a framework that makes explicit the concepts, definitions, and principles that underpin the development of IPSASs," states IPSASB Chair Mike Hathorn. "Since it will apply across countries and jurisdictions with different political systems and forms of government, the framework will recognize the diversity that exists in the many jurisdictions that may adopt IPSASs and help to strengthen the transparency and consistency of financial reporting by governments worldwide. This makes receiving a broad spectrum of comments on this paper, and all our consultation papers, all the more significant."

"Given the important role the conceptual framework will eventually play in the future standard-setting activities of the IPSASB, I strongly urge constituents to respond to the views expressed in this milestone paper," adds Mr. Hathorn.

How to Comment
Comments on the consultation paper are requested by March 31, 2009. It may be viewed and downloaded by going to http://www.ifac.org/Guidance/EXD-Details.php?EDID=0119. Comments may be submitted by email to EDComments@ifac.org. They can also be faxed to the attention of the IPSASB Technical Director at +1 (416) 977-8585, or mailed to the IPSASB Technical Director at 277 Wellington Street West, 6th Floor, Toronto, Ontario M5V 3H2, Canada.   All comments will be considered a matter of public record and will ultimately be posted on the IFAC website.

About IFAC

IFAC (http://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 157 members and associates in 123 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, through its independent standard-setting boards, 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) today released a consultation paper Matters to Consider in a Revision of International Standard on Review Engagements (ISRE) 2400, "Engagements to Review Financial Statements" developed by staff from the national auditing standard setters of New Zealand (Professional Standards Board), Canada (Auditing and Assurance Standards Board), and South Africa (Independent Regulatory Board for Auditors). It is expected that the responses to this paper will assist the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of IFAC, in its consideration of a relevant and cost-effective assurance service that is an alternative to an audit for small- and medium-sized entities in particular.

The paper, commissioned by the IAASB, focuses on a number of significant matters relevant to a revision of ISRE 2400, including the nature and extent of the work a practitioner should perform in an engagement to review financial statements, and how the level of assurance obtained should best be communicated to users.  It also raises numerous discussion points. In so doing, it helps to accelerate the IAASB’s work to revise ISRE 2400, a project that is included in the IAASB's Strategy and Work Program for 2009-2011.

"We are grateful for this collaborative effort on the part of auditing standard setters in South Africa, Canada, and New Zealand, and encourage practitioners, other national auditing standard setters, national professional accountancy bodies, end users of review services, and others with an interest in alternative assurance services, to review and respond to the issues discussed in this paper," emphasizes Jim Sylph, IFAC Executive Director, Professional Standards. "The preliminary input in response to this paper will help guide the Board’s work and enable it to address in a timely and efficient manner the needs of users, practitioners and other stakeholders for robust and appropriate standards," he adds.

How to Comment
Comments on the consultation paper are requested by December 15, 2008. The paper may be downloaded from the IFAC website at http://www.ifac.org/EDs. Comments on the consultation paper may be sent to reviewengagements@ifac.org. They may also be faxed to James M. Sylph, IFAC Executive Director, Professional Standards, at +1-212-286-9570 or mailed to him at 545 Fifth Avenue, 14th Floor, New York, NY 10017, USA. All comments will be considered a matter of public record and will ultimately be posted on the IFAC website

About the IAASB
The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce.  In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board within the International Federation of Accountants (IFAC), is seeking comments on its proposed changes to IPSAS 5, Borrowing Costs, set forth in exposure draft (ED) 35, Borrowing Costs (Revised 200X). 
 
"Public sector entities borrow for a variety of reasons, most of which are unrelated to asset acquisition," said Mike Hathorn, Chair of the IPSASB. "The IPSASB concluded that requiring public sector entities to capitalize borrowing costs as part of the cost of qualifying assets would not satisfy the qualitative characteristics of general purpose financial reporting, particularly related to the reliability of information reported. The immediate expensing of these borrowing costs instead will enhance the accountability of public sector entities." 

Most notably, ED 35 proposes amendments to reflect that in many circumstances the capitalization of borrowing costs as part of the cost of an asset is not appropriate for public sector entities.  This view, a departure from both IPSAS 5 and International Accounting Standards Board's International Accounting Standard 23, Borrowing Costs, is an evolution from public sector consideration of the issue.  The ED proposes that entities recognize borrowing-related expenses, such as interest or loan origination fees, during the period in which they are incurred. The ED also proposes, however, that where entities borrow funds specifically to acquire, construct or produce a qualifying asset, the entity has the option to capitalize those costs as part of the cost of that asset.

ED 35 may be viewed and downloaded by going to http://www.ifac.org/EDs. The IPSASB values the public's opinion and welcomes comments on its decision to require entities to expense borrowing costs, except in the circumstances outlined.

How to Comment
Comments on ED 35 are requested by January 7, 2009, and may be submitted via email at EDcomments@ifac.org.  Comments can also be faxed to the attention of the IPSASB Technical Director at +1 (416) 977-8585, or mailed to the IPSASB Technical Director at 277 Wellington Street West, 6th Floor, and Toronto, Ontario M5V 3H2, Canada. All comments will be considered a matter of public record and, ultimately, will be posted on the IFAC website.

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 157 members and associates in 123 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, through its independent standard-setting boards, sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high quality performance by professional accountants in business.

SMS Latinoamérica has been named a full member of the Forum of Firms after reporting it has implemented a globally coordinated quality assurance program, committed to the use of International Standards on Auditing (ISAs), and met other specific ethics requirements, the Forum announced today. Seventeen other international networks of accounting firms achieved full member status earlier this year. A list of the Forum's members is attached.

The Forum of Firms is an association of international networks of accounting firms. These firms perform audits of financial statements that are or may be used across national borders. The Forum's goal is to promote consistent and high quality standards of financial reporting and auditing practices worldwide.

In order to achieve full membership status, SMS Latinamérica had to commit to meet the Forum's membership obligations which require members to:

• Maintain appropriate quality control standards in accordance with International Standards on Quality Control issued by the International Auditing and Assurance Standards Board (IAASB) in addition to relevant national quality control standards and conduct, to the extent not prohibited by national regulation, regular globally coordinated internal quality assurance reviews;
• Have policies and methodologies for the conduct of transnational audits that are based, to the extent practicable, on ISAs issued by the IAASB; and
• Have policies and methodologies which conform to the IFAC Code of Ethics for Professional Accountants and national codes of ethics.

As of July 2008, of the 22 Forum members, 18 are full members and four are provisional members. The Forum's remaining provisional members are working toward becoming full members in 2008. For additional details on the Forum of Firms, please visit: http://www.ifac.org/Forum_of_Firms/.

Good morning, ladies and gentlemen. It is a pleasure to be here with you for this international conference.

I would like to thank USAID and the hosting organizations for inviting me to be here with you in this country of beautiful lakes and hills that has attracted travelers for thousands of years.

The International Federation of Accountants (IFAC), of which I am currently the President, is the global organization for the accountancy profession. IFAC's mission is to develop the accountancy profession globally so that it can effectively serve the public interest and contribute to the development of strong economies. 

IFAC sees the accountancy profession and all professional accountants as effective agents for development in our societies.  This places the accountancy profession in its true role, and makes the relevance and sustainability of our profession a matter of public interest.

In order to fulfil our mission, we work with our 157 members and associates in more than 120 countries, including the Union of Accountants and Auditors of Kyrgyz Republic, the Chamber of Auditors of the Republic of Kazakhstan and the National Association of Professional Accountants and Auditors of Uzbekistan. We also work with regional organizations and accountancy groupings, such as the Eurasian Council of Certified Accountants and Auditors. Of course, we would also like to work with other professional organizations in Central Asia that want to join our global family and are ready to make the commitment to comply with IFAC's Statements of Membership Obligations.

To achieve our mission, we also work with regulatory bodies, government officials, and representatives of the international donor community.

The presence here today of individuals from each of these backgrounds demonstrates the importance of the focus of this conference: the role of the accountancy profession in economic growth and development worldwide.

Professional accountants play a vital role in every sector of each economy around the world. Professional accountants who work as auditors provide assurance as to the reliability of financial information, which is essential for the proper functioning of capital and credit markets. Professional accountants working in business also contribute to the quality of financial information and promote strong corporate governance and ethics within their organizations. Professional accountants working in government help to ensure that public resources are managed effectively and efficiently.

In each of these areas – serving the markets, their organizations, or the public sector – professional accountants contribute to the development of strong and stable economies. This stability is essential to promoting the long-term growth of nations, to increasing internal and external investment and, ultimately, to generating wealth, improving the lives of citizens, and reducing poverty. 

This morning, I would like to share with you my views on how the accountancy profession, working in collaboration with its various stakeholders, can make a meaningful contribution to economic growth and development.

My remarks today will focus on four main areas:

• Adoption and implementation of international standards to support high quality practice;
• The role of education in building a strong accountancy profession;
• The development of guidance and translations to support implementation of international standards; and
• The importance of collaboration – both nationally and internationally – in strengthening the profession and serving the public interest.

Let me begin with convergence.

Within IFAC, there are four independent standard-setting boards that develop international standards in the areas of auditing and assurance, education, ethics, and governmental financial reporting. These standards raise the level of practice and promote reliable and high quality financial reporting worldwide. IFAC’s commitment to convergence also includes promoting the use of the International Financial Reporting Standards (IFRSs), which are developed by the International Accounting Standards Board (IASB).

The adoption and implementation of a common set of high quality international standards by nations around the world is crucial to assuring the quality and uniformity of the profession’s services. It is also vital to operating effectively in a global world.

When an investor in Boston is looking to invest in Bishkek, he needs to understand and have confidence in that company’s financial information. If the financial information is based on a common set of standards that are used internationally, the investor will tend to be more confident about investing.

This helps to increase international investment and to reduce the cost of raising capital and obtaining credit. Therefore, by reducing or eliminating the differences in financial reporting requirements, we can help to eliminate barriers to international investment and trade.

Regarding IFRSs, it is important to keep in mind that towards the end of this year, or the beginning of 2009, the IASB will be issuing the IFRS for SMEs. This simplified set of standards is being designed to be used by entities that, without being entities of public interest, need to present general purposes financial statements. It is important to remember this fact when making a decision regarding the adoption of IFRS.

With respect to International Standards on Auditing (ISAs), which are developed by the International Auditing and Assurance Standards Board (IAASB), we are seeing the fruits of convergence all over the world.

Countries moving toward adoption of ISAs range from China and India to Canada and the United States, where the Auditing Standards Board, which sets auditing standards for private companies, has set convergence with ISAs as an objective.

I understand that the Kyrgyz Republic adopted ISAs several years ago. This was an important step for your country, but it is not the end of the process. Adoption and implementation of international standards is a journey which requires that we continue to move forward, updating and refining the standards as needed to reflect changes in financial reporting and business practices. 

Much has changed in your country in recent years and much progress has been made. Significant changes have taken place in the realm of financial reporting and auditing standards, and ISAs in particular have continued to be revised and updated to address the new challenges faced by auditors, both here in the Kyrgyz Republic and globally.

One important area in which the ISAs have significantly changed in just the past two years is in their structure and language. The IAASB is in the final stages of a project to redraft all of the ISAs to improve the clarity of the language and to help facilitate their translation and implementation. It is on target to complete the redrafting of all 35 ISAs as final standards by the end of this year, and the standards will have a common effective date for financial periods beginning on or after December 15, 2009.

The IAASB’s Clarity project represents a major change in the standards since they were last adopted here in the Kyrgyz Republic. Your nation has demonstrated its strong commitment to international involvement by becoming the first in Central Asia to join the World Trade Organization in 1998, and I urge you to continue your active international engagement and continue your convergence activities by adopting and implementing the redrafted ISAs on the recommended effective date. I encourage the same of all countries in Central Asia.

Unlike IFRSs, ISAs can be applied in every case, no matter how big or small the entity is. This means it is not necessary to develop a simplified set of auditing standards for the audits of the SMEs. However, we can, and we should, consider the needs of SMEs in the development of International Standards on Auditing and support SMEs in the application of these standards.

To support small and medium accounting practices (SMPs) and others in applying ISAs to the audit of SMEs, last December IFAC released new implementation guidance entitled Guide to Using ISAs in the Audit of Small- and Medium-sized Entities. The guide, developed by the Canadian Institute of Chartered Accountants on IFAC’s behalf, is an example of collaboration at its best.

This new guide, which is available free from our website, provides an analysis of all ISAs issued as of December 31, 2006 and their requirements in the context of an SME audit.  In just the first six months since the guide was issued, more than 11,000 copies were downloaded from our website, showing the clear interest in and need for such guidance.

IFAC is already planning an update to the guide once the IAASB’s Clarity project has been completed to include the newly redrafted ISAs.

Although adoption of international standards is essential both for improving the quality of the profession’s services and to promoting external investment, adoption alone is not enough. The standards must also be effectively implemented and consistently applied by all practitioners.

We at IFAC recognize that implementing a new set of standards presents challenges, which can only be effectively addressed through education, training, and continuing professional development.

Through their participation in the CAP/CIPA certification program, countries in Central Asia have shown that they take education and training seriously. The CAP/CIPA program is an important symbol of collaboration among Russian-speaking nations, and it provides a good foundation for education and certification of professional accountants throughout this region.

Within IFAC, the International Accounting Education Standards Board (IAESB) develops standards and guidance for education and training of all professional accountants. This Board has issued eight International Education Standards (IESs) and a number of guidance papers that are focused on enhancing the professional knowledge, values, skills, and ethics of all professional accountants and accounting students.

One standard in particular, IES 8, Competence Requirements for Audit Professionals, prescribes the competence requirements for audit professionals involved in transnational audits.

This standard, which became effective on July 1 of this year, requires that audit professionals have an advanced level of knowledge about audit and financial reporting, have relevant knowledge regarding information technology, and possess the skills, values, ethics and attitudes expected from audit professionals. Additionally, the standard mandates that professional accountants taking on the role of an audit professional undertake a period of practical experience in audit and undergo an assessment of capabilities and competence before they assume such a role.

All of these requirements are essential to adequately prepare auditors to fulfil their public interest responsibilities to the financial markets and to the investing public, not to mention to the companies they audit.

Achieving full convergence to and implementation of international standards requires developing high quality translations of international standards into the many languages of the world.

IFAC believes that promoting high quality practice and supporting convergence requires that professional accountants have translations of the standards in their languages.  To increase the accessibility of our standards to accountants and others worldwide, in March IFAC issued a consultation paper that set out our proposed strategy to move to one quality translation of IFAC standards per language. This new process is designed to facilitate the ability of member bodies and other qualified organizations to translate IFAC standards and to ensure the timeliness and quality of such translations. IFAC welcomes the active participation of all our members, associates and other interested parties in the process of developing translations of our standards. We recognize, however, that there is a need to coordinate translations activities.  IFAC’s proposed translations policy is designed to eliminate duplicate efforts and ensure that a single, high quality translation of our standards in each language has the authority of international consensus. After considering the comments received, we are planning to approve the final policy on translations at the next IFAC Board Meeting, in September.

An example of success in developing translations collaboratively is the IFAC developing nations toolkit. Entitled Establishing and Developing a Professional Accountancy Body, this good practice guidance is designed to support the establishment and further development of strong national professional accountancy bodies. It addresses the roles and responsibilities of a professional accountancy body, education for accountants, and capacity development.  In collaboration with our member bodies, this guidance has been translated into Spanish, French and Russian, and an Arabic translation is currently being developed. You may find this toolkit to be of particular benefit as you work toward continuing adoption and implementation of international standards, as it provides case studies from IFAC member bodies on their experiences in implementing IFRSs.

The purpose of the guide is to promote the formation and ongoing development of strong professional accountancy bodies, which serve as the foundation of the accountancy profession nationally, regionally and globally.

Strong national accountancy bodies play many important roles, including representing the needs of the profession in their country and acting in the public interest. Professional bodies support the delivery of high quality services by their members by assisting in the implementation of international standards and, in this way, contributing to the achievement of global convergence. They also provide input, from a national perspective, to the development of international standards, helping to ensure that national concerns are addressed in the standard-setting process. In addition, professional bodies can participate in the regulation of the profession by having mechanisms in place to monitor their members’ compliance with ethical and practice standards and by providing input to reform processes to strengthen the profession and broader financial systems.

You may have noticed that in each of the areas I mentioned collaboration is key to making progress.

In developing and emerging nations, where the needs are sometimes great and the resources scarce, collaboration is vital to developing both the accountancy profession and the nation as a whole. As leaders of the accountancy profession, regulatory bodies, and government, those of you here today have an important role in promoting collaboration here in the Kyrgyz Republic, throughout Central Asia, and globally.

I firmly believe that it is only through collaboration and cooperation that we can continue to build a strong and dynamic accountancy profession that protects the public interest, delivers value to its customers and stakeholders, and contributes to the development of the economy.

The accountancy profession must continue to collaborate in moving forward to build a better future for itself. This requires that we both identify and design more efficient ways to deliver our services and that we generate new services that better respond to the changing demands of the market, for example, by taking a lead role in areas such as corporate social responsibility, which includes environmental sustainability as well as social economic performance.  

I firmly believe that sustainability will be increasingly important to long-term business performance in the future and that professional accountants will play an even greater role in sustainability and corporate social responsibility, particularly, in preparing and in auditing reports.

As a united global profession, we must continue to be players, not spectators, in the development of our countries. We can and must continue to take the initiative in collaborating to build an even better future.

Thank you very much for your attention.