The Prince’s Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) announced today the formation of the International Integrated Reporting Committee (IIRC). The IIRC brings together a cross section of representatives from the corporate, accounting, securities, regulatory, NGO, and standard-setting sectors. Ian Ball, CEO of IFAC, will serve as co-chairman of the Working Group.

The objective of the IIRC is to create a globally accepted framework for accounting for sustainability that brings together financial, environmental, social, and governance information in a clear, concise, consistent, and comparable format. The intention is to help with the development of more comprehensive and comprehensible information about an organization’s total performance, prospective as well as retrospective, to meet the needs of the emerging, more sustainable, global economic model.

Please see the attached press release issued and briefing notes. For further information regarding the IIRC, please see www.integratedreporting.org.

The Board of the International Federation of Accountants (IFAC) has reappointed Prof. Arnold Schilder to lead the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board supported by IFAC, for the period 2012–2014.

As chairman, Prof. Schilder will continue to lead the IAASB as it works to set high-quality auditing and assurance standards and to facilitate the convergence to international standards. He will play a key role in guiding the IAASB as it strives to enhance the quality and uniformity of audit practice throughout the world by promoting the adoption and implementation of its International Standards on Auditing (ISAs). And, he will steer the board into the future as it works to build public confidence in financial reporting by developing new standards addressing assurance services such as on greenhouse gas statements and pro forma financial information.

“I am delighted to announce that Arnold Schilder will continue to serve as chairman, which will provide for stability and ongoing leadership of IAASB operations well into the future,” said IFAC Chief Executive Officer Ian Ball. "Arnold has been a superb chairman of the IAASB as it implements its first strategy and work program after the Clarity Project. His leadership has enabled the IAASB to make significant progress on standards for review and compilation engagements, which are particularly relevant to small- and medium-sized practices (SMPs).”

"It has been my great pleasure to chair the IAASB for the past 18 months, and I am honored to have been reappointed to lead the board through 2014,” said Prof. Schilder. “I look forward to continuing the Board’s work to achieve global adoption of the clarified ISAs and to helping practitioners around the world successfully implement these high-quality international auditing standards.”

Prof. Schilder's appointment to a second three-year term as IAASB Chairman begins on January 1, 2012. The appointment was approved by the Public Interest Oversight Board (PIOB)*—an independent body that oversees IAASB activities—at its latest meeting in Madrid, Spain on June 28–29, 2010.

From 1998 to 2008, Prof. Schilder was a member of the Managing Board of the Dutch Central Bank, responsible in particular for banking regulation and supervision. He served as the chairman of the Basel Committee on Banking Supervision's Accounting Task Force from 1999–2006, and from 2005–2008 as a member of the PIOB. During 1994 and 1995 he served also as President of Royal NIVRA. From 1972 to 1998 he worked with PricewaterhouseCoopers, serving since 1985 as an international audit partner.

For more information about the work of the IAASB, visit its homepage at www.iaasb.org.

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 PIOB, 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.

* Note to Editors
The Public Interest Oversight Board (PIOB) was formally established in February 2005 to oversee IFAC's auditing and assurance, ethics, and education standard-setting activities as well as the IFAC Member Body Compliance Program. The objective of the PIOB is to increase confidence of investors and others that such activities, including the setting of standards by the IAASB, are properly responsive to the public interest. PIOB members are nominated by international institutions and regulatory bodies.

The Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) today issued the second edition of its Guide to Quality Control for Small- and Medium-Sized Practices (QC Guide) The implementation guide is intended to help SMPs understand and efficiently apply the redrafted 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.

The first edition of the QC Guide was issued in March 2009 and went on to become IFAC’s second most downloaded publication after the Handbook of International Auditing, Assurance, and Ethics Pronouncements last year. The new edition conforms to the revised and redrafted Code of Ethics for Professional Accountants and includes various improvements based on feedback from users of the first edition. It features an integrated case study, practical checklists and forms, and two sample quality control manuals.

IFAC wishes to thank the Certified General Accountants Association of Canada (CGA-Canada) for producing the QC Guide for free and the global panel of reviewers for volunteering their time and effort to helping with its development.

“This guide will help SMPs to cost effectively implement ISQC 1 and ensure that they can provide high-quality assurance and related services to their clients,” said SMP Committee Chair Sylvie Voghel.

The PDF version of the QC Guide can be downloaded from the Publications and Resources section of the IFAC website. In addition, CGA-Canada is currently working on developing a French translation of the QC Guide. It will be available on the Translations Database of the IFAC website in September.

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.

Recognizing developments in the internal auditing environment and the evolving relationship between internal and external auditors, the International Auditing and Assurance Standards Board (IAASB) today released an exposure draft on a proposed revised standard that addresses the external auditor’s responsibilities relating to using internal auditors’ work during an audit.

The proposed International Standard on Auditing (ISA) 610 (Revised), Using the Work of Internal Auditors, aims to enhance the external auditor’s performance by providing a stronger framework for evaluating and using the work and assistance of an entity’s internal auditors. Related enhancements to the external auditor’s required considerations of the internal audit function are also proposed in ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.

“Internal auditing standards and practices continue to evolve, as does the relationship between external and internal auditors,” said Prof. Arnold Schilder, IAASB Chairman. “Ensuring that global audit practices take account of these changes benefits both auditors and preparers. Through our revision of ISA 610, we believe external auditors will be better equipped to evaluate opportunities for effective coordination with internal auditors.”

Analyzing Benefits and Impacts of the Proposals
In addition to setting out the main proposals of the IAASB, the explanatory memorandum to the exposure draft pilots an approach for analyzing the benefits and impacts of the IAASB’s proposals. The approach provides a structured and transparent means for communicating the effects of proposals to stakeholders.

“Understanding the potential benefits and impacts of proposed changes is an integral part of developing high-quality standards,” said James Gunn, IAASB Technical Director. “This pilot will help inform the IAASB and further integrate the analysis of benefits and impacts into the standards-setting process.”

Matters on which the IAASB would like stakeholders’ input are set out in the explanatory memorandum to the exposure draft.

How to Comment
The IAASB invites all stakeholders to comment on its proposals. 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 November 15, 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 Small and Medium Practices (SMP) Committee of the International Federation of Accountants (IFAC) today issued the Guide to Practice Management for Small- and Medium-sized Practices, which provides guidance on how this sector can better manage their practices and ultimately operate in a safe, profitable, and professional manner.

The publication includes practice management principles and best practices on a comprehensive range of topics, including strategic planning, managing staff, client relationship management, and succession planning. It features case studies to illustrate the concepts, checklists and forms, a list of further readings, and modules that may be used for training and education. The guide was developed with CPA Australia, which was commissioned by the SMP Committee.

“This guide will help SMPs cope with an increasingly complex and competitive environment by providing them with information to help them operate with greater proficiency and professionalism,” said SMP Committee Chair Sylvie Voghel.

IFAC wishes to thank 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 publication, as well as the international panel of experts who helped in its development.

The PDF print version of the guide can be downloaded free of charge from the Publications and Resources section of the IFAC website. A fully interactive version with internal links to aid navigation will be available in the coming weeks.

The IFAC SMP Committee welcomes readers to visit its International Center for Small and Medium Practices, which hosts a collection of relevant links to free resources from IFAC member bodies and other organizations, including a category devoted to practice management, and the SMP/SME Discussion Board, where readers may submit their views on practice management issues.

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.

This guide provides guidance to small- and medium-sized practices on how to better manage their practice and ultimately operate in a safe, profitable, and professional manner. The publication includes practice management principles and best practices on a comprehensive range of topics, including strategic planning, managing staff, client relationship management, and succession planning. It features case studies to illustrate the concepts, checklists and forms, a list of further readings, and modules that may be used for training and education.

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.