Distinguished guests, ladies and gentlemen, friends and colleagues, good afternoon. Before I begin I would just like to say what a pleasure it is for me to be asked by FEE and AMA (Mediterranean Association of Auditors) to present the activities and views of the IFAC Small and Medium Practices (SMP) Committee today. For the benefit of those not familiar with the SMP Committee a few words of introduction.

The SMP Committee started life as a Working Group of the IFAC Board in 2000. Under the chairmanship of my countryman Angelo Casas it quickly progressed to being a task force, then a permanent task force, and, in January of this year, a full standing committee of IFAC. On its promotion to being a committee, Sylvie Voghel took over the reins. Our vital statistics read as follows: 18 members from 17 countries, 6 from the EU; a full time technical manager; an annual forum; and an ambitious and expanding work program centered on inputting to standard-setting - accounting, education, ethics, but most especially audit - and providing practical support to SMPs.

Canada is showing its support for the work of the International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting body of the International Federation of Accountants (IFAC), in two significant ways: The Treasury Board of Canada is providing funding of US$200,000 per year for five years and the Canadian Institute of Chartered Accountants (CICA) has agreed to provide, at its expense, a dedicated professional to support the IPSASB. Beginning this month, some of the IPSASB's staff, including its new Technical Director, Stephenie Fox, will be located in an office in Toronto, Canada.

The IPSASB focuses on the accounting and financial reporting needs of national, regional and local governments, related governmental agencies, and the constituencies they serve through the development of high quality International Public Sector Accounting Standards. Canada's actions demonstrate the increasing recognition of the importance of these standards.

"These standards are the foundation for better, more transparent and more responsible financial reporting by government," states IFAC Chief Executive Ian Ball. "Citizens in all countries have a right to understand how the government manages the financial resources that have been entrusted to it. By addressing such issues as the application of accrual accounting to the public sector, or accounting for social policy obligations or for tax revenues, these standards help to enhance the accountability of governments."

"We very much appreciate the commitment of the Canadian Government and the CICA to the IPSASB. Together with our Canadian partners and others throughout the world, the IPSASB can continue to improve financial reporting in the public sector and thus contribute to better financial decision making and financial management by governments," states IFAC President Graham Ward, CBE, MA, FCA.

"The Canadian offer is significant in that it will strengthen the IPSASB's capacity to deal with its priorities on public sector specific issues, including public/private arrangements and a conceptual framework, as well as convergence with other standards," states Philippe Adhémar, IPSASB Chair. "An important IPSASB goal is to promote the acceptance and use of its standards worldwide, and significant progress has been made in this area. For example, the United Nations recently approved a resolution calling for its agencies to adopt the standards. The European Commission and Organisation for Economic Co-operation and Development have also adopted the standards, and the World Bank has indicated its support for their use by governmental entities."

"We are very pleased to have IPSASB based in Toronto. It is a huge vote of confidence in Canada's standard-setting abilities," says Kevin J. Dancey, FCA, CICA President and CEO. "It is through initiatives like this that the CA profession demonstrates its leadership and the increasingly important role it plays on the international stage in terms of establishing best practices and guidance for improved financial reporting."

For more information about the IPSASB and to download its standards and other guidance free-of-charge, visit its home page on the IFAC website at http://www.ifac.org/publicsector.

IFAC is the worldwide organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. Its current membership consists of approximately 160 professional accountancy bodies in 120 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 international standards of ethics, auditing and assurance, and education. It also issues guidance to encourage high-quality performance by professional accountants in business.

The General Assembly of the United Nations (UN) has approved a financial management reform program that calls for the adoption of International Public Sector Accounting Standards (IPSASs) by the UN. The adoption of IPSASs is viewed as critical to maintaining and enhancing the credibility, transparency, and authority of the financial processes and transactions of the United Nations.

"The reform program enables, for the first time, the UN and its many agencies to have a comprehensive and consistent view of their financial position and performance. This will, in turn, enable the UN to manage more effectively, and to be fully accountable for, the resources entrusted to it," states IFAC President Graham Ward.

IPSASs are developed by the International Public Sector Accounting Standards Board, an independent standard-setting body within the International Federation of Accountants (IFAC). The standards set out the requirements for financial reporting by governments and other public sector organizations. The standards may be downloaded from the IFAC website at http://www.ifac.org/store.

As a result of the UN's decision to use IPSASs, the UN will move from a system of modified accrual to full accrual, which provides a more comprehensive financial picture.

Chief Executive Ian Ball states: "Public sector entities, such as the United Nations, that have undertaken a financial management reform program incorporating full accrual financial reporting are better able to manage their finances, and demonstrate by their actions their commitment to transparency."

The President of the United Nations General Assembly, H.E. Mr. Jan Eliasson, issued a Statement on the Adoption of the Resolution on Management Reform in which he said: "...We have taken a step to make the Organization more efficient and effective. We have begun consolidating a culture of accountability, transparency and integrity in the Secretariat (of the UN)."

IFAC is the worldwide 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's current membership consists of approximately 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting public sector accounting standards through the IPSASB, IFAC, through its independent standard-setting boards, also sets international standards on ethics, auditing and assurance, and education. It also issues guidance to encourage high-quality performance by professional accountants in business.

Stephenie Fox, CA, has been named Technical Director for the International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board of the International Federation of Accountants (IFAC). Ms. Fox, who will be based in Toronto, Canada, will assume the position on September 1.

Ms. Fox has extensive experience in public sector accounting standard setting and in working with all levels of government, in addition to having worked with public accounting firms. She most recently served as a Senior Reviewer for the Canadian Public Accountability Board. Prior to this, she worked for over twelve years as a Principal of the Public Sector Accounting Standards Board of the Canadian Institute of Chartered Accountants. While in this position, she participated on the steering committee for the IPSASB's project on non-exchange revenue.

"Stephenie's technical expertise and strong communications and leadership skills will be of great assistance to the IPSASB as it continues its work of developing financial reporting standards for governments worldwide," states Ian Ball, IFAC Chief Executive. "In this way, she will play a key role in improving the quality of financial reporting and financial management of public sector entities."

Stephenie Fox takes over from Paul Sutcliffe who is retiring as full-time Technical Director. Mr. Sutcliffe will continue to work for the IPSASB on specific projects as a Senior Advisor on a part-time basis. The IPSASB focuses on the accounting and financial reporting needs of national, regional, and local governments, related governmental agencies, and the constituencies they serve. A primary goal of the IPSASB is to achieve convergence in financial reporting between different governments, with the private sector, and between financial reporting and economic statistics.

IFAC is the worldwide 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's current membership consists of approximately 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on ethics, auditing and assurance, education, and public sector accounting. It also issues guidance to encourage high-quality performance by professional accountants in business.

Attention to the social, environmental and economic effects on business performance is increasing from investors, governments, customers, and society in general. As a result, professional accountants in business (PAIBs) are among those who are being called on to take a more active role in sustainable development. To help PAIBs better understand how they can advance, measure and report on sustainable development, the Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has published two new information papers on the topic.

The first information paper, Why Sustainability Counts for Professional Accountants in Business, provides an overview of enterprise sustainability and sets out the business case for addressing the risks and opportunities of sustainable development at the enterprise level. It also discusses the ways in which professional accountants in business, especially those working for organizations with significant environmental or social impacts, will be involved with the measurement, recording and interpretation of sustainability-related information.

Professional Accountants in Business - At the Heart of Sustainability?, the second paper, provides first-hand commentary from eleven senior professionals working in various enterprises around the world on the role of PAIBs and the challenges they face in promoting and implementing sustainable development strategies. The comments are based on interviews conducted by Mr. Robert Bruce, a leading accountancy journalist based in the United Kingdom. While recognizing that the role of PAIBs in sustainability will vary based on the organization employing them and the nature of their role, there was significant agreement that this was a field in which PAIBs should become more educated and more involved.

These two IFAC papers represent a significant international step in the education process. "Sustainability is an important topic that is moving up fast on the agendas of professional accountants in business," states Bill Connell, Chair of the PAIB Committee. "These information papers explain what is meant by sustainability, its importance to professional accountants in business, the roles they should play, and how they should operate within the management team." Mr. Connell added, "Professional accountancy bodies need to ensure that the topic is addressed in both the pre- and post-qualification of professional accountants."

The two information papers can be downloaded free-of-charge from the IFAC online bookstore at http://www.ifac.org/store. The PAIB Committee serves IFAC member bodies and the more than one million professional accountants worldwide who work in commerce, industry, the public sector, education, and the not-for-profit sector. Its aim is to enhance the profession by encouraging and facilitating the global development and exchange of knowledge and best practices.

IFAC is the worldwide 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's current membership consists of approximately 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on ethics, auditing and assurance, education, and public sector accounting. Through its Professional Accountants in Business Committee, IFAC also issues guidance to encourage high-quality performance by professional accountants in business.

In recent years, global guidance and regulations have focused on the development and strengthening of internal control systems as a means of minimizing business risk and protecting shareholder investments. A new publication, Internal Controls - A Review of Current Developments, released today by the International Federation of Accountants' (IFAC) Professional Accountants in Business (PAIB) Committee, summarizes key internal control frameworks, highlights recent legislative and other initiatives, and discusses the role of internal control in enhancing corporate governance.

"Professional accountants play an important role in supporting the internal control systems of their organizations. This new paper describes much of the current thinking on internal control from countries around the world and is the first step in the PAIB Committee's program to develop practical guidance on internal control," states PAIB Committee Chair Bill Connell.

The paper finds that current views on internal controls support a principles- and market-based approach in which organizations make a commitment to develop internal control systems particular to their own specific internal and external environments. It also identifies the importance of the tone at the top and the culture and ethical framework throughout the organization to the effective implementation of an internal control system.

This paper follows on the findings of the 2004 report, Enterprise Governance - Getting the Balance Right, jointly published by IFAC and the Chartered Institute of Management Accountants in the United Kingdom, which found that companies must balance conformance with rules and organizational performance. Internal Controls - A Review of Current Developments can be downloaded from the IFAC online bookstore at http://www.ifac.org/store.

The PAIB Committee serves IFAC member bodies and the more than one million professional accountants worldwide who work in commerce, industry, the public sector, education, and the not-for-profit sector. Its aim is to enhance the profession by encouraging and facilitating the global development and exchange of knowledge and best practices.

IFAC is the worldwide 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's current membership consists of approximately 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on ethics, auditing and assurance, education, and public sector accounting. Through its Professional Accountants in Business Committee, IFAC also issues guidance to encourage high-quality performance by professional accountants in business.

The American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), and the International Auditing and Assurance Standards Board (IAASB) have joined forces to launch a research initiative that will provide a better understanding of users' perceptions of the financial statement audit and the auditor's report. The research is intended to independently examine the perceptions of users of financial statements in countries around the world. A "Request for Proposal" is being issued this week, soliciting academic research to identify and provide information about such perceptions. The AICPA's Auditing Standards Board (ASB) has a current project to consider whether the auditor's report should be revised. The IAASB recently completed a project in this regard. The new research findings will provide important information that can be used as a basis for any future revisions to the auditor's report.

"Anecdotal evidence points to financial statement users not consistently understanding communications in an unqualified auditor's report, but there's little rigorous evidence to support the anecdotal observations," points out Douglas F. Prawitt, Chair of the ASB's Audit Report Research Task Force and Glen Ardis Professor of Accountancy at Brigham Young University. "This project should provide the required information, as well as anchor any effective modifications necessary to clarify the communication of information to financial statement users."

Mark Beasley, President of the AAA Auditing Section and a professor at North Carolina State University, explains, "We are thinking globally with this project. The plan is for the ASB to select one or more proposals to examine U.S. perceptions and the IAASB to select one or more proposals to examine perceptions internationally. We envision that, once the selected projects are completed, the ASB and IAASB will fund additional research to identify and explore ways in which the auditor's reports might be revised to communicate more clearly and to address identified user misperceptions."

IAASB Technical Director Jim Sylph emphasizes the public interest benefit of the project: "The interests of all stakeholders will be better served if any gaps between users' understanding and the intended meaning of the auditor's report, including the level of assurance that can reasonably be derived from a financial statement audit, can be identified and addressed."

Research proposals must be submitted by October 2, 2006 to Sharon Walker, Technical Manager, Audit and Attest Standards, AICPA, 1211 Avenue of the Americas, New York, NY 10036-8775. The "Request for Proposal" may be downloaded from the IAASB home page at www.iaasb.org. The ASB and IAASB will fund between US$10,000 and $20,000 for each project. Researchers are required to submit a summary of results to the ASB and IAASB by October 1, 2007, with a more detailed report to be provided to the Boards by January 7, 2008. The summary should be tailored toward practitioners, rather than readers of an academic journal. Researchers will have the right to publish the research, so long as the Boards are given appropriate credit for research support provided.

The American Institute of Certified Public Accountants (www.aicpa.org) is the national, professional association of CPAs, with approximately 330,000 members, including CPAs in business and industry, public practice, government, and education. It sets ethical standards for the profession and U.S. auditing standards for audits of private companies; federal, state and local governments; and non-profit organizations. It also develops and grades the Uniform CPA Examination.

The American Accounting Association (http://aaahq.org) promotes worldwide excellence in accounting education, research and practice. Founded in 1916 as the American Association of University Instructors in Accounting, its present name was adopted in 1936. The Association is a voluntary organization of persons interested in accounting education and research.

The IAASB (www.iaasb.org) is an independent standard-setting board within the International Federation of Accountants. Its objective 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 the criteria for its due process and working procedures.

The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has released its 2006 Articles of Merit, a collection of award-winning international articles on topics such as performance measurement, sustainability and corporate social responsibility, and the changing roles of accounting and finance professionals. This collection includes 10 previously published articles that were selected by the PAIB Committee as part of its annual Articles of Merit Award Program for Distinguished Contribution to Management Accounting.

The winning article for 2006 is "Performance Measures in Supply Chains" by Kim Langfield-Smith and David Smith, which was first published in CPA Australia's Australian Accounting Review. The article examines the benefits and challenges of supply chain management. Other articles of outstanding merit were first published in the American Institute of Certified Public Accountants' Journal of Accountancy; the Chartered Institute of Management Accountants' (UK) Financial Management; CMA Canada's CMA Management, CPA Australia's Australian Accounting Review; the Institute of Chartered Accountants in England and Wales' Performance Measurement, Finance & Management Special Report; and the Institute of Management Accountants' (US) Strategic Finance.

The 2006 Articles of Merit, together with past issues, may be downloaded from the IFAC online bookstore: http://www.ifac.org/store. The PAIB Committee serves IFAC member bodies and the more than one million professional accountants worldwide who work in commerce, industry, the public sector, education, and the not-for-profit sector. Its aim is to enhance the profession by encouraging and facilitating the global development and exchange of knowledge and best practices.

IFAC is the worldwide 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's current membership consists of approximately 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on ethics, auditing and assurance, education, and public sector accounting. Through its Professional Accountants in Business Committee, IFAC also issues guidance to encourage high-quality performance by professional accountants in business.

This information paper provides an overview of enterprise sustainability and sets out the business/financial case for addressing sustainable development at the enterprise level in terms of the risks that sustainable development poses and the opportunities which it brings. It also seeks to identify the main sustainability related roles which the professional accountant in business might occupy, either today, tomorrow or at some more distant future time.

This information paper features interviews conducted by Robert Bruce, a leading accountancy journalist, with professional accountants operating in business throughout the world to seek their views on the role of professional accountants in business in sustainability.