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.

Good morning, ladies and gentlemen. I am honored to participate in the 12^th World Congress of Accounting Historians here in Turkey. I am pleased to be back in Istanbul, which I had the pleasure of visiting in November 2006 for the 16^th World Congress of Accountants. This city is the perfect location for a global discussion centering on history and business, as this is a place where civilization and commerce have some of their deepest roots. 

I would like to extend my appreciation to Dr. Oktay Güvemli for inviting me to speak to you today.

As many of you are aware, IFAC is the global organization for the accountancy profession and is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, industry, commerce, education, and government.

While IFAC itself is very young – we celebrated our 30th anniversary last year – the history of the accountancy profession stretches back centuries. The military museum where we are meeting is featuring a special exhibition on accounting from the Ottoman Empire, including documents on the Merdiban, or Stairs, method of accounting that was used as the state accounting system in the Middle East for more than 1,000 years.

The tradition of a deeply committed accountancy profession in this country continues today. I would like to acknowledge IFAC’s two member bodies here inTurkey: the Expert Accountants’ Association of Turkey and the Union of Chambers of Certified Public Accountants of Turkey. In addition, I would like to recognize and thank the two Turkish members who currently serve as IFAC volunteers: Omer Duman who is a member of the International Public Sector Accounting Standards Board, and Masum Turker who is a member of the Small and Medium Practices Committee.

History is important. It is important because it is a source of knowledge. History is a source for learning and a driver of evolution. If we need to understand something, we need to observe its beginning and its development.

In order to create a clear and promising path for our future, we need to consider and understand our past. History helps us understand who we are and where we are standing. We live in a time of rapid change, a time of progress, where we sometimes prefer to define ourselves in terms of where we are going, not where we come from.

But history does matter. Our view of history shapes the way we view the present, and, therefore, it contributes to our ability to find solutions for existing problems and challenges.

The writer and historian David Crabtree defines history as the facts about the past that are significant and true. This simple definition contains two words packed with meaning which must be understood in order to understand history.

The first word is “significant.” History is the process of simplifying. Of all that could be said about an event or a process, what is most important or most significant? The goal of history is to identify the knowledge about the past that best captures the essence of values, skills, passions or achievements.

And these facts have to be “true” in the sense they are well supported by research, investigation and reliable sources. History confines itself to facts, and to the relation of actual events. The dignity of history consists in describing events with truth and accuracy and in presenting human agents and their actions in an interesting and instructive form. The first element in history, therefore, is truthfulness.

Since I am not a historian, I will not talk to you today about past history. Instead, I will focus on why, I believe, today we are experiencing a very special time in the history of accounting and auditing and what the near future may hold.

I think that two significant issues are shaping the future of accounting and auditing: the achievement of convergence and the return to a principles-based approach in the development and use of professional standards. 

Global convergence

What we are witnessing around the world is a rapidly spreading affirmation that convergence to a single set of global, principles-based auditing and accounting standards is an idea whose time has come.

It is a time when convergence plays an important role, and the use of commonly accepted international standards worldwide is being recognized by everyone as a true need, as something that will contribute significantly to the proper functioning of the financial and the capital markets and, consequently, will improve the world’s economic growth and stability.

In the past year or two, many countries and jurisdictions have reached the conclusion that convergence is essential to consistent financial reporting, believing, in turn, that it fosters investments and global economic competitiveness.

One event that will undoubtedly be registered in the history of the accountancy profession as significant in 2007 is the United States Securities and Exchange Commission’s adoption of rules to accept, from foreign private issuers in their filings with the Commission, financial statements prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) without reconciliation to generally accepted accounting principles (GAAP) as used in the United States. 

No less important in our current history have been the decisions that were taken by countries like Australia, New Zealand, India, China, Canada, Brazil and others to converge with IFRSs or International Standards on Auditing.

This progress is actually not a surprise to IFAC. I am proud to tell you that IFAC was a champion of convergence long before the concept was popular and well before it was called convergence. Surely history will acknowledge IFAC’s role and contribution in this area.

IFAC is so committed to the goal of convergence that this is reflected in its mission statement. Well before many in the business community were working with a global mindset, IFAC recognized that a single set of high quality international standards is essential to raising the quality and uniformity of practice by professional accountants throughout the world.

In our early days, we referred to “harmonization” of standards but moved to the word “convergence,” because it better conveys what IFAC is working to achieve: many interested parties moving simultaneously towards the same point: the worldwide use of a consistent set of high quality professional standards.

IFAC’s four independent standard-setting boards – the International Auditing and Assurance Standards Board (IAASB), the International Accounting Education Standards Board, International Ethics Standards Board for Accountants, and the International Public Sector Accounting Standards Board – are committed to developing international standards that 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 accounting standards developed by the IASB. 

In fact, IFAC showed great foresight in adhering to a global perspective back in the 1970s and 1980s, because the phenomenon of globalization was just around the corner. In the 1990s, as the world increasingly “flattened” and barriers to trade and investment collapsed, the need for a more common business language with consistently applied standards became ever more necessary. We witnessed the tripling of the global equity market value of all publicly traded securities and saw even the smallest companies begin to adopt structures that would enable them to participate and compete in the global marketplace.

While these developments presented the accountancy profession with unique challenges, the ongoing development and adoption of international standards enabled us to effectively respond and contribute to strengthening economic growth and development around the globe.

Today, support for global convergence is nearly unanimous and crosses regional, cultural and professional boundaries. The results of IFAC’s Global Leadership Survey of the leaders of professional accountancy organizations, conducted in late 2007, showed that nearly all respondents believed that convergence was key to economic growth and development in their respective countries. In responding to our survey, they ranked convergence to International Standards on Auditing (ISAs), set by the IAASB, at the same high level of importance as convergence to IFRSs set by the IASB. The respondents to the Global Leadership Survey recognized that convergence strengthens auditing and accounting standards and results in improved financial reporting, which is so critical to establishing investor confidence and to creating vibrant capital markets. 

Members of IFAC are not alone in supporting convergence.

• The World Federation of Exchanges has endorsed the IAASB’s processes for standard setting and recognizes the importance of ISAs.
• The Financial Stability Forum has identified ISAs and IFRS as two of the 12 key standards for sound financial systems and deserving of propriety implementation depending on country circumstances.
• And the World Bank uses ISAs and IFRSs as the benchmarks for its ROSCs (Reports on the Observance of Standards and Codes) for assessing the quality of national auditing and accounting standards.

Convergence is a most important and, I believe, a most achievable goal and the more quickly we move on this, the greater the chance for success is. However, it is also important to be aware that there is still a long road to be traveled in order to achieve the goal of global convergence. Our aspirations should be beyond the scope of equivalence and mutual recognition and we should recognize that we have much to do to move further down the path.

IFAC’s work supporting and promoting convergence

Because IFAC understands there is much to be gained from convergence, and because developing a strong accountancy profession is central to our mission, we are working in numerous ways to support and promote adoption of high quality international standards in all countries and jurisdictions around the world. Let me briefly outline three of IFAC’s actions in this regard.

First, the IAASB’s Clarity project aims to ease the process of convergence to ISAs, making them easier to translate and to implement. Besides, this project supports the historic tendency: to achieve simplicity. The IAASB expects to complete all 35 ISAs as final standards, redrafted under the Clarity project, by the end of 2008. These standards will be effective for financial periods beginning on or after December 15, 2009. IFAC believes the Clarity project is crucial to removing any barriers to convergence to international auditing standards.

I am convinced that the Clarity Project, as its subsequent impact on the formulation of the future auditing standards, will be recognized as one of the significant milestones in the history of auditing.

IFAC also works to promote convergence through its Member Body Compliance Program. This program was established to support IFAC’s members and associates in meeting the requirements for IFAC membership, which are set out in the Statements of Membership Obligations, or SMOs. As part of the Compliance Program, IFAC members and associates completed self-evaluation questionnaires designed to assess whether and how they are complying with SMOs, which require them to promote, incorporate and assist in implementing international standards issued by IFAC’s independent standard-setting boards and the IASB, and to have in place quality assurance and investigation and discipline programs.

The Compliance Program plays a major role in contributing to the overall quality of the profession, and it does so in a way that is supportive and collaborative. Launched in November 2003, the Compliance Program is now entering the third phase, which involves member bodies and associates developing action plans based on policy recommendations provided by IFAC Compliance staff. To encourage the development of effective and responsive action plans, IFAC encourages its member bodies and associates to collaborate by sharing their experiences and offering advice in the preparation and implementation of Action Plans.

I would also like to emphasize that IFAC’s Member Body Compliance Program is an international model of transparency. All responses to the self-assessment questionnaire are posted on the IFAC website and the action plans, once agreed with the member body, will also be posted on the site. Thus, anyone in any part of the world can readily obtain information about the state of the profession in the more than 120 countries represented by IFAC members and associates.

I am absolutely convinced that the IFAC Compliance Program will remain in history as one of the most ambitious and effective programs for the development of the accounting profession and for the improvement of financial reporting systems.

Another way IFAC is working to promote international convergence is through increased dialogue with those who oversee the financial and capital markets and, for that reason, have key interests in the work of the profession. We are engaged in ongoing dialogue with international regulators and organizations, including the International Organization of Securities Commissions, the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors, the European Commission, the World Bank, and the Financial Stability Forum. We also hold meetings with national regulators in countries that IFAC officers and chairs of standard-setting boards visit. Regulators also participate on the consultative advisory groups to IFAC standard-setting boards.

In recent years, IFAC has undertaken a number of reforms, including increased dialogue with regulators and other organizations, to help ensure that its standard-setting activities reflect the public interest and are fully transparent to those affected by the standards. One of the most important developments, and one that history will also highlight as a relevant event, was the establishment of the international Public Interest Oversight Board (PIOB) in March 2005 to oversee IFAC’s standard-setting activities in the areas of auditing and assurance, ethics, and education, as well as the IFAC Member Body Compliance Program. Earlier this year, the PIOB completed its first three-year term, and its continuing oversight has helped to increase confidence that IFAC’s activities are properly responsive to the public interest.

The return to principles and the search for simplicity

Along with the historic achievement of convergence, we are now also witnessing another historic process: the return to principles and the search for simplicity.

I talk about a return to principles because the standards were first created as generally accepted principles. Initially, they were the reflection of the criteria that had consensus among the professionals of a specific jurisdiction. It was that consensus that gave the standards authority. And those basic standards were expressed as general principles. These standards, on the other hand, were generated in each country, and they were strongly influenced by each culture.

It is not easy now to determine how, in a relatively short period of time, in many countries those general principles became a set of numerous and complex detailed rules.

Those who favor rules say the more specific the requirement, the more certain you can be that, for example, similar transactions are accounted for in a similar manner. Rules limit the preparer’s or auditor’s use of professional judgment and, in a litigious environment, can initially provide a sense of protection. Regulators and oversight authorities tend to like rules because they offer a specific means of measuring compliance.

On the other hand, the argument against rules is that no standard will fit all circumstances. Since the practice of auditing and accounting is a technique, not a science, it is necessary that professional accountants and auditors exercise their professional judgment. With the principles-driven approach, the standards have some requirements written into them, accompanied by guidance, that provide a framework within which the auditor or preparer uses his or her professional judgment and interprets the standard in a given circumstance.

The facts and events of our profession’s recent past seem to indicate that the concept of “principles-based standards” will be imposed. Underlying this development is the “search for simplicity,” a basic principle in the definition of criteria and the elaboration of standards.

Looking ahead, I believe we can expect principles-based standards to become the global benchmark. The world regulatory community has been endorsing IFRSs and major regulators in the world are supporting ISAs. Globally, most major economies are already using international standards or national standards based significantly on IFRSs and ISAs. 

Last year, the SEC established an advisory committee to develop recommendations on improving financial reporting in the US. In February 2008, the committee submitted a number of proposals to the SEC in a progress report; the proposals included that the Financial Accounting Standards Board move away from industry-specific guidance and instead focus on activity-based guidance. The committee also proposed that the SEC and US Public Company Accounting Oversight Board adopt frameworks for reviewing the exercise of judgment.

In this progress report, the committee recognized that detailed rules not only increase the complexity of the financial reporting system, but they also permit the structuring of transactions to achieve a particular accounting result, even if the results are inconsistent with the economic substance of the transactions or the underlying purposes of the rules.

It is truly gratifying to witness such international affirmation of principles-based standards, especially considering IFAC’s long commitment to this issue. This concept will necessarily entail an increased use of professional judgment, and this, in turn, will lead to an increase in the value of the old principle of uniformity, as a substantial requisite in the preparation and presentation of financial information.

The way forward

As the momentum for convergence and for principles-based standards continues to build and become a reality, the language of our profession becomes a truly universal one. Thus, you can see why this is a very special moment in accounting and auditing history. 

This is not to say that our work is over or that the push for convergence is a part of the past. It is, indeed, a necessary part of our future. IFAC well recognizes that additional progress needs to be made. And this additional work is required by, on the one hand, the developed economies, that have to accept being a part of an international process of standard setting and, on the other hand, by the emerging economies, where it is necessary to work intensely on the training and the guidance to effectively implement standards. All of us, including the profession here inTurkeyand around the globe, can be of assistance in this process. We must look for and identify the role we can play in helping emerging economies to strengthen the profession.

Moreover, we are only beginning this process of establishing principles-based standards and searching for simplicity. We still have a long road ahead of us.

In developing its strategy for the coming years, IFAC acknowledges that much work lies ahead in addressing issues beyond convergence and simplicity.

The accountancy profession must also continue to work to achieve greater efficiency and effectiveness and remain open to new approaches and further improvements, for example, in financial reporting. 

The quality and usability of financial reports was a key area of focus for a report that IFAC released earlier this year on the financial reporting supply chain. The report – which surveyed 340 financial reporting supply chain participants worldwide, including investors, preparers, company management and directors, auditors, standard setters, and regulators – found that the quality and strength of financial reports and financial reporting have improved in recent years as have corporate governance, the preparation of financial reports, and the audit of financial reports. But the report also emphasized that investors and other stakeholders are still finding it difficult to make sense of the figures in financial reports due to insufficient narrative reporting or qualitative information on company strategy and other areas. As a result, the recommendations for change included making the financial reporting information more understandable, increasing communication among all financial reporting supply chain participants, and including more business-driven information. 

These findings were echoed in the referred interim report of the SEC advisory committee on improving US financial reporting, which called for increasing emphasis on the investor perspective in the financial reporting system.

IFAC is already working to address these concerns, having launched a new project to analyze actions currently being taken to address the suitability of business reporting and to identify areas for future development. This project will take the findings of the financial reporting supply chain report to the next stage and deliver specific recommendations for further action in enhancing the quality and usefulness of corporate reporting.

I have often expressed my belief that the future of the accountancy profession lies in its ability to change, evolve and adapt to market demands. This includes technological demands such as XBRL, the language for the electronic communication of business and financial data.

The use of XBRL is seen as an important part of making financial reports more consistent, interactive, and useful. This view is shared by a number of regulators, including theUSSecurities and Exchange Commission, stock exchanges around the world, and national banks inBelgium,Japan,Spainand elsewhere. It is very probable that in the next few years XBRL will have a firm place in the history of accountancy.

If we act creatively in rethinking financial reporting, and in approaching many other challenges, the accountancy profession will be better equipped to sustain itself and grow. Looking to the future, we must be innovative and flexible – words, I know, that are not popularly associated with accountants. Nonetheless, we have proven we can proceed with innovation. 

To further sustain this great profession, I believe that each and every professional accountant must become its greatest advocate. We must not be shy about talking about our role in creating an investment climate of trust, of contributing to economic growth and development, and of serving as the corporate conscience for companies large and small. These are all roles that we can and should be proud of. We must let others know how they, too, can fulfill these and other roles in the international profession and provide them with the necessary training and education so that they can succeed in fulfilling them.  

Finally, as a unified global profession, we must come to agreement on strategic objectives and actions and then align our activities. We need to identify and implement mechanisms that facilitate effective communication, collaboration and consultation. And, the global profession, acting in unison, needs to address issues of new and growing importance, such as our role in environmental sustainability reporting.

Historians say that in order to consider our future, we must learn from our past. As we do this, we see that IFAC and the accountancy profession have acted as pioneers in anticipating the need for a more global business perspective. Celebrating our 30^th anniversary last year underscored our progress. Our predecessors had vision and they anticipated the future. They made the right decisions and acted upon them. IFAC was focused on convergence and principles-based standards before other organizations began to consider such issues. IFAC was one of the first organizations working to develop international standards and urging the accountancy profession to address crucial matters with a global mindset.

I believe the accountancy profession can meet the challenges and opportunities of the coming decades with a similar capacity for vision and change. Today, we continue to offer the world an example of what can be accomplished.

And if we are effective, we can make a positive difference in the world.

Thank you for your attention.

To further promote and facilitate accountants' adherence to high ethical and independence standards, the International Ethics Standards Board for Accountants (IESBA), an independent standard-setting board within the International Federation of Accountants (IFAC), has proposed changes to the IFAC Code of Ethics for Professional Accountants. The changes, outlined in an exposure draft with the same title, focus on enhancing the clarity of the Code. The proposed changes make clear the specific requirements that are contained in the Code and refine the application of the Code's conceptual framework.

"The proposals significantly enhance the clarity and understandability of the provisions in the Code," states Richard George, IESBA Chair. "We believe that the revised Code will provide a strong foundation to further the IESBA's objective of facilitating convergence of international and national ethical standards."

Comments on the exposure draft are requested by October 15, 2008. The exposure draft may be viewed by going to http://www.ifac.org/eds. Comments may be submitted by email to edcomments@ifac.org. They can also be faxed to the attention of the IESBA Senior Technical Manager at +1 (212) 286-9570 or mailed to IFAC, 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 IFAC's website.

About the IESBA and IFAC
The IESBA develops ethical standards and guidance for use by professional accountants. It encourages member bodies of IFAC to adopt high standards of ethics for their members and promotes good ethical practices globally. The Public Interest Oversight Board oversees the activities of the IESBA 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 standards of ethics through the IESBA, IFAC, through its independent standard-setting boards, sets standards on auditing and assurance, education, and public sector accounting. It also issues guidance to encourage high quality performance by professional accountants in business.

Following the consideration and approval of due process by the Public Interest Oversight Board (PIOB), 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 International Standard on Auditing (ISAs) 550 (Revised and Redrafted), Related Parties and three clarity redrafted ISAs.

Related Parties
The involvement of related parties in major corporate scandals encouraged the IAASB to revise its current auditing standard on the subject. The revised Related Parties standard clarifies the meaning of "related party" for purposes of an audit. It also makes clear the auditor's responsibility to obtain sufficient evidence about the required accounting and disclosure of related party relationships and transactions and to understand how such relationships and transactions affect the view given by the financial statements.

"The standard will strengthen current auditing practice in this area by emphasizing the need for the auditor to understand related party relationships and transactions in order to identify the risks of material misstatement to which these may give rise, and directing the auditor to focus work effort on the assessed risks of material misstatement, including those due to fraud," explains John Kellas, IAASB Chairman.

"The revised standard clarifies the auditor's responsibilities in those cases where the financial reporting framework establishes minimal or no related party requirements. In addition, it provides enhanced guidance to assist the auditor in understanding and responding to the risks of material misstatement that may arise in relation to related parties with dominant influence," emphasizes Kellas.

Clarity Redrafted ISAs
In addition to ISA 550 (Revised and Redrafted), the IAASB has also released the following clarity redrafted ISAs:

• ISA 250 (Redrafted), Consideration of Laws and Regulations in an Audit of Financial Statements;
• ISA 510 (Redrafted), Initial Audit Engagements-Opening Balances; and
• ISA 570 (Redrafted), Going Concern.

They form part of the IAASB's ambitious 18-month program to redraft existing standards following the clarity drafting conventions.* To date, the IAASB has released 15 final clarity redrafted ISAs. The IAASB is on track to finalize its complete set of clarified ISAs by the end of this year.

The complete set of clarified ISAs, including newly revised standards such as ISA 550 (Revised and Redrafted), will be effective 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 Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released its Strategy and Work Program, 2009-2011. The three-year strategy includes an emphasis on the development of standards that contribute to the effective operation of the world's capital markets and that address the needs of small- and medium-sized entities and small and medium practices.

The Strategy and Work Program, issued following consideration and approval of its completeness from a public interest perspective by the Public Interest Oversight Board (PIOB)*, is consistent with the IAASB's overall objectives. ** It builds on the strong base of standards developed by the IAASB to date and focuses on three areas:

• The development of standards;
• The facilitation and monitoring of adoption of those standards; and
• Responding to concerns about the implementation of the standards by activities designed to improve the consistency with which they are applied in practice.

"The IAASB's vision is that the high quality standards on assurance, related services and, in particular, International Standards on Auditing that we develop in the public interest are adopted and applied internationally. The strategy and work program are consistent with this longer term vision," explains John Kellas, IAASB Chairman.

The Strategy and Work Program responds to significant developments in the environment in which audit and other assurance services are performed, and in which standards for such services are set. It also highlights the IAASB role in working toward global acceptance of and convergence with its standards and in establishing and maintaining relevant partnerships. It is underpinned by the IAASB's communications initiatives to keep stakeholders informed of its activities and to promote adoption and implementation of its standards.

The Strategy and Work Program reflects the outcome of an extensive consultation program to obtain the widest possible input into determining the IAASB's priorities over the next three years. A summary of the IAASB's conclusions with regard to significant matters raised during these consultations is presented in the Basis for Conclusions: IAASB Strategy and Work Program, 2009-2011.

"I am grateful to the many people and organizations that contributed to our strategy review consultations. I hope that the direction of our work will be seen as responding to the representations made to us, and to the public interest, which must be our overriding concern. Of course, events and circumstances may require us to amend our program, and for this reason it will be kept under constant review," notes Kellas.

The Strategy and Work Program, 2009-2011 can be downloaded free-of-charge from the IFAC online bookstore. To access the related Basis for Conclusions and other information on the IAASB's work, visit its home page.

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.

Notes to Editors

* The 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 objective of the IAASB is: "To serve the public interest by setting, independently and under its own authority, high quality standards dealing with auditing, review, other assurance, quality control, and related services, and by facilitating the convergence of national and international standards." This objective contributes to enhanced quality and uniformity of practice in these areas throughout the world and to strengthened public confidence in financial reporting. The IAASB aims to achieve its objective through the following strategic initiatives:

(a) Development of Standards - Establish high quality auditing, review, other assurance, quality control, and related services standards.

(b) Global Acceptance, Convergence and Partnership - Promote the acceptance and adoption of IAASB pronouncements throughout the world and support a strong and cohesive international accountancy profession by coordinating with IFAC member bodies, regional organizations, and national standard setters to achieve the objective of the IAASB.

(c) Communication - Improve the quality and uniformity of auditing practices and related services throughout the world by encouraging debate and presenting papers on a variety of audit and assurance issues and increasing the public image and awareness of the activities of the IAASB.

The International Federation of Accountants (IFAC) Member Body Compliance Program, launched four years ago, has reached a major milestone in its mission to encourage accountancy organizations worldwide to work together with their members, regulators, standard setters, and other key stakeholders to strengthen the profession. The Compliance Program is comprised of a three-part process:

• A member organization's assessment of its country's regulatory and standard-setting framework;
• A self-assessment of the extent to which a member body has committed to international convergence of standards and promoted the implementation of strong quality assurance and enforcement regimes as specified in IFAC membership requirements; and
• The development of action plans to further the convergence process and meet other IFAC membership requirements.

The Compliance Program is now in this third phase and, today, the actions plans of IFAC members from six countries were publicly released on the IFAC website.  The six members are:

• Federación Argentina de Consejos Profesionales de Ciencias Económicas;
• Botswana Institute of Accountants;
• Chinese Institute of Certified Public Accountants;
• Chamber of Auditors of the Czech Republic;
• Institute of Certified Public Accountants of Kenya; and
• Corpul Expertilor Contabili si Contabililor Autorizati din Romania.

Representing four different continents, these actions plans are reflective of the kinds of programs and activities that all IFAC member organizations are developing in their own jurisdictions.

"These action plans demonstrate the leadership of the profession in engaging country stakeholders, such as regulators, government officials, academics, and others in further enhancing the quality of the profession and ensuring greater consistency worldwide," states Robert Mednick, Chair of the Compliance Advisory Panel that oversees the Member Body Compliance Program.

"Our expectation is that all of IFAC's 157 member bodies in both developed and emerging countries will develop actions plans that address the key elements of convergence, the subsequent implementation of standards and new regulatory initiatives," added Mednick. 

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. Through its independent standard-setting boards, IFAC 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.

The Board of the International Federation of Accountants (IFAC) has appointed Prof. Dr. Arnold Schilder, RA, to lead the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of IFAC, beginning January 1, 2009. Prof. Schilder's appointment to a three-year term as IAASB Chair was approved by the Public Interest Oversight Board (PIOB)*, which oversees the IAASB's activities, at its meeting in Madrid, Spain last week.

"Arnold Schilder brings both a breadth and depth of experience and strong integrity to the position of IAASB Chair," states Fermín del Valle, IFAC President. "As its next chair, he will lead the IAASB in continuing to develop high quality international audit standards to be used around the world."

Prof. Schilder is currently Executive Director of De Nederlandsche Bank NV, the prudential supervisor of financial institutions in the Netherlands. He is a member of the Basel Committee on Banking Supervision and served as Chairman of its Accounting Task Force from 1999 to 2006. Prof. Schilder has also served as a member of the PIOB and as Chairman of the European Interim Working Committee on Financial Conglomerates. In addition, he is a part-time professor of auditing at the University of Amsterdam and is a past President of the Koninklijk Nederlands Instituut van Registeraccountants, IFAC's member body in the Netherlands. Previously, he was a senior international audit partner in PricewaterhouseCoopers (PwC) in the Netherlands and worked for PwC and predecessor firms from 1972 to 1998.

As chair, Prof. Schilder will lead the IAASB in its initiatives in setting high quality auditing and assurance standards and facilitating the convergence of international and national 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 and to build public confidence in financial reporting.

"I am delighted to chair the IAASB during the next three years as it continues to fulfill its public interest mission," states Prof. Schilder. "I will welcome the input of all our stakeholders, including users of IAASB standards, national standard setters, regulators, governments, and the public, as the IAASB addresses new assurance topics as well as promotes further the benefits of its standards to key constituencies that have not yet adopted them."

For more information about the work of the IAASB, visit its home page at http://www.iaasb.org.

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.

* 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.

French and Spanish translations of the press release are posted below.

Mr. Prime Minister of the Republic of Trinidad and Tobago, Mr. Patrick Manning, distinguished guests, ladies and gentlemen, dear friends.

It is a pleasure to be here with you for this 26th Annual Conference of Accountants in the Caribbean.

I would like to thank the President of the Institute of Chartered Accountants of the Caribbean (ICAC), Angela Lee Loy, and the President of the Institute of Chartered Accountants of Trinidad and Tobago (ICATT), Sean Ramirez, for the invitation to speak to you today.

Let me start with a question.

Is it worth being an accountant? This is not a minor question to face for those of us who made this decision a long time ago. But it is even more important for the thousands of students who are making this decision now, and trying to determine what path they will follow. Of course, this question is also crucial for the future of our profession, because in order to have a future, our profession must be attractive to new generations. Hence, it is vital that we communicate the key role that professional accountants play in society to potential members and the wider world.

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 dimension, and makes the relevance and sustainability of our profession a matter of public interest.

As part of its ongoing commitment to support professional accountants in business and their organizations in enhancing governance and in assessing and delivering organizational performance, the International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB) Committee has released two new proposed International Good Practice Guidance documents for public comment. The proposed guidance addresses evaluating and improving governance structures and use of costing to support effective decision making.

Governance
The newly released exposure draft, Evaluating and Improving Governance in Organizations, sets out a framework, a series of fundamental principles, practical guidance, and references on how to evaluate and improve governance in organizations. The purpose of this guidance is to assist professional accountants and their organizations in creating a balance between conformance with rules and regulations and organizational performance.

Costing
The second proposed International Good Practice Guidance, Costing to Drive Organizational Performance, is designed to assist professional accountants in business in delivering useful cost information to support effective decision making and organizational performance. The proposed guidance sets out eight fundamental principles of costing that encourage a performance-based view of costing to help professional accountants in business to ensure that costing information supports forward-looking strategic and operational decisions.

"This principles-based good practice guidance addresses key strategic and financial management issues that many professional accountants in business address in their daily work," states Edward Chow, Chair of the PAIB Committee. "Our goal is to develop principles-based guidance that offers a global perspective and places professional accountants in business at the heart of driving organizational performance."

How to Comment
Comments on the two proposed guidance documents are requested by September 23, 2008. They may be viewed by going to http://www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org. They may also be faxed to the attention of the PAIB Committee Technical Manager at +1-212-286-9570 or mailed to PAIB Committee Technical Manager 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. A summary of online feedback on the proposed governance guidance will also be posted on the IFAC website.
 
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. Through its independent standard-setting boards, IFAC sets international standards on ethics, auditing and assurance, education, and public sector accounting. Through its Professional Accountants in Business Committee, IFAC issues guidance to encourage high quality performance by professional accountants in business.

Alta Prinsloo, CA (SA), has been named Director of Operations of the International Federation of Accountants (IFAC), the global organization for the accountancy profession, effective January 1, 2009. Ms. Prinsloo is currently Deputy Director of the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of IFAC. She joined the organization as an IAASB Senior Technical Manager in September 2002.

As Director of Operations, Ms. Prinsloo will oversee IFAC's planning, budgeting, and financial management and accounting processes, including supporting the activities of IFAC's Planning and Finance Committee and Audit Committee. She will direct the organization's day-to-day operations, play a key role in the strategic planning process, oversee its human resources and information technology activities, and manage preparations for IFAC Board and Council meetings.

 "Alta's strong international experience, together with the leadership and management skills she has demonstrated with the IAASB, will be of great value to IFAC as she assumes the role of Director of Operations," states Ian Ball, IFAC Chief Executive Officer. "In that capacity, Alta will play a central role in the effective management and operations of a global organization with more than 150 member organizations worldwide."

Prior to joining IFAC, Ms. Prinsloo was Technical Director of the South African Institute of Chartered Accountants, an IFAC member body, where she managed the Technical Department and oversaw the convergence of South African accounting and auditing standards with international standards. She also served as a technical advisor to the South African member of the IAASB from January 2001 to March 2002.

Alta Prinsloo will assume the position later this year, after she has completed her obligations with respect to work on the IAASB Clarity project. She will take over from Stephen Walker, who has served as IFAC Director of Operations since September 2002 and will be returning to his home country of New Zealand.

"Stephen has played a very significant role in strengthening IFAC's strategic planning and finance functions and improving our organization's efficiency. We are grateful for his many contributions to IFAC, and we wish him all the best for the future," states Mr. Ball.

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. Through its independent standard-setting boards, IFAC 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. For more information about IFAC, visit its website at www.ifac.org.