This IAASB Staff Audit Practice Alert assists auditors by highlighting areas within the ISAs that are particularly relevant in the audit of fair value accounting estimates1 in times of market uncertainty.

It is an enormous pleasure and privilege for me to be able to share time with you this morning in order to discuss convergence with international standards on auditing.  President CA Ved Jain, may I start these remarks by thanking you most sincerely for the opportunity to share time with you, with your Vice President, CA Uttam Prakash Agarwal, with your fellow guests and with your members: fellow chartered accountants of the Institute of Chartered Accountants of India. 

May I also take this opportunity to congratulate you on your election as a member of the Board of the International Federation of Accountants, which became effective last week on 13 November 2008.  Our global profession has been illuminated by the contribution of the Institute of Chartered Accountants of India and its many excellent nominees to IFAC boards and committees; it will be even more brightly illuminated by your presence at its Board meetings.  Under your leadership, the Institute of Chartered Accountants of India is the largest professional body of Chartered Accountants in the World, with a strong tradition of service to the public interest and to the Indian economy.  Members of your Institute are increasingly working overseas, to the benefit of the economies of the countries in which they work. 

I am particularly delighted at the MOU signed yesterday between the Institute of Chartered Accountants of India and my own professional body of the Institute of Chartered Accountants in England and Wales.  This foreshadows a time of great development of our wonderful profession in India and the UK and of even more outstanding service to our two great nations.  May I congratulate you on your outstanding leadership of the Institute of Chartered Accountants of India, which will shine throughout the years ahead as a major milestone in the development of the Indian profession and the Indian economy. 

One of the epithets applied to the Institute of Chartered Accountants of India is "partners in nation building."  To me, this is an excellent characterisation of the contribution of our profession of accountancy to the world.  Our profession is concerned with adding value to economies, in particular in creating an investment climate of trust.  An investment climate of trust is key to raising capital on the national and international markets.  It is key to the provision of energy, water, education, healthcare, food, and employment.  Indeed, it is key to the fight against poverty-a fight which is so important to us all.

High standards of auditing are an essential component of an investment climate of trust, and it is my firm belief that trust will be higher if all nations adopt and implement International Standards on Auditing as the standards to be followed by auditors in their own country.  I am most encouraged by the progress which has been made in India towards the adoption of International Standards on Auditing and would strongly encourage you to complete this process at the very earliest opportunity.  Indeed, I am delighted to have been told that this is your firm intention.

This information paper contains the results of a survey conducted by the Professional Accountants in Business Committee (PAIB) in the spring of 2008, designed to identify similarities and differences in performance measurement structures in public sector entities and to assess the extent to which these structures help meet their objectives.

Leaders of over 100 accountancy organizations worldwide met in Rome on November 11-14 to participate in the International Federation of Accountants' (IFAC) Board and Council meetings, where they addressed the global financial crisis, convergence to global auditing and ethics standards, and the profession's role in sustainable development. At the conclusion of the meeting, President Robert Bunting of the United States assumed the IFAC Presidency for a two-year term ending in November 2010. Göran Tidström of Sweden assumed the position of Deputy President. In addition, the Council approved the appointment of three new members to the IFAC Board and the reappointment of four members to a second term.*

Newly elected IFAC President Robert Bunting, a past Chairman of the American Institute of Certified Public Accountants and an IFAC Board member since 2005, commented on the global financial crisis, pointing out "The financial crisis has clearly demonstrated how interconnected global markets are. This makes IFAC's initiatives to achieve convergence of international standards ever more urgent. Convergence to a common set of high quality accounting and auditing standards is essential to assuring the quality of the profession's services and is vital to the effective operations of markets and to promoting cross-border trade and investment."

"I believe that IFAC has a key role to play in restoring confidence in the markets," emphasizes Mr. Bunting. "We must demonstrate that our standard-setting processes are rigorous. And we must continue to promote strong corporate governance and the highest quality practices by the world's accountants, whether they work in public practice or in business and industry. Additionally, we need to scrutinize ourselves and look at what we can do better or differently. And lastly, we must be even more engaged with all market participants and actively collaborate with them in identifying and implementing the solutions that can prevent future crises."

Supporting these goals, the IFAC Council approved an updated Strategic Plan for 2009-2012. This plan has an increased focus on the implementation of international standards, on enhancing the relevance and sustainability of the profession, and on communicating more vigorously on regulatory, financial management, financial reporting, corporate governance, and other issues.

"Another area of focus in the strategy and one to which I plan to give my attention is meeting the needs of small and medium practices (SMPs) and enterprises (SMEs)," adds Mr. Bunting. "The SMP/SME community did not cause the current financial crisis, but they will be very much affected by it. We must do what we can, including ensuring that they are not subject to overly burdensome regulatory requirements, to contribute to their health and effectiveness."

The IFAC Strategic Plan for 2009-2012 is available on the IFAC website.

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 is currently comprised of approximately 158 professional accountancy bodies in 122 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 of ethics, auditing and assurance, education, and public sector accounting. It also issues guidance to encourage high quality performance by professional accountants in business.

* Note to Editors - IFAC Board Members (November 2008 - November 2009)

Robert L. Bunting, President, United States

Göran Tidström, Deputy President, Sweden

Warren Allen, New Zealand**

Abdeljelil Bouraoui, Tunisia

Yugui Chen, China

Roberto D'Imperio, Italy

Kevin Dancey, Canada

Ingrid Doerga, Netherlands

Robert Hodgkinson, United Kingdom

Gen Ikegami, Japan**

Ved Kumar Jain, India*

Japheth Katto, Uganda

Olivia Kirtley, United States

David Leonard, United Kingdom

Bernadette McGrory-Farrell, Ireland**

Joycelyn Morton, Australia**

William Nahum, France

Norbert Pfitzer, Germany

Roberto Resa, Mexico

Syed Asad Ali Shah, Pakistan*

Luiz Carlos Vaini, Brazil

Steve Vieweg, Canada*

* New IFAC Board members as of November 2008
** IFAC Board members reappointed for a second term in November 2008

Congratulations to Fermín del Valle on his successful and productive term as IFAC President.

He had an eventful term of office and, under his leadership, IFAC accomplished many of its goals. In fact, he has been so energetic and committed to fulfilling the goals of IFAC that at times I wondered if he would leave anything for me to do. However, as inevitably happens, some of his initiatives will pass to me for further pursuit or implementation.

I'm pleased to carry on and complete his good work, including advancing the process for delivering quality translations of IFAC standards, further examining how to enhance business reporting needs, and supporting initiatives addressing the needs of professional accountants in business and small and medium enterprises, to name only a few.

I would also like to express my congratulations to Göran Tidström on his election as Deputy President.  We have already developed a strong working relationship and I look forward to a close association over the next two years.

As part of its mission to serve all professional accountants in business, including those working in the public sector, IFAC's Professional Accountants in Business (PAIB) Committee has conducted a survey to obtain information about the development of financial and non-financial performance measurement and reporting structures in various public sector entities around the world.

The results of this survey, contained in the information paper Developments in Performance Measurement Structures in Public Sector Entities, will help professional accountants in business, and others who work in the public sector, in evaluating and further improving their own financial and non-financial performance measurement structures. This will enable them to better plan, execute and control their organization's service delivery and to achieve a higher level of accountability. The results will also help IFAC's PAIB Committee to consider specific public sector aspects when developing International Good Practice Guidance for professional accountants in business.

The survey received 250 responses from public sector organizations at all levels of government and in a variety of sectors, including local councils, public utilities and various ministries from countries all over the world. The survey results clearly demonstrate that respondents are much more satisfied with the performance measurement structures in the public sector entities for which they completed this survey, if these structures possess the following, more advanced elements:

• A balanced combination of relevant financial and non-financial objectives, supported by specific measurement indicators (financial and non-financial KPIs);
• Accrual accounting for the budgeting, the (legislative) appropriation and the financial reporting processes;
• Capability for capturing, processing and reporting useful information on both financial and non-financial developments;
• Independent external review of the figures to report on financial and non-financial performance;
• A formal structure for measuring and assessing risk, and developing strategies to control it; and
• A regular review to ensure that the performance measurement structure remains effective and efficient.

IFAC (www.ifac.org) is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries 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 staff of the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), has released a Clarity Project Update to help those with responsibilities relating to audits of financial statements set in motion plans to ensure that audits are effectively carried out under the clarified International Standards on Auditing (ISAs) when the standards come into effect.

In December 2008 the IAASB expects to complete its 18-month program to comprehensively review all ISAs and International Standards on Quality Control (ISQCs) to improve their clarity and, thereby, their consistent application. The standards approved in December are scheduled to be submitted to the Public Interest Oversight Board (PIOB) in February 2009, and if cleared by the PIOB, the program will be brought to a final conclusion then. The completion of this program, known as the IAASB Clarity Project, will result in 36 ISAs drafted in accordance with the IAASB's Clarity conventions subject to a single statement of authority, which will come into effect for audits of financial statements for periods beginning on or after December 15, 2009.

"In most cases of annual financial statements for a full 12 month year, the clarified ISAs will apply to audits of financial statements for periods that end after December 15, 2010. This may seem a long way off, but there is much to be done to ensure that implementation of the standards is smooth and that audits will be effectively carried out in accordance with them," states John Kellas, IAASB Chairman. Mr. Kellas continued, "All of the ISAs include improvements to enhance their understandability, and a significant number of them also include, as a result of their revision, substantive new requirements that aim to improve practice in a variety of respects. Accordingly, national standards setters, legislators and others involved in setting standards, IFAC members and associates, regulators, and accounting firms need to take such steps as are necessary for effective implementation, including national adoption, translation, amendment of manuals and processes and training. I urge everyone, therefore, to get ahead with preparations to ensure that implementation of the clarified standards is a success and that their benefits are achieved from the start."

This latest Clarity Project Update indicates the status of the clarified ISAs and clarified ISQC 1 as of October 2008 and where these documents can be accessed on the IAASB website. This staff report also provides an overview of the main changes to the ISAs arising from the Clarity Project, and highlights some of the matters to be considered as jurisdictions implement the clarified standards. It also lists the clarified standards published to date. The update may be downloaded from the Resources section of the IAASB website.

The IAASB plans to publish the set of clarified ISAs in IFAC's 2009 Handbook of International Standards on Auditing and Assurance, expected to be released in April 2009.

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

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Federation of Accountants (IFAC) supports recent moves by the International Accounting Standards Board (IASB) to contribute to greater consistency in financial reporting and to work towards convergence of international standards, an objective which IFAC views as critical to the efficient operation of global capital markets.

While accepting the value of moving rapidly to remove differences in the application of fair value accounting in different jurisdictions, IFAC strongly opposes attempts to change more radically, or to suspend, the use of fair value accounting without adequate due process. In particular, IFAC considers that making changes at a national or regional level that exacerbate reporting differences would serve to further confuse financial markets and would result in a reduction of confidence in financial reporting - exactly the opposite of what is required in current circumstances. "Reducing transparency is not the answer," says IFAC President Fermín del Valle, "and it will not serve the interests of investors."

IFAC believes that the additional guidance given to those applying both accounting and auditing standards relating to fair values has been very valuable and will contribute to the public interest through more consistent application of the standards. This guidance has come from the IASB and the United States Financial Accounting Standards Board, as well as from the International Auditing and Assurance Standards Board in its Staff Audit Practice Alert, Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment.

IFAC and its independent standard-setting boards are continuing to monitor the impact of the credit crisis and will consider whether further guidance is needed.

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. 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.

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

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

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

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

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

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

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

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. The organization, through its independent standard-setting boards, sets international ethics, auditing and assurance, education, and public sector accounting standards. IFAC also issues guidance to encourage high quality performance by professional accountants in business.

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

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

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

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

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

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

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.