The International Federation of Accountants (IFAC) has appointed Richard Fleck as the independent Chair of the Consultative Advisory Group (CAG) to the International Ethics Standards Board for Accountants (IESBA). Mr. Fleck was elected by members of the CAG and his appointment, which is for a three-year term, beginning May 2006, was approved by the Public Interest Oversight Board (PIOB).*

"We are delighted by Mr. Fleck's appointment to this very significant role. His experience and leadership will be invaluable to the CAG as it provides public interest input to the IESBA," states IFAC President Graham Ward.

The CAG, which includes representatives of organizations** that have an interest in international ethics issues, provides technical advice and input on the strategic direction of the IESBA. The IESBA establishes, independently and under its own authority, the IFAC Code of Ethics for Professional Accountants and other ethical standards and guidance for use by professional accountants around the world. The PIOB oversees the standard-setting activities of the IESBA to ensure that they are properly responsive to the public interest.

Commenting on the appointment, Professor Stavros Thomadakis, Chair of the PIOB, stated: "We welcome Mr. Fleck's appointment as the first independent chair of the IESBA CAG. This major step completes the CAG structure contemplated for this important element of IFAC reform. It will also further strengthen the due process applied to setting international ethical standards and guidance."

Mr. Fleck is a partner with Herbert Smith, an international legal practice with 1,100 lawyers in Europe and Asia. His practice experience includes mergers and acquisitions, competition and regulation, insolvency, dispute resolution, and accountancy work. Mr. Fleck is a member of the United Kingdom Financial Reporting Council and Chairman of the UK Auditing Practices Board.

The Chair of the CAG acts as the primary representative of those who use or rely on IESBA standards and guidance and encourages a deeper understanding by the IESBA of the public's needs and expectations. The Chair provides leadership direction to the CAG, overseeing the achievement of the CAG's goals and objectives. As the CAG's liaison with the PIOB, the IESBA and identified key stakeholders, the Chair is also responsible for communicating the views of the CAG to these bodies and conveying the views of these bodies to the CAG.

IFAC is the worldwide organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. Its current membership consists of over 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on auditing and assurance, ethics, education, and public sector accounting. It also issues guidance to encourage high-quality performance by professional accountants in business.

* Note to Editors

The Public Interest Oversight Board (PIOB), established in 2005, oversees IFAC's public interest activities with the objective of increasing the confidence of investors and others that such activities, including the setting of standards, are properly responsive to the public interest. The PIOB oversees the activities of the IESBA and of the CAG and, as one element of this oversight, establishes the criteria for their due processes and working procedures. PIOB members are nominated by international institutions and regulatory bodies.

** IESBA Consultative Advisory Group Members (As of April 30, 2006)
Auditing Practices Board (United Kingdom)
Basel Committee on Banking Supervision
CFA Institute
Eastern Central and Southern African Federation of Accountants
European Federation of Accountants and Auditors for SMEs
European Federation of Financial Executives' Institutes
Fédération des Experts Comptables Européens
Institute of Internal Auditors
International Auditing and Assurance Standards Board Consultative Advisory Group
International Corporate Governance Network
International Organization of Securities Commissions
International Organization of Supreme Audit Institutions
Public Company Accounting Oversight Board (United States)
World Bank

The Professional Accountants in Business Committee identified a practical business planning guide as a very useful tool for management, principally but not exclusively, operating in the small and medium entities (SMEs) area of the market. This information paper provides practical guidance that will help SMEs to understand their own business and industry, enabling them to better evaluate the business potentials and their associated risks. It will also be useful to small and medium-sized practitioners that are providing professional accounting services to SMEs.

The International Federation of Accountants' (IFAC's) 2006 Handbook of International Auditing, Assurance, and Ethics Pronouncementsis now available in print and in several electronic formats. It includes all pronouncements issued by the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants through December 31, 2005. The handbook includes the following IAASB pronouncements:

• International Standards on Auditing (ISAs);
• International Standards on Review Engagements (ISRE);
• International Standards on Assurance Engagements; and
• International Standards on Related Services.

The 2006 handbook features the following new standards issued by the IAASB in 2005:

• ISA 230 (Revised), Audit Documentation; and
• ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

In addition, the handbook contains the revised Code of Ethics for Professional Accountants, issued by the International Ethics Standards Board for Accountants in June 2005. The updated Code establishes a conceptual framework for all professional accountants to ensure compliance with the five fundamental principles of professional ethics. These are integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. The Code, which becomes effective June 30, 2006, applies to all professional accountants, including those in business and industry, public practice, the public sector, and academia. Two electronic versions of the 2006 handbook are available: a free PDF downloadable version and an online eComPress version. The eComPress version has features designed to make accessing the pronouncements more user-friendly.

• It is fully searchable, so users can readily find the specific guidance they need.
• Its easy-to-use navigation enables users to minimize the time necessary to find relevant information.
• The handbook can be annotated by the user with a unique "Notes" feature, with all the annotations being transcribed automatically to newer editions.
• The publication is compressed and stays compressed, saving disk space and download time.

Used offline, the eComPress version of the handbook is not reliant on the Web and requires no additional software as it comes complete with its own viewer and index. The eComPress version of the handbook can be securely purchased and is immediately downloadable from the IFAC website. Prices for the 2006 Handbook of International Auditing, Assurance, and Ethics Pronouncements are as follows: print - US $100 and eComPress download - US$50. A package discount of US$130 is available when you purchase both the print and eComPress download versions. Downloadable networked versions are also available. Shipping charges apply for printed materials. Visit the IFAC online bookstore at http://www.ifac.org/Store for more information or to place an order. You can also contact IFAC at +1 (212) 471-8722.

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

At a meeting held recently in London, more than 30 chief executives of accountancy bodies and regional accountancy organizations around the world expressed support for appropriate, simplified guidance being developed for small and medium entities. They also agreed that a major challenge for the accountancy profession is ensuring that requirements for financial information and assurance are appropriate for both large and small entities in both developed and developing countries. The requirements should be straightforward, clear and brief as possible.

Recognizing that international standards that are right for a large public company may be burdensome for a small enterprise, the International Federation of Accountants (IFAC), together with its member bodies, is urging standard setters and regulators to consider the unique needs of small and medium enterprises (SMEs) in developing their rules and regulations.

"We believe the goals of standard setters like the International Accounting Standards Board (IASB) and the International Auditing and Assurance Standards Board (IAASB) should be to develop succinct, relevant and understandable guidance that eases the compliance burden on SMEs and ensures that benefits exceed costs," states IFAC President Graham Ward. "This essentially means that the costs of preparing, auditing and disseminating financial statements should be proportionate to the information needs of the financial statement users."

IFAC expressed these views in its comments on the IASB Discussion Paper, Preliminary Views on Accounting Standards for Small and Medium-Sized Entities. "Concerns over the high costs of complying with full International Financial Reporting Standards have prompted many countries, particularly those with developing economies, to look at alternatives to international standards or to delegate standard setting to organizations that may not be appropriate for such a role," emphasizes IFAC Chief Executive Ian Ball. "Such actions are not in the public interest and, therefore, it is critical that standard setters be conscious of the effect of compliance costs on small and medium entities."

With SMEs representing 95.77 percent of the businesses in the European Union, over 97 percent of the total companies in the Asia Pacific region, and 99.7 percent of all United States employers, the issue needs to be addressed urgently. The issue is at the forefront of the agendas of IFAC's Developing Nations and Small and Medium Practices (SMP) Committees and is a matter of concern to IFAC's Professional Accountants in Business Committee. The Developing Nations and SMP Committees provide regular input to both the IASB and IAASB to ensure that the SME perspective is considered during the development of international accounting and auditing standards.

IFAC is the worldwide organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. Its current membership consists of over 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on ethics, education, and public sector accounting. It also issues guidance to encourage high-quality performance by professional accountants in business.

The International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC) has released an information paper on the experiences of the United States (US) in its transition to accrual accounting, entitled The Road to Accrual Accounting in the United States of America.

"Adoption of accrual-based accounting by public sector entities increases the accountability and transparency of their financial reports and provides better information for planning and management purposes. This paper provides valuable insights for jurisdictions currently in the process of migration from the cash basis to the accrual basis or those considering adoption of the accrual basis," says IPSASB Chairman Philippe Adhémar.

The challenges for entities moving to the accrual basis include both development and implementation issues. They also include the establishment of appropriate institutional arrangements and mechanisms to promote, manage and assist in the transition. The IPSASB paper notes the development of administrative arrangements for formal standards setting at the local, state and federal government levels in the US and highlights key factors shaping the standards-setting structure. It also provides input on the US federal government reporting model.

The paper was prepared by David Bean, Director of Research and Technical Activities at the Governmental Accounting Standards Board (GASB) and technical advisor to the US member on the IPSASB, and staff at the GASB. The Road to Accrual Accounting in the United States of America can be downloaded from the IFAC online bookstore at http://www.ifac.org/store.

IFAC is the worldwide organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. Its current membership consists of over 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international public sector financial reporting standards through the IPSASB, IFAC, through its independent standard-setting boards, sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high-quality performance by professional accountants in business.

Proposals designed to enhance the quality of audits of group financial statements are released today by the International Auditing and Assurance Standards Board (IAASB). The IAASB recently approved, and is now issuing, a re-exposure draft (ED) of the proposed International Standard on Auditing (ISA) 600 (Revised and Redrafted), The Audit of Group Financial Statements. The ED is drafted in the new style designed to enhance the clarity of IAASB pronouncements. Following earlier consultations, the IAASB has modified the proposals and reissued the ED. The primary issues revolve around the extent to which the group auditor needs to be involved in the audits of components that are audited by other auditors, whether these auditors are independent of the group auditor (unrelated) or belong to the group auditor's national or international firm or network of firms (related auditors). The IAASB is, therefore, seeking reaction on the following two specific matters:

• Previous proposals distinguished between the work that the group auditor needed to do, depending upon whether other auditors were related or not. While this may be a relevant factor, the strength of relationships varies, and the IAASB considers that the distinction is not of itself a sufficient basis for determining the group auditor's work. The IAASB has, therefore, proposed eliminating the distinction in the proposed ISA; this has given rise to substantial changes to some of the proposed requirements. Respondents are asked to indicate whether they are in agreement with the proposal and the effect that it has on the procedures that the group auditor performs in relation to the work of other auditors.
• The proposed ISA is drafted on the basis that a group auditor takes sole responsibility for the audit opinion on the group financial statements. This requires that the group auditor obtain sufficient appropriate audit evidence on which to base such an opinion. Because current group audit practices vary, the IAASB considered it necessary to be reasonably specific about the steps to be taken, and the work effort required, by the group auditor to acquire such evidence when other auditors are involved. Respondents are asked whether this approach is justified.

In addition, respondents are invited to comment on the application of the clarity drafting conventions. John Kellas, Chairman of the IAASB, explains: "Our proposals respond to public expectations for continuous improvement in auditing standards. In particular, a number of regulatory bodies and studies supported the need for this project. The IAASB has shown itself to be prepared to tackle such major audit areas. The project has not been an easy one, but we are confident that the proposed standard will enhance current practice and promote consistency worldwide." In developing the requirements and guidance, the IAASB considered regulatory and standard-setting developments around the world, the interests of small entities, and the expectations of various stakeholders.

How to Comment

Comments on the ED are requested by July 31, 2006. The ED 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 IAASB Technical Director at +1-212-286-9570 or mailed to the IAASB Technical Director 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 International Federation of Accountants' (IFAC's) website.

About IAASB

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

* Note to Editors The Public Interest Oversight Board 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.

I am honoured to be here with you today to share in this celebration of your 100^th anniversary. Both personally, and on behalf of IFAC’s Board, committees, and staff, I offer you our sincerest congratulations on this important milestone. I would also like to thank the Consiglio Nazionale dei Ragionieri e Periti Commerciali, its President, William Santorelli and its Vice President, Francesco Distefano for inviting me to participate in this historic event by making some brief remarks about IFAC and the role of the international profession.

There can be no more appropriate place to discuss the international accountancy profession and to celebrate its history than here in Italy, the birthplace of Luca Pacioli who is credited with founding our great profession during the 14^th century. Pacioli was a man of diverse backgrounds and talents: he was a tutor, a professor of mathematics, an author and a Franciscan Friar.  He associated with the common merchants, devising bookkeeping methods that could assist them with their businesses and, at the same time, counted Leonardo Di Vinci amongst his friends. A true Renaissance man, Pacioli continues to be a model for our profession today. Like Pacioli, our lives as professional accountants result in us working with individuals in all paths of life. We are continually challenged to understand business’s changing needs, to deliver credible financial information and to adopt the vision necessary to serve the public interest effectively in the years ahead.

The CNRPC is dedicated to helping professional accountants  to meet these goals. As an active member of the International Federation of Accountants for a dozen years, CNRPC has demonstrated its commitment to the development of a high quality accountancy profession both here inItalyand internationally. And we are very grateful to the leaders of your organization for sharing IFAC’s mission to protect the public interest. I would like to recognize and to thank those Italian representatives currently serving on our boards and committees,  whose support enables IFAC to achieve its mission and objectives: Dr. Roberto D’Imperio, a member of the IFAC Board and his technical advisor Gianfrancesco Padoan; Prof. Roberto Tizzano, a member of the International Auditing and Assurance Standards Board; Prof. Stefano Pozzoli, a public member of the International Public Sector Accounting Standards Board; and Lino De Vecchi, Deputy Chair of our Small and Medium Practices Committee. I would also like to thank Angelo Casò, who retired from the IFAC Board last November after more than five years of service on the Board and four years as Chair of the SMP Committee. These outstanding professional accountants, like the great Italian Pacioli, possess the leadership, integrity and vision necessary further to develop our profession and to serve the public interest.

Today, I would like to speak to you briefly about recent IFAC initiatives – initiatives that are themselves designed further to strengthen our accountancy profession and its ability to contribute to economic growth and stability worldwide.

IFAC’s activities are driven by a mission that reflects our broad vision to consider the public’s welfare. Our mission is:

To serve the public interest, IFAC will continue to strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession's expertise is most relevant.

In striving to meet this mission, IFAC has taken significant steps in four key areas, working closely with its 160 member organizations:

• Strengthening our standard setting and promoting ethical conduct;
• Achieving convergence with international standards;
• Reaching out to and supporting developing nations, professional accountants in business and small and medium practices and enterprises; and
• Strengthening the financial reporting supply chain.

Our initiatives in each of these areas are central to our mission to serve and to protect the public interest. Let me begin with standard setting. IFAC sets international auditing and assurance, ethics, education and public sector accounting standards. Over the past year, we have continued to increase public interest input into these processes through Consultative Advisory Groups and other means and enhanced the transparency of those processes by including more information on the IFAC website (www.ifac.org). Time does not permit me to outline all of our standard setting initiatives but I would like to highlight a few of the most significant ones for you now.

In the area of auditing standards, the International Auditing and Assurance Standards Board has undertaken a significant project to improve the clarity and structure of its standards. Last October, the IAASB issued four exposure drafts of proposed standards re-drafted using its new drafting style. This new style was developed based on input it received at a forum in July last year and through responses to its 2004 Proposed Policy Statement and Consultation Paper on Clarity. These proposed new standards are the first to be issued as part of an ambitious program to make IAASB standards more understandable and capable of being translated and to facilitate international convergence.

In addition to focusing on clarity, last year the IAASB released a new international standard on audit documentation, designed to enhance auditor performance and audit quality by establishing stricter requirements for audit documentation. Beginning with this standard, the IAASB staff is preparing a “Basis for Conclusions” for each new international standard to increase understanding about the development of the standards – in particular, how the IAASB has responded to input received. We hope that you find this to be helpful.

Other current IAASB projects are the development of standards on the audit of group financial statements and related parties issues. In January, the IAASB issued an exposure draft of a proposed revised International Standard on Auditing that would require the auditor to perform a minimum set of procedures to identify related party transactions and transactions not identified or disclosed by management.  I view this exposure draft as being particularly important.

In the area of ethics, IFAC’s International Ethics Standards Board for Accountants has updated the Code of Ethics for Professional Accountants, further emphasizing the five fundamental values, which are integrity, objectivity, professional competence and due care, confidentiality and professional behavior. The development of the updated Code is part of an ongoing effort to ensure that all professional accountants – whether they work in public practice, business or government – have clear, relevant and high quality ethical guidance.

The Ethics Standards Board is also addressing issues such as audit independence and whistle-blowing and is in the process of developing new guidance for professional accountants in government and in business.

IFAC’s International Accounting Education Standards Board is also focused on ethics, among other issues. It is in the process of developing a tool kit and an International Education Guideline to assist member bodies, academic institutions and others in instilling a strong ethical foundation in the accountants of tomorrow. The guideline will offer recommendations for good practice models of ethics education, while the tool kit will provide practical tools – such as sample course outlines, teaching notes and case studies – to be used by member bodies and educators. The tool kit and proposed guideline are expected to be available later this month.

As part of its effort to help ensure that there are competent professional accountants worldwide, the Education Standards Board is developing new guidance on the training of audit professionals. The Board is also in the process of updating International Education Guideline 11, Information Technology for Professional Accountants, to reflect changes in the information technology field, and it plans to release an exposure draft in the near future.

Through the International Public Sector Accounting Standards Board, IFAC develops Standards which are designed to improve public sector financial management and accountability. This is an area that we cannot afford to overlook and IFAC views it as an increasingly important area of activity. The IPSASB is currently addressing key issues for public sector accounting, including accounting for non-exchange revenue, heritage assets and budget reporting.

The IPSASB’s recent consultation paper on accounting for heritage assets, such as museum collections, historic buildings and nature reserves, will be very relevant toItaly, a country  that has such significant heritage assets.

In consultation with IFAC boards and committees, and other relevant interested parties, IFAC staff are further developing the concept of “international convergence.” The objective is to develop guidance to accompany IFAC’s Statements of Membership Obligations (SMOs), which require IFAC members and associates to use their best endeavors to incorporate international standards, set by IFAC and by the International Accounting Standards Board, into their national standards. The SMOs, which also require member bodies to implement quality assurance and investigation and discipline programs, form the basis of IFAC’s Member Body Compliance Program.

The Compliance Program supports the development of high quality auditing, accounting, ethical, educational and related quality assurance and disciplinary standards in IFAC member bodies throughout the world. The program is intended to guide accounting institutes in the full spectrum of their professional responsibilities, to demonstrate a shared commitment to our profession’s values of integrity, transparency and expertise.

Part 1 of the Compliance Program, a fact-based questionnaire to assess the regulatory and standard-setting frameworks of IFAC member bodies, is now complete. Responses from more than 130 member bodies, including the CNRPC, have been posted on the IFAC website, and the remaining responses are in the process of being agreed and posted.

Part 2, the SMO Self-Assessment Questionnaire, was launched last December and member body responses will be posted beginning in the second half of this year. The responses from these questionnaires will  provide a global snapshot of the accountancy profession from both a regulatory and standards perspective. Additionally, they can be used to help IFAC gauge where it needs to focus its efforts to support the development of the profession and to work to achieve convergence. Lastly, but perhaps most importantly, the responses to the questionnaires demonstrate the international accountancy profession’s willingness to be accountable for its actions to meet high standards, to deliver quality and to protect the public interest – all important responsibilities in the changing and complex environment in which we all work.

This focus on convergence is fundamental to all IFAC standard-setting activities. We firmly believe that it is in the public interest to have a single set of international standards, of the highest quality, set in the public interest by an international expert body which transparently consults with, and recognizes the legitimate interests of, the international community. The IAASB and  IFAC’s Education and Ethics Standards Boards develop standards that do meet these requirements. The independent international Public Interest Oversight Board, formed in February 2005, oversees these standard-setting activities as well as the IFAC Member Body Compliance Program. Last September, the PIOB approved the due process and working procedures for these standard-setting boards and in December,  it approved IFAC’s nominations of members of them .

In order to achieve its goal of developing a high quality profession that meets the public interest, IFAC must ensure that it supports the roles of all professional accountants. For this reason, over the past year, we have reached out to accountants in developing nations, to those in small and medium practices and to professional accountants in business. IFAC’s Small and Medium Practices Committee is increasingly active in representing the interests ofSMPs to both theIAASB and the International Accounting Standards Board. The committee is providing input to theIASB’s project considering the development of financial reporting standards for SMEs. It is also planning to develop guidance materials forSMPs, especially in relation to the application of ISAs to the audit of SMEs and to establish an electronic data exchange on SME andSMPissues.

Our Developing Nations Committee is also focused on the goal of high quality in the public interest. As a result of an extensive consultative process, the committee is preparing a country-specific approach to supporting developing nations, helping both those countries where there is no established profession and those that have only begun to build the professional, financial and regulatory architecture necessary to support economic growth.

In addition, to assist in the establishment and development of professional accountancy bodies, last year the committee released new good practice guidance on the roles and responsibilities of a professional body, education and examination and capacity development. This guidance addresses a range of situations, including where the accountancy profession does not exist in a country, where the profession exists and there is a desire to establish a professional accountancy body and where an existing professional body requires further development and enhancement. The guide also includes suggested areas for priority action based on short-, medium- and long-term goals and projects.

I believe that tools such as this new guidance are a key way that the accountancy profession can support economic growth and stability, which in turn can reduce poverty and improve the quality of life for citizens of developing nations.

IFAC is also working to help member bodies to meet the unique needs of professional accountants in business. These accountants hold a wide range of positions in companies inItalyand around the globe and are often the gatekeepers of financial information, and thus, of public trust. Recognizing this very critical role, our Professional Accountants in Business (PAIB) Committee has undertaken several initiatives to provide accountants in business with good practice guidance, including the forthcoming launch of an electronic resource center to provide one-stop access to current information on issues faced by this constituency.

Recognizing the critical role of ethical values and standards on protecting the public interest, the PAIB Committee has issued an exposure draft, Guidance for the Development of a Code of Corporate Conduct, proposing guidance to assist professional accountants and others in establishing and implementing codes of conduct in their organizations. The exposure draft may be downloaded from the IFAC website. The goal of this proposed new guidance is to support sound corporate governance policies worldwide.

Accounting and auditing firms play an important role in the financial reporting supply chain through the provision of assurance about the financial reports of the companies they audit. It is important, however, to keep in mind that accounting firms are only one part of that chain, which also includes accountants within businesses, analysts, lawyers, senior management and boards of directors. It is for this reason that IFAC’s Board agreed to begin a new initiative on enhancing the quality of the financial reporting supply chain. The project will identify investor expectations and needs and include practical suggestions for enhancements that the global accountancy profession can provide by direct action and those where it will need to engage with others to create change. Among the issues being considered in the new study are corporate management and governance, regulatory developments, auditor independence and rotation and the expectations around the board’s and auditor’s responsibility for the detection of fraud.

As IFAC looks to the future, we are aware that the profession’s reputation rests squarely on its ability to protect the public interest and to improve the transparency of financial markets. Ensuring high-quality financial reporting is an area where there is no room for compromise. The CNRPC and the accountancy profession here inItalyhave been vital participants in the development of the international accountancy profession. We are most grateful for your very active role in strengthening our profession and for your continued support for IFAC. Inspired by Pacioli, we need to keep in mind that together, we can make a difference. Together, we can serve the public effectively and strengthen capital markets. Together, we can contribute to stability and prosperity both here inItalyand worldwide.

Thank you very much for your attention.

The Consultative Advisory Group (CAG) of the International Auditing and Assurance Standards Board (IAASB) has announced that its meetings are now open to the public. Its next meeting is scheduled for May 11-12 in Paris.

The IAASB CAG is comprised of organizations that are interested in the development of high quality international standards on quality control, audits, reviews and other assurance engagements designed to serve the public interest. Members include international organizations that represent users and preparers of financial statements and regulators. They provide input to and assist the IAASB by advising on its work program, including project priorities, and offering technical advice on projects as items evolve and on other matters of relevance to the IAASB's activities.

Over the past year, the Chairman of the CAG has brought the representation of organizations in the membership of the CAG to 25 - adding new members so that it could harness the views of a wider constituency of stakeholders, both geographically and by professional background, in the auditing process. An important feature is the accountability of the IAASB to the CAG: IAASB project task forces are required to consider significant points made in the CAG discussions and respond in writing to the CAG, explaining how the matters raised have been dealt with.

In developing this process, the meetings of the CAG are attended by the leadership of the IAASB and of the relevant task forces. "Since becoming Chairman, I have planned for the opening of the CAG meetings to the public," says David Damant, Chairman of the CAG. "I have already noted the high-level transparency with which the IAASB operates and this step seems essential to me if organizations, which rely on the auditors and the standards they use, want to have confidence in the full standard-setting process."

Opening the CAG meetings to the public will provide organizations other than the CAG member organizations, and the general public, an opportunity to observe the discussions and follow the various points of view put forward. This may assist them in preparing responses to documents issued by the IAASB for public consultation. Attendance at the CAG meeting can also help individuals or organizations to better understand how the public interest is represented in the development of international auditing and assurance standards.

John Kellas, Chairman of the IAASB, emphasizes: "The CAG is an integral and important part of the IAASB's formal process of consultation. This step further enhances the transparency of that process."

In addition to the May 2006 meeting, the CAG will meet September 11-12 in Toronto. The meeting venues and a registration form to be completed by public observers are available on the IAASB website. The agenda and material for each meeting will be posted to this website two weeks in advance of the meeting.

Notes: IAASB Consultative Advisory Group

The IAASB CAG is independent of the International Federation of Accountants (IFAC). A list of the CAG member organizations as at December 31, 2005 is attached to this press release. The objective and the scope of activities of the CAG, with the rules for membership, and operating procedures are set out in its terms of reference, which are available on the IAASB website.

International Auditing and Assurance Standards Board

The objective of the IAASB, an independent standard-setting board within IFAC, 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.

Public Interest Oversight Board

The international Public Interest Oversight Board (PIOB) for accountancy, established in 2005, oversees IFAC's public interest activities with the objective of increasing the confidence of investors and others that such activities, including the setting of standards, are properly responsive to the public interest. The PIOB oversees the activities of the IAASB and of the CAG and, as one element of this oversight, establishes the criteria for their due processes and working procedures. The opening of the CAG meetings to the public is in line with these criteria. 

IAASB Consultative Advisory Group Members (As at December 31, 2005)

• Asian Financial Executives' Institutes
• Basel Committee on Banking Supervision
• CFA Institute
• Eastern, Central and Southern African Federation of Accountants
• European Commission
• European Federation of Accountants and Auditors for SMEs
• European Financial Executives' Institutes
• Fédération des Experts Comptables Européens
• Foundation Institute Capixaba of Research in Accounting, Economy, and Finance
• Information Systems Audit and Control Association
• Institute of Internal Auditors
• Institute of International Finance
• International Accounting Standards Board
• International Actuarial Association
• International Bar Association
• International Corporate Governance Network
• International Organization of Securities Commissions
• International Organization of Supreme Audit Institutions
• Islamic Financial Services Board
• Japan Securities Dealers Association
• National Organization for Financial Accounting and Reporting Standards in Russia
• North American Financial Executives' Institutes
• United Nations Conference on Trade & Development
• World Bank
• World Federation of Exchanges

The International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC) is working to improve both the quality and uniformity of financial information reported by public sector entities around the world. In pursuit of this objective, the IPSASB has issued a Consultation Paper entitled Accounting for Heritage Assets under the Accrual Basis of Accounting. The Consultation Paper includes a Discussion Paper, Heritage Assets: Can Accounting Do Better?, recently published by the United Kingdom's Accounting Standards Board (ASB).

Accounting for heritage assets is an area of particular interest for governments and public sector entities worldwide. Many assets of significant cultural, artistic and historical importance and outstanding natural beauty are controlled by public sector entities, including items and sites which are emblematic of particular nations. Diverse approaches to accounting for heritage assets have been developed by different standard-setters worldwide.

"The IPSASB recognizes the need to develop at an international level requirements and guidance on accounting for heritage assets and to harmonize those requirements across national jurisdictions," says IPSASB Chair Philippe Adhémar.

So that it can use its resources efficiently, the IPSASB has decided to benefit from the development work of some national standard setters, where possible, as a starting point in its approach to particular topics. The UK ASB Discussion Paper is a case in point. The proposals in the paper do not necessarily reflect the views of the IPSASB. However, they do suggest potential solutions to challenges in accounting for heritage assets that are likely to be faced in many jurisdictions reporting on the full accrual basis or in the process of migrating to that basis. The IPSASB Consultation Paper provides the international financial reporting community with the opportunity to respond to approaches that are being considered by the national standard setter. Responses received will be considered by the IPSASB as it commences its own due process.

How to Comment

Comments are requested by June 30, 2006. The Consultation Paper may be viewed by clicking here. Comments may be submitted by email to publicsectorpubs@ifac.org. They can also be faxed to the attention of the IPSASB Technical Director 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.

About IFAC

IFAC is the worldwide organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC's current membership consists of over 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international public sector financial reporting standards through the IPSASB, IFAC, through its independent standard-setting boards, sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high-quality performance by professional accountants in business.

At a meeting hosted by the International Federation of Accountants (IFAC) on February 20-21 in London, chief executives of accountancy organizations worldwide expressed a strong desire for improvements in the quality of governmental financial reporting and financial management and recognized the benefits this would generate for all taxpayers in all countries.

IFAC, the global organization for the accountancy profession representing over 160 accountancy organizations with more than 2.5 million accountants in public practice, education, government service, industry and commerce, convened the meeting with 35 of its member organizations and regional accountancy organizations to discuss strategic priorities for the profession over the next five to 10 years.

Participants agreed that the international profession must take a strong role in advocating that governments should follow standards in line with those to which they expect companies in the private sector to adhere and, in particular, to promote the use of IFAC's International Public Sector Accounting Standards as a means to strengthen governmental financial accountability. The group also agreed that there was a strong need to strengthen enterprise governance, through, for example, greater numbers of professional accountants on Boards and in CFO positions. This, in turn, can contribute to enhanced corporate performance and economic growth and development.

Another critical issue requiring the attention of the global profession is the recruitment, training and retention of accountancy professionals. "Shortages in the availability of qualified professional accountants and shortages in the quality of potential recruits can seriously affect the production of quality financial information - information which is critical to investors. It can also affect business development, jeopardizing economic growth," emphasized IFAC President Graham Ward. "Better communicating the value of accountancy qualifications and career opportunities and reducing the personal financial risks faced by accountants in practice and in business through liability reform are among the ways in which we can make the profession more attractive and address recruitment and retention issues."

About IFAC

IFAC is dedicated to serving the public interest by strengthening the worldwide accountancy profession and contributing to the development of strong international economies. The organization sets international standards of ethics, auditing and assurance, education and public sector accounting and issues good practice guidance and studies to encourage high quality performance by professional accountants in business.