Together with ICAEW, The International Federation of Accountants (IFAC) today released the second installment in its Anti-Money Laundering: The Basics educational series: Installment 2: A Risk-Based Approach.  

The publication is part of a 6-month short series helping professional accountants enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest.

The first installment in the series provided a general overview of AML, including a definition of money laundering and an analysis of key concepts professional accountants must understand.  

The installment series, with its focus on accessibility and ease of use, will be a resource for Small and Medium Practices (SMPs,) and accountants less familiar with AML, while also providing guidance for those looking for a quick refresher or reference.

Anti-Money Laundering: The Basics will be featured on both the IFAC and ICAEW websites and available for download for free. To be globally relevant, the series uses the risk-based approach of the Financial Action Task Force (FATF) – the global money laundering and terrorist financing watchdog -- as a starting point. 

For more information about IFAC, visit www.ifac.org.

For more information about ICAEW, visit https://www.icaew.com/.

Ladies and gentlemen, dear colleagues:

It is an honor and a great pleasure to be with you today on Global Ethics Day. I congratulate the ACCA/SINGAPORE for hosting for the fourth year, and virtually for the first time, the Ethics Film Festival, an engaging and significant event.

Today, I am speaking to you in my capacity as Chairman of IESBA, the global standard setter of the International Code of Ethics for Professional Accountants, including the International Independence Standards. I am pleased that Singapore is among the 80 jurisdictions around the world that have adopted the 2018 edition of the Restructured Code which came into effect last year, in its substantively revised form.

Ethics is a social endeavor that permeates our mindset and orients our judgments. Events as this Film Festival offer an innovative and enticing way to bring together accounting professionals for discussion, and cultivation of awareness of ethical challenges that continuously accompany professional practice. And unfortunately, the COVID-19 pandemic makes awareness of ethical values a pressing need. We, at IESBA, perceive demand for ethical guidance to be clearly on the rise globally. We are doing much work at IESBA to explore new themes, for example in the areas of technology and tax planning.

The role ethics plays in the accounting profession cannot be overstated. Accountants are no strangers to dealing with complex and challenging situations. The Code’s provisions – the fundamental principles, the conceptual framework, the requirements, the application material – require individual accountants and firms to behave ethically and uphold their responsibility to the public interest.

The role of leaders of organizations is paramount in guiding, incentivizing, and shaping a professional culture. That is why the conversations among leaders, as among today’s distinguished panelists, provide individual accountants with insights and inspiration. So, I have been looking forward very much to tonight’s event.

THE ESG AGENDA AND THE GLOBAL PUBLIC INTEREST

The broad commitment of the profession to the public interest is of course reflected on our responsibilities as global standard setters. We have a strong commitment to crafting our standards with clear public interest objectives. The Ethics Code has long been a source of public interest education and practice by the profession.

For many years, I have encountered a persistent request: define the global public interest. It has been hard to offer a satisfactory answer. As commonly understood public interest is a concept varying across jurisdictions and across time, reflected in variety of laws and regulations. Yet today, with all the vicissitudes of crises, a global notion of the public interest has emerged. It is embedded in the environmental, social and governance (ESG) agenda. This makes the vector of objectives for both global standard-setters and global practitioners very definitive. There are surely complexities to be ironed out, but the value system built around sustainability is stable, foundational, and global. This is indeed a very exciting time. A time for work, vision, and restructuring.

How does ethics precisely relate to an agenda about sustainable environment, society, and governance? How does ethics fit into a discussion about Troubled Water?

Ethics and sustainability are close relatives. Ethics is crucial for the sustainability of human relationships, based on trust. There are ethics involved in every facet making up the ESG agenda. How do the policies and decisions of public and private entities and of professionals affect the ESG matrix for shareholders, employees, taxpayers, society at large? Sustainability will be by construction ethical, or it will not prevail. Sustainability standards must acknowledge and embody ethical values.

International organizations, public authorities, and private entities in many countries – including Singapore – are crafting policies for sustainable operations and investments. Capital markets are also affected. In January 2020, Blackrock’s Chairman Larry Fink stated “... companies have a responsibility … to give shareholders a clear picture of their preparedness. And in the future, greater transparency on … sustainability will be a persistently important component of every company’s ability to attract capital.” The big 4 accounting firms, and others as well, are focusing on ESG matters. I note with interest the recently released ESG metrics by the World Economic Forum. We look forward to a standardization of a common approach for measuring and reporting ESG metrics.

THE UNIQUE ROLE OF ACCOUNTANTS

The longstanding expectation of accountants to prioritize the public interest and commitment to the Code of Ethics fits very well with the role of measuring and reporting on ESG objectives. Transparency on sustainability metrics will require strong application of ethical provisions both in the preparation and in the assurance of ESG. The accounting profession is uniquely positioned to lead in this space, as ethics forms part of its value-proposition.

In this connection, I read with special interest the ACCA’s global report: Mainstreaming Impact: Scaling a Sustainable Recovery, launched this month. A large majority surveyed agreed that professional accountants should be involved in understanding social and environmental impacts and dependencies, prioritising the creation of positive social impact alongside financial returns and improving risk management of social and environmental issues.[1] This is a very encouraging finding.

The Code has many lessons for these novel tasks in non-financial reporting. Highlighting the Code I would remind that:

• Accountants are required to be honest and competent and should not associate themselves with misleading or fraudulent information.
• To follow the pace of innovation and technology, accountants must be agile, alert, and open to continuous learning and upskilling.
• Accountants cannot cave under pressure nor can they turn a blind eye when they witness or suspect illegal or illicit behaviors and activities.

Today’s Netflix film, Troubled Water, is a dramatic reminder of the importance of this pair, ethics and sustainability, as technological and social change are unfolding at breakneck speed.

Change is inevitable. Professional standards must be modernized to remain fit-for-purpose. We understand this well at IESBA. Our work program includes projects that enhance transparency and improve communications, among other goals. Earlier this month, we released a new comprehensive pronouncement on “Role and Mindset” that elevates accountants’ societal role and strengthens the mindset and expected public interest orientation.

The drive for sustainable economies and societies will depend very much on building transparency, accountability, and trust in private and public organizations and among the financial professions. Accountants have a central responsibility in this construction for recovery and future well-being. And already, from ACCAs work, it appears that the new generations in the profession are ready and eager to move in that direction. That is the most encouraging sign of all. Keep going!

Thank you very much.

The International Public Sector Accounting Standards Board (IPSASB) has today released for comment Exposure Draft (ED) 74, IPSAS 5, Borrowing Costs – Non-Authoritative Guidance. The ED proposes the addition of non-authoritative guidance to IPSAS 5.

The proposed non-authoritative guidance would add implementation guidance and illustrative examples to IPSAS 5. The new material proposed in ED 74 would clarify how the existing principles for when borrowing costs can be capitalized should be applied in various regularly encountered public sector contexts. No amendments are proposed to the authoritative material in IPSAS 5.

“We undertook this project to address the practical challenges constituents identified in determining which borrowing costs can be capitalized and when,” said IPSASB Chair Ian Carruthers. “This is an important step in enhancing comparability between those public sector entities that capitalize borrowing costs.”

How to Comment
To access the Exposure Draft and its summary At-a-Glance document, or to submit a comment, visit the IPSASB website, www.ipsasb.org. Comments on the Consultation Paper are requested by March 1, 2021. The IPSASB encourages IFAC members, associates, and regional accountancy organizations to promote the availability of this Consultation Paper to their members and employees.

About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

The SMP Advisory Group has issued a response to the IAASB's Proposed International Standard on Auditing 600 (Revised): Special Considerations -- Audits of Group Financial Statements (Including the Work of Component Auditors).