The International Federation of Accountants (IFAC), the global organization for the accountancy profession, today issued Policy Position Paper 7, Effective Governance, Risk Management, and Internal Control, to highlight good practice and the role of professional accountants in business.

Integrated and effective governance, risk management, and internal control within a robust ethical culture make an invaluable contribution to achieving sustained organizational success. At the same time, organizations often fail because of poor governance and/or ineffective and disconnected risk management and internal control.

“The recent global financial and sovereign debt crises have bought into greater focus the need for all organizations—in both the private and public sectors—to implement governance, risk management, and internal control as integrated parts of their management systems,” said IFAC CEO Ian Ball. “As the global organization for the accountancy profession, IFAC is encouraging and facilitating a better understanding of good practices in governance, risk management, and internal control, and greater global consistency in principles and guidelines to support effective implementation.”

IFAC is actively engaged in promoting relevant knowledge, experience, and learning so the profession can better support the more one million professional accountants worldwide working as employees, advisors, consultants, and self-employed owner-managers in commerce, industry, financial services, education, and the public and not-for-profit sectors. Governance, risk management, and internal controlare among the core competencies of professional accountants working in business, who play a leading and public interest role in planning, implementing, executing, evaluating, and improving these areas. 

“Organizations can be confident that professional accountants are able to contribute strongly to governance, risk management, and internal control,” stated Ball. “This policy position paper, and IFAC’s supporting publications, provide leadership and guidance to the profession and will help facilitate a common view of how organizations can effectively implement governance, risk management, and internal control.”

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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IFAC believes that establishing an integrated and effective system of governance, risk management, and internal control is desirable for all types of organizations and can make an invaluable contribution to achieving sustained organizational success. When organizations fail, the costs to society can be considerable.1 This was illustrated during the global financial and sovereign debt crises, when the failure of organizations—irrespective of size or structure, or whether in the private sector or public sector—led to a variety of adverse consequences.

This response to the International Financial Reporting Standards for Small- and Medium-Sized Entities (IFRS for SMEs) was prepared by the IFAC Small and Medium Practices (SMP) Committee in collaboration with IFAC public policy and regulation staff.

IFAC submitted this comment letter to Public Expenditure and Financial Accountability (PEFA) on its public consultation for Guidance Note on Sequencing PFM Reforms, specifically on the section that deals with “developing the accounting system.” The comment letter addresses multiple issues, including the importance of robust arrangements for public sector financial management, the use of International Public Sector Accounting Standards, and implementation of public sector financial management reforms.

Global regulatory convergence is an essential element of the globalization of capital and debt markets, and is important in promoting the comparability of financial information, minimizing the effects of systemic economic risks, and helping to create a level playing field for international competition. For the accountancy profession, regulatory convergence includes the globally consistent adoption and implementation of high-quality internationally accepted financial reporting, auditing, assurance, and auditor independence standards.

The International Federation of Accountants (IFAC), the global organization for the accountancy profession, today issued Position Paper 5, A Definition of the Public Interest.

A hallmark of the accountancy profession is its obligation to act in the public interest. But it is not always apparent what this means, and how accountants can determine whether they are meeting this expectation. IFAC, by developing this position paper, is seeking to advance its understanding of this important issue. The paper, which presents a practical definition of the public interest, was developed in the context of IFAC’s mission, to enable IFAC to assess the extent to which its actions and decisions are made in the public interest.

In light of the challenges presented by prevailing market and economic conditions, policy makers, regulators, standard setters, professional accountants, and others in the financial system are examining their roles, responsibilities, and actions; and therefore it is timely to consider the basis on which these actions are taken, and decisions made.

“IFAC developed this definition of the public interest to assist us in evaluating whether our actions and decisions are in fact in the public interest,” said IFAC CEO Ian Ball. “Whether we are using it to develop public policy positions, professional standards, or guidance and tools, we believe the definition provides rigor, objectivity, and consistency in assessing the important public interest perspective of our work. It applies not only to evaluating past and current actions and decisions; but also guides our behavior and the manner in which we assess future actions and decisions. We believe that the definition may also be relevant to other organizations and individuals that seek to act in the public interest, and feel the need for increased rigor in evaluating their actions and decisions.”

The development of the position paper included a public consultation process. Comments and feedback received from a range of stakeholders in the accountancy profession, regulatory community, and academia were considered, and incorporated into the final paper. “While we consulted widely on this policy position paper before issuing it, we continue to invite dialogue on the subject,” continued Ball. “Clearly it is a complex subject, and we hope that this paper is the beginning, rather than the end, of the debate.” 

IFAC welcomes comments on this paper to: PubInt@ifac.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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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In a letter submitted this week, the International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 127 countries, urged the G-20 Leaders at their June 2012 meeting in Mexico to focus on global solutions to global issues, to create sustainability and growth.

The letter, which is a follow-up to previous submissions in 2009, 2010, 2011, and earlier in 2012, recommends that the G-20 take action directed toward the priorities of the current Mexican Presidency to: achieve economic stabilization and structural reforms as foundations for growth and employment; strengthen the financial system and foster financial inclusion to promote economic growth; improve the international financial architecture in an interconnected world; and promote sustainable development, green growth, and the fight against climate change. The recommendations include:

• The adoption and implementation, across all jurisdictions, of:
  • International Financial Reporting Standards (IFRS);
  • International Standards on Auditing (ISAs); and
  • Auditor independence requirements set out in the Code of Ethics for Professional Accountants, issued by the International Ethics Standards Board for Accountants (IESBA).
• That the G-20 works to support strengthened resourcing and governance arrangements of international regulatory organizations (including standard setters) that have clearly defined expectations and responsibilities. In this regard, IFAC reiterates its support for shared private sector/public sector arrangements for international standard setting for financial reporting, auditing and assurance, ethics, and accounting education.
• That the G-20 supports initiatives leading to greater transparency in the management of public resources, including improving financial reporting practices by governments, developing an international framework of governance for public sector organizations, combating money laundering and terrorist financing, and ensuring that taxation obligations are properly assessed and collected according to the law.
• That the G-20 formally signals its support for the work being undertaken by the International Integrated Reporting Council (IIRC) with respect to developing a framework for integrated reporting. The IIRC, in which IFAC participates, is an important initiative and represents a collaboration among a broad cross-section of corporate, investment, accounting, securities, regulatory, and academic leaders.
• That governments and regulators adhere to principles of high-quality regulation, especially economic impact assessment, in implementing evidence-based regulatory reform. In particular, they should recognize that regulatory reforms may affect parts of the economy differently; for example, changes targeting large and complex organizations may have unintended consequences when applied to small- and medium-sized entities.
• That G-20 nations support initiatives aimed at strengthening the accountancy profession in developing and emerging countries. In fulfilling its mission, IFAC contributes to the development of strong professional accountancy organizations and high-quality practices by professional accountants in many ways, including through its relationships with the donor community.

“Today’s global issues require global solutions, and the G-20 is uniquely positioned to support global sustainability and growth,” said IFAC Chief Executive Officer Ian Ball. “The current problems being confronted by the global community require enhanced management of public resources, improved non-financial reporting, and more sustainable organizations. The accountancy profession is well-placed to assist in finding and implementing these solutions.”

The letter to the G-20 with the full recommendations is 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 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Federation of Accountants (IFAC) is pleased to present the following recommendations for consideration at the G-20 Leaders’ Summit on June 18-19, 2012 in Los Cabos, Mexico. These recommendations focus on actions aimed at promoting global sustainability and growth, and are directed towards several of the stated priorities of the Mexican presidency of the G-20.

IFAC Deputy President Warren Allen discussed “Developing Global Solutions—a Shared Responsibility” at the 22^nd Audit & Assurance Conference of the Auditing Special Interest Group of the British Accounting & Finance Association