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International Federation of Accountants Supporting Accounting and Auditing in Latin America And the Caribbean Sylvia Barrett November 2006, Washington D.C.


IFAC

IFAC’s Mission To serve the public interest, strengthen the worldwide accountancy profession and contribute to the development of strong international economies by‌


IFAC

IFAC’s Mission • Establishing and promoting adherence to high quality professional standards • Furthering international convergence • Speaking out on public interest issues • Promoting integrity, transparency and expertise


IFAC

IFAC’s Membership • 163 organizations in 119 countries – 22 countries and 23 members / associates

• Developing and developed economies • Professional accountants in – Business – Public practice – Government – Academia


IFAC

Key Priorities and Activities • Development of the international profession – Role of IFAC members as national accountancy bodies

• Focus on challenges facing members – Development of tools and resources – Developing Nations Committee (DNC) – Small and Medium Practitioners Committee (SMPC)


Role of the Profession

Role of National Accountancy Body • Common legal responsibilities – Education and training (initial and continuing) – Examination (Licensing and/or certification) – Enforcement (Ethics and Discipline) – Standard-setting (Development and implementation)

• Represent the needs of its members


Role of the Profession

Role of National Accountancy Body • Absence of legal responsibilities – Emphasis on protecting the public interest – Input into development of legislation and regulation – Contribute to education needs of professional accountants – Input into the development of standards – Implementation of standards – Adherence to ethics and independence requirements


Membership Obligations

Statements of Membership Obligations • Serve as the foundation for requirements of existing members and applicants – Incorporate international standards as an objective – Assist in implementation of the standards

• Evaluating whether members are meeting the requirements (Compliance Program)


Membership Obligations

Statements of Membership Obligations • Seven SMOs – Quality assurance – Accountancy education – Ethics – Auditing and assurance standards – Accounting standards – Investigation and discipline – Public sector accounting


Solutions

IFAC Membership Obligations • Information gathering and action plans – Regulatory and standard-setting framework – Whether and how SMOs being met

• Emphasis on – “Incorporation” of international standards – Responsible body or not responsible body – Assist with implementation


Challenges

Latin America and Caribbean • Economic composition – Capital markets but primarily smaller entities

• Lack of resources and capacity – Financial and operational – Technical and language

• Competing high priority activities – Profession, government and regulators


Challenges

Financial Reporting and Auditing • Statutory reporting and auditing – Which entities should prepare financial statements? – What are the thresholds for requiring an audit?

• Convergence – National decision to converge or not – Role of IFAC members in promoting international standards


Challenges

Financial Reporting and Auditing • Convergence – Keeping pace with new and amended standards

– Increasingly complex reporting standards – Applicability of all required auditing procedures

• Cost versus benefit considerations


Challenges

Standard-Setting By Multiple Bodies • Regulatory bodies: banking, insurance, securities market • Professional accountancy bodies – IFAC members and non-IFAC members – National federations and local associations / branches


Challenges

Standard-Setting By Multiple Bodies • Impact – Conflicts – Lack of consensus – Market confusion – Established standards vary in legal authority – Duplication of efforts when resources limited


Challenges

Adoption versus Implementation • Understanding the difference between adoption and implementation • Many countries have formally adopted IFRS and ISA but then lack – Experience, skills, training, resources and basic tools – Standards not used in practice


Joint Efforts • Requires the participation of all key stakeholders – IFAC and professional accountancy bodies – Government and regulators – Donor and development community – Education community – Individual professional accountants


Solutions and Actions

Joint Effort • Avoid duplication of effort • Regional solutions based on common challenges – Representing a regional / sub-regional view – Share experiences and work together to effect change


Solutions and Action

Education and training • Different university curriculum • Lack of resources to update education programs for new standards and practices • Need to implement effective continuing education • Access to practical experience providers


Solutions

SMP and SME Activities • Small and Medium Practitioners Committee – Input and involvement in IAASB processes and task forces – “Think small” approach – Following IASB’s project on SME standards

• Develop tools for smaller practitioners – ISA Guide (Quarter 2, 2007) – ISA – based audits


Developing Nations

Developing Nations Committee • Recently issued: “Establishing and Developing a Professional Accountancy Body” – Provides practical guidance and examples – Assists in identifying priorities for developing organizations


Latin America

Summary • Diversity in Latin America • Key challenges continue to exist • Solutions driven by joint efforts • IFAC Activities – Member Body Compliance Program – Small and Medium Practices Committee – Developing Nations Committee


International Federation of Accountants www.ifac.org


supporting accounting and auditing in latin america and the caribbean