IFAC, IASB, FEE, EU Updates

Commission Appoints Chair Of European Financial Reporting Advisory Group (EFRAG)

The European Commission recently decided to appoint Mr Wolf Klinz as President of the Board of the European Financial Reporting Advisory Group (EFRAG). EFRAG was established in 2001 to provide technical expertise and advice to the European Commission on accounting matters. Mr Klinz, a former member of the European Parliament, is due to take office after his nomination is submitted to the European Parliament and Council and after appointment by the General Assembly of EFRAG.

IFAC Global SMP Survey: 2014 Results

The 2014 International Federation of Accountants® (IFAC®) Global Small and Medium Practitioners (SMP) Survey asked practitioners operating in small- and medium-sized practices (SMPs) a number of questions about the challenges they face, the market factors and technologies most likely to affect them in the future, the consulting services they provide, and their performance, both in 2014 and projected for the year ahead. In addition, respondents were asked about their small- and medium-sized entity (SME) clients, including questions around the challenges they face, exposure to financial crimes, access to finance, and the extent of their international operations. The report includes a summary of overall insights and notable highlights by region and size of practice.

The 2014 survey was conducted in 21 languages between November 3 and December 29, 2014 and received 5,083 responses from 135 countries. The survey was undertaken in collaboration with lead researchers from the University of Dayton (US), and the report was authored by professors Timothy and Marsha Keune. IFAC wishes to thank the many member and regional organisations that helped with translation and distribution of the survey. Some regions, countries, and larger SMPs were not well represented in the survey results; caution should be exercised when attempting to generalise survey results to specific countries, specific regions, or SMPs of all sizes.

Conducted since 2011, the IFAC Global SMP Survey provides an opportunity for SMPs around the world to share their insights on key trends and developments facing them and their small business clients. The results are critical to IFAC and its member bodies gaining a deeper understanding of the challenges and opportunities facing this key sector.

ICAS and IAAER Call for Research to Inform the IAASB Standard-Setting Process

The International Auditing and Assurance Standards Board (IAASB), The Institute of Chartered Accountants of Scotland (ICAS) and The International Association for Accounting Education and Research (IAAER) are delighted to announce a new global call for research to gather independent evidence to inform the IAASB’s crucial standard setting process.

The call for research asks for proposals which will help to inform the IAASB, and specifically asks for research to address the following topics:

  • Data analytics;

  • Materiality;

  • Audit quality;

  • Preliminary announcements and the role of the auditor;

  • Professional judgment and professional skepticism; and

  • New and revised auditor reporting standards.

The IAASB sets, independently and under its own authority, high-quality international standards to serve the public interest. The IAASB is committed to the goal of developing a set of robust international standards that are generally accepted worldwide in both the private and public sectors, and facilitating their adoption and implementation. The IAASB’s objectives contribute to enhanced quality and consistency of practice throughout the world, and strengthened public confidence in the global auditing and assurance profession. Up to four research grants of £20,000 each will be awarded. The funding for this program is provided by ICAS and the ICAS Foundation (exclusively from the SATER funds).

Successful candidates will be expected to present research progress at three deliverables and submit a report for publication by the IAASB, ICAS and IAAER. Launch events for the reports may also be held to encourage dissemination of the findings and research impact amongst the profession and policy makers. Academic papers are also encouraged.

Prof. Arnold Schilder, Chairman of the IAASB, stated, “The IAASB has recently begun several new projects under its Strategy for 2015-2019 and this research program is an important means to obtain insights into new and emerging issues, particularly in the areas of innovation, audit quality and implementation.”

Anton Colella, ICAS Chief Executive, said, “ICAS is committed to supporting world class research which informs future policy and is delighted to be working with the IAASB and IAAER to support research which will inform and assist with the development of the highest quality audit and assurance standards. By focusing on crucial and emerging issues, such as data analytics, the research will help both the profession and the standard setting process evolve and continue to deliver the high quality audits required by both the global markets and the public.”

Katherine Schipper, President of IAAER, added, “IAAER is both delighted and honored to work with ICAS and the IAASB in this research program. Fostering and encouraging high quality, rigorous research that aims to inform and support the independent standard-setting activities of the IAASB is wholly consistent with one of the foundational principles of IAAER’s mission, namely, to maximise the academic community’s contribution to the development of high quality global standards of accounting practice.”

The deadline for submission of proposals is October 1, 2015

IFAC Welcomes Review Group Report to Enhance Governance Arrangements for Public Sector Accounting Standards

The International Federation of Accountants® (IFAC®) welcomes the release of the International Public Sector Accounting Standards Board® (IPSASB®) Governance Review Group report on the future governance of the IPSASB, which is an important milestone in further strengthening its governance and credibility.

“We fully support the recommendations of the Review Group, and believe they will strongly enhance the robustness of the standard-setting arrangements and ultimately improve the legitimacy and acceptance of the International Public Sector Accounting Standards (IPSASs) across the globe” said Fayez Choudhury, Chief Executive Officer of IFAC. “High-quality internationally accepted standards provide the necessary foundation for high-quality financial reporting in the public sector-an area that needs vast improvement in many jurisdictions around the world, and which leads to better government decision-making, transparency, and accountability.”

Following a public consultation early last year, the Review Group made several important recommendations, including that:

  • a governance body, the Public Interest Committee, be established to ensure that the public interest is served by the standard-setting activities of the IPSASB; the Committee’s membership should include, but not be limited to, individuals from the IMF, OECD, World Bank Group, and INTOSAI;

  • the Committee’s objectives should be to review and advise IFAC and the IPSASB on the (i) terms of reference of the IPSASB; (ii) arrangements for nomination and appointment of IPSAB members; and (iii) procedures and processes for formulation of the IPSASB’s strategy and work plan and development of IPSASs to ensure that the views of all relevant stakeholders are sought and given due consideration;

  • the Committee should not have a direct role in the development, adoption, and implementation of public sector accounting standards;

  • IFAC should establish a Consultative Advisory Group (CAG) for the IPSASB; and

  • a public consultation on the effectiveness of the IPSASB’s reformed governance arrangements be undertaken no later than 2020.

“The recommendations represent strong support for robust and balanced standard-setting arrangements, whereby the involvement of the profession, public sector, and international organisations ensure that the standards that are produced are in the public interest and are high quality-and can be practically implemented.” Mr Choudhury added, “IFAC is highly appreciative of the work done by the Review Group and its members and looks forward to working with these organisations to put the new arrangements in place in 2016.”

Information Paper on the Performance Audit in the Public Sector

The Federation of European Accountants (FEE) project “Getting involved in public sector assurance” has set off with the publication of an information paper on the performance audit; an independent examination on whether the activities of public organisations are economical, efficient and effective and how they can be improved.

The project is part of FEE’s ongoing contributions to improving public sector financial management. This has become especially relevant since the financial and fiscal crisis have decreased the trust of citizens who push public sector organisations to deliver value for money. With this pressure the demand grows for assurance services that enhance the information on which government or public management base their decisions. The European accountancy profession can play a role in making this information more transparent and reliable. With “Getting involved in public sector assurance” FEE starts exchanging best practices to this end.

Tax Transparency Package

Recently the European Commission issued a package of measures to boost tax transparency.

This is the first step in a programme to reform EU tax policy. The Commission’s main proposal is that all Member States shall share information on the tax rulings they grant to multinational corporations, but it also includes other transparency initiatives.

FEE believes that tax policy is a matter for society as a whole. We look forward to discussing these issues in more detail at our 4th FEE Tax Day on 29 April 2015. We welcome the Commission’s actions to modernise the international tax system; a robust legislative process is needed to work towards coordinated, new and stable tax regimes for corporations operating in the realities of the 21st century. We will keep engaging with all stakeholders to advance this debate and find sustainable solutions.

The accountancy profession recognises that the political context on tax matters has radically changed. Legislation has not kept up with an increasingly digital and global economy. It is difficult to question yesterday’s practices in the light of today’s values, including social responsibility.

We support efforts to update the international framework on corporate taxation and other progress in addressing the demands of civil society for more transparency and of business for more clarity and legal certainty. Increased transparency can ensure better accountability and decision making. This only works if this transparency focusses on the quality and relevance of the information disclosed, rather than merely make more information available. It should not add any further confusion to the already complex area of international tax legislation.

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