Interview with Olivia Kirtley – IFAC President
Mark Abela interviews IFAC President Olivia Kirtley exclusively for The Accountant on the occasion of her visit to Malta in June 2015 to celebrate the Institute’s 50th Anniversary.
What are those aspects from your professional career that were instrumental in your appointment as IFAC president? Those factors that convinced you to put yourself forward and accept such a demanding role, as well as those factors that convinced the people around you that you were the right person for this role.
It never begins at the point in time when you accept a position, but many years before that. I started off volunteering in the profession 10 years into my career, and I did that by speaking to members in my state society about proposed tax law changes. From that I eventually was asked to take a local leadership role, which in turn to my involvement at the national level in the American Institute of Certified Public Accountants (AICPA). As you can see, one thing leads to another. While leading the AICPA Business and Industry Executive Committee, I was asked to join the AICPA board, before eventually being asked to chair it.
My relationship with IFAC started after the ENRON/Worldcom crisis. IFAC and the AICPA asked me to be part of a multidisciplinary task force-including accountants and other professionals-to rebuild public confidence in financial reporting. The task force report contained many recommendations that ultimately were implemented in many jurisdictions regarding auditor independence, ethics, codes of conduct within corporations, people serving on audit committees and others. Several years later, the AICPA recommended me to serve on the IFAC board.
When you join an organisation, you hope to bring your own experiences or insights that could potentially enhance it either structurally or strategically. Since I have spent much of my career working as a corporate executive, one of the first things that I was asked to do was to head up a task force to review how IFAC’s Professional Accountants in Business (PAIB) Committee operated, what its strategy was and how it was serving our member bodies. That gave me the opportunity, as an IFAC board member, to interact with a lot of people around the world early on in my involvement with IFAC. I was subsequently approached about whether I would have my name put forward for this role.
This opportunity came at a time when I was very busy with my business and with my non-executive director roles. I knew that to become President, I would have to give up most of my other activities. I decided that I was willing to choose this role primarily for two reasons: I thought I could make a difference and meaningful contribution in the leadership role and, since there had never been a woman President of IFAC, I felt it was important to demonstrate to both men and women around the world that women are very capable leaders.
The profession has been very good to me and I feel an obligation to serve as an example how women can contribute throughout the profession. In some places women have made great advancements, in others there is still much to do.
How are you doing this tangibly? This is something that we are also experiencing here in Malta. The Government has acknowledged the importance of the female part of the workforce and the fact that it was not used to its full potential. As a result the Government enhanced a previously introduced set of family friendly measures so as to encourage females to contribute to the economic development of the country. Sometimes however these are not matched by practical facilitators, for example, allowing women to start later, work flexible hours, are these the sort of things you are targeting?
Well, the first thing to do is to really embed the message that this is not just the right thing to do-it is in fact a very significant strategic business issue. It has been demonstrated in a wide body of research that organisations with balanced work forces perform better because there is diversity of thought and approaches. Additionally large corporations tend to be more profitable when they not only have a diverse but also an all-inclusive workforce. By inclusive, I do not mean just counting the numbers but also allowing diversified leadership.
So presence on boards as well?
Absolutely. So you have to make the business case first because that’s what motivates people. They need to understand that the greater the diversity, the greater the reward.
Are you referring to the organisations?
Right. The organisation being the accounting firm, business or government. An inclusive and diverse environment provides for different backgrounds and experience-lenses through which issues can be viewed differently, and which enable easier identification of barriers and opportunities. In order to optimise the potential for attracting and retaining a more diverse staff, organisations need to introduce friendlier policies for the different phases that a woman goes through so as to keep them engaged and not lose their talent from the work force and the profession. We cannot keep doing the same things and expect different results-so it is time to figure out the different things we need to be doing to not lose their talent.
I am also very passionate about women in leadership. I have always had the privilege to be included as a leader, even when for years and years I was the only woman in the room. I was lucky to grow up in a family where I thought that I could do anything I wanted and I could be whatever I wanted. So one thing that I did not have to fight early on in my career is having confidence. There is a lot of research that shows women are more affected by the confidence factor than men. This holds them back from attaining leadership roles in the same numbers as men. We will not win this battle until we convince women that the only way to gain experience is by taking risk. Women need to know that it’s OK to not be fully prepared-to understand that probably there is no one out there who is fully prepared for a new role. The only way to learn is by taking risk and saying yes to new and different opportunities.
So what single attribute brought you to where you are nowadays? Self-confidence?
First of all, there is no substitute for competency. You have to be a continuous learner and willing to take on new challenges. Confidence is built with experience that comes from taking risks and applying competency and learning to successfully navigate new challenges. I believe that if I dedicate myself to something and put my mind to it, then I am capable of obtaining answers, solutions and pathways to achieving strategic goals.
I also choose to focus on my strengths rather than my weaknesses – we all have both. I am not afraid to ask for help and I am not afraid to say that I do not know. I value building relationships as these provide resources with which to collaborate when you are addressing issues. One of the most important things for me from my professional involvement with my state society, AICPA and IFAC is that I got to know people in the profession and so I know who to refer to in specific circumstances. Involvement in professional associations gives you a tremendous wealth of knowledge about people in the profession and their experiences which can prove to be invaluable throughout your professional career and in the business world.
How can small member bodies like Malta contribute to the global profession and make a difference?
The perspective of Malta is so important because one size does not fit all. It is extremely important for you to get involved and speak out. Malta may be small but it has a mature profession. There are many small countries, and there are many countries that serve primarily SMEs. That perspective is vital to the global economy. SMEs in most economies account for 80% to 90% of the economy. If we do not hear the voices of the profession like Malta then we would not be as valuable to the majority of companies out there that represent economic growth engines. So Malta’s participation-and countries of her comparative size-throughout IFAC, including the IFAC Small and Medium Practice Committee or other boards and committees, is important.
The other thing in which Malta can prove to be extremely valuable is in integrated reporting. We are involved in integrated reporting because we believe sustainable success is dependent on much more than financial capital –such as natural capital and human capital. Malta being a small country may be more concerned some issues than other countries. Larger countries have a different sense of urgency or sensitivity than smaller countries. Size has nothing to do with contribution. Individual contribution is what matters.
One of the challenges being faced by the Maltese profession is that regulators and government authorities’ expectations from accountants and auditors exceed what can be provided by the profession. Is it also the case in other countries? How can this gap be addressed?
I think the expectations gap with the government, regulators and the public in general is everywhere.
One of my key initiatives has been to engage with the government and regulators at an early stage and I do this in two ways:
- If there is some new action or regulation they are thinking about, then the government or regulator is encouraged to talk to us because-working together-we can come up with a better solution. The issue is not that we should influence them in doing or not doing something but we have to give them all the information that they ought to have so that they can act in the public interest. Sometimes there are unintended consequences of laws and regulations that were drawn up with great intentions but-because of missing information-they do not serve the public as effectively as they should. So it’s important to build these relationships. We have to reach out and let them know that we are there to help, and can be trusted.
- Offering help even in areas not directly related to the accounting profession but in fields where we might have unique insights or expertise, serving as advisors. Additionally, I strongly support ongoing dialogue and education on what accountants really do in their capacity as accountants, and the importance of other roles in the whole financial reporting chain.
Can you tell us more about the Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration (Mosaic) that IFAC has signed with key groups in the international donor community? How will this help in promoting the global profession?
MOSAIC is a historic Memorandum of Understanding that sets out the basis for improving cooperation and collaboration between IFAC, international donors, and the international development community. With 13 signatories, it provides the foundation for an aligned approach to increase the capacity of Professional Accountancy Organisations (the ‘PAOs’) and improve the quality of financial management systems in emerging economies.
“We are uniquely qualified to bring together the different issues of the entity.”
A report, entitled the ‘PAO Global Development Report’ was developed to assess the status of PAOs around the world and key areas of development needed. The report was co-funded by the African Development Bank, Asian Development Bank, Inter-American Development Bank, and World Bank.
The Memorandum of understanding tries to match the different needs of countries with the interests of the donors. Different donors have different interests and include institutions such as the African Development Bank, the Asian Development bank, also described as the providers of donor funds. Our position helps us in identifying what the needs are, the vehicles needed to communicate those needs to the donors, and try to match the needs with the interests.
For example £4.935m grant was received from the UK Department for International Development (DFID) for PAO capacity-building programs in at least 10 countries (in the African continent) over seven years. The funds will be used to strengthen PAOs in approximately ten DFID partner countries with capacity building needs that, based on current information, are ready to benefit from assistance. So we will be partnering with some of our member bodies to help African countries to enhance their PAOs in education, enforcement and any other areas that help to establish a strong PAO. IFAC’s role is that of a conductor or orchestrator that brings together all the bigger elements, technical expertise and therefore leads from a strategic standpoint. We believe that accounting is at the very heart of sound economies and good governance. Accordingly, IFAC is dedicating a lot of time and resources for this cause and its role is to complement what other professional bodies or IFAC’s member bodies are doing.
In your closing remarks to the WCOA in Rome last year you said that the finance function-and the accountancy profession-is transitioning from the passenger or navigating seat to the driver’s seat. Do you think that having a requirement for or recognition for having a Finance Director on the Boards of listed or large public interest entities would be conducive to such a statement?
I have spent a considerable amount of my career advocating for strong governance, so this is something that I feel particularly strongly about. The board is an oversight body. It’s difficult to oversee yourself or to audit yourself. The finance director is such a critical element in the preparation of information presented to the board that being part of the board overseeing that information might not be the most appropriate structure from an independence stand point. There is nothing that holds them back from being part of the board, but certainly they cannot be part of the audit committee.
We are not just passengers. Accountants have so much knowledge that they take for granted, other people may not appreciate that we need to be part of the strategic leadership.
We need to provide the right information – not just financial information. This is essential as one needs to be able to link financial information with everything else. We are uniquely qualified to bring together the different issues of the entity.
One of the items high on IFAC’s agenda is global regulatory convergence. How is IFAC working to achieve this?
We cannot control legislation and regulation. We can only voice our opinion and contribute to the process. A key element is the importance of building relationships so as to create a voice for ourselves. Since the financial crises we have experienced more regulatory fragmentation because everybody wants to fix things and be seen to be doing something.
Our focus as IFAC and national bodies should be on providing possible solutions that improve audit quality and this what we are trying to address. We are all committed to enhancing audit quality. However there can possibly be 50 answers to the question of how we can improve it.
Furthermore-regardless of the regulatory environment-we need to continue to focus on ways to improve audit quality. Whilst independence is a key element of audit quality, it is not the only important element-it must be coupled with other elements that are equally critical, such as competencies and experiences.
Professional accountancy organisations represent diverse sectors of the profession. How can a PAO effectively ensure that all members feel a sense of belonging to the profession?
Obtaining representations from the different groups through the different Committees, and ensuring that there is a representative of such constituencies on the PAO governing council, allows the PAO to benefit from their perspectives and sends the message that their input is valued. Also, providing better services to SMPs and PAIBs through the use of technology, even if it just involves linking them to other sources, such as IFAC, ACCA, ICAEW or CIMA, provides a tremendous wealth of information.
What, in your view, should a PAO strategic objectives in the short to medium term be?
Always focus on:
- Serving the public interest;
- Meeting your ethical standards and your quality of work, consequently developing trust enhancing the standing and reputation of the profession;
- Enhancing competency by addressing continuous education;
- Welcome change because it will bring on improvement;
- Looking at what the next right answer is for your members, your clients and for building trust with the public, government and regulators.