Role of Ifac and the Accountancy Profession in Economic Development

ROLE OF IFAC AND THE ACCOUNTANCY PROFESSION IN ECONOMIC DEVELOPMENT

By: Graham Ward, CBE MA FCA President, International Federation of Accountants

Video Message – September 28, 2006

Chairman, distinguished delegates, ladies and gentlemen. Thank you for your participation in this Africa Region Learning Workshop. I apologize that I cannot be with you personally. My wife was born in Africa and spent her childhood in Africa; I have visited Africa many times. It would have been a great pleasure for both of us to share time with you in Nairobi today.

Please accept my sincere good wishes, and the best wishes of the IFAC leadership, for a successful and productive conference.

The focus of the Learning Workshop – the role of the accountancy profession in contributing to economic growth and development – is of great importance to IFAC, because we want to know how we can best support the profession and developing nations in achieving one fundamental goal – creating a better world for all.

I believe that by working together, exchanging ideas and making a commitment to real change, we can achieve our goal.

of 9 Throughout this two-day event, you will discuss some of the most important issues to economic growth and stability on the African continent: promoting the highest ethical conduct; sustaining good corporate governance; strengthening public sector accounting and auditing; meeting the needs of growing small and medium practices; and establishing and developing professional accountancy bodies. I urge you to listen thoughtfully and to determine what you can do personally to make a difference here in Africa.

With representatives from both the public and private sectors, from more than

50 African nations gathered at this Learning Workshop, there is much to share and much to gain from your discussions. The ultimate goal is that this

Learning Workshop will help to improve financial reporting, boost accountancy capacity and sustainability, and contribute to good governance throughout Africa.

I would like to thank the African Development Bank for sponsoring the

Learning Workshop and the World Bank for co-sponsoring the event together with IFAC. I would also like to extend my appreciation to the groups that, together with IFAC, have organized the event: the Eastern Central and

Southern African Federation of Accountants, the Federation Internationale des Experts-Comptables Francophones and the United Nations Conference on Trade and Development; and to the Institute of Certified Public

Accountants of Kenya, who, together with ECSAFA, have been kind enough to host the Learning Workshop in Nairobi. I would especially like to

of 9 acknowledge and thank Mr. Ndung’u Gathinji, Chief Executive Officer of

ECSAFA, Chair of IFAC’s Developing Nations Committee and a member of the IFAC Board. Mr. Gathinji has served on the IFAC Board since 1999 and, during that time, he has helped to lead IFAC’s efforts to support the accountancy profession in developing countries. On behalf of the leadership of IFAC, I would like to thank him for his many years of service to the accountancy profession both in Africa and around the world.

It is through the dedication and commitment of volunteers like Mr. Gathinji and through the support of IFAC’s 163 member bodies in 120 countries, such as the Institute of Chartered Accountants of Kenya, and regional accountancy organizations, such as ECSAFA, that IFAC is able to achieve its mission, which I will state for you now:

To serve the public interest, IFAC will continue to strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high- quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession's expertise is most relevant.

As stated in this mission, it is a primary goal of IFAC to strengthen the accountancy profession worldwide, in both developed and developing countries, and to contribute to the growth and development of strong

of 9 economies. Because IFAC is a global organization, and because it is predicted that 95 percent of the world’s population growth will occur in developing nations, we have made strengthening the profession in these nations a key objective. Our position is this: we have a fundamental role and responsibility to play in fostering progress in the developing world, in eradicating poverty and in building prosperity. Establishing a sound and viable accountancy profession is a critical step in building a sound financial infrastructure and addressing these issues; it is a critical step in providing the people with access to food, healthcare, education, energy and water. And it is the reason that you are all here today, participating in this Learning

Workshop.

IFAC’s goal is to have a member body, with an established accountancy profession, in every country around the globe. There is no doubt that this is a lofty goal, but as we look ahead and see that the growth of the world’s population will largely be in developing economies, I am more and more certain that this goal is one that we cannot compromise or forsake.

IFAC’s Developing Nations Committee is leading our efforts to achieve this goal. The committee is involved in extensive outreach to developing countries and has prepared new guidance, with the input of IFAC member bodies, which was released in December 2005. This new guidance, entitled

Establishing and Developing a Professional Accountancy Body, covers the roles and responsibilities of a professional body, education and examination,

of 9 and capacity development. The guide addresses a variety of situations, including where a formal accountancy profession does not exist in a country, where the profession exists and there is a desire to establish a professional accountancy body, and where an existing professional body requires further development and enhancement. It also includes suggested areas for priority action based on short-, medium- and long-term goals and projects. The guide is available electronically, along with all other IFAC standards and guidance, free-of-charge from the IFAC website: www.ifac.org.

Following on the release of this new guidance, the Developing Nations

Committee is in the process of preparing a country-specific approach to supporting developing nations, helping both those countries where there is no established profession and those that have only begun to build the professional, financial and regulatory architecture necessary to support economic growth.

In addition, to further support and provide resources to developing countries, the committee is working closely with the IFAC Member Body Compliance

Program, which supports the development of high quality auditing, accounting, ethical, educational and related quality assurance and disciplinary standards in IFAC member bodies throughout the world. The Member Body

Compliance Program is intended to guide accounting institutes in the full spectrum of their professional responsibilities, to demonstrate a shared commitment to our profession’s values of integrity, transparency and

of 9 expertise. I personally believe that the Compliance Program will play a major role in building credibility in the financial reporting process and in the accountancy profession in general.

The Member Body Compliance Program was established to help to support and encourage IFAC members and associates, throughout the world, in their best endeavors to meet our requirements for membership in IFAC. These include promoting and incorporating international standards issued by IFAC and the International Accounting Standards Board into national standards, and also implementing quality assurance and investigation and discipline programs to monitor compliance with applicable professional standards.

Promoting international convergence is fundamental to all IFAC standard- setting activities. We firmly believe that it is in the public interest to have a single set of international standards, of the highest quality, set in the public interest by an international expert body which transparently consults with, and recognizes the legitimate interests of, the international community. This is an important issue for both developed and developing countries, both here in

Africa and throughout the world.

Within IFAC, there are four independent standard-setting boards that develop standards that meet these requirements:

of 9  The International Auditing and Assurance Standards Board, which

develops international standards on auditing, assurance and quality

control;

 The International Ethics Standards Board for Accountants, which

establishes IFAC’s international Code of Ethics for Professional

Accountants;

 The International Accounting Education Standards Board, which sets

standards and guidance on the pre-qualification and continuing

professional development of all professional accountants; and

 The International Public Sector Accounting Standards Board, which

sets International Public Sector Accounting Standards, designed to

improve the transparency and accountability of public sector financial

reporting.

Each of these boards is comprised of members representing a broad geographic and professional background and includes representatives of the public. The boards follow a rigorous due process, which includes exposing proposed standards for public comment and obtaining public interest input through consultative advisory groups.

In addition, in February 2005, a Public Interest Oversight Board, comprised of members nominated by international regulators and institutions, was established to oversee IFAC’s auditing and assurance, ethics and education standard setting and the IFAC Member Body Compliance Program. The PIOB was created through the collaborative efforts of the international financial

of 9 regulatory community, working with IFAC, to ensure that its standards are set in a transparent manner that reflects the public interest. The PIOB has approved the due process and working procedures for the IAASB and the

Education and Ethics Standards Boards. It has also approved the nominations to these boards and continues to provide public interest oversight.

An important area of consideration for IFAC’s standard-setting boards, especially the IAASB and the Ethics Standards Board, is addressing the needs of small and medium practices and small- and medium-sized entities.

SMEs are vital to the economies of African nations and to the global economy as well. IFAC’s Small and Medium Practices Committee is increasingly active in representing the interests of SMPs to both the IAASB and the International

Accounting Standards Board. The committee is providing input to the IASB’s project in the development of financial reporting standards for SMEs. It is also in the process of developing a guide to applying International Standards on

Auditing for the audits of SMEs, and it is working to establish an electronic data exchange on SME and SMP issues.

Before closing, I would like to emphasize the values of the people that lead

IFAC. All members of IFAC’s Board and IFAC committee chairs have taken an oath, to operate with integrity and in the public interest. We in IFAC do indeed put the international public interest before national interests and commercial gain. We work transparently and welcome your input, your

of 9 suggestions and your questions at any time. And we are committed to the accountancy profession’s role in contributing to economic growth and stability, both in Africa and throughout our world.

There is no question that the accountancy profession has a unique, critical and practical role to play in building stronger and more stable economies both in Africa and around the globe. However, we cannot accomplish this alone. It is through partnership and cooperation among the public and private sectors, the accountancy profession, donor and development agencies and others that we can build strong financial architectures both in Africa and around the world

– architectures that are supported by strong ethical standards, high professional standards and an unwavering commitment to act transparently and to be accountable.

Together, we can build a better world. Together, we can contribute to greater economic growth and stability. And together, we can build a better quality of life for the people of Africa and for the people of the world.

Thank you very much indeed for your attention.