Proposed IFAC Member Body Compliance Program Strategy

Transcription

1 Cmpliance Advisry Panel Cnsultatin Paper February 2011 Cmments requested by May 30, 2011 Prpsed IFAC Member Bdy Cmpliance Prgram Strategy

2 REQUEST FOR COMMENTS The Cmpliance Advisry Panel (CAP) apprved this Cnsultatin Paper, Prpsed IFAC Member Bdy Cmpliance Prgram Strategy fr , fr publicatin in February This cnsultatin paper may be mdified in light f cmments received befre being issued in final frm. Respndents are asked t submit their cmments electrnically thrugh the IFAC website ( using the Submit a Cmment link n the Expsure Drafts and Cnsultatin Papers page. Please nte that first-time users must register t use this new feature. All cmments will be cnsidered a matter f public recrd and will ultimately be psted n the IFAC website. Cmments can als be faxed t the attentin f the Cmpliance Senir Technical Manager at +1 (212) , r mailed t: Senir Technical Manager Cmpliance Prgram 545 Fifth Avenue, 14th Flr New Yrk, New Yrk USA Cmments shuld be submitted by May 30, Cpies f this Cnsultatin Paper may be dwnladed free f charge frm the IFAC website at Cpyright February 2011 by the Internatinal Federatin f Accuntants (IFAC). All rights reserved. Permissin is granted t make cpies f this wrk t achieve maximum expsure and feedback prvided that each cpy bears the fllwing credit line: Cpyright February 2011 by the Internatinal Federatin f Accuntants (IFAC). All rights reserved. Used with permissin f IFAC. Permissin is granted t make cpies f this wrk t achieve maximum expsure and feedback. 2 P age

3 INTERNATIONAL FEDERATION OF ACCOUNTANTS IFAC MEMBER BODY COMPLIANCE PROGRAM STRATEGY AND WORK PLAN FOR Table f Cntents Chairman s Statement Intrductin Alignment t IFAC Strategy Member Bdy Cmpliance Prgram Prgram s Visin, Values and Gals Strategy Wrk Plan Reprting and Cmmunicatin Resurces Appendix 1 CAP Terms f Reference Appendix 2 CAP Self-Assessment fr the Mnitring Grup s Review f IFAC Refrms 14 Appendix 3 Excerpts frm the Fifth Public Reprt f the PIOB Appendix 4 IFAC s strategy and the Cmpliance Prgram Appendix 5 Outline f the Wrk Prgram Appendix 6 Detailed Wrk Plan fr P age

4 Chairman s Statement As a Chairman f the Cmpliance Advisry Panel (CAP) it is my pleasure t prvide an intrductin t this cnsultatin paper presenting the draft CAP and IFAC Member Bdy Cmpliance Prgram (the Prgram) strategy fr The Cmpliance Prgram was launched in 2004 as a part f a series f refrms, including the establishment f the Public Interest Oversight Bard (PIOB), adpted by IFAC t clearly demnstrate its cmmitment t strengthen the accuntancy prfessin arund the wrld. The gal f the Prgram is t encurage cntinuus imprvement in the practice f accuntancy thrugh an nging assessment f member bdies cmmitment t use best endeavrs t adpt internatinal financial reprting, auditing, ethical, educatin, and public sectr accunting standards as well as best practice in quality assurance and investigatin and disciplinary mechanisms. Yu will find mre infrmatin abut the evlutin and achievements f the Prgram in Appendix 2 t this paper but I wuld like t stress tw imprtant things: First, the bjective f the prgram despite its title is nt punitive but t encurage all members and assciates t cntinuusly imprve by adpting and successfully implementing internatinal standards and best practice. Secnd, while we are still wrking with members n finalizing sme f the initial Actin Plans, we are aware it will take years befre the required actins have been cmpleted. But we are als well aware that thrugh the Prgram we have already psitively impacted the agendas f prfessinal accuntancy rganizatins arund the wrld, fcusing mre and mre attentin and resurce n imprving the quality f financial reprting and auditing. These achievements were als highlighted in the Fifth Public Reprt f the PIOB and yu can find the relevant excerpts in Appendix 3 t this paper. The reprt clearly states the wrk f the CAP and the Cmpliance Prgram cnstitutes an imprtant element f the IFAC s public interest activities. Since 2007, PIOB representatives bserved substantially all CAP meetings. Our nging dialgue with them and their input t ur discussins cntributed greatly t the prgress f the Prgram and its evlutin t date. As we have prgressed with the implementatin f the CAP mandate we have been carefully develping prcesses underlying ur cre activities. I am very prud that we nw have cmpiled a cmprehensive due prcess setting ut the CAP Terms f Reference as well as, the principles fr the Actin Plan prcess, membership admissin prcess, and revisins t ur cre dcument the Statements f Membership Obligatins (SMO). Regardless f the significant achievements t date, we realize that we are just at the beginning f the rad. By setting ut ur updated strategy we want t cntinue n the path that was laid fr us thrugh the IFAC refrms. 4 P age

5 In the cming years we want t further intensify ur cperatin with the independent standard-setting bards and prvide them with imprtant feedback n successes and challenges in adptin and implementatin f their standards. We will explre hw best we can build clser links with the newly refrmed Prfessinal Accuntancy Organizatins Develpment Cmmittee (frmer Develping Natins Cmmittee). We will wrk twards further strengthening f the Reginal Organizatins and Accuntancy Grupings Plicies and Accuntability Framewrk t facilitate clser cperatin. And, finally, we will cntinue t seek enhanced and strengthened relatinships with external stakehlders like the IOSCO Emerging Markets Cmmittee, the Internatinal Frum f Independent Audit Regulatrs, the Wrld Bank, and ther internatinal and natinal dnr agencies. I wuld like t encurage yu t review this dcument and share yur thughts with us by submitting yur cmments n this draft strategy. Manuel Sánchez y Madrid Chairman, Cmpliance Advisry Panel 5 P age

6 1 Intrductin This strategy and wrk plan sets ut the visin, strategic directin and crrespnding wrk plan f the IFAC Member Bdy Cmpliance Prgram (the Prgram) fr the years The Prgram is the respnsibility f the IFAC Cmpliance Staff reprting t the Chief Executive. The Cmpliance Advisry Panel (CAP) versees the Prgram s implementatin and peratin. The CAP is subject t the versight f the Public Interest Oversight Bard (PIOB). The CAP s Terms f Reference (see Appendix 1) are subject t review at least every three years. The draft strategy set ut belw builds n: The current Prgram s strategy and wrk plan; The Self-assessment submitted as part f the Mnitring Grup s review f the IFAC Refrms (see Appendix 2); The cmments in the Fifth Public Reprt f the PIOB, May 2010 (See Appendix 3); and The strategic discussins between the CAP, Cmpliance staff and PIOB representatives in Octber 2010 and January This strategy is aligned with the verall IFAC Strategic Plan fr Alignment t IFAC Strategy IFAC s missin, as stated in the IFAC s Strategic Plan fr , is t serve the public interest by: Cntributing t the develpment, adptin and implementatin f high-quality internatinal standards and guidance Cntributing t the develpment f strng prfessinal accuntancy rganizatins and accunting firms Prmting high-quality practices by prfessinal accuntants wrldwide Speaking ut n public interest issues where the accuntancy prfessin s expertise is mst relevant IFAC s Strategic Plan fr explains that IFAC seeks t achieve its missin by influencing varius ecnmic and scial utcmes. An imprtant aspect f IFAC s strategic planning prcess is the selectin 6 P age

7 f services and allcatin f resurces that have the greatest influence n the IFAC s visin in the cntext f the current envirnment. IFAC s services fall int fur service areas: 1 Standards and Guidance; 2 Adptin and Implementatin; 3 Quality and Develpment; and 4 Representatin. The IFAC Member Bdy Cmpliance Prgram s Strategy and Wrk Plan fr is designed t cmplement IFAC s Strategic Plan fr Table in the Appendix 4 illustrates the link between IFAC s strategy and the Prgram s strategic bjectives and the utcmes ver which the Prgram has a mre direct influence. 3 Member Bdy Cmpliance Prgram The IFAC Bard established the Cmpliance Prgram and the Cmpliance Advisry Panel (CAP) in Nvember The Cmpliance Prgram is a staff driven functin reprting t the Chief Executive. The Cmpliance Advisry Panel, currently cmprised f six members representing six regins f the Wrld, prvides versight and advice t the staff as utlined in the CAP Terms f Reference (Appendix 1). The Prgram is als subject t versight by the Public Interest Oversight Bard (PIOB). The primary emphasis f the Prgram is t encurage cntinuus imprvement by prfessinal accuntancy rganizatins thrugh an nging assessment f their cmmitment t use best endeavrs t adpt and supprt implementatin f internatinal financial reprting, auditing, ethical, educatin, and public sectr accunting standards as well as t perate r therwise supprt rbust quality assurance and investigatin and disciplinary mechanisms. IFAC members and assciates have the respnsibility fr maintaining the accuracy f their Actin Plans and ensuring that they are kept up t date and reflect the status f the accuntancy prfessin in their jurisdictins. 7 P age

8 4 Prgram s Visin, Values and Gals Prgram s Visin The Prgram s Visin builds n the bjectives utlined in the CAP Terms f Reference as well as, the experience f the Prgram since its inceptin and prvides the fundamental strategic directin fr the future: In the spirit f encuragement and imprvement the Cmpliance Prgram strives t be a meaningful glbal platfrm fr the natinal adptin and implementatin f internatinal standards n private and public sectrs accunting, auditing, ethics, educatin and best practices. The Prgram influences actins and drives behavirs f prfessinal accuntancy rganizatins arund the wrld by fcusing attentin and resurce n imprving the quality f the accuntancy prfessin in supprt f the IFAC visin and in the public interest. Prgram s Values The Prgram executes its strategy within the fllwing set f guiding values: Cmmitment t quality and cntinuus imprvement Transparency Understanding and appreciatin f differing regulatry framewrks, natinal envirnments and stages f develpment f PAOs arund the wrld Prgram s Objectives In executing the strategy the Prgram is aiming t achieve the fllwing key bjectives: Quality and cntinuus imprvement thrugh clear and relevant Statements f Membership Obligatins (SMOs) supprting strng Prfessinal Accuntancy Organizatins Influence agendas and actins fr the meaningful adptin and implementatin f internatinal standards Infrmatin and knwledge sharing n Cmpliance Prgram and regulatry matters bth internally and externally Cllabratin with stakehlders invlved in the regulatin and develpment f the prfessin 8 P age

9 5 Strategy The Prgram pursues its bjectives thrugh executing the fllwing key strategic gals: Quality and cntinuus imprvement Encuraging recgnitin f the SMOs as the internatinal benchmarks fr prfessinal accuntancy rganizatins Mnitring the prgress f Actin Plans develped, updated and executed by Members and Assciates under their respnsibilities Enhancing the enfrcement framewrk in supprt f the CAP mandate Perfrming the IFAC membership applicatin prcess with stringent due diligence Enhancing the Accuntability Framewrk fr Reginal Organizatins and Accuntancy Grupings Influence agendas and actins Having a lasting impact n the agendas f prfessinal accuntancy rganizatins arund the wrld by ensuring they: Understand the need fr successful adptin and implementatin f internatinal standards and best practices Publish and regularly update their SMO Actin Plans t describe their cmmitment t adptin and implementatin Establish and/r maintain strng relatinships with gvernment agencies and ther cuntries stakehlders Prviding plicy advice and guidance t prfessinal accuntancy rganizatins and ther key cnstituencies Enhancing fcus n specific strategic cuntries r grups f cuntries Infrmatin and knwledge sharing Being a central repsitry f valuable and user friendly infrmatin n the status f the accuntancy prfessin arund the wrld Enabling IFAC t understand, articulate and disclse members and assciates prgress n Actin Plans 9 P age

10 Enhancing due diligence t minimize the risk f IFAC Members and Assciates submitting biased r incrrect infrmatin Prmting Cmpliance Prgram Actin Plans t external users and stakehlders (gvernments, regulatrs and dnr agencies) Cllabratin Enhancing cllabratin and knwledge sharing with the independent standard-setting bards under the auspices f IFAC Prviding input int the executin f the develpment activities led by the Prfessinal Accuntancy Organizatin Develpment Cmmittee (PAODC) Enhancing cperatin with and between Reginal Organizatins and Accuntancy Grupings Prviding cntinuus input int the Wrld Bank Accunting and Auditing ROSC prcess thrugh peer reviews and ther prjects Assisting regulatrs and ther key stakehlders wrldwide in achieving their bjectives t imprve the quality f the practice f accunting and auditing 6 Wrk Plan Outline f the Wrk Plan fr In supprt f the strategy set ut in this dcument, Appendix 5 includes an utline f the prpsed wrk plan fr Detailed Wrk Plan fr 2011 The current detailed Wrk Plan fr 2011 is in Appendix 6. This is prvided fr infrmatin nly and is reflected in the IFAC Operatinal Plan fr 2011 and the crrespnding budgets. 10 P age

11 7 Reprting and Cmmunicatin The Prgram will seek t cntinue t cmmunicate in an innvative and user friendly way. Fr instance, in additin t reprting peridically t the IFAC Bard, the staff and CAP will reprt n its activities and results, frm time t time, t relevant stakehlders independent standard-setting bards, member bdies, reginal accuntancy rganizatins and acknwledged accuntancy grupings, regulatry and dnr cmmunities and thers: at meetings, cnferences and ther frums. The Prgram will als lk fr ways t make the reprts available n the IFAC website and t include them in the IFAC annual reprt. 8 Resurces Specific budget cnsideratins fr the CAP and Cmpliance Prgram activities are included in the verall IFAC s budget cnsideratins as utlined in Strategy and related Operatinal Plan. The CAP and Cmpliance Prgram are supprted by the IFAC staff f the Member Bdy Develpment team. This team als supprts the Prfessinal Accuntancy Organizatin Develpment Cmmittee (PAODC). 11 P age

12 Appendix 1 CAP Terms f Reference 1.0 Purpse COMPLIANCE ADVISORY PANEL TERMS OF REFERENCE (Apprved by the IFAC Bard in September 2008) The purpse f the Cmpliance Advisry Panel (CAP) is t versee the implementatin and peratin f the IFAC Member Bdy Cmpliance prgram which is the respnsibility f the IFAC Cmpliance Staff reprting t the Chief Executive. The Cmpliance Advisry Panel is subject t the versight f the Public Interest Oversight Bard (PIOB). 2.0 Objectives The bjectives f the CAP are t versee and advise the IFAC Cmpliance staff with regards t: Assessing applicatins fr membership t IFAC and the related recmmendatins t the Bard; Undertaking peridic reviews f the criteria fr admissin t membership and related recmmendatins t the Bard; Reviewing the relevance, sufficiency and efficacy f the Statements f Membership Obligatins (SMOs) and related recmmendatins t the Bard; Implementing a self assessment prcess t determine whether members and assciates cmply with applicable SMOs; Apprving actin plans prepared by members and assciates t address required imprvements in their cmpliance with the SMOs; Disclsing cmpliance self assessments and actin plans, as apprpriate, fr each member and assciate via publicatin n the IFAC web site; Preparing recmmendatins t the Bard fr suspensin r expulsin f a member r assciate fr failure t adequately participate in the Cmpliance Prgram; Invlving Reginal Organizatins and Accuntancy Grupings in the implementatin f the cmpliance prgram, as apprpriate; Reprting t the Bard and Cuncil n the cmpliance prgram and the results theref; Assessing applicatins fr the recgnitin f Reginal Organizatins and the acknwledgement f Accuntancy Grupings and related recmmendatins t the Bard; and 12 P age

13 Preparing recmmendatins t the Bard fr withdrawal f recgnitin r acknwledgement fr Reginal Organizatins and Accuntancy Grupings fr failure t meet their bligatins t IFAC. 3.0 Authrity f Prnuncements The Bard has the authrity t issue the SMOs. The CAP and Cmpliance staff may recmmend t the Bard the issuance f r changes t the SMOs with an affirmative vte f a simple majrity f the CAP. 4.0 Membership The CAP, including the Chair and Deputy Chair, shall be cmpsed f nt less than five members frm IFAC member bdies appinted by the Bard n the recmmendatin f the Nminating Cmmittee and with the apprval f the PIOB. Selectin is based n the principle f the best persn fr the jb. Additinally, the Nminating Cmmittee shall prperly cnsider that members f the CAP are experts in cmpliance matters and prvide a brad gegraphic representatin f member bdies. Subject t transitinal arrangements, members are appinted fr terms f three years, and shall nt serve mre than tw cnsecutive three-year terms, unless the persn is appinted t serve as Chair fr a further three-year term. Appintments are made annually, in such a way that apprximately ne third f the Cmmittee shall retire every year. Each member f the CAP shall sign an annual statement at the first meeting f the panel in each calendar year declaring that they will act in the public interest and with integrity in discharging their rles within IFAC. 5.0 Meeting Prcedures Each CAP meeting requires the presence, in persn r by simultaneus telecmmunicatins link, f at least tw-thirds f the appinted members. Each member has ne vte. The affirmative vte f a simple majrity f the members present at the meeting r by simultaneus telecmmunicatins link is required t apprve any decisin. All membership and applicatin matters which may result in a staff recmmendatin t the Bard will be cnsidered by the CAP befre such recmmendatin is made t the Bard. The meetings and agenda papers are in English which is the fficial wrking language f IFAC. 6.0 Other The CAP will annually reprt n its wrk prgram, activities and prgress made in achieving its bjectives during the year. This reprt shuld nrmally be included as part f the IFAC annual reprt. IFAC will review the terms f reference and prcesses fllwed by the CAP at least every three years. 13 P age

14 Appendix 2 CAP Self-Assessment fr the Mnitring Grup s Review f IFAC Refrms The Cmpliance Advisry Panel (CAP) Intrductin The IFAC Member Bdy Cmpliance Prgram ( the Prgram ) was launched in 2004 as an integral part f the 2003 refrms. It is a staff driven prgram reprting directly t the IFAC Chief Executive verseen by a small advisry panel f highly experienced prfessinals, ne frm each f six distinct gegraphic regins f the wrld. The primary emphasis f the Prgram is t encurage cntinuus imprvement by prfessinal accuntancy rganizatins thrugh an nging assessment f their cmmitment t use best endeavrs t adpt and supprt implementatin f internatinal financial reprting, auditing, ethical, educatin, and public sectr accunting standards as well as t perate r therwise supprt rbust quality assurance and investigatin and disciplinary mechanisms. Cre Elements Statement f Membership Obligatins The fundatin f the Prgram are seven Statements f Membership Obligatins ( SMOs ), ratified by the IFAC Cuncil in 2004 as part f the 2003 refrms. Participatin is mandatry fr the 157 IFAC members and assciates in ver 120 cuntries. Five f the seven SMOs crss reference t the five sets f internatinal standards established by the fur IFAC standard setting bards and the Internatinal Accunting Standards Bard. The ther tw establish best practice fr Quality Assurance Reviews and Investigatin and Disciplinary Prcesses. All IFAC members are required t use their best endeavrs t adpt and supprt implementatin f these internatinal standards and best practices within their cuntries, recgnizing that in many jurisdictins the authrity t establish standards and practices des nt exist within the member but in sme ther regulatry bdy. Part 1 Assessment f the Standard-Setting and Regulatry Framewrk Beginning in 2010, the CAP will initiate a review t cnsider revisins t existing SMOs as well as the additin f new SMOs t make sure the IFAC membership bligatins are clearly stated and meet the needs f the current envirnment. The implementatin f the Prgram has been cnducted in three distinct phases. Part 1, launched in 2004, was a fact-gathering exercise using a lengthy questinnaire that prvided details f the legal, regulatry and standard setting arrangements in each jurisdictin represented by an IFAC member bdy. Cmpletin f the questinnaire prved t be a significant challenge t many member bdies. It tk all f 2004 and well int 2005 until ultimately cmpleted. Alng the way, 12 member bdies (almst 10% f ttal membership) had t be temprarily suspended and, in the end, 5 member bdies were expelled fr failure t satisfactrily participate while a sixth bdy resigned its membership. These were the first suspensin and expulsin actins by IFAC fr reasns ther than failure t pay membership dues and, 14 P age

15 therefre, sent an imprtant message bth internally and externally that IFAC was transfrming itself int a strngly fcused rganizatin willing t regulate its membership. Part 2 SMO Self-Assessment Part 2 was launched in 2005 using specialized sftware that mved individual respndents thrugh a self-assessment questinnaire t increasingly specific questins depending n their answers t previus questins. During this phase, members and assciates self-assessed their level f cmpliance with the specific requirements f the 7 SMOs as well as the status f their cnvergence with the underlying internatinal standards and best practices. While this was a self-assessment, the IFAC staff was able t perfrm selected validatin by: Prbing further where respnses seemed questinable r internally incnsistent; Cmparing respnses frm different member bdies where there is mre than ne member bdy in a particular cuntry; Cmparing the respnses received t the apprximately 75 ROSC Accunting & Auditing reprts published by the Wrld Bank as well as inquiring abut specific matters with the Wrld Bank staff and ther knwledgeable parties. Part 3 Actin Plans Part 3 was launched in late 2007 and, is itself, being carried ut in tw phases. The first phase invlved the preparatin by the Cmpliance staff f brad Plicy Recmmendatins based n the staff s analysis f the gaps in cmpliance indentified during the Part 2 Self-Assessments. Member bdies were given 3 mnths t cnsider the recmmendatins, nt nly at a staff level but als by apprpriate cmmittees f vlunteers, and then cnfirm them (with clarificatins, if necessary) at the gverning bdy level (e.g. their Bard r Cuncil). Once Plicy Recmmendatins were agreed, members and assciates were given anther 6 mnths t prepare detailed Actin Plans, including specific timelines and accuntabilities, indicating hw and when the recmmended actins wuld be taken. By January 2009, Plicy Recmmendatins had been issued t all f the mre than 120 develping member bdies. In additin, as a result f a successful pilt test with 10 develped member bdies during 2008, each f the apprximately 35 develped bdies were requested t prepare an Actin Plan, withut the need fr Plicy Recmmendatins, with an emphasis n hw they supprt implementatin f the underlying standards and cntinuusly mnitr any changes in the standards. While the staff has prepared a detailed Guide n the Preparatin f Actin Plans, including templates and illustrative plans, it has been emphasized in a Backgrund Nte in published plans and elsewhere that such plans are prepared by member bdies fr their wn use and reflect their specific natinal framewrks, pririties, prcesses and challenges. As a result, Actin Plans vary in bjective, cntent and level f detail. The key is that the member bdy takes full wnership f the plan which is the nly way it can be successfully implemented. 15 P age

16 The first six Actin Plans, prepared by member bdies n fur different cntinents, were psted t the IFAC website in July 2008 (Argentina, Btswana, China, Czech Republic, Kenya, and Rmania). As f Nvember 2009, a ttal f 70 plans have been published and ver 40 drafts are currently under review 1. The Actin Plan, hwever, is just the beginning f the prcess. The gal is actual change reflected by the cmpletin f the actin steps identified in the plan. As a result, the staff has begun the implementatin f a Mnitring prcess fr member bdies with published Actin Plans. This prcess invlves an infrmal assessment every 6 mnths by the staff and member bdy f the prgress n planned activities. A frmal prgress reprt by each member bdy n cmpleted actins as well as a cmprehensive update t the Actin Plan will be required at least nce a year. Transparency and Oversight Frm the utset f the prgram, a cre element was a cmmitment t transparency. All Part 1 and 2 questinnaires, as well as the published Actin Plans, are psted t a separate sectin f the IFAC website and are available t anyne wh wants t review such infrmatin. Since the initial pstings, ver 1 millin page views have been recrded in this prtin f the website. PIOB representatives have bserved substantially all meetings f the CAP since April 2007 and have prvided feedback n CAP prcesses as well as the public interest aspects f the CAP agenda. In additin, in 2008, the CAP Chairman has met with members f IFIAR and the IOSCO Emerging Markets Cmmittee and prvided updates n the Cmpliance Prgram. Such utreach is imprtant t keep key cnstituencies infrmed f nging prgress, challenges and the valuable utput f the Cmpliance Prgram. Outcmes Since its inceptin, the Prgram and its related activities have achieved a number f imprtant utcmes: Transfrmatin thrugh the member bdy cmmitments cntained in the SMOs, the Prgram has made a substantial cntributin t transfrming IFAC int a prfessinal rganizatin that is demnstrating its cmmitment t strengthen the accuntancy prfessin arund the wrld. Recgnitin the SMOs have becme recgnized as the internatinal benchmarks fr prfessinal accuntancy rganizatins; in particular, the Wrld Bank ROSC A&A reprts specifically refer t the SMOs as part f their Plicy Recmmendatins t gvernments and prfessinal accuntancy rganizatins. Regulatry Supprt the Prgram may assist regulatrs and ther key stakehlders in achieving their bjectives by prviding a transparent assessment f the current status f adptin f internatinal standards and best practices in their jurisdictins (as well as ther jurisdictins 1 As f January 15, 2011 a ttal f 117 Actin Plans have been published and 24 drafts are currently under review. 16 P age

17 wrldwide) and the planned activities f their natinal prfessinal bdies t achieve cnvergence with these standards and practices. Valuable Feedback while the Prgram is designed t drive behavir and actin at the individual member and assciate level, extremely valuable infrmatin abut the status f adptin f internatinal standards acrss all jurisdictins is a supplementary glbal benefit. Such infrmatin is nw being analyzed and rganized by the Cmpliance staff and the first cmprehensive assessment Basis f ISA Adptin - was launched n the IFAC website in Nvember 2009 ( Additinally, the Cmpliance staff regularly prvides feedback n adptin and implementatin issues bserved in the Prgram t the IFAC standard setting bards. Influencing Actin as described abve, the Prgram serves as an engine t drive behavir t achieve the successful adptin and implementatin f internatinal standards and best practices, either thrugh the direct actins f IFAC members and assciates r thrugh their encuragement and advcacy t ther stakehlders with the authrity t initiate change in their jurisdictins. It is currently estimated that all initial Actin Plans shuld be published by the end f Hwever, it will take a cnsiderable perid f time befre member bdies cmplete all required actin steps. Nevertheless the Prgram has significantly impacted the agendas f prfessinal accuntancy rganizatins arund the wrld, fcusing mre and mre attentin and resurce n imprving the quality f financial reprting and auditing. Facilitating Funding fr the Develpment f the Accuntancy Prfessin the required actins will nt be easy. Mrever, the further the Prgram mves int the Actin Plan phase the mre bvius it becmes that develping member bdies will need significant assistance - bth financial and technical - t get the jb dne. As a result, IFAC has been building relatinships with develpment partners such as the Wrld Bank, reginal develpment banks, bilateral dnr agencies, and thers t prmte the funding f prjects t help these develping bdies. At the July 2009 G-20 Accuntancy Summit, the Wrld Bank highlighted the urgent need t develp and strengthen the prfessin in develping and emerging ecnmies as a key step in achieving financial stability and annunced that it will wrk with IFAC t deepen cperatin and establish a framewrk fr building sustainable capacity fr the accuntancy prfessin in such ecnmies. IFAC, thrugh its Develping Natins Cmmittee 2, has als strngly prmted mentring relatinships within reginal rganizatins and by the mst develped member bdies. Ultimately, the ability f develping accuntancy bdies t meaningfully execute their Actin Plans will significantly depend n 1) their ability t clearly cmmunicate their challenges, required actins and need fr assistance including resurces and 2) the willingness f gvernments, dnr agencies and develped prfessinal bdies t prvide assistance whenever pssible. 2 In July 2010, in accrdance with the Recmmendatins f the DNC Review Task Frce, the IFAC Bard apprved the revised Terms f Reference f the cmmittee which name has been changed t Prfessinal Accuntancy Organizatin Develpment Cmmittee (PAODC). 17 P age

18 Appendix 3 Excerpts frm the Fifth Public Reprt f the PIOB Nte: Full text f the 5 th PIOB Reprt can be dwnladed frm the PIOB website at: PIOB Oversight Mdel (See 5 th PIOB Reprt Page 4-5) The PIOB was established t versee the standard-setting prcesses spnsred by the IFAC in the areas f audit, educatin, and ethical standards fr prfessinal accuntants, including independence and ethical requirements fr auditrs, quality cntrl and assurance standards, and cmpliance. The PIOB s versight respnsibility extends, specifically, t three f the independent standard-setting bdies under the aegis f the IFAC and their respective cnsultative advisry grups (CAGs): the Internatinal Auditing and Assurance Standards Bard (IAASB), the Internatinal Ethics Standards Bard fr Accuntants (IESBA), and the Internatinal Accunting Educatin Standards Bard (IAESB). The PIOB als versees the Cmpliance Advisry Panel (CAP) f the IFAC, which evaluates the cmpliance f members with IFAC membership bligatins, including each member s prgress in prmting the adptin f private and public sectr accunting (Internatinal Financial Reprting Standards and Internatinal Public Sectr Accunting Standards), audit, ethics, and educatin standards. These independent standard-setting bdies and the CAP are cllectively referred t as the public interest activity cmmittees (PIACs). Imprvements after Five Years f Independent Oversight (See 5 th PIOB Reprt Page 9) Cmpliance by IFAC member bdies with their membership bligatins has made significant prgress under the vigrus leadership f the Cmpliance Advisry Panel. Membership bligatins include, n a best-endeavrs basis, adpting and supprting implementatin f standards develped by the PIACs and the IASB. In additin, actin plans designed t ensure and enhance cmpliance with membership bligatins are being develped by IFAC member bdies under the guidance f the CAP and are prgressing, r have prgressed, t the stage f implementatin. Many IFAC member bdies have already adpted and are executing their actin plans. The PIOB believes that the cmpliance prgram has becme, and will cntinue t be, an imprtant platfrm fr encuraging and facilitating cnvergence tward internatinal standards. The rigr and fcus f the CAP are already enhancing the quality f the prfessin, assisting member bdies t develp meaningful actin plans fr cmpliance with Statements f Membership Obligatins (SMOs), and, thrugh this activity, psitining prspective members fr further assistance and funding. Oversight f the CAP and the IFAC Cmpliance Prgram in 2009 (See 5 th PIOB Reprt Page 16) PIOB members believe that the Cmpliance Advisry Panel is an imprtant element in the IFAC s public interest activities. It cntinues t be a high pririty fr the PIOB. The CAP has made imprtant prgress 18 P age

19 ver the years in enhancing the level f cmpliance with the IFAC membership bligatins. Abut half f IFAC member bdies and assciates have published their actin plans t date (usually the first step in the prcess f achieving r maintaining cnvergence with internatinal standards and practices), and many ther member bdies have submitted partial r cmplete drafts fr CAP review. This year the PIOB bserved the CAP deliberatins during which varius actin plans were apprved fr publicatin. The CAP has pledged t finalize the remaining actin plans by 2010, prviding the circumstances f individual members s allw. Further, the CAP requires members t reprt peridically n their prgress. This reprting has helped the CAP t cmmunicate regularly with the accuntancy bdies and t discuss their effrts t achieve internatinal cnvergence. The CAP perfrms extensive utreach activities that have included cntacts with reginal rganizatins and acknwledged accuntancy grupings. The CAP als has prcessed and recmmended several new IFAC members this year and has cntinued t wrk with prfessinal bdies that have expressed an interest in becming IFAC members. This year the CAP has cntinued t wrk n its prject t revise the seven Statements f Membership Obligatins during the perid and the pssible develpment f new statements cvering areas such as the crprate gvernance f member bdies. These tw prjects will be amng the mst imprtant n the CAP s agenda ver the next few years. The PIOB will mnitr these prjects given the public interest inherent in each f the SMOs and the benefits that wuld derive frm the glbal adptin and implementatin f the internatinal standards cvered by the SMOs. The Challenges f Adptin and Implementatin (See 5 th PIOB Reprt Pages 24-25) The adptin f internatinal standards in the areas f audit practice, assurance services, ethics, and educatin fr prfessinal accuntants in many jurisdictins arund the wrld will bring adptin and implementatin challenges t and increase the wrklad f internatinal standards setters. This will include requests fr interpretatin, practice guidance, revisin f existing standards, and, ptentially, the creatin f new nes. With five years f experience in mnitring and verseeing the IFAC s respnses t the challenges it faces, the PIOB is well placed t ensure that a prper public interest perspective is maintained in these imprtant new areas. The prper implementatin f standards is a jint respnsibility f audit practitiners, ther accuntancy prfessinals, accunting bdies, and natinal audit regulatrs wh are charged with ensuring cmpliance. Implementatin invlves numerus activities and actrs t set the stage fr successful cmpliance. Sme f these tasks and prcesses include the translatin f standards, the adptin f standards by natinal jurisdictins, the develpment f implementatin methdlgies by all sizes f audit practices, the educatin and training f practitiners, the develpment f prfessinal bdies in emerging markets r regins, and the creatin f mechanisms and channels f cmmunicatin t prmte the achievement f unifrm implementatin arund the wrld. While these are largely natinal activities, the creatin f necessary cnditins t supprt cmpliance is an area f implementatin supprt that requires internatinal crdinatin subject t cmmn due prcess disciplines. Implementatin and cmpliance must be effective if they are t serve the public interest, s public interest versight has a rle t play. 19 P age

20 Implementatin is a large area in which varius activities are already being carried ut. Fr example, the Internatinal Frum f Independent Audit Regulatrs is playing an imprtant and grwing rle in identifying the prcesses used by audit firms t implement internatinal standards and evaluating hw these standards are being applied in practice. The PIOB has established a strng dialgue with the IFIAR. The Wrld Bank plays a brader and mre macr rle in determining whether cuntries are cmplying with adpted standards, thrugh its Reprts n the Observance f Standards and Cdes (ROSC) initiative. Finally, the wrk f the Cmpliance Advisry Panel is grwing rapidly in imprtance. The wrk f the IFAC Cmpliance Prgram t test and prmte imprvements in the cmpliance f IFAC member bdies with their bligatins relative t internatinal standards cnstitutes an imprtant platfrm fr prmting the adptin and effective implementatin f these standards. The advice and directin prvided by the CAP are crucial t the success f these initiatives. The CAP is already subject t intense PIOB versight. Ging frward, it wuld be beneficial t evaluate whether the public interest dimensin f the CAP s wrk wuld be strengthened by adpting certain principles and practices underlying the wrk f the standard-setting bards. An immediate step culd be fr the CAP t review its current Terms f Reference as well as t cnsider develping its wn Due Prcess and Wrking Prcedures dcuments. 20 P age

21 Appendix 4 IFAC s strategy and the Cmpliance Prgram Service Area Missin Outcmes (relevant t CP) CP Cntributin Standards and Guidance Adptin and Implementatin Quality and Develpment Representatin f the Accuntancy Prfessin Cntributing t the develpment, adptin, and implementatin f high-quality internatinal standards and guidance Cntributing t the develpment f strng prfessinal accuntancy rganizatins and accunting firms, and t high-quality practices by prfessinal accuntants Prmting the value f prfessinal accuntants wrldwide Speaking ut n public interest issues where the accuntancy prfessin s expertise is mst relevant Cnfidence in internatinal standards Adptin f high-quality internatinal standards Effective implementatin and enfrcement f internatinal standards Strng prfessinal accuntancy rganizatins Strng accunting firms High-quality services by accunting firms and practitiners High-quality financial management and reprting practices in all types f rganizatin All f the abve Direct Thrugh SMOs Indirect As a platfrm fr meaningful adptin and implementatin Regular revisin f the SMOs t ensure their currency and in turn their credibility Actin Plan prcess / Member Bdy Strategic Planning Plicy advice and guidance t IFAC Members Membership Applicatins due diligence and assessments Input t Wrld Bank ROSC Reviews RO/AG Plicies and Accuntability Framewrk Cntinued Prmtin f the Value and Relevance f the Member Bdy Cmpliance Prgram t Relevant Regulatry Bdies and ther stakehlders Participatin in events f Member Organizatins, ROs, AGs, and Other Relevant Organizatins Meetings with Regulatrs and Other Stakehlders (including participatin in Wrld Bank and ther funded prjects) 21 P age

22 Appendix 5 Outline f the Wrk Prgram KEY STRATEGIC GOALS ACTIVTIES AND PROJECTS STATUS JAN 2011 APRIL 2011 JULY 2011 OCT 2011 JAN 2012 APRIL 2012 JULY 2012 OCT 2012 JAN 2013 APRIL 2013 JULY 2013 OCT Quality and Cntinuus Imprvement SMOs Revisin Prject Mnitring f Actin Plan Prgress Enfrcement (Current and enhanced) Current X X X X X X X X Onging X X X X X X X X X X X X X Onging X X X X X X X X X X X X X Membership Applicatins: Assessment and Due Diligence Management f the ptential member pipeline Onging X X X X X X X X X X X X X Management f Accuntability Framewrk fr Reginal Organizatins (ROs) and Accuntancy Grupings (AGs) Onging X X X X X X X X X X X X X 22 P age

23 KEY STRATEGIC GOALS ACTIVTIES AND PROJECTS STATUS JAN 2011 APRIL 2011 JULY 2011 OCT 2011 JAN 2012 APRIL 2012 JULY 2012 OCT 2012 JAN 2013 APRIL 2013 JULY 2013 OCT Influence Agendas and Actins Publish Actin Plans Publish Actin Plan Updates Onging X X X X X Onging X X X X X X X X X X X X X Plicy Advice and Guidance t IFAC Members Onging X X X X X X X X X X X X X Infrmatin and Knwledge Sharing Cmpliance Infrmatin Analysis and Reprting (internal and external) Cmbine and Maintain Parts 1 and 2 Onging X X X X X X X X X X X X X New X X X X X X X X X Further enhance validatin f the infrmatin gathered thrugh the Prgram and Membership applicatin prcess New X X X X X X X X X Cllabratin Prmte the Value and Relevance f the Prgram t Relevant Onging X X X X X X X X X X X X X 23 P age

24 KEY STRATEGIC GOALS ACTIVTIES AND PROJECTS STATUS JAN 2011 APRIL 2011 JULY 2011 OCT 2011 JAN 2012 APRIL 2012 JULY 2012 OCT 2012 JAN 2013 APRIL 2013 JULY 2013 OCT Regulatry Bdies Input t the Wrld Bank Reprts n Observance f Standards and Cdes (ROSC) Auditing & Accunting prgram Onging X X X X X X X X X X X X X Others Strategic and Operatinal Plan Current X X X 24 P age

25 Appendix 6 Detailed Wrk Plan fr 2011 Nte: Shaded areas represent external service delivery Service Area Actin / Service Descriptin Delivery Methd Expsure Draft Apprved by Bard Q2/Q Timeframe ( Standards & Guidance Revisin f the Statement f Membership Obligatins (SMOs) and develp a prpsal fr amendments, as apprpriate Final SMOs ratified by Cuncil Cnslidatin and refinement f the Infrmatin Gathering Questinnaires (Part 1 and Part 2) Nvember Q Adptin and Implementatin Reprt n the Status f the Adptin f Internatinal Standards Issued by the IAASB, IAESB, IESBA and IPSASB Reprt r ther website publicatin Q2-Q Quality and Develpment Publicatin f Initial Actin Plans Published new Actin Plans Thrughut 2011 Sft Updates f Actin Plans Sft updates cmpleted Thrughut 2011 Annual Updates f Actin Plans Published updated Actin Plans Thrughut 2011 Plicy Advice and Guidance t IFAC Members Assessment and Due Diligence f Membership Applicatins Staff Outreach t Member Bdies re Actin Plans / SMOs and related matters Membership Applicatins fr Apprval by IFAC Cuncil [2011 Estimate: 10] Thrughut 2011 Thrughut P age

26 Service Area Actin / Service Descriptin Delivery Methd Timeframe ( Manage ptential member pipeline Establishing Early Cntact with Ptential Members and Managing Apprpriate Applicatin Timing [30 rganizatins] Thrughut 2011 Input t the Wrld Bank Reprts n Observance f Standards and Cdes (ROSC) Auditing & Accunting prgram Cntinued Prmtin f the Value and Relevance f the Prgram t Relevant Regulatry Bdies Cntinued implementatin f Plicy Statements fr Reginal Organizatins (ROs) / Accuntancy Grupings (AGs) ROSC reprts where IFAC prvides cmments as a peer reviewers ROSC disseminatin wrkshps with IFAC representatin Other frms f input prvided t the Wrld Bank ROSC initiative Infrmal and frmal interactins with relevant stakehlders Meetings with individual ROs / AGs Annual ROs / AG meeting Assessment reprts received frm ROs / AGs Interactins with ROs/AGs t prgress Member Bdy Cmpliance Prgram in their cnstituency Thrughut 2011 Thrughut 2011 Thrughut 2011 Reprts t PIOB Reprts by CAP Chair and/r Executive Directr t PIOB Thrughut 2011 Representatin f the Accuntancy Prfessin Prvide Cuntry and Other Relevant Briefing Materials t IFAC Leadership Briefings Prvided Thrughut 2011 Events f Member Organizatins, ROs, AGs, and Other Relevant Organizatins Attendance at / participatin in events Thrughut 2011 Meetings with Regulatrs and Other Stakehlders (including participatin in Wrld Bank and ther funded prjects) Attendance at / participatin in events Thrughut P age

27 Service Area Actin / Service Descriptin Delivery Methd Timeframe ( Other Revise CAP TOR and Strategy as required by the CAP TR Draft Strategy fr Public Expsure by Q2 f Bard Apprval by Q3/Q4 f 2011 Q Q3/Q Member Bdy/Cuntry/Regin input int Officer speeches Speeches with input prvided Thrughut 2011 Annual Updates t the independent standard-setting bards Reprts by staff t respective bards Thrughut P age