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Member Body Compliance Program

Member Body Compliance Program. Russell Guthrie, Executive Director. IESBA Meeting. New York, USA. October 19, 2011. Member Body Compliance Program. A Brief History. Program and Compliance Advisory Panel launched in 2004 as part of IFAC Reforms

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Member Body Compliance Program

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  1. Member Body Compliance Program Russell Guthrie, Executive Director IESBA Meeting New York, USA October 19, 2011

  2. Member Body Compliance Program A Brief History • Program and Compliance Advisory Panel launched in 2004 as part of IFAC Reforms • Established 7 Statements of Membership Obligations (SMOs): • QA, Education, ISAs, Ethics, IPSASs, I&D, IFRS • PIOB oversight

  3. Compliance Program Focus Strategic Considerations • Supporting continuous improvement of strong PAOs through SMOs • Influence PAOs’ agendas and actions • Information and knowledge sharing • Collaboration with stakeholders

  4. Compliance Program Focus Continuous Development and Improvement • Part 1 – Information Gathering: Overview of regulatory and standard-setting framework in a member’s jurisdiction • Part 2 – Self-assessment: Benchmarking against the 7 SMOs • Part 3 – Own Strategy: Action Plans for development & continuous improvement in addressing the SMOs

  5. Impact / Achievements Beginning of the Road • Action Plans as first step: • Transparent plans for continuous improvement (153 out of 163 published) • Annual updates by all member bodies • Monitoring of progress by the CAP • Time and resources needed to achieve meaningful change • Outreach activities and policy advice provided by the IFAC Staff

  6. Impact / Achievements Enforcement – since 2005 • To date – key focus on commitment to and participation in the Compliance Program • Enforcement Actions • 43 suspension warnings • 18 suspensions • 9 expulsion warnings • 5 expulsions

  7. Uptake of the Code of Ethics Russia –Drivers of Local Modifications • Working on adoption of the recent Code • Adoption environment: • Ethics Committee of the Audit Council under Min Fin • Independence rules must eventually be aligned with Russian legislation • Initial proposal to start with existing Russian CoE (based of old and abbreviated version of IESBA Code) and then make necessary additions • Auditors and accountants need different Codes • IFAC Staff providing guidance and analysis to PAOs, Large Firms, MoF

  8. Uptake of the Code of Ethics Latin America – Multiple Stakeholders • Challenges: • Barriers of legal, institutional, cultural and financial nature • Lack of ongoing mechanism for adopting and implementing changes • Lack of current translation makes it difficult to discuss with regulators, analyze independence requirements and organize relevant communications and trainings • To achieve meaningful change a thorough cultural change is needed • IFAC coordinates formation of a Latin America Review Committee to facilitate translation at the regional level

  9. Uptake of the Code of Ethics France – More Stringent Requirements • Ministry of Justice adopts ethical requirements for CNCC: • Requirements for CNCC endorsed by MinJus in consultation with AMF (securities market regulator), and the H3C • Requirements are considered to be more stringent than IESBA Code • CSOEC drafts its ethical requirements to be approved by Ministry of Economy and Finance • Direct incorporation of IESBA code impossible due to a different structure (Ordinance of 1945, OEC bylaws, other doctrinal texts) • Both French Bodies are planning to promote the adoption of the recent IESBA CoE to the Government

  10. Uptake of the Code of Ethics Malawi – Direct Adoption • IFAC Member sets the ethical requirements through a mandate implied by general consensus • Adopted IESBA Code of Ethics in 2008 without any modifications • Issuing the current IESBA CoE with Jan 2012 effective date • Action Plan focus on implementation support

  11. Uptake of the Code of Ethics Overarching Themes • CoE clearly used as a major point of reference • Strong awareness among PAOs • Adoption challenges • Principles and rules at a national level often embedded in legislation, regulation and member body governance documents • Implementation challenges • Overcoming cultural barriers

  12. Tracking of Adoption – Challenges Complex National Environments • Government (MinFin, Ministry of Justice) • Regulators (Capital Market, Insurance, Banking) • Professional accountancy organizations • Cultural differences, even different understanding of the concept of morality

  13. Tracking of Adoption – Challenges Differing MB Constituencies • Auditors: • Big firms • SMPs • Professional Accountants in Business • Management Accountants • Public Finance Accountants • Accounting Technicians

  14. Tracking of Adoption – Challenges Different than Standards that Tend to be Adopted en Block

  15. Other Matters of Interest Moving Forward • SMO Revisions • Clarified no best endeavors where PAO has direct responsibility • Removed “no less stringent standards” langauge • How do we best track and articulate “adoption” of CoE and/or key independence provisions

  16. Other Matters of Interest Moving Forward • Who is will determine whether local modifications are substantive (i.e., lead to different outcomes)?

  17. International Federationof Accountants www.ifac.org

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