IFAC Monthly Update


1. IFAC Board

Statements of Membership Obligations 1  7 (Revised) Comment Deadline: March 5, 2012

2. IESBA Exposure Draft

Proposed Changes to the Code of Ethics for Professional Accountants Related to Provisions Addressing a Breach of a Requirement of the Code Comment Deadline: January 23, 2012

Proposed Changes to the Code of Ethics for Professional Accountants Addressing Conflicts of Interest Comment Deadline: March 31, 2012

3. IPSASB Exposure Draft and Consultation Paper

 Exposure Draft 46, Recommended Practice Guidelines, Reporting on the Long-term Sustainability of a Public Sector Entity™s Finances Comment Deadline: February 29, 2012

Reporting Service Performance Information Comment Deadline: April 15, 2012

4. PAIB Committee Exposure Draft

 Evaluating and Improving Internal Control in Organizations Comment Deadline: February 29, 2012

1. Exposure Drafts and Consultation Papers Issued by the IFAC Board, IESBA, IPSASB, and PAIB Committee

Please see the Open Consultations and Exposure Drafts section for more details.

2. IFAC Comments on European Commission Proposed Legislation

The Following the release of the European Commission’s proposed legislation on audit, IFAC released comments on the proposed measures. IFAC is supportive of efforts to continue to improve audit quality, enhance the role of audit, and safeguard auditor independence. However, there are also several components of the proposed legislation that IFAC does not support as there is not sufficient evidence that the measures will have a positive impact on auditor independence and audit quality, and that the benefits will outweigh the risks and costs. See the press release for more information.

3. Updated Practice Management Guide Released by SMP Committee

The Small and Medium Practice (SMP) Committee has released the second edition of its Guide to Practice Management for Small- and Medium-Sized Practices (PM Guide) to help practitioners improve the management of their accounting practices, and help IFAC members support their SMP constituents, especially in education and training. The PM Guide is comprised of eight standalone modules that include developing a growth strategy, managing staff and client relationships, managing risk, and succession planning. It also includes an extended case study, a sample office procedures manual, and numerous checklists and worksheets. An updated companion guide to help professional accountancy organizations make the best use of the PM Guide will be released in early 2012.

4. IAASB Issues International Auditing Practice Note 1000 on Financial Instruments

The International Auditing and Assurance Standards Board (IAASB) has released International Auditing Practice Note (IAPN) 1000, Special Considerations in Auditing Financial Instruments, which provides important practical assistance to auditors when addressing valuation and other considerations pertaining to financial instruments. This area of financial reporting involves complex issues and has come under particular focus due to the recent difficult financial market conditions.

5. IAASB Releases ISAE on Pro Forma Financial Information

The International Auditing and Assurance Standards Board (IAASB) has issued International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus. Companies seeking to access capital markets commonly include pro forma financial information in their prospectuses as a key element to enable investors and others to better assess the investment opportunities presented. Pro forma financial information included in an issuer’s prospectus illustrates the impact of a proposed acquisition, equity or debt issuance, or other transactions on the issuer’s historical financial information as if such event or transaction had occurred at an earlier selected date.

6. IAASB Reminds Auditors of Responsibilities Under ISAs

In light of current global financial crises, the International Auditing and Assurance Standards Board (IAASB) has taken steps to remind auditors of their important responsibilities under the International Standards on Auditing (ISAs), and that the appropriateness of management’s use of the going concern assumption is a matter to be considered on every audit engagement. See the press release for additional information and comments.

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1. IFAC President Delivers Keynote on Transparency and Regulatory Simplicity

IFAC President Gran Tidstrm recently attended the 10th Annual ©ration des Experts-Comptables Mediterranéens Conference: SME™s Financial Regulation: Striking the Right Balance Between Transparency and Regulatory Simplicity. Mr. Tidstrm delivered the opening keynote speech, which expressed IFAC™s commitment to global convergence of international standards on financial reporting, ethics, quality control, audit, and related services across the whole spectrum of entities from public interest entities to small- and medium-sized entities. Mr. Tidstrm emphasized the critical need to achieve the proper balance between transparency and regulatory simplicity.

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Open Consultations & Exposure  Drafts

1. IFAC Board Proposes Changes to Statements of Membership Obligations

The IFAC Board has released proposed revisions to the Statements of Membership Obligations (SMOs) for comment. The SMOs form the basis of the IFAC Member Body Compliance Program and serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members. The SMOs were redrafted to clarify what is expected of IFAC member bodies when they have varying degrees of responsibility for an SMO area, and to bring the SMOs in line with IFAC’s current strategic focus on adoption and implementation of international standards. Comment Deadline: March 5, 2012

2. IESBA Releases New Exposure Drafts for Comment

The International Ethics Standards Board for Accountants (IESBA) has released:

• Proposed Changes to the Code of Ethics for Professional Accountants Related to the Provisions Addressing a Breach of a Requirement of the Code provides guidance for professional accountants on actions to be taken for any breach of the Code of Ethics for Professional Accountants. The Exposure Draft also includes a robust framework for addressing a breach of a requirement, which will increase transparency. Comment Deadline: January 23, 2012

• Proposed Changes to the Code of Ethics for Professional Accountants Addressing Conflicts of Interest is intended to provide additional guidance to professional accountants in business and in public practice concerning conflicts of interest. The proposed changes are also intended to make revisions to provide more comprehensive guidance in identifying, evaluating, and managing conflicts of interest. In the IESBA’s view, the approach to be taken by a professional accountant in public practice and a professional accountant in business should be broadly similar. The proposal recognizes, however, that conflicts of interest will typically arise in different circumstances for accountants in public practice, particularly because a conflict of interest may arise from professional services provided by other members of the accountant's firm. Comment Deadline: March 31, 2012

3. IPSASB Releases New Exposure Draft and Consultation Paper, Invites Comment

The International Public Sector Accounting Standards Board (IPSASB) has issued the following Exposure Draft and Consultation Paper:

Exposure Draft 46, Recommended Practice Guidelines, Reporting on the Long-term Sustainability of a Public Sector Entity™s Finances builds on a consultation paper issued in late 2009 and provides good practice guidelines on reporting on the long-term fiscal sustainability of a public sector entity. It also emphasizes that entities may be able to draw on projections that are already being made by other bodies, which will ensure a cost-effective approach. In addition, it provides users with information on the impact of decisions made by the reporting date under current policy. IPSASB has also released an At a Glance summary of the material in the Exposure Draft. Comment Deadline: February 29, 2012

• Reporting Service Performance Information discusses the IPSASB view that service performance information is necessary to meet the objectives of financial reporting, which is to provide information that is useful to users of General Purpose Financial Reports for accountability and decision making. The project also aims to present a principles-based approach to developing a consistent framework for public sector entities. IPSASB also released an At a Glance summary for this Consultation Paper. Comment Deadline: April 15, 2012

4. PAIB Committee Releases New Exposure Draft on Internal Control

The Professional Accountants in Business (PAIB) Committee has released Evaluating and Improving Internal Control in Organizations for public comment, the latest proposed International Good Practice Guidance. This proposed publication seeks to establish a benchmark for good practice in maintaining effective internal control in response to risk, as well as help professional accountants in business and their organizations create a cycle of continuous improvement for their internal control systems. Comment Deadline: February 29, 2012

Prepared by IFAC™s Communications Department. Contact communications@ifac.org for further information. This newsletter is sent to all volunteers and key contacts. To unsubscribe, email communications@ifac.org. To subscribe to our other electronic publications, please visit My Subscriptions (you must sign in to manage your account).

Copyright © January 2012 by the International Federation of Accountants (IFAC). All rights reserved. Permission is granted to make copies of this work provided that each copy bears the following credit line: Copyright © January 2012 by the International Federation of Accountants (IFAC). All rights reserved. Used with permission of IFAC.