IFAC has urged the G-20 Deputies and Finance Ministers at their April 2012 meeting in Mexico to take action to encourage governments to seriously address the quality of public sector financial management systems and institutions. The letter, which is a follow-up to previous submissions to the G-20 in 2009, 2010, and 2011, focuses solely on public sector financial management, transparency, and accountability. 

The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 127 countries, has submitted, on behalf of the Private Sector Taskforce (PSTF), an update to the report Regulatory Convergence in Financial Professions and Industries (”2011 Report”), issued to the G-20 Deputies in September 2011.

The PSTF strongly encourages the G-20 to implement all of the 15 recommendations presented in its 2011 Report with a strong emphasis on its first two recommendations, encouraging the G-20 to:

• Continue to focus on regulatory convergence in the financial sector, ensuring that G-20 nations work together to identify and narrow gaps in regulatory practice; and
• Discourage nations from implementing unilateral national regulatory reforms that are inconsistent with international standards and that widen—rather than narrow—the convergence gap.

In support of these recommendations, the update provides a discussion of matters that have arisen since the report was issued―including examples of where regulatory convergence has moved forward, such as the introduction of Legal Entity Identifiers (LEI), adoption of International Financial Reporting Standards (IFRS), and the adoption of International Standards on Auditing (ISAs). The update also notes examples where international regulatory arrangements have become more fragmented.

The update includes additional recommendations regarding public sector financial management and reporting, transparency, and accountability. Over the last year this has been brought into greater focus as a consequence of the sovereign debt crisis, and growing global financial instability. Other important matters are identified which the taskforce suggests will require closer attention by the G-20 in 2013 and beyond.

“It is imperative the G-20 follow through on the PSTF's initial 15 recommendations outlined in the 2011 report.  It is equally important the G-20 evaluate and respond to crucial matters that have become even more critical since the report was issued, such as the sovereign debt crisis. The taskforce and its member organizations would be pleased to assist the G-20 in any way they can,” said IFAC Chief Executive Officer Ian Ball.

The PSTF was established in May 2011 at the request of the Presidency of the G-20.  The initial report provided the G-20 with an analysis of the development of financial policy and regulation, with the aim of facilitating economic stability in the world’s capital markets. The benefits of regulatory convergence were identified, as well as the inefficiencies and associated costs created by regulatory gaps. A range of possible scenarios and associated risks were analyzed and explored, specific examples were given, and a set of recommendations provided.

Coordinated by the International Federation of Accountants, the taskforce includes CFA Institute (CFA I); INSOL International; Institute of International Finance (IIF); International Accounting Standards Board (IASB); International Actuarial Association (IAA); International Corporate Governance Network (ICGN); International Insurance Society (IIS); and International Valuation Standards Council (IVSC).

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The PSTF strongly encourages the G-20 to implement all of the 15 recommendations presented in its 2011 Report with a strong emphasis on its first two recommendations, encouraging the G-20 to: continue to focus on regulatory convergence in the financial sector, ensuring that G-20 nations work together to identify and narrow gaps in regulatory practice; and discourage nations from implementing unilateral national regulatory reforms that are inconsistent with international standards and that widen—rather than narrow—the convergence gap.

The Compliance Advisory Panel oversees the implementation and operation of the IFAC Compliance Program, which is the responsibility of the IFAC staff and operates in accordance with this agreed upon Strategy and SMO Revision Due Process.

IFAC CEO Ian Ball is quoted in the Economist on accounting standards and transparency in the public sector.

While in Kigali, Rwanda, for the CAP, which was hosted by the Institute of Certified Public Accountants of Rwanda (currently applying for IFAC membership), IFAC member body development staff and CAP members met with attendees of the East Africa Community Institutes of Accountants Chief Executive Officers (CEOs) Strategy Meeting. The meeting brought together leaders of the East African PAOs to discuss the Mutual Recognition Agreement (MRA) signed in September 2011.

The executives discussed developments and challenges within the accountancy profession and their organizations, including their IFAC Compliance Program Action Plan priorities. Members of the CAP noted the signing of the MRA between the five countries—Burundi, Kenya, Rwanda, Tanzania, and Uganda—represents a unique and positive step toward enhanced knowledge sharing and collaboration in the region, which has three IFAC members and one organization applying for associate status.

The meeting included a presentation from Vickson Ncube, CEO of the Pan African Federation of Accountants (PAFA), on the development of PAFA strategy and confirmation of its intention to apply for IFAC Recognized Regional Organization status in 2012.

The PAIB Committee submitted this comment letter to the International Ethics Standards Board for Accountants (IESBA) Exposure Draft on Proposed Changes to the Code of Ethics for Professional Accountants (the Code) Addressing Conflicts of Interest. Recommendations include expansion of some of the definitions and parameters to better cover the work and domain of professional accountants in business.

The International Public Sector Accounting Standards Board (IPSASB) has published Exposure Draft (ED) 47, Financial Statement Discussion and Analysis—a proposed new standard. The ED proposes minimum required content while still providing sufficient flexibility for entities to prepare and publish financial statement discussion and analysis that best portrays their specific circumstances.

Because of the close link between financial statement discussion and analysis and an entity’s financial statements, ED 47 proposes that:

• the guidance be issued as an International Public Sector Accounting Standard (IPSAS) with the same authority as IPSASs concerning accrual-based financial statements;
• financial statement discussion and analysis be prepared and presented in conjunction with an entity’s financial statements; and
• the qualitative characteristics governing preparation of financial statements be applied to financial statement discussion and analysis.

ED 47 includes implementation guidance and an illustrative example that show how an entity might prepare its financial statement discussion and analysis to comply with the proposed requirements.

IPSASB Chair Andreas Bergmann notes, “The purpose of the financial statement discussion and analysis is to provide additional information to users of an entity’s financial statements for accountability and decision-making purposes. Financial statement discussion and analysis complements and supplements the information in the accrual-based financial statements with further insights and perspectives.”

How to Comment
To access the Exposure Draft and the At-a-Glance document, which provides a summary of the Exposure Draft, or to submit a comment, please visit the IPSASB website at www.ipsasb.org. Comments on the Exposure Draft are requested by July 31, 2012. The IPSASB encourages IFAC members, associates, and regional accountancy bodies to promote the availability of this Exposure Draft to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the United Nations and the governments of Canada, China, New Zealand, and Switzerland.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The plan outlines the link between IFAC's activities and services in 2013 and its mission and strategies articulated in the strategic plan. It details the services planned to be delivered during 2013, the estimated costs of delivery of those services, the specific organizational and staffing matters to be addressed during 2013, and the 2013 budget to support the operations.