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.

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 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 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, 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 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:

• 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 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 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.

Good morning ladies and gentlemen. It is a pleasure for me to speak to you on this second morning of the Africa Region Learning Workshop. It is an honor for me to have the opportunity to share with you today IFAC’s key priorities related to the development of the worldwide profession.  IFAC, as an international accountancy organization and standard-setter, has a number of key initiatives underway that focus on the growth of the accountancy profession and the needs of the profession in developing nations and transitioning economies. That is the focus of my discussion today; however, I would first like to thank those who have made this Workshop possible. 

The generous sponsorship of the African Development Bank, and our co-sponsor, the World Bank, whose commitment to Africa and to the objectives of this Learning Workshop are greatly appreciated.  ECSAFA, FIDEF and UNCTAD have also made important contributions and provided technical guidance as members of the Organizing Committee.

I would also like to say a special thank you to the staff of IFAC for their efforts in organizing this workshop, assisting with travel arrangements and support your work during the breakout sessions.  They are an excellent team and I am proud of both their professionalism and their friendship.

Most importantly, I would like to recognize the commitment of you, the participants, who represent 37 African countries. As professional accountants, representatives of government, and academia in Africa, your presence here at the Workshop demonstrates the support and commitment you have for development and improvement.

I now would like to turn to IFAC and its focus on development of the profession. With 20 African professional accountancy bodies as its members, IFAC believed it was critical to take an active role in this Learning Workshop. In addition to the secretariat support provided by IFAC staff in organizing the Workshop, IFAC’s Developing Nations Committee and the Compliance Advisory Panel also held meetings here earlier this week in order to participate in these two days.

If there is one thing that is clear to me when I think of Africa is its diversity. With its significant geographic size, its diverse cultures and traditions, and with 53 countries, Africa does face unique challenges. With such diversity come different needs and priorities, but at IFAC we believe that through our common goals we can work together to address key issues and needs that are fundamental for all professional accountancy bodies.

I would like to now share with you some of the specific activities is currently undertaking to meet the challenges facing professional accountancy bodies and practitioners.

The first important initiative was established to strengthen the profession and support implementation of standards – and this resulted in the formation of the Developing Nations Committee.  The Developing Nations Committee objectives include:

• Development and mentoring of existing and potential IFAC members
• Establishing strong working relationships with Donor Community
• Providing input to international standard setters on behalf of developing nations
• Producing guidance to assist in development of professional accountancy bodies

For an example of this type of guidance, the Developing Nations Committee launched new guidance November 2005 on Establishing and Developing a Professional Accountancy Body. The new guidance, available online through the IFAC website or on the CD-Rom included in your conference bag, is designed to assist national and regional accountancy bodies in building capacity around the world.

Based on feedback received in the past several months, we have also learned that it is considered a valuable tool for donor and development agencies in increasing the effectiveness and efficiency of development efforts related to the profession. This guide demonstrates our commitment to building the infrastructure necessary to contribute to economic growth and stability in emerging countries and to enhance performance by the profession globally.  I am also extremely pleased to announce that part of the funding for this event is being used to translate this guidance into French with the assistance of UNCTAD.

Another sign of IFAC’s commitment to Developing Nations is evidenced by a recent IFAC Board decision to establish a pilot program to subsidize the participation of developing nations in IFAC Boards and Committees.  $100,000 has been set aside to provide financial support to candidates from IFAC member bodies in developing nations to attend and participate in IFAC standard setting and other activities.

Another important IFAC initiative grew from IFAC’s recognition that - even with globalization and its undeniable impact on every country in the world - it is Small and Medium Enterprises (SMEs) that drive the growth of national economies.  They drive job growth, wealth creation and stability.  It is a fact in the United States, in the European Union and a fact in Africa.  And it is our profession’s Small and Medium Practitioners (SMPs) that provide professional services to these companies. 

The SMP Committee, formed in 2005, is a vigorous force within IFAC. Its members, from both developed and developing countries, seek to identify and address the most challenging issues facing SMEs and SMPs.

In July, the committee organized a forum in Hong Kong to discuss the challenges and opportunities facing SMEs and SMPs. Over 130 participants from 35 countries attended the conference, and their deliberations identified two significant challenges facing SMEs and SMPs: SMEs need financial reporting standards that are appropriate for their users’ needs and reduce the associated cost of compliance; and, in an increasingly globalized economy, SMPs should continue to explore new ways to support the growth and accountability of SMEs.

To help address these challenges, IFAC’s SMP Committee is taking a two-pronged approach to helping SMEs and SMPs converge and comply with international auditing and accounting standards – this approach includes helping to shape the form and content of international standards and providing practical assistance to SMPs and SMEs that have to use such standards.

For example, the SMPC is developing a guide to International Standards on Auditing for SMEs and a web-based knowledge resource for SMPs. Additionally, IFAC continues to respond to exposure drafts of international standard setters where an SMP or SME focus is needed.

In addition to the SMP and Developing Nations activities, are IFAC’s efforts to encourage quality in all that we do as a profession.  Quality, for each professional accountant, begins with education and so I will mention some of the work of our Education Board.

IFAC’s International Accounting Education Standards Board seeks to bring consistency to accountancy education, training and certification around the world. Our global environment does, I believe, demand this kind of consistency. How else can we assure the public that a professional accountant practicing in the United Kingdom or France is as qualified as one practicing in Kenya or Senegal?

The Education Board has issued the International Education Standards which address the vital topics of education prior to qualification, the minimum education requirements to become a member of the professional body, the final assessment of professional competence and capabilities, the specific competence requirements for auditors and continuing professional education.

Another area of focus for the Education Board is ethics education.  Last month, the Education Standards Board issued an information paper entitled Approaches to the Development and Maintenance of Professional Values, Ethics and Attitudes in Accounting Education Programs. The paper, which was the result of a wide-ranging research project into ethics education in the worldwide accountancy profession, is designed to stimulate discussion and debate on the subject of ethics education.

This information paper served as the basis for the Education Standards Board to develop a proposed International Education Practice Statement entitled Approaches to Developing and Maintaining Professional Values, Ethics and Attitudes. The proposed practice statement provides guidance to IFAC member bodies on how to achieve good practice in developing and maintaining professional values, ethics and attitudes in accordance with International Education Standards and suggests that member bodies may adopt an approach to ethics education based on the IAESB’s Ethics Education Framework. In addition, since ethics education is a lifelong commitment that begins when an individual begins training to become an accountant, and continues throughout a professional accountant’s career, the proposed new practice statement also provides guidance for member bodies on ethics education through continuing professional development.

In addition to the information paper and the practice statement, the Education Standards Board is preparing a toolkit on ethics education to assist member bodies, academic institutions and others in instilling a strong ethical foundation in the accountants of tomorrow.

Underpinning all of these activities is IFAC’s Member Body Compliance Program.  IFAC has established a rigorous Member Body Compliance Program to provide clear quality benchmarks for professional accountancy bodies and to require the identification of required actions which all assist our members in continuously improving standards, quality control and support to members of profession.   Through this program, IFAC seeks to contribute to the quality of financial reporting and thus to building sound market economies by facilitating convergence to international standards. Indeed, making best endeavors to converge national and international standards is a requirement for IFAC member bodies as set out in IFAC’s Statements of Membership Obligations (SMOs). The SMOs, which also require member bodies to implement quality assurance and investigation and discipline programs, form the basis of IFAC’s Member Body Compliance Program.  These are the requirements for IFAC members and we are also prepared to take actions, and indeed have taken actions, to suspended or expel bodies that do not participate in the program or demonstrate persistent non compliance, I want to emphasize that the program is focused on encouragement and improvement and making progress.

Part 1 of the Compliance Program, a fact-based questionnaire to assess the regulatory and standard-setting frameworks in the home countries of each of IFAC’s members and associates, is now complete. This portion of the program provides information on the roles and responsibilities of IFAC members – which vary from jurisdiction to jurisdiction.  Responses from all active members and associates have been posted on the IFAC website.

Part 2, the SMO Self-Assessment Questionnaire, was launched last December and approximately 35 responses been published with more to follow during this year.  The responses from these questionnaires are important for several reasons: they provide a global snapshot of the accountancy profession from both a regulatory and standards perspective. Additionally, they can be used to help IFAC gauge where it needs to focus its efforts to support the development of the profession and to work to achieve convergence.

Lastly, but perhaps most importantly, the responses to the questionnaires will lead into Part 3 of the program – Development of Actions Plans.  Member bodies will be required to develop action plans to close any gaps between current practice and the SMO requirements.  These action plans will demonstrate the international accountancy profession’s willingness to be accountable for its actions to meet high standards, to deliver quality and to protect the public interest – all important responsibilities in the changing and complex environment in which we all work.

I now want to make a few comments about IFAC membership.  One of IFAC’s objectives is to have a high quality professional accountancy body in every country in the world.  As you can see from this map where countries without representation are indicated with light colors, we have important work to do in Central and South America, in Central Asia, in Southeast Asia.

And we have the most work to do in Africa – there are over 30 countries where the profession is not represented within IFAC.  This represents both an opportunity and a challenge.  This is not an easy task or one we can accomplish on our own.  We need the sustained efforts of governments, professional bodies, educational institutions and donor assistance to make this objective a reality.

There is good news – several African professional bodies are making good progress and are actively working on their application and related compliance questionnaire requirements. We hope to consider a number of applications from the African continent during 2007.  We look to the Developing Nations Committee, existing IFAC members and our regional accountancy bodies to mentor potential members.

I would like to emphasize that the IFAC membership requirements have been significantly strengthened in the past three years through the Member Body Compliance Program, which is overseen by the Public Interest Oversight Board for IFAC.  Generally, the application process can take between 6 to 9 months.  This includes preparation of the application and related compliance questionnaires, obtaining sponsorship from an IFAC member, having the application reviewed by staff, the Developing Nations Committee and the Compliance Advisory Panel – all this must take place before a recommendation is made to the IFAC Board and Council in November each year. The staff and the CAP have made a policy decision that only those applications submitted by May 31 each year will be considered for recommendation to the Council in November of that calendar year. We therefore strongly suggest that applicants submit materials in January or February to permit adequate time for these review processes.  Normally, professional bodies will join IFAC as Associates with an agreed action plan based on our Statements of Membership Obligations.  Associates are expected to demonstrate clear progress on these action plans and would generally be considered for full membership during a period of one to three years based on progress on the action plan.

We also recognize that there are countries where the profession is not appropriately organized, or where the profession does not yet really exist.  We are committed, through our Developing Nations Committee, to support the capacity building needed in these countries and to eventually mentor them through the membership process at the appropriate time.

Later this morning you will hear from Honorable Henry Obwocha on the Role of Government.  I just want to mention here that IFAC clearly recognizes the vital role the profession has to play in the public sector.  In Africa, as in many countries, the public sector accounts for more than 50% of annual GDP and therefore public sector accountability and transparency is an important priority.  IFAC’s work to strengthen public sector financial reporting and financial management is accomplished largely through the International Public Sector Accounting Standards Board, known as the IPSASB.

The IPSASB develops International Public Sector Accounting Standards, which are designed to improve public sector financial management and accountability.

To enhance government’s credibility, both nationally and overseas, governments need to report their financial position and performance and their cash flows in a transparent and high quality manner. Such information is vital to the efficient operations of government and can assure the public that government resources are managed effectively.  These efforts should be supported by a sufficient number of professional accountants working in the public sector.

It is important to keep in mind that the need for high quality professionals and information from governments is as important as it is for business and industry. Without a financial structure that engenders confidence, a government’s infrastructures may crumble and with them, the ability to support its citizens.

So this is a brief description of some of the work that IFAC is doing to assist our members and all professional accountants and we welcome your participation and support. And, we also recognize that our work involves listening and learning and indeed that is the purpose of these two days. 

Let me conclude my remarks by reminding you of the vital role of the professional accountants in supporting economic growth.  The bedrock of our international commercial system is high quality finan­cial information: information based on ethics and integrity, on high quality international accounting and auditing standards and on the work and sound judgment of both internal and external professional accountants. Credible and reliable financial information is fundamental to investment. It builds investor confidence which, in turn, facilitates business development, contributes to job growth and leads to indi­vidual financial prosperity.

Fundamental to achieving this growth and prosperity is achieving our goal of having an IFAC member body in each country of the world – and to transform the map of Africa today with IFAC members into the map of Africa IFAC members of tomorrow.

Chairman, Presidents, fellow accountants, ladies and gentlemen. Good afternoon. It is a great pleasure to be here in Mangochi in the Warm Heart of Africa to address the 7^th Congress of the Eastern Central and Southern African Federation of Accountants. Thank you for your kind invitation

Africa has a special place in my heart, because my wife, Ann, was born in Africa and spent her childhood in Africa:  Egypt, Ethiopia, Kenya, Morocco and Nigeria.  I myself lived in South Africa on an international secondment with my firm and have visited eight other African countries.

The theme for this Congress – Africa’s response to globalization – is  especially relevant; it keeps us focused on understanding the challenges resulting from globalization, the opportunities presented to Africa for increased economic development and growth and the role of the accountancy profession in that process. My comments today are focused, therefore, not simply on IFAC’s response to globalization, but more specifically, on IFAC’s role in assisting African countries – and indeed all developing countries – in addressing the challenges of globalization in order to create a better world for their citizens.

I would like to thank the Society of Accountants in Malawi, its President, Mr Jimmy Lipunga, its Council and its Executive Director, Mr. Hennox Mazengera, for hosting this Congress and for inviting me to speak with you today.

In addition, I would like to recognize ECSAFA President, Mr. Butler Phirie, and ECSAFA Chief Executive, Mr. Ndung’u Gathinji, who is also a long-standing and highly respected member of the IFAC Board. Their dedication and service to ECSAFA and to our international profession as a whole is to be commended.

Regional accountancy organizations, such as ECSAFA, often serve as a vital link between international standard setters and regulators; and members of our profession. As exemplified by ECSAFA, they promote international standards; provide training, education and networking resources; and support development efforts. ECSAFA has been especially supportive of the IFAC Member Body Compliance Program, a landmark program initiated in 2004 to provide comprehensive and measurable information on the progress made by IFAC members and associates in adopting international standards. I will speak more about the Member Body Compliance Program in a few minutes.

ECSAFA has a long history of working closely with IFAC and for this I am very grateful. Since its founding in 1989, ECSAFA has worked at a regional level to support the development of a high quality accountancy profession and to promote convergence to international standards. Thank you.

It is through the commitment of the volunteer members of IFAC boards and committees, the support of our 163 member bodies in 120 countries, such as the Society of Accountants in Malawi, and of 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.

IFAC’s mission is to strengthen the accountancy profession in all sectors and all nations worldwide. To accomplish this, IFAC is focused on five key areas:

• Strengthening national accountancy bodies in countries around the world;
• Developing an internationally recognized single set of standards and promoting convergence to those standards;
• Focusing on ethics and ethical conduct;
• Supporting all sectors of the profession, including professional accountants in business, in government, and small and medium practices; and
• In all things we do, protecting the public interest.

IFAC has as a primary goal to strengthen the accountancy profession in both developed and developing countries worldwide and to contribute to the growth and development of strong 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.

IFAC’s goal is to have a member body, with an established accountancy profession, in every country around the globe. This includes all African nations. 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. Without an established accountancy profession, I believe that we cannot succeed in helping African countries, or any others, in reaping the benefits of globalization.  IFAC is engaged in a number of initiatives to achieve this goal.

Next week, together with the Fédération Internationale des Experts-Comptables Francophones and the United Nations Conference on Trade and Development, IFAC and ECSAFA are organizing an Africa Region Learning Workshop, on the accountancy profession’s role in economic development, in Nairobi, Kenya. This Learning Workshop, which is sponsored by the African Development Bank and co-sponsored by the World Bank and IFAC, will bring together representatives of nearly all 53 African nations; donor agencies; national, regional and international accountancy bodies; the private sector; and other interested parties to discuss how to address the challenges and opportunities facing the accountancy profession in Africa. At this important conference, in which some of you here today will participate, we will discuss critical issues such as sustaining good corporate governance; strengthening public sector accounting and auditing; meeting the needs of growing small and medium practices; and developing and promoting ethical conduct. Most importantly, we will have the opportunity to build and to strengthen partnerships, in other words, determining how we can work together, effectively and efficiently, to achieve sustainable economic development in African countries. Globalization has, I believe, made this goal attainable.

IFAC’s Developing Nations Committee, which Mr. Gathinji has led excellently since its creation, is leading our efforts to represent the interests of developing nations and to seek resources and development assistance. The committee is involved in extensive outreach to developing countries and has prepared guidance entitled Establishing and Developing a Professional Accountancy Body. This publication covers the roles and responsibilities of a professional body, education and examination 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.

The Developing Nations Committee is now 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, further to support and provide resources to developing countries, the Developing Nations Committee works closely with the IFAC Member Body Compliance Program.

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

Part 1 of the Compliance Program, a fact-based questionnaire to assess the regulatory and standard-setting frameworks of IFAC member bodies, is now complete. Responses have been submitted by all active IFAC members and associates – including all 23 IFAC member bodies in Africa. These responses are now posted on the IFAC website and I encourage you to review them. I would like to thank ECSAFA very much indeed for its support of the Member Body Compliance Program.

Part 2, the SMO Self-Assessment Questionnaire, was launched last December and member and associate responses have begun to be posted on the IFAC website. The responses provide a valuable global snapshot of the accountancy profession from a standards perspective. Additionally, they help IFAC to gauge where it needs to focus its development work. Lastly, but perhaps most importantly, the responses to the questionnaires demonstrate the global profession’s willingness to be accountable for its actions to meet high standards, to deliver quality and to protect the public interest – all important responsibilities in this era of globalization and in this complex environment in which we all work.

Responses to the Compliance program will also assist IFAC in understanding where further assistance or development is needed. Action plans will be developed by IFAC members and associates, with assistance from the Compliance staff. During this phase of the program, the Compliance Advisory Panel, which oversees the Compliance Program, will provide feedback to the IFAC standard-setting boards and to the Developing Nations Committee to enable them to develop necessary tools, guidance and resources to assist members and associates in successfully completing the required actions.

The Member Body Compliance Program has as a primary objective to encourage and support member bodies in convergence to international standards set by IFAC’s independent standard-setting boards and by the International Accounting Standards Board.

It is important, I believe, to recognize that, as globalization takes hold, markets have the potential of becoming more integrated and developing countries have greater potential to increase investment and, thereby, to raise the quality of life of their citizens. To achieve these potentials, it is vital that the accountancy profession adheres to high quality standards. It is only through adherence to such standards that accountants can build confidence in the financial reporting process and create an investment climate of trust.

I would like to comment for just a few minutes on IFAC’s standard-setting activities and to emphasize that these activities are conducted by independent standard-setting boards with substantial public interest input.

The International Auditing and Assurance Standards Board (IAASB) sets international standards on auditing and assurance, quality control and related services. To ensure that its standards are clear and understandable the world over, the IAASB has undertaken a significant project to improve the clarity and structure of its standards. Beginning in October 2005, it issued four exposure drafts of proposed standards re-drafted using its new drafting style. It plans to have an aggressive timetable for updating all its standards in this new clarity style. The new style was developed based on input it received at an international Clarity forum last year and through responses to its 2004 Proposed Policy Statement and Consultation Paper on Clarity. We hope that this new style will not only make the standards more understandable, but also make them better capable of being translated and used in countries throughout the world.

In developing its international standards, the IAASB works with national auditing standard setters, from around the globe, that share the common goals of: promulgating high quality standards and reaching consensus at an early stage in their development. In July, the IAASB issued new guidance for national auditing standard setters that adopt its international standards with limited modifications. While not intended to be a definitive statement on convergence, the document provides guidance on the extent to which modifications to adopted international standards are permitted, while still allowing the national standard setter to assert that the national standards conform to the international standards. I urge all of you who hold a leadership position in an accountancy institute, or with a standard setter, to review this document, which is available in the IAASB homepage at www.ifac.org/IAASB.

The IAASB is also addressing critical issues in auditing and assurance. In March 2006, it issued a re-exposure draft designed to enhance the quality of audits of group financial statements, entitled Proposed International Standard on Auditing (ISA) 600 (Revised and Redrafted), The Audit of Group Financial Statements. Following earlier consultations, the IAASB has modified the proposals and reissued the exposure draft to address issues related to the extent to which the group auditor needs to be involved in the audits of components that are audited by other auditors, whether these auditors are independent of the group auditor or belong to the group auditor's national or international firm or network of firms.

Another area that the IAASB is addressing is related party transactions. The involvement of related parties, such as directors, owners, and management, in major corporate scandals has prompted the IAASB to review its current auditing standard on the subject. As a result of its review, in January the IAASB issued an exposure draft, proposed ISA 550 (Revised), Related Parties. The exposure draft proposed requirements for auditors regarding the audit of related party relationships and transactions. The proposed standard would place new emphasis on evaluating the effects of related party relationships and transactions on the financial statements, even in circumstances where the financial reporting framework does not establish related party accounting or disclosure requirements.

An essential element of credible financial information is a foundation in ethics and integrity. To build credibility in financial systems and to contribute to sound economic systems, we at IFAC promote our values of integrity, transparency and expertise to all professional accountants around the globe.

Here in Africa, there are many organizations that are promoting strong ethics and good governance as part of their work to eradicate poverty; to place the African countries, both individually and collectively, on a path of sustainable growth and development; and to halt the marginalization of Africa in the globalization process and enhance its full and beneficial integration into the global economy.

NEPAD, the New Partnership for Africa’s Development, is one organization that has made progress in achieving these goals. Indeed, one of the specific priorities of NEPAD is the promotion of democracy and good political, economic and corporate governance.

I had the sincere pleasure, in March 2005, of meeting the NEPAD Chairman, Mr. Reuel Khoza, at the IFAC Board meeting in Cape Town, South Africa. During that meeting, Mr. Khoza addressed the IFAC Board and emphasized the importance of sound corporate governance policies, good accounting and auditing and the need for professional accountants in business to be the conscience of businesses worldwide. He also urged IFAC to do more in these areas in order to eliminate corruption and eradicate poverty.

The need for individuals in government and business to operate with integrity and transparency is absolutely vital to creating the kind of institutions that operate efficiently and create stability. In turn, this brings investment and the opportunity to create prosperity among the public at large. Our profession should be at the forefront of this effort, leading and educating by example.

One way that we can lead is through the development and implementation of high standards of ethical conduct. The IFAC Code of Ethics for Professional Accountants, which is applicable to all accountants worldwide, including those in business and industry, public practice, the public sector and academia, reinforces our profession’s core values of integrity, transparency and expertise. The Code, which is developed by IFAC’s International Ethics Standards Board for Accountants, has been adopted by more than a dozen IFAC members here in Africa, including our member bodies in Botswana, Cameroon, Kenya, Lesotho, Malawi, Namibia, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe and our two member bodies in South Africa. I would like to commend these institutes for their commitment to international convergence and to the adoption of high ethical standards.

IFAC’s Ethics Standards Board is currently engaged in ongoing work to ensure that all professional accountants – whether they work in public practice, business or government – have clear, relevant and high quality ethical guidance. The board has undertaken projects to address issues such as audit independence and whistle-blowing and is in the process of developing new guidance for professional accountants in government and in business. In addition, in July 2006, the Ethics Standards Board revised the Code of Ethics by updating the definition of a network firm. Network firms are required to be independent of an audit client of another firm within the network. The updated definition focuses on how networks operate and how they present themselves to third parties.

IFAC’s International Accounting Education Standards Board is focused on ethics and conduct, among other issues, and seeks to bring consistency to accountancy education, training and certification around the world. Our global environment does, I believe, demand this kind of consistency. How else can we assure the public that a professional accountant practicing in the United Kingdom is as qualified as one practicing in, say, Kenya?

Last month, the Education Standards Board issued an information paper entitled Approaches to the Development and Maintenance of Professional Values, Ethics and Attitudes in Accounting Education Programs. The paper, which was the result of a wide-ranging research project into ethics education in our worldwide accountancy profession, is designed to stimulate discussion and debate on the subject of ethics education.

This information paper served as the basis for the Education Standards Board to develop a proposed International Education Practice Statement, entitled Approaches to Developing and Maintaining Professional Values, Ethics and Attitudes. The proposed practice statement provides guidance to IFAC member bodies on how to achieve good practice in developing and maintaining professional values, ethics and attitudes in accordance with International Education Standards and suggests that member bodies may adopt an approach to ethics education based on the IAESB’s Ethics Education Framework. In addition, since ethics education is a lifelong commitment, that starts when an individual begins training to become an accountant, and continues throughout a professional accountant’s career, the proposed new practice statement also provides guidance for member bodies on ethics education through continuing professional development. Comments on this exposure draft are requested by December 15, 2006, and I encourage you to review it and to provide your comments.

In addition to the information paper and the practice statement, the Education Standards Board is preparing a toolkit on ethics education to assist member bodies, academic institutions and others in instilling a strong ethical foundation in the accountants of tomorrow.

The Education Standards Board is also addressing issues such as auditor competence and the information technology training needs of professional accountants. In June, the Board released a new International Education Standard (IES) 8, Competence Requirements for Audit Professionals, that requires all IFAC member bodies to ensure that professional accountants acquire and maintain the specific capabilities required to work as competent audit professionals. Under the new standard, IFAC member bodies will need to modify their policies and procedures to ensure that audit professionals meet the requirements of IES 8, which includes having advanced level knowledge of auditing and financial reporting; relevant information technology knowledge; and the professional skills and professional values, ethics and attitudes expected from audit professionals. The new standard also establishes requirements for the education and development programs of new audit professionals, including that they undertake a period of practical experience in audit and that they undergo an assessment of capabilities and competence.

In August, the Education Standards Board also issued an exposure draft of a proposed International Education Practice Statement, entitled Information Technology for Professional Accountants. Information technology is one of the critical areas for all of us in this globalized world. The proposed practice statement provides details of the knowledge and skills required of professional accountants in the IT environment to prepare them to use information technology, to work in the information technology environment and to rely on information technology.

Another important aspect of IFAC’s work is its program to strengthen public sector financial reporting and financial management. This is accomplished largely through the International Public Sector Accounting Standards Board, known as the IPSASB. The IPSASB develops International Public Sector Accounting Standards, which are designed to improve public sector financial management and accountability. It is currently addressing key issues for public sector accounting, including accounting for social policy obligations of governments, non-exchange revenue and budget reporting.

The IPSASB recently released a proposed standard on accounting for non-exchange revenue. Many public sector entities derive most of their revenue from non-exchange transactions – including taxes and transfers, such as grants, appropriations, donations and fines. The exposure draft proposes requirements for the recognition, measurement and disclosure of revenue from non-exchange transactions and contributions from owners and also includes definitions of: taxes, a taxable event, expenses paid through the tax system and tax expenditures.

A new information paper on the United States’ experience in making the transition to the accrual basis of accounting has also been released recently by the IPSASB. The paper identifies the benefits of this and highlights the challenges in developing and implementing an accrual based accounting system. We believe that this paper will be useful for governments considering implementation of the accrual basis.

The IPSASB is also currently developing proposed new International Public Sector Accounting Standards (IPSASs) on impairment of cash-generating assets and accounting for employee benefits – two important areas of public sector financial reporting.

An important IPSASB objective is facilitating convergence with International Financial Reporting Standards, upon which the IPSASs are based, and with statistical bases of financial reporting. Last year, the IPSASB issued exposure drafts further to converge its standards with International Financial Reporting Standards and with statistical reporting bases. The IPSASB is making great strides in its convergence efforts. An increasing number of entities worldwide, including the World Bank and NATO, are using IPSASs. In addition, in June of this year, the United Nations General Assembly approved a package of financial management reforms that called for UN agencies to use IPSASs for its financial statements.

To enhance government’s credibility, both nationally and overseas, governments need to report their financial position and performance and their cash flows in a transparent and high quality manner. Such information is vital to the efficient operation of government and can assure the public that government resources are managed effectively. It is important to keep in mind that the need for high quality information from governments is as important as it is for business and industry. Without a financial structure that engenders confidence, a government’s infrastructures may crumble and with them, its ability to support its citizens.

IFAC is committed to ensuring that all professional accountants, in every country of the world, both developed and developing, have the tools that they need to deliver high quality work. IFAC’s Professional Accountants in Business (PAIB) Committee is addressing the key issues facing accountants in business, including internal control, sustainability, and business planning. Last month, the committee released a new information paper, Internal Controls – A Review of Current Developments, that summarizes key internal control frameworks, highlights recent legislative and other initiatives, and discusses the role of internal control in enhancing corporate governance. The paper finds that current views on internal controls support a principles- and market-based approach in which organizations make a commitment to develop internal control systems particular to their own specific internal and external environments. It also identifies the importance of the tone at the top and the culture and the ethical framework throughout the organization to the effective implementation of an internal control system.

Also last month, the PAIB Committee released two new publications on a growing issue of concern in our globalized work – the environmental and social impact of the operations of businesses and organizations. These two publications explore the role of the professional accountant in business in sustainability reporting. The first paper, Why Sustainability Counts for Professional Accountants in Business, provides an overview of enterprise sustainability and sets out the business case for addressing sustainable development at the enterprise level in terms of the risks that sustainable development poses and the opportunities which it brings. It also seeks to identify the main sustainability related roles which the professional accountant in business might occupy: today, tomorrow or at some point in the future. The paper was published simultaneously with an information paper, entitled Professional Accountants in Business – At the Heart of Sustainability, in which high profile professional accountants in business explain how sustainability issues affect them.

To support small- and medium-sized entities (SMEs) and their small and medium practice (SMP) advisors in developing business plans, in May the PAIB Committee released new guidance entitled Business Planning Guide: Practical Application for SMEs. The new guide includes information on how to develop a corporate values statement and to manage business risks. In addition, it describes how the business plan may serve as a performance tool on an ongoing basis and support a business in obtaining external funding.

SMPs and SMEs are an important part of our globalized world and a vital part of national and international economies around the world. SMPs and SMEs are particularly relevant to developing economies. Yet they often find it very difficult to obtain the financial and other resources necessary for them to grow. According to the United Nations Economic Commission for Africa’s Economic Report on Africa 2004: Unlocking Africa's Trade Potential in the Global Economy Overview, “Africa desperately needs to create national … small business institutions that coordinate comprehensive programs for SME support.”

Programs to support SME growth and development are essential, because SMEs are vital to the economies of African nations. In his March 2006 speech to an International Finance Corporate conference, the Hon. Henry Obwocha, Kenyan Minister for Planning and National Development, who will be a featured speaker at the Africa Region Learning Workshop next week, provided some illuminating statistics on the vital importance of SMEs to national economies. He pointed out that in South Africa, for example, SMEs account for 55 percent of all jobs. And in his home country of Kenya, SMEs employed 5.1 million people and accounted for about 18 percent of GDP in 2003.

Here in Malawi, you have recognized the importance of SMEs to national economies and answered the call to provide them with resources through the establishment in 2002 of the Malawi Poverty Reduction Strategy. The strategy is supporting the growth and development of SMEs by providing financial, information and development training, among other resources.

IFAC is also actively working to support SMPs and other professional accountants that provide services to SMEs. The IFAC SMP Committee, formed in 2005, is a vigorous force both within IFAC and in representing the interests of SMEs and SMPs to international standard setters. Its members, from both developed and developing countries, seek to identify and address the most challenging issues facing SMEs.

In July, the committee organized a forum in Hong Kong to discuss the challenges and opportunities facing SMEs and SMPs. Over 130 participants from 35 countries attended the conference and their deliberations identified two significant challenges facing SMEs and SMPs: SMEs need financial reporting standards that are appropriate for their users’ needs and reduce the associated cost of compliance; and, in an increasingly globalized economy, SMPs should continue to explore new ways to support the growth and accountability of SMEs.

To help to address these challenges, IFAC’s SMP Committee is taking a two-pronged approach to helping SMEs and SMPs converge and comply with international auditing and accounting standards, helping to shape the form and content of international standards and providing practical assistance to SMPs and SMEs that have to use them. It is developing a guide to International Standards on Auditing for SMEs and a web-based knowledge resource for SMPs. Additionally, IFAC continues to respond to exposure drafts of international standard setters where an SMP or SME focus is needed.

In addition to working with professional accountants in business and small and medium practices, IFAC has built and maintained a key partnership with the Forum of Firms, which represents over 20 global networks and associations of public accounting firms. The members of the Forum of Firms have committed to the use of ISAs and of the IFAC Code of Ethics for transnational audits. Additionally, these firms have committed to use the IAASB’s International Standard on Quality Control 1, which establishes a high quality standard for the quality control systems within the firms. This commitment, to IFAC standards and to the promotion of high quality and consistent performance, was reinforced in February 2006 with the approval by the IFAC Board of a new constitution for the Forum of Firms. The new constitution updates membership requirements to emphasize the firms’ commitment to audit in accordance with the IAASB’s International Standards on Auditing and all members of the Forum must show that they meet all the requirements to be deemed to be full members.

The Forum of Firms supports and actively participates in IFAC’s auditing, ethics and education standard-setting processes. The Forum also engages in dialogue with regulators and those that oversee standard setting. For instance, representatives of the Forum have attended and made presentations to meetings of the Public Interest Oversight Board, which oversees IFAC’s auditing and assurance, ethics and education standard setting and the IFAC Member Body Compliance Program. The PIOB was established in February 2005 through the collaborative efforts of the international financial regulatory community, working with IFAC, to ensure that its standards are set in a transparent manner that reflects the public interest. It is chaired by Professor Stavros Thomadakis, a former Chairman of the Hellenic Capital Market Commission, and is comprised of members nominated by international regulators and institutions. 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. More information on the work of the PIOB is available on its website.

In summary, uncompromising individual values, strong institutional standards and appropriate oversight are all critical to the development of a trusted and reliable accountancy profession – one that is capable of and recognized for protecting the public interest and one that contributes to building an investment climate of trust. To leverage the opportunities made possible by globalization, the development of such a profession is a crucial first step.

To effectively support and sustain economic development and growth, however, a strong accountancy profession is not enough. We must promote sound governance by all business and governmental entities. We must promote high ethical standards by all those in the financial reporting supply chain. We must be willing to form new partnerships to seek regional and international cooperation in building the financial architectures necessary to achieve worldwide trust. And lastly, we must encourage the design of public policies that maximize the potential benefits from globalization and support human rights.

I truly believe that in this way, together, we can create greater economic stability here in Africa. We can, together, turn pessimism to optimism. We can, together, turn despair, where it exists, into hope. And we can, together, over time, give each and every African a better life.

Thank you very much indeed for your attention.

Attention to the social, environmental and economic effects on business performance is increasing from investors, governments, customers, and society in general. As a result, professional accountants in business (PAIBs) are among those who are being called on to take a more active role in sustainable development. To help PAIBs better understand how they can advance, measure and report on sustainable development, the Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has published two new information papers on the topic.

The first information paper, Why Sustainability Counts for Professional Accountants in Business, provides an overview of enterprise sustainability and sets out the business case for addressing the risks and opportunities of sustainable development at the enterprise level. It also discusses the ways in which professional accountants in business, especially those working for organizations with significant environmental or social impacts, will be involved with the measurement, recording and interpretation of sustainability-related information.

Professional Accountants in Business - At the Heart of Sustainability?, the second paper, provides first-hand commentary from eleven senior professionals working in various enterprises around the world on the role of PAIBs and the challenges they face in promoting and implementing sustainable development strategies. The comments are based on interviews conducted by Mr. Robert Bruce, a leading accountancy journalist based in the United Kingdom. While recognizing that the role of PAIBs in sustainability will vary based on the organization employing them and the nature of their role, there was significant agreement that this was a field in which PAIBs should become more educated and more involved.

These two IFAC papers represent a significant international step in the education process. "Sustainability is an important topic that is moving up fast on the agendas of professional accountants in business," states Bill Connell, Chair of the PAIB Committee. "These information papers explain what is meant by sustainability, its importance to professional accountants in business, the roles they should play, and how they should operate within the management team." Mr. Connell added, "Professional accountancy bodies need to ensure that the topic is addressed in both the pre- and post-qualification of professional accountants."

The two information papers can be downloaded free-of-charge from the IFAC online bookstore at http://www.ifac.org/store. The PAIB Committee serves IFAC member bodies and the more than one million professional accountants worldwide who work in commerce, industry, the public sector, education, and the not-for-profit sector. Its aim is to enhance the profession by encouraging and facilitating the global development and exchange of knowledge and best practices.

IFAC is the worldwide 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's current membership consists of approximately 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on ethics, auditing and assurance, education, and public sector accounting. Through its Professional Accountants in Business Committee, IFAC also issues guidance to encourage high-quality performance by professional accountants in business.

I am delighted to be here and to have the privilege to speak to you today and I am heartened by the warm welcome that Ann, my wife, and I have received. There is no question that the accountancy profession has a unique, critical and practical role to play in building stronger and more stable economies around the globe. In order to carry out this role fully, however, we need to continue to enhance confidence in our profession and to build public trust. Investor confidence and public trust empowers our profession. Without it, the credibility of the information we produce, indeed the future of our profession itself, is put at risk. Wherever we work we cannot afford to take this risk.

I am delighted to be here and to have the privilege to speak to you today and I am heartened by the warm welcome that Ann, my wife, and I have received. There is no question that the accountancy profession has a unique, critical and practical role to play in building stronger and more stable economies around the globe. In order to carry out this role fully, however, we need to continue to enhance confidence in our profession and to build public trust. Investor confidence and public trust empowers our profession. Without it, the credibility of the information we produce, indeed the future of our profession itself, is put at risk. Wherever we work we cannot afford to take this risk.

I am delighted to be here and to have the privilege to speak to you today and I am heartened by the warm welcome that Ann, my wife, and I have received. There is no question that the accountancy profession has a unique, critical and practical role to play in building stronger and more stable economies around the globe. In order to carry out this role fully, however, we need to continue to enhance confidence in our profession and to build public trust. Investor confidence and public trust empowers our profession. Without it, the credibility of the information we produce, indeed the future of our profession itself, is put at risk. Wherever we work we cannot afford to take this risk.

Mr. Prime Minister, Rt. Hon. Owen Arthur, President Kiddoe of ICAC, President Robinson of ICAB, distinguished delegates, fellow accountants, ladies and gentlemen. Good morning.  Thank you very much for the opportunity to be here with you to discuss this new era for the accountancy profession and what the International Federation of Accountants (IFAC), together with its member bodies, are doing at a national, regional and global level to support professional accountants worldwide.

It is a great pleasure to be here again in Barbados. I would like to thank Mr. Garth Kiddoe, ICAC President, and Mr. Brian Robinson, President of the Institute of Chartered Accountants of Barbados, for the opportunity to speak with you today. As you know, Barbados is one of the first six members to join the Caribbean Single Market on 1 January 2006. I applaud this commitment to greater regional cooperation, lowering of trade barriers and harmonization of standards, as these are sure to lead to increased economic growth and development. “Sharpening the edge” indeed.  I offer the congratulations of the world’s accountancy profession to you, Mr Prime Minister, on an outstanding initiative.

Your commitment to the development of the accountancy profession is also to be commended.  The IFAC Board recognized this commitment last week in Beijing when it formally acknowledged the Institute of Chartered Accountants of the Caribbean as a Regional Grouping of accountancy bodies. Throughout the ICAC’s near twenty-year history, it has been a major force in encouraging regional cooperation and integration of the profession here in the Caribbean. Speaking at a conference in Trinidad & Tobago last month, Agustín Carstens, Deputy Managing Director of the International Monetary Fund, affirmed the importance of such a goal when he stated “The path to greater prosperity for the Caribbean lies in greater integration, within the region and with the rest of the world.”

The ICAC spirit of cooperation and the extent to which the global accountancy profession is truly connected, are exemplified by five members of the ICAC also being member bodies of IFAC. They are:

• The Bahamas Institute of Chartered Accountants;
• The Institute of Chartered Accountants of Barbados;
• The Institute of Chartered Accountants of Guyana;
• The Institute of Chartered Accountants of Jamaica; and
• The Institute of Chartered Accountants of Trinidad and Tobago.

In addition, the ICAC’s three affiliates – the Association of Chartered Certified Accountants, the Institute of Chartered Accountants in England and Wales, and the Certified General Accountants Association of Canada – are also IFAC member bodies. I see that the ACCA and CGA Canada are ably represented here today by Mr. Dennis Yeates, Mr. Allen Blewitt and Mr. Tony Ariganello.

The attendance of so many distinguished members of the profession here today is evidence that this is a new era for the accountancy profession in one very significant way: globalization has made our world smaller and our profession more interconnected than ever before. On the positive side, this means that we are able to benefit from each other’s strengths and each other’s expertise. On the other hand, we well know from personal experience that business or accounting scandals in one country have reverberations far beyond national borders. Indeed, we have seen how the issuance of new laws and regulations can cross oceans and continents.

Globalization has also made it vital that members of our profession share a commitment to similar values, similar goals and similar standards. This is in the best interests of our profession and, more importantly, in the best interests of the public that relies on our work.

IFAC’s mission is designed, among other things, to articulate IFAC’s values and the goals that are shared by our 159 member bodies in 120 countries. It states:

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.

In this era of globalization, IFAC has focused on four key areas that I would like to highlight for you now:

• Strengthening our standard setting and promoting ethical conduct;
• Achieving convergence with international standards;
• Serving the needs of small and medium practices and entities and those of professional accountants in business; and
• Supporting the growth and development of the accountancy profession worldwide.

Our initiatives in each of these areas are central to our mission to serve and protect the public interest. I believe they also reflect how we, as a profession, are addressing some of challenges of globalization. Let me begin with standard setting. IFAC sets international standards of auditing and assurance, ethics, education and public sector accounting. Over the past year, we have continued to increase global, public interest input into these processes through Consultative Advisory Groups (CAGs) and other means and enhanced the transparency of those processes by including more information on the IFAC website (www.ifac.org). In addition, the roles of the CAGs to the auditing, ethics and education standard-setting boards have been expanded and enhanced. All three CAGs now have independent chairs and the meetings of the CAGs are now open to public observers.

In the area of auditing standards, the International Auditing and Assurance Standards Board (IAASB) has undertaken a significant project to improve the clarity and structure of its standards. This project is vital to achieving convergence – and to putting our profession, whether here in Barbados or in my home of Great Britain, on a level playing field.

Last October, the IAASB issued four exposure drafts of proposed standards re-drafted using its new drafting style. This new style was developed based on input it received at a forum in July 2005 and through responses to its 2004 Proposed Policy Statement and Consultation Paper on Clarity. These proposed new standards are the first to be issued as part of an ambitious program to make IAASB standards more understandable and capable of being translated, which is essential to achieving convergence.

In March, the IAASB issued a re-exposure draft of the proposed International Standard on Auditing 600 (Revised and Redrafted), The Audit of Group Financial Statements, designed to enhance the quality of audits of group financial statements. Following earlier consultations, the IAASB has modified the proposals and reissued the exposure draft to address issues related to the extent to which the group auditor needs to be involved in the audits of components that are audited by other auditors, whether these auditors are independent of the group auditor (unrelated) or belong to the group auditor's national or international firm or network of firms (related auditors). The exposure draft can be downloaded from the IFAC website. Comments are requested by 31 July 2006, and I encourage you to review the exposure draft and to submit comments on this very important document.

In developing its International Standards on Auditing, the IAASB reaches out to its stakeholders. In addition to the input it receives from the IAASB Consultative Advisory Group, the IAASB meets annually with the national auditing standard setters, from countries around the world, to discuss matters of convergence, collaboration on projects and sharing of resources. The IAASB also actively seeks input on matters of importance to small- and medium-sized accounting practices (SMPs) and to small and medium entities (SMEs).

We at IFAC believe that it is vital to support SMEs and SMPs because they are drivers of economic growth and development. SMEs are especially important to the economic health of many nations here in the Caribbean. There are well over half a million SMEs in this region alone, and the majority of those SMEs are in fact micro-entities, having 10 or less employees.

IFAC’s Small and Medium Practices Committee represents the interest of SMPs and the SMEs they serve. To help to address the challenges and opportunities facing SMPs and SMEs, the committee is hosting a forum in Hong Kong on 3 July to discuss how best to reflect SMP/SME issues in accounting, auditing and ethics standard setting, as well as how SMPs can best contribute to the growth of SMEs.

The SMP Committee also provides regular input to the standard-setting projects of the IAASB and of the International Accounting Standards Board (IASB), which develops International Financial Reporting Standards (IFRSs). One of the IASB’s current projects is exploring the possibility of developing simplified accounting standards for SMEs. IFAC believes that the goals of standard setters, like the IASB and the IAASB, should be to develop succinct, relevant and understandable guidance that eases the compliance burden on SMEs and ensures that benefits exceed costs. This essentially means that the costs of preparing, auditing and disseminating financial statements should be proportionate to the information needs of the users of those financial statements.

Concerns over the high costs of complying with full IFRSs have prompted many countries, particularly those with developing economies, to look at alternatives to international standards or to delegate standard setting to organizations that may not be appropriate for such a role. Such actions are not in the public interest and, therefore, it is critical that standard setters be conscious of the effect of compliance costs on small and medium entities.

IFAC expressed these views in its comments on the IASB discussion paper, Preliminary Views on Accounting Standards for Small and Medium-Sized Entities, which set out and invited comments on the Board’s preliminary views on the approach to the project. At the January 2005 IASB meeting, the IASB reaffirmed its approach to SMEs. The responses to the discussion paper showed a clear demand for IASB SME standards and a preference, in many countries, to adopt global SME standards rather than locally or regionally developed standards. The IASB is proceeding with the development of an exposure draft of SME standards, which it plans to issue later this year.

In developing its International Standards on Auditing, the IAASB is not following the IASB model, for some significant public interest reasons. Both the IAASB and the IFAC SMP Committee recognize that an audit is an “audit” and if a company requires an audit report, the auditor is responsible for carrying out sufficient work to form an opinion. The IAASB, therefore, has no plans to develop modified or light audit standards for SME audits. Recognizing, however, the concerns of SME auditors about the challenges of understanding the body of ISAs and keeping up with changes, the IFAC Board has approved the development of an ISA implementation guide aimed at assisting SMP practitioners in coming to grips with the complexities of ISAs in applying them to SMEs. At the IFAC Board meeting last week, we approved proposals for the development of the guide. It is anticipated that the guide will be developed over the next 18 months.

In addition, the IAASB will include, where appropriate, specific guidance for SMEs in the development of its standards. This will assist auditors of SMEs in understanding those aspects of the standards that may be complex or only applicable to larger public entities.

While IFAC recognizes that certain standards, such as those for accounting, should be appropriate for the size of the entity, we also firmly believe that there are areas such as ethical guidance that must be uniform and consistent for all accountants the world over, whether their organization employs ten people or ten thousand.

In June 2005, IFAC’s International Ethics Standards Board for Accountants released an updated international Code of Ethics for Professional Accountants, further emphasizing the five fundamental ethical principles. These are integrity, objectivity, professional competence and due care, confidentiality and professional behavior. The revised Code is set to take effect on 30 June 2006, and professional accountants signing audit reports on or after 30 June will need to comply with the independence requirements set out in the Code.

The Ethics Standards Board is also engaged in ongoing work to ensure that all professional accountants – whether they work in public practice, business or government – have clear, relevant and high quality ethical guidance. The Board is currently addressing issues such as audit independence and whistle-blowing and is in the process of developing new guidance for professional accountants in government and in business.

IFAC’s International Accounting Education Standards Board is also focused on ethics. It is in the process of developing a tool kit and an International Education Guideline to assist member bodies, academic institutions and others in instilling a strong ethical foundation in the accountants of tomorrow. The guideline will offer recommendations for good practice models of ethics education, while the tool kit will provide practical tools – such as sample course outlines, teaching notes and case studies – to be used by member bodies and educators. The tool kit will be provided to member bodies in the coming weeks and the proposed guideline is expected to be issued in early 2007.

The Education Standards Board is also set to release this month a new International Education Standard 8, Competence Requirements for Audit Professionals. The new standard will require all IFAC member bodies to ensure that professional accountants acquire and maintain the specific capabilities required to work as competent audit professionals. The new standard will also prescribe specific competence requirements for transnational audit professionals. You can view this new standard on the IFAC website as soon as it is released. 

We at IFAC are also focused on strengthening the transparency and accountability of the financial reporting of governments and of other public sector entities. Through the International Public Sector Accounting Standards Board, IFAC develops International Public Sector Accounting Standards, which are designed to improve public sector financial management and accountability. We view this as an increasingly important area of IFAC activity. The IPSASB is currently addressing key issues for public sector accounting, including accounting for social policy obligations of governments, non-exchange revenue and budget reporting.

The IPSASB recently released a proposed standard on accounting for non-exchange revenue. Many public sector entities derive most of their revenue from non-exchange transactions – including taxes and transfers, such as grants, appropriations, donations, and fines. The exposure draft proposes requirements for the recognition, measurement and disclosure of revenue from non-exchange transactions, and also includes definitions of: taxes, a taxable event, expenses paid through the tax system and tax expenditures.

The IPSASB also recently released a new information paper on the United States’ experience in making the transition to the accrual basis of accounting. The paper identifies the benefits of this and highlights the challenges in developing and implementing an accrual based accounting system. We believe that this paper will be useful for governments considering implementation of the accrual basis.

I congratulate you, Mr. Prime Minister, on the transition of the Barbados Public Accounting System to an accruals basis – a worthy example to the world.

An important IPSASB objective is facilitating convergence with International Financial Reporting Standards, upon which the IPSASs are based, and with statistical bases of financial reporting. Last year, the IPSASB issued exposure drafts further to converge its standards with IFRSs and with statistical reporting bases. The IPSASB is making great strides in its convergence efforts. An increasing number of entities worldwide, including the World Bank and NATO, are using IPSASs and most recently, the United Nations indicated that it will be proposing to its General Assembly, later this month, that these standards be used for its financial statements.

In consultation with IFAC boards and committees, and other relevant interested parties, IFAC staff is further developing the concept of “international convergence.” The objective is to develop guidance to accompany IFAC’s Statements of Membership Obligations (SMOs), which require IFAC members and associates to use their best endeavors to incorporate international standards set by IFAC and by the International Accounting Standards Board into their national standards. The SMOs, which also require member bodies to implement quality assurance and investigation and discipline programs, form the basis of IFAC’s Member Body Compliance Program.

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

Part 1 of the Compliance Program, a fact-based questionnaire to assess the regulatory and standard-setting frameworks of IFAC member bodies, is now complete. Responses have been submitted by all 153 active IFAC members and associates – including the five ICAC member institutes that are members of IFAC. Nearly all of these responses are now posted on the IFAC website and I encourage you to review them.

Part 2, the SMO Self-Assessment Questionnaire, was launched last December and member and associate responses will be posted on the IFAC website during the next few months. They will provide a valuable global snapshot of the accountancy profession from a standards perspective. Additionally, they will be used to help IFAC to gauge where it needs to focus its efforts to support the development of the profession and to work to achieve convergence. Lastly, but perhaps most importantly, the responses to the questionnaires will demonstrate the global profession’s willingness to be accountable for its actions to meet high standards, to deliver quality and to protect the public interest – all important responsibilities in this era of globalization and in this complex environment in which we all work.

This focus on convergence, which I well that recognize that the ICAC shares, 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 the Caribbean region and throughout the world. The IAASB, IFAC’s Education and Ethics Standards Boards and our International Public Sector Accounting Standards Board develop standards that do meet these requirements.

The Public Interest Oversight Board, formally established in February 2005, oversees these standard-setting activities (except for the IPSASB), as well as the IFAC Member Body Compliance Program. Last September, the PIOB approved the due process and working procedures for these standard-setting boards, which, I believe, will build further confidence in our standards. In December, the PIOB approved IFAC’s nominations to the IAASB and the Ethics and Education Standards Boards. The due process and working procedures and the board compositions are posted on the IFAC website in each board’s area. In addition, the PIOB has just released its first public report, highlighting its first year of oversight of IFAC’s public interest activities. I encourage you to read the report, which is available at http://www.ipiob.org.

In order to achieve its goal of developing a high quality profession that meets the public interest, IFAC must ensure that it supports the roles of all professional accountants. For this reason, over the past year, we have reached out to accountants in developing nations and to professional accountants in business.

Professional accountants in business play a vital role in supporting global business and contributing to economic growth and stability. To give you a sense of the size of this constituency, more than 50 percent of the members of IFAC member bodies, or nearly 1.3 million accountants worldwide, are professional accountants in business.

To provide PAIBs with one-stop access to current information on topics of interest to them, IFAC is preparing to launch, in October, a new web-based global knowledge resource. This resource center will feature a powerful Internet search engine that will enable users to search a key term or phrase to access information on a variety of topics, including budgeting and planning, corporate governance, internal control, and strategic management accounting. In addition, this electronic resource will be expanded early in 2007 to serve the information needs of accountants in small and medium practices. More details on this new resource center will be provided to member bodies in the next few weeks.

IFAC’s PAIB Committee has also developed draft new guidance to assist professional accountants in business in carrying out their roles both effectively and with integrity. The exposure draft, Guidance for the Development of a Code of Corporate Conduct, is designed to help professional accountants in business in the establishment and implementation of corporate codes of conduct.

In addition, in late May, the committee released a new information paper on business planning for SMEs. Entitled Business Planning Guide: Practical Application for SMEs, the new guide includes information on how to develop a corporate values statement and to manage business risks.  In addition, it describes how the business plan may serve as a performance tool on an ongoing basis and support a business in obtaining external funding. This new document, along with all IFAC standards and guidance, can be downloaded free-of-charge from the IFAC online bookstore. I urge all of you here to visit our website to access the guidance we have available.

IFAC is committed to ensuring that all professional accountants, in every country of the world, both developed and developing, have the tools that they need to face the challenges of the new global economy.

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 those 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. We welcome assistance from established accountancy groups, such as the Institute of Chartered Accountants of the Caribbean, in this effort to grow and develop our profession worldwide.

IFAC’s Developing Nations Committee is leading our effort to build accountancy capacity around the world. The committee will hold a forum in Kenya, in September, on the development of the accountancy profession in developing nations. The forum will provide an opportunity to discuss the challenges and opportunities in Africa and to address issues related to the further development of the accountancy profession in Africa. The output of that forum will, I believe, have relevance to other developing nations around the world. 

The committee is also engaged 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.

This project follows the release, in December 2005, of new guidance entitled Establishing and Developing a Professional Accountancy Body. This good practice guidance covers the roles and responsibilities of a professional body, education and examination, and capacity development. It addresses a range of situations, including where the 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. The guide also includes suggested areas for priority action based on short-, medium- and long-term goals and projects.

Tools such as this are an important way that the accountancy profession can support economic growth and stability, which in turn can reduce poverty and improve the quality of life for citizens.

Our Developing Nations Committee is holding its meeting here in Barbados following this conference and is looking forward to meeting with representatives of ICAC and the Institute here in Barbados.

In addition to working with developing nations, accountants in business and small and medium practices, IFAC has built and maintained a key partnership with the Forum of Firms, which represents over 20 global networks and associations of public accounting firms. The members of the Forum of Firms have committed to the use of ISAs and the IFAC Code of Ethics for transnational audits. Additionally, these firms have committed to use the IAASB’s International Standard on Quality Control 1, which establishes a high quality standard for the quality control systems within the firms. This commitment to IFAC standards and to the promotion of high quality and consistent performance was reinforced in February 2006 with the approval by the IFAC Board of a new constitution for the Forum of Firms. The new constitution updates membership requirements to emphasize the firms’ commitment to audit in accordance with the IAASB’s International Standards on Auditing, and all members of the Forum must show that they meet all the requirements to be deemed full members.

Accountants and accounting firms in countries throughout the world have an important part to play in contributing to economic growth and stability. Here in the Caribbean region, it is recognized that there are both important challenges and real opportunities. According to the World Bank report, A Time to Choose: Caribbean Development in the 21st Century, poverty and unemployment rates in the region overall are falling, foreign direct investment averages a strong 20 percent of gross domestic product, and government spending on education, region-wide, has risen to 4.9 percent of GDP. In such an environment, the profession can do much to contribute to the growth of both individual enterprises and the economy as a whole.

As IFAC looks to the future, we are aware that the profession’s reputation rests squarely on its ability to protect the public interest and to improve the transparency of financial markets. Ensuring high-quality financial reporting is an area where there is no room for compromise. The ICAC and the accountancy profession here in the Caribbean are vital participants in ensuring high quality, reliable financial reporting. The work that the ICAC has undertaken to strengthen the profession here in the Caribbean, your support of the convergence process and your dedication to quality assurance, through the Regional Monitoring Programme, will all help to ensure that financial reporting in the Caribbean will be of the highest quality, thus contributing to investor confidence. We are most grateful for your very active role in strengthening our profession and for your continued support for IFAC.

Together, we can make a difference. Together, we can serve the public effectively and strengthen capital markets. Together, we can contribute to stability and prosperity and to the reduction of poverty not only in the Caribbean region, but worldwide.

Thank you very much for this opportunity to speak with you today and for your attention.

Good morning. It is a privilege to be here today in the People’s Republic of China to speak before your CPA Forum. Thank you for your kind invitation. This is my third trip to China since I became IFAC President and each time I am here I continue to learn more about your culture, your profession and your people. This enhanced understanding most certainly makes our global world seem to be more coherent and enables the International Federation of Accountants better to support your needs and those of the public you serve.

The Chinese Institute of CPAs is one of IFAC’s newer members, having joined IFAC in 1997. The CICPA is also a very important member and will continue to be so as China’s role in the global marketplace continues to expand. IFAC is dedicated to supporting you in developing our profession. This means providing you with the standards and guidance necessary for professional accountants to carry out their work both effectively and responsibly; it means encouraging accountability and transparency in your undertakings; and it means promoting sound practices of corporate governance.

We are very much working with your leadership in these endeavors. Dr. Yugui Chen serves on IFAC’s Board and Mr. Jianhua Tang is his Technical Advisor on the Board. They thus are able to provide direct input and direction as to how IFAC can best support countries with developing economies and a growing accountancy profession. Ms. Xin Ye, another CICPA member, serves on IFAC’s Small and Medium Practices (SMPs) Committee, which is dedicated to addressing the unique needs of SMPs and small and medium entities (SMEs).

I am here, today, to discuss initiatives of the International Federation of Accountants, and, in particular, our support for accountancy firms. My comments will be presented in the context of what I believe is our profession’s most important goal – that is, to improve the standard of living of and to create better environments for the world’s citizens.  A lofty goal, indeed, but also, I believe, an achievable one.

It is important for all of us – whether we are accounting professionals, government ministers, academics, regulators or standard setters – to remember that we are fundamentally engaged in the business of  “people.”  I emphasize this because, as we discuss policies and standards, approaches and infrastructures, we cannot and should not lose sight of those who can and should benefit from what we do: the world’s citizens.

The best way to help the world’s citizens, including the citizens of the People’s Republic of China, is through financial liberalization. Financial liberalization requires putting out a welcome mat for foreign investors. It requires greater openness to international trade and the privatization of state-owned enterprises. It also means making a commitment to good governance, which can do much to root out corruption – conditions which are essential for successful economic development.

Financial liberalization, the development of sound economic policies, and strong corporate governance are critical steps on the path towards a market economy that is the cornerstone of improving living standards. Accountants have a significant role to play in developing and sustaining market economies by providing the information they need to implement their planning processes

I have been asked to speak to you today about how the accountancy profession is a building block of a market economy. An essential element of a market economy is information. It drives the decision-making process for businesses, investors and individual consumers. From a government or management perspective, high quality financial reporting information is essential in order to manage resources, maintain growth and understand the true health of an enterprise, be it a small start-up company or a nation of millions.

The accountancy profession plays a vital role in the collection, retention and dissemination of financial information of businesses, organizations and governments. The International Federation of Accountants is leading the global accountancy profession in its efforts to ensure high-quality financial reporting, helping to fulfill its role as an essential building block of market economies. High-quality financial information should have three characteristics:

• First and foremost, it must be credible.
• Secondly, in order to achieve that credibility, it must be based on strong principles or standards.
• Thirdly, it must be produced by people with integrity – in other words, individuals who act responsibly and ethically. 

IFAC, through the development of standards and guidance, encourages the accountancy profession, indeed all those involved in financial reporting in both the public and private sectors, to develop information that is consistent with these characteristics. IFAC sets international auditing and assurance, ethics, education and public sector accounting standards. Over the past year, we have continued to increase public interest input into these processes in several significant ways. The first was through the creation of the Public Interest Oversight Board, formed in February 2005, and chaired by Professor Stavros Thomadakis. The PIOB was established through the cooperation of international regulators and IFAC and has just completed its first full cycle of operations. The PIOB oversees auditing, education, and ethical standard setting as well as the IFAC Member Body Compliance Program. Its effect on IFAC over the past year has been extremely positive and we will continue to welcome the PIOB’s comments and input. Its activities are highlighted in its first annual report, which can be downloaded from the new PIOB website.

IFAC has also provided for more public interest input through the establishment and expansion of Consultative Advisory Groups (CAGs) to standard-setting boards. For the first time this year, meetings of the CAGs are open to public observers. We have also enhanced the transparency of our standard setting, most notably, by including more information on the IFAC website (www.ifac.org).

Let me turn now for a moment to our standard setting initiatives. Time does not permit me to describe all of the new standards, but I would like to highlight for you now a few of those which are most significant to well informed markets.

In the area of auditing, the International Auditing and Assurance Standards Board (IAASB) sets international standards on auditing and assurance, quality control and related services that are recognized throughout the world. Over 70 countries either use the IAASB’s International Standards on Auditing or rely on them as the basis for national standards.  I congratulate The People’s Republic of China and the CICPA for their leadership in deciding to converge to IFAC’s standards and those of the International Accounting Standards Board.  This decision is indeed monumental, as it will help to strengthen the profession here in China, build confidence in your financial reporting model and also increase the credibility of financial information produced by you, in both domestic and overseas markets.

IFAC is dedicated to supporting you as much as possible in the implementation of these standards.  In order to ensure that its standards are clear and understandable the world over, the IAASB has undertaken a significant project to improve the clarity and structure of its standards. Beginning in October 2005, it issued four exposure drafts of proposed standards re-drafted using its new drafting style. The new style was developed based on input it received at an international Clarity forum last year and through responses to its 2004 Proposed Policy Statement and Consultation Paper on Clarity. It is currently in the process of reaching an agreement on the Clarity style. It will then launch an aggressive program to modify all of its standards based on the new style over the next 18 months or so. We hope that this new style will not only make the standards more understandable, but also make them better capable of being translated.

In addition to addressing the issue of clarity, in March of this year the IAASB issued a re-exposure draft designed to enhance the quality of audits of group financial statements, entitled “Proposed International Standard on Auditing (ISA) 600 (Revised and Redrafted), The Audit of Group Financial Statements”. Following earlier consultations, the IAASB has modified the proposals and reissued the exposure draft to address issues related to the extent to which the group auditor needs to be involved in the audits of components that are audited by other auditors, whether these auditors are independent of the group auditor (unrelated) or belong to the group auditor's national or international firm or network of firms (related auditors). The exposure draft can be downloaded from the IFAC website. Comments are requested by 31 July, 2006.  I encourage you to review it and to submit your comments.

Another area that the IAASB is addressing is related party transactions. The involvement of related parties, such as directors, owners, and management, in major corporate scandals prompted the IAASB to review its current auditing standard on the subject. As a result of its review, in January the IAASB issued an exposure draft, proposed ISA 550 (Revised), Related Parties. The ED proposed requirements for auditors regarding the audit of related party relationships and transactions. The proposed standard would place new emphasis on evaluating the effects of related party relationships and transactions on the financial statements, even in circumstances where the financial reporting framework does not establish related party accounting or disclosure requirements.

An essential element of credible financial information is a foundation in ethics and integrity. To build credibility in financial systems and to contribute to sound economic systems, we at IFAC promote our values of integrity, transparency and expertise to all professional accountants, both in practice and in business, as well as to all those in the financial reporting supply chain.

IFAC’s International Ethics Standards Board for Accountants develops the international Code of Ethics for Professional Accountants which is applicable to all accountants, including those in business and industry, public practice, the public sector and academia. The Ethics Standards Board recently released an updated Code of Ethics which establishes a conceptual framework for all professional accountants to ensure compliance with the five fundamental principles of professional ethics. These principles are integrity, objectivity, professional competence and due care, confidentiality and professional behavior. Under the framework, professional accountants are required to identify threats to these fundamental principles and, if there are threats, to apply safeguards to ensure that the principles are not compromised. The framework applies to all professional accountants: to those in public practice, as well as to those in business and government.

The Ethics Standards Board is also addressing issues such as audit independence and whistle-blowing and is in the process of developing new guidance for professional accountants in government and in business.

Additionally, IFAC’s International Accounting Education Standards Board is focused on ethics and conduct, among other issues. It plans to issue a tool kit and an International Education Guideline to assist member bodies, academic institutions and others in instilling a strong ethical foundation in the accountants of tomorrow. The guideline will offer recommendations for good practice models of ethics education, while the tool kit will provide practical tools – such as sample course outlines, teaching notes and case studies – to be used by member bodies and educators. The tool kit and proposed guideline are expected to be available in the coming months.

The Education Standards Board is also set to release in June a new International Education Standard 8, Competence Requirements for Audit Professionals, that will require all IFAC member bodies to ensure that professional accountants acquire and maintain the specific capabilities required to work as competent audit professionals. The new standard will also prescribe specific competence requirements for transnational audit professionals. More information on this new standard will be distributed in the coming weeks. 

Another important aspect of IFAC’s work, and one to which I urge you to give note, is its programme to strengthen public sector financial management and accountability. This is accomplished largely through the International Public Sector Accounting Standards Board, known as the IPSASB.  The IPSASB develops International Public Sector Accounting Standards, which are designed to improve public sector financial management and accountability. It is currently addressing key issues for public sector accounting, including accounting for social policy obligations of governments, non-exchange revenue and budget reporting.

The IPSASB recently released a proposed standard on accounting for non-exchange revenue. Many public sector entities derive most of their revenue from non-exchange transactions – including taxes and transfers, such as grants, appropriations, donations, gifts or fines. The exposure draft proposes requirements for the recognition, measurement and disclosure of revenue from non-exchange transactions and contributions from owners and also includes definitions of: taxes, a taxable event, expenses paid through the tax system and tax expenditures.

A new information paper on the United States’ experience in making the transition to the accrual basis of accounting has also been released recently by the IPSASB. The paper identifies the benefits of this and highlights the challenges in developing and implementing an accrual based accounting system. We believe that this paper will be useful for governments considering implementation of the accrual basis.

An important IPSASB objective is facilitating convergence with International Financial Reporting Standards, upon which the IPSASs are based, and with statistical bases of financial reporting. Last year, the IPSASB issued exposure drafts further to converge its standards with International Financial Reporting Standards and with statistical reporting bases. The IPSASB is making great strides in its convergence efforts. An increasing number of entities worldwide, including the World Bank and NATO, are using IPSASs and the United Nations has indicated that it will be proposing to its General Assembly, next month, that these standards be used for its financial statements.

To enhance government’s credibility nationally and overseas, governments need to report their financial position and performance and their cash flows in a transparent and high quality manner. Such information is vital to the efficient operations of government and can assure the public that government resources are managed effectively. It is important to keep in mind that the need for high quality information from governments is as important as it is for business and industry.

It is business and industry, as exemplified here in China, that are the real drivers of economic growth and development, leading to better lives for citizens.  Professional accountants in business play a vital role in supporting global business and contributing to growth and stability. To give you a sense of the size of this constituency, more than 50 percent of the members of IFAC member bodies, or nearly 1.3 million accountants worldwide, are professional accountants in business. IFAC, through its Professional Accountants in Business (PAIB) Committee, provides professional accountants in business and industry with guidance and tools to support high quality information.

In 2004, the PAIB Committee, in conjunction with the Chartered Institute of Management Accountants, issued a report entitled Enterprise Governance – Getting the Balance Right. This report provides recommendations covering the range of enterprise governance, recognizing the interaction between probity and profitability.

The committee is now expanding the guidance it develops, with a focus on supporting professional accountants in business in providing high quality information and in acting ethically. It recently issued an exposure draft, Guidance for the Development of a Code of Corporate Conduct, proposing guidance to assist professional accountants and others in establishing and implementing codes of conduct in their organizations. The goal of this proposed new guidance is to support sound corporate governance policies worldwide. The proposed guidance highlights the benefits of an effective code of conduct and identifies the professional accountant's role in the development, monitoring, reinforcement, and reporting of such codes in their organizations. To assist in the creation of codes of conduct, the guidance includes information on presentation and content, organizational and management challenges and implementing a code of conduct in a global organization.

In addition, to provide professional accountants in business with one-stop access to current information on topics of interest to them, IFAC is preparing to launch, in September, a new web-based global knowledge resource. This resource center will feature a powerful Internet search engine that will enable users to search a key term or phrase to access information on a variety of topics, including budgeting and planning, corporate governance, internal control, and strategic management accounting. In addition, this electronic resource will be expanded early in 2007 to serve the information needs of accountants in small and medium practices. More details on this new resource center will be provided to member bodies in the coming weeks.

Another way that IFAC contributes to the quality of financial reporting and thus to building sound market economies is by facilitating convergence to international standards. Indeed, making best endeavors to converge national and international standards is a requirement for IFAC member bodies as set out in IFAC’s Statements of Membership Obligations (SMOs). The SMOs, which also require member bodies to implement quality assurance and investigation and discipline programs, form the basis of IFAC’s Member Body Compliance Program.

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

Part 1 of the Compliance Program, a fact-based questionnaire to assess the regulatory and standard-setting frameworks in the home countries of each of IFAC’s members and associates, is now complete. Responses from more than 150 members, including the CICPA, have been posted on the IFAC website, and the remaining responses are in the process of being agreed and posted.

Part 2, the SMO Self-Assessment Questionnaire, was launched last December and responses will be posted beginning in the second half of this year. The responses from these questionnaires are important for several reasons: they provide a global snapshot of the accountancy profession from both a regulatory and a standards perspective.

Additionally, they can be used to help IFAC gauge where it needs to focus its efforts to support the development of the profession and to work to achieve convergence. Lastly, but perhaps most importantly, the responses to the questionnaires demonstrate the international accountancy profession’s willingness to be accountable for its actions, to meet high standards, to deliver quality and to protect the public interest – all important responsibilities in the changing and complex environment in which we work.

We are pleased that member body participation in this program is so significant and I thank the CICPA leadership for making the questionnaire a priority.

In addition to the Member Body Compliance Program, IFAC, through the Forum of Firms, is able to promote convergence and adherence to high ethical values. The members of the Forum of Firms, which is comprised of over 20 global networks and associations of public accounting firms, have committed to the use of ISAs and of the IFAC Code of Ethics for transnational audits. Additionally, these firms have committed to use the IAASB’s International Standard on Quality Control (ISQC) 1, which establishes a high quality standard for the quality control systems within the firms. This commitment to IFAC standards and to the promotion of high quality and consistent performance was reinforced in February 2006 with the approval by the IFAC Board of a new constitution for the Forum of Firms. The new constitution updates membership requirements to emphasize the firms’ commitment to audit in accordance with the IAASB’s International Standards on Auditing, and all members of the Forum must show that they meet all the requirements to be deemed to be full members.

Before closing, I would like to comment on one other area that is critical to economic  development – that is, corporate governance. Across the globe, corporate governance has risen to the top of the agenda for corporate executives, investors and regulators. As your country continues to transition from a planned economy to a market-driven economy, it is important to keep in mind the importance of strong corporate governance. We fully recognize that progress in governance reform has occurred in China, but there are still more changes looming on the horizon for you. I urge you to continue to liaise with the China Project Development Facility and to speak up to legislators about their role.

It is important to note that the quality of a nation’s corporate governance system strongly influences the character of its capital market and the availability of external capital. Ronald Gibson, the Meyer Professor of Law and Business at Stanford University, is among those who calls for developing countries to make a full commitment to corporate governance.  Both good corporate growth and good corporate governance requires the capacity to make credible disclosure of financial results. In the absence of effective financial disclosure, a country’s capacity to support equity markets, and in turn, important kinds of industry, is compromised.

China has made significant economic strides and can achieve even more by addressing governance issues. Just this past week the Organization for Economic Co-Operation and Development – OECD -- noted in its semi-annual report that China is one of the few countries enjoying double digit growth. The report also said that it expected China’s robust expansion to continue, forecasting economic growth of 9.7 per cent this year and 9.5 per cent in 2007. These forecasts imply, however, that China can not just simply hold the course. It must continue to enhance its policies to fulfill its potential.

All of us here have a role to play in building confidence in financial information and financial infrastructure.  Yet we also have a role to play in communicating how those infrastructures work to protect the public interest. Clear information about the financial reporting process needs to be presented to those who rely on – or want to rely on – the information that results from it. Additionally, clear information about the economic policy framework, the regulatory environment, and economic developments is essential to sound business decisions. Thus, while I urge you to continue to take actions in this area, it is equally important to communicate those actions to the public who, ultimately, will benefit from them.

As we look to the future, it is evident that the quality of information expected by investors and needed by public and private sector decision makers will become even more critical to the development not only of national market economies, but to the global economy as well. Thus, ensuring high-quality financial reporting is an area where there is no room for compromise. We must all continue to be as proactive as possible and make an ongoing commitment to high-quality financial reporting. Together, we can contribute to stability and prosperity, not only in the People’s Republic of China, not only in the Asia-Pacific region, but worldwide. Together, we can help to grow your economy and together, we will benefit.

Thank you very much for your attention. 

At a meeting held recently in London, more than 30 chief executives of accountancy bodies and regional accountancy organizations around the world expressed support for appropriate, simplified guidance being developed for small and medium entities. They also agreed that a major challenge for the accountancy profession is ensuring that requirements for financial information and assurance are appropriate for both large and small entities in both developed and developing countries. The requirements should be straightforward, clear and brief as possible.

Recognizing that international standards that are right for a large public company may be burdensome for a small enterprise, the International Federation of Accountants (IFAC), together with its member bodies, is urging standard setters and regulators to consider the unique needs of small and medium enterprises (SMEs) in developing their rules and regulations.

"We believe the goals of standard setters like the International Accounting Standards Board (IASB) and the International Auditing and Assurance Standards Board (IAASB) should be to develop succinct, relevant and understandable guidance that eases the compliance burden on SMEs and ensures that benefits exceed costs," states IFAC President Graham Ward. "This essentially means that the costs of preparing, auditing and disseminating financial statements should be proportionate to the information needs of the financial statement users."

IFAC expressed these views in its comments on the IASB Discussion Paper, Preliminary Views on Accounting Standards for Small and Medium-Sized Entities. "Concerns over the high costs of complying with full International Financial Reporting Standards have prompted many countries, particularly those with developing economies, to look at alternatives to international standards or to delegate standard setting to organizations that may not be appropriate for such a role," emphasizes IFAC Chief Executive Ian Ball. "Such actions are not in the public interest and, therefore, it is critical that standard setters be conscious of the effect of compliance costs on small and medium entities."

With SMEs representing 95.77 percent of the businesses in the European Union, over 97 percent of the total companies in the Asia Pacific region, and 99.7 percent of all United States employers, the issue needs to be addressed urgently. The issue is at the forefront of the agendas of IFAC's Developing Nations and Small and Medium Practices (SMP) Committees and is a matter of concern to IFAC's Professional Accountants in Business Committee. The Developing Nations and SMP Committees provide regular input to both the IASB and IAASB to ensure that the SME perspective is considered during the development of international accounting and auditing standards.

IFAC is the worldwide organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. Its current membership consists of over 160 professional accountancy bodies in 120 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC, through its independent standard-setting boards, sets international standards on ethics, education, and public sector accounting. It also issues guidance to encourage high-quality performance by professional accountants in business.