About FEE and its Activities 10th Visegrad 4 Countries Meeting Sárvár, 10 June 2010 Hans van Damme, FEE President

Content About FEE Organisation Activities of various bodies Engagement of our members Overview of current FEE Activities Questions

About FEE So let’s start by a few words on FEE. The profession in its entirety and its diversity: 45% in public practice in both large and small firms and this is more than auditors only: accountants acting as consultants in a variety of sectors and specialities from company law to corporate finance and sustainability, tax advisors… A majority of our members are not in public practice: business and public sector. 43 professional institutes of more than 500.000 accountants all contributing to a more efficient, transparent and sustainable European economy 32 European countries, including all 27 EU MS

FEE’s Role: Representing the Profession and Adding Value to Members With PCAOB, SEC, etc. With EC, EP, EU Council & Committees With IFAC & its Boards: IAASB, IESBA, IAESBA, CAGs, IPSASB, etc. Inform, advise & influence Facilitate consensus between Catalyst in Europe institutes, accountancy firms (big & small) EU & intl. regulation, policy standard setting, etc. How do we represent them? We’re very much focused on the policy debate and especially the EU policy debate and we are engaging on all issues that have an impact on the profession or on which the profession can add value by bringing its expertise and field experience, its values and its public interest dimension. We are in regular dialogue with the different policymakers, regulators and standards setters that you can see on this slide. We’re also informing our members and hope to be a catalyst for change in the profession. It’s from that perspective that we have worked on XBRL.

Adding value to members Making representations to the EU Institutions Making representations to international organisations Identifying, analysing and influencing relevant public policy developments Promoting co-operation among Members Contacts with other regional groupings

Working with members

FEE General Assembly GA is top FEE governance body Decisions on Constitutional matters: Admission of new member organisations Determination of members’ contribution Appointment of President and Deputy President Approval of annual financial statements Decision on level of expenditure for next two years Meets every second year Execution of work at Council and Executive level

FEE Council Council is top FEE decision-making body Exclusive right to decide FEE’s positions Possibility to contribute to agenda and propose additional items with appropriate documentation Increased transparency and accountability: Executive’s agendas and (draft) minutes provided to Council General delegation to Executive

FEE Executive More central role in execution: Implementing Council’s strategy and decisions Coordinating and supervising Working Parties Possibility to address WPs’ issues where necessary Reporting to Council Executive has full and unconditional implementation powers

Decisions at FEE Council creates and dissolves WPs Member Bodies appoint Representatives, Executive may set criteria, President may make requests Executive decides creation of Groups within WPs and of Joint-Groups Coordinates the work of WPs May impose reporting mechanisms May specify and limit the use of denominations such as 'Committees‘, ‘Policy groups’ or 'Task Forces‘ No denomination may be used without Executive’s prior approval

FEE: Advancing members’ activities Auditing Sustainability Financial Reporting Qualification and Market Access Ethics Accounting Company Law Corporate Governance SMEs-SMPs Insurance Taxation Banks Public Sector And more…

Accountants: involved for centuries … this man is Luca Pacioli, who we know as the father of accounting. Well some say that mainly theorised what Venice merchants were doing to understand and manage their business. Many surveys and polls, some conducted by some of our Member Bodies, others by UEAPME, the representative organisation for SMEs in Europe have shown that accountants are the preferred source of advice of SMEs. This is why we thought that today we should ask SMEs to tell us what they think - What is really important to them Their real needs How they struggle in the current crisis and what way out they see How they feel about (regulation) what we do for them and what policymakers do for them According to a 2007 poll (EC Observatory of European SMEs): 36% of EU SMEs reported that compliance with administrative regulations constrained their business activities - 44% of SMEs consider themselves as operating in an over-regulated environment. And what is worst – and I would personally despite all the fuzz we hear in Brussels about cutting red tape and simplification – SMEs believe things are deteriorating, not improving. So we have to listen to SMEs and only then we shall be better placed to understand, deliver and service SMEs.

Developments impacting our profession

5 decisive years to fostering recovery and sustainability

FEE: contributing to policy debates ONE: Making the Internal Market a reality TWO: Thinking small first for SMEs, green and global too THREE: Promoting transparency through high quality financial reporting and global standards FOUR: Fostering trust and integrity through auditing FIVE: Improving corporate governance and company law SIX: Ensuring better regulation and better financial supervision SEVEN: Integrating sustainability at the heart of policymaking, society and markets

Key issues: Accounting 1 International Pressure on IASB to respond to G20 and financial crisis  Convergence and new standards Many new standards out for comments Heavy work on IAS 39 overhaul (IFRS 9) Ongoing IASCF constitutional review Developments US and elsewhere Level playing field FEE favours high-quality principles-based global standards translation

Key issues: Accounting 2 Europe Overhaul of 4th and 7th Directives Proposal for Micro enterprises Proposals on dynamic provisioning Major implementation work on Solvency II EFRAG enhancement Improved operating structure (PRC) Joint funding from EU, founding fathers and NFM New Supervisory Board More attention on pro-active role translation

Key issues: Audit 1 Clarified ISAs SAD issues Project finalised by IAASB Adoption for use in EU in relation to outcome Consultation document 2009 Some countries will need to move from National standards to ISAs Task force on proportionality Survey on audit software, training and other implementation issues SAD issues Article 47 on access to audit working papers FEE consistent position inspections: mutual reliance translation

Key issues: Audit 2 Audit exemptions Alternative assurance services Use of increased audit thresholds in various EU countries Alternative assurance services Increasingly addressed by accountancy bodies, regulators and EU institutions Desire to arrive at positive audit opinion but with less work FEE survey: Wide variety of practices confirmed XBRL Allowing or mandating filing of audited FS under XBRL becoming more and more common translation

Other areas of work SME/SMP Consideration on new working methods and strategy QMA EU Broad Consultation into Accountancy sector Ethics New ethical code 2009 FEE discussion paper Integrity in Professional Ethics Comparison EC and IESBA independence principles and requirements being done Corporate Governance/Company Law More attention on governance in view of crisis: Green Papers Assurance on Corporate Governance Statements Sustainability Policy statements on Sustainability issues translation

Questions

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