The Accountancy Profession – Adding Value Globally, Regionally and Locally Alan Johnson IFAC Board Member South Asian Federation of Accountants / IFAC PAIB Forum Mumbai, 23 April 2016

IFAC and Our Profession As an accountant I am proud to be a member of this profession. It is, to my knowledge, the only profession that has a global organisation that represents us across the world and unites us under one umbrella.

What is IFAC? Global organisation for the accountancy profession Founded in 1977 More than 175 members and associates, 130 countries Representing more than 2.8 million accountants globally Accountants working in public practice, education, government, industry & commerce IFAC is at the heart of the entire accountancy eco-system Delivers public value, working always in the public interest

IFAC’s Vision A global accountancy profession recognised as a valued leader in the development of strong and sustainable organisations, financial markets & economies.

To serve the public interest by … IFAC’s Mission To serve the public interest by … contributing & facilitating the development and adoption of high quality standards and guidance contributing to the development of strong professional accountancy organisations & accounting firms and high quality practices for professional accountants promoting the value of professional accountants worldwide speaking out on public interest issues

Accountants are Crucial IFAC believes that the world needs a strong & vibrant accountancy profession of highly- trained ethical accountants to protect the public interest … to promote economic activity & development that will lead to responsible & effective governments thus building overall confidence in the global financial system

IFAC 2016-2018 Strategic Plan Charting the Future of the Global Profession Strategic Objectives— Strengthening the profession in the public interest International Standards Support Global Accountancy Profession Support Global Accountancy Profession Development

Nexus 1: The Accountancy Profession, Behind the Numbers IFAC member organizations grew 16% (2.4m to 2.8m) 1/3 of IFAC members in Asia Employment of IFAC member organizations: Business & Industry: 5% Public Practice: 45% Public Sector: 8% Academia / Education: 2% Data shows significant opportunity for our profession

Nexus 2: The Accountancy Profession – A Global Value-Add Economic development, improved living standards linked to a robust accountancy profession Economic contribution of the global accountancy ecology is $575 bn IFAC member organizations contribute $248 bn Contribution from Asia has a huge potential to grow

Developing the Profession is Crucial When PAOs function effectively they further the quality of financial management and reporting, which in turn… attracts foreign direct investment; promotes growth and development of the small- and medium-sized sector; enhances transparency and accountability in the use of resources in both private and public sectors; improves the delivery of vital public services; and enhances the effectiveness and efficiency of official development assistance.

A Profession Relevant to Professional Accountants in Business

A Place to Start: What is a PAIB? Professional accountant working in: business and industry public and not-for-profit sectors education In: finance and accounting operations internal audit Compliance Reporting investor relations

PAIBs: A Unique Set of Challenges Work in an environment together with other professionals Not always connected with their member body, thus creating an identity and recognition problem Often perceived as “back office” support rather than adding value in “performance” roles Professional mindset and skills applied in a very different environment than public practice – we need to be prepared!

Key Business Challenges Facing PAIBs Speed of change and keeping up-to-date Fulfilling employer expectations to balance stewardship/compliance and entrepreneurial roles Being transparent and ethical under pressure Navigating fragmented career paths Acquiring broader professional skills and capabilities that enable our full contribution to organizations

Supporting PAIBs is an Opportunity Provide relevance through: Certification and training/education programmes: ensure a relevant professional skillset for professional accountants Advocate the value proposition of the profession and professionalization Support services valued by PAIBs Achieving relevance requires a collective effort – between PAOs, regional bodies and IFAC Ensure PAIBs have status in the profession Use your members as a force for change!

Working together to ensure a profession relevant to PAIBs by: IFAC and SAFA Working together to ensure a profession relevant to PAIBs by: Identifying trends and priorities for the profession Sharing knowledge on emerging themes and issues Equipping PAOs to better support their PAIBs Advocacy: Identifying significant opportunities to place PAIBs and PAIB issues in the spotlight

Relevant PAIB Focus Areas I would not like to talk about some of the focus areas relevant for PAIBs

Focus Area: The Role of Accountants in Society The profession’s role in the Global Goals for Sustainable Development Our global profession means we can speak with one voice on issues that are relevant to society, everywhere We need to act in the public interest in everything we do Our training and continuous development ensures we remain relevant Our collaborative ways of working mean our influence is widespread and our advice is sought and respected

Focus Area: Effective Governance, Risk & Control PAIBs delivering effective governance and risk management Managing risk as an integral part of managing an organization Achieving business objectives as well as ensuring compliance Responding to changes in the business environment Understanding the nature of risks and the impact on the organization It is not about avoiding risks or being risk averse, it is about managing risks effectively

Focus Area: Enhancing Audit Quality Audit quality a joint responsibility between auditor and organization A quality team of audit professionals Audit is not a commodity service. A quality audit is unlikely to be cheap. Honest and transparent communication between all parties in the financial reporting supply chain efficient financial reporting timetable continuous communication A strong internal control environment A strong and independent internal audit function

Focus Area: High-Quality Financial Reporting Financial reporting is the bedrock: Staying on top of developments in financial reporting e.g., leases/revenue recognition and ensuring high quality financial reporting High-quality financial statements prepared and audited using global standards help support the continued growth and diversification of the region's economy.

Integrated Reporting: Communicating Value Creation Addresses problems of corporate reporting system Capital providers & stakeholders want to better understand value creation and preservation Provides an opportunity to Create value Tell the story Integrated thinking unlocks change in mindset and create real change PAIBs: ideally positioned to facilitate integrated thinking

Other Focus Areas Trends impacting the finance function and implications for the global profession and PAOs Outsourcing/offshoring Finance business partnering, career pathways and talent acquisition Digital technology and the effects of automation

High performing public sector Other Focus Areas High performing public sector Accountability Now initiative to improve financial reporting & transparency Enhancing public sector governance & accountability Combatting fraud and corruption Corporate taxation Encouraging smart regulation

Final Thoughts IFAC plays an essential role in promoting a strong and robust accountancy profession Everything we do is working entirely in the public interest We speak out on key issues on behalf of the profession We support capacity building of the global accountancy profession Together with our member organizations we play a role in supporting all accountants to succeed in their careers We contribute to global economic growth and development which have wide societal benefits