International Federation of Accountants International Education Standards for Professional Accountants Mark Allison, Executive Director Institute of Chartered Accountants of Scotland and Technical Advisor to IFAC Education Committee

Presentation Outline About IFAC Harmonisation of International Standards through education International acceptance and benefits IFAC Education Board Overview of International Education Standards

IFAC Today Comprehensive set of standards on auditing, ethics, education, and public sector financial reporting Expanding network of 158 member bodies in 118 countries, representing 2.5 million accountants Increasing recognition of IFAC’s work by international organizations

IFAC’s Mission To serve the public interest, strengthen the worldwide accountancy profession and contribute to the development of strong international economies

IFAC Achieves this Mission by - Establishing and promoting adherence to high quality standards Furthering international convergence Speaking out on public policy issues

Harmonisation of International Standards Harmonisation key issue for profession Solid foundation to support application of international standards Education provides foundation

Benefits of IES to Profession Provide consistent global framework of education Promote consistency and convergence in accounting education processes Advance convergence in the application of technical and practice standards Support greater mobility of accountants Contribute to co-operation among member bodies

Education Board (IAESB) Develops standards and guidance for education and development of professional accountants Transparency in standard-setting process Members include practicing accountants, academics, representatives from business and the public Observers from international accounting academic community and UNCTAD

Standards Development Decision to develop Education Standards November 2001 Exposure drafts released July 2002 Consideration of comments International Education Standards (1 -6) issued October 2003 Support of academics, employers IES7 issued May 2004

Implementation of Education Standards Compliance required by all IFAC member bodies – January 2005, IES 1 – 6 – January 2006, IES 7 Recognise different education systems and processes Acknowledge stages of development

International Education Standards Set benchmarks for education of worldwide accountancy profession Ensure quality and consistency in accounting education Foundation to achieve convergence of international accounting, auditing, public sector standards Different approaches around the world

International Education Standards Prescribe the range of professional knowledge, professional skills, professional values, ethics and attitudes required Develop an attitude of lifelong learning

Framework and Introduction Framework – objectives and operating procedures of EDCOM Introduction – purpose, scope and development of IES – discussion about way standards may be adopted and applied

IES 1, Entry Requirements Requirements for entry to a programme of professional accounting education and practical experience Aim to ensure students have background to have reasonable chance of achieving success

IES 2, Content of Professional Accounting Education Programs Prescribes knowledge and competences candidates require to function as a professional accountant – Accounting, finance and related knowledge – Organisational and business knowledge – IT knowledge and competences Degree or professional qualification At least two years full time study

IES 3, Professional Skills Prescribes the mix of professional skills required – Intellectual skills – Technical and functional skills – Personal skills – Interpersonal and communication skills – Organisational and business management skills General education helps to develop these skills

IES 4, Professional Values, Ethics and Attitudes Prescribes the professional values, ethics and attitudes required Prescribes minimum subject areas Acknowledge different approaches will reflect national and cultural environment

IES 5, Practical Experience Requirements Aims to ensure candidates have the necessary practical experience to become a professional accountant Minimum of 3 years’ practical experience Guidance of experienced professional accountant Record of experience and review

IES 6, Assessment of Professional Capabilities and Competence Final assessment before qualification as a professional accountant Test of theoretical knowledge and practical application of knowledge Reliable and valid

IES 7, Continuing Professional Development Mandatory CPD for all professional accountants Foster commitment to lifelong learning Facilitate access to CPD opportunities Establish benchmarks for development and competence of professional accountants Monitor and enforce CPD

IES 7, Continuing Professional Development Three approaches Input approach – 120 hours, three year rolling period Output approach Combination approach

IES8 (Draft) Competence for Audit Professionals Audit of historic financial information All IES1-7 and additional advanced knowledge Graduate level Audit specific skills Application of ethics in an audit context Specific work experience To be issued July 2006

European Union – Revised Eighth Directive Final draft stage (May 2006 published) Two years to implement to national law Articles 6 – 14 Education related Similar to current Eighth Directive applied in EU member states

European Union – Revised Eighth Directive However changes in: International accounting and auditing standards Auditing professional skills Ethics and independence Risk management Corporate governance Continuous education Increasing links to IES evident

More information IFAC’s web site – – provides access to all standards and a wide range of free guidance for the world’s accountantswww.ifac.org