International Federation of Accountants IFAC SMP Committee Strategic and Operational Plan Paul Thompson, Senior Technical Manager IFAC SMP Forum 2008 Abuja, Nigeria, October 13, 2008

Content IFAC Strategic Plan IFAC Strategic Plan SMP CommitteeSMP Committee Critical IssuesCritical Issues Input to Standard SettingInput to Standard Setting Provision of Practical SupportProvision of Practical Support How Can You Get Involved?How Can You Get Involved?

IFAC Strategic Plan Four strategic themes are:Four strategic themes are: 1. Be recognized as the international setter standard in the areas of auditing and assurance, education, ethics and governmental financial reporting. 2. Actively support the adoption of, and assist in, the implementation of international standards 3. Continually enhance the relevance of the profession 4. Be the international voice of the accountancy profession

IFAC SMP Committee Overview IFAC SMP Committee Overview Canada USA Brazil Finland Germany Italy Malta Spain Turkey UK Nigeria Tunisia Chair – Sylvie Voghel (Canada) 18 members Resources – one full-time senior technical manager Budget of US$ 475k (2008) Israel China Hong Kong SAR India Malaysia

IFAC SMP Committee Purpose and Constituents Purpose:Purpose: “….to identify and represent the needs of the constituents and, where applicable, to give consideration to relevant issues pertaining to SMEs/SMPs.” Constituents:Constituents: “…SMPs who provide accounting and assurance services principally but not exclusively to clients who are small and medium enterprises (SMEs). In so far as they provide services to SMEs other professional accountants are included as constituents.”

Critical Issues Limited awareness we exist let alone what we do!Limited awareness we exist let alone what we do! Definition of SMPs – large firm in small country?Definition of SMPs – large firm in small country? Impact of risk and redrafted ISAs on SME auditImpact of risk and redrafted ISAs on SME audit Some calls for differential auditing standardsSome calls for differential auditing standards Trend towards exempting SMEs from audit – loss of valuable revenue stream & need to diversifyTrend towards exempting SMEs from audit – loss of valuable revenue stream & need to diversify Complexity of regulation is driving consolidationComplexity of regulation is driving consolidation SMPs lack recognizable brand…SMPs lack recognizable brand… ….but highly respected source of business support….but highly respected source of business support

IFAC SMP Committee SMP Committee Strategic and Operational Plan Four main issues facing SMPs (& SMEs): 1.Relevance & proportionality of international standards to SME/SMP 2.Capacity of SMP/SME to efficiently implement these standards 3.Ability of SMPs to remain competitive & client-focused 4.Ability of SMPs to proficiently operate & manage their practices

IFAC SMP Committee SMP Committee Strategic and Operational Plan Two-pronged approach to helping SMPs (& SMEs) tackle these issues:Two-pronged approach to helping SMPs (& SMEs) tackle these issues: 1. Helping to shape form & content of international standards through direct input to standard-setting (Session 3) 2. Providing practical support to SMPs through, for example, provision of implementation materials & web- based information resources/tools (Session 4)

Input to Standard Setting IAASB/IESBA Comments on draft material & advocates at high- levelComments on draft material & advocates at high- level SMP Committee welcomes IAASB/IESBA plans to:SMP Committee welcomes IAASB/IESBA plans to: –Impact assessment of proposed future changes –Implementation effectiveness review –Stability in standards/Code –Increased focus on implementation assistance –Alternative assurance for SMEs Need to get more SMPs/SMEs involvedNeed to get more SMPs/SMEs involved

Input to Standard Setting IASB Support IFRS for Private Entities (formerly IFRS for SMEs) projectSupport IFRS for Private Entities (formerly IFRS for SMEs) project Assisting IASB find optimal solution:Assisting IASB find optimal solution: –Encouraging SME/SMP participation in debate –IFAC comment letter (SMP Committee led drafting): –More simplification required –Standard needs to be truly standalone –Micro-Entity Financial Reporting Research Project: –Proposed standard (ED) much too complex for micro-entities –Promote IASCF’s ‘train the trainer’ initiative

Provision of Practical Support Implementation Materials - Overview Vision – develop and facilitate development of range of high quality materials at low (nil) cost to end usersVision – develop and facilitate development of range of high quality materials at low (nil) cost to end users IFAC to develop material only in specific instancesIFAC to develop material only in specific instances Focus is on high level implementation guidesFocus is on high level implementation guides

Provision of Practical Support Implementation Materials - Guides ISA Guide - to help practitioners efficiently, effectively and economically apply ISAs to SME audits (Q4 2007: Q4 2009)ISA Guide - to help practitioners efficiently, effectively and economically apply ISAs to SME audits (Q4 2007: Q4 2009) Quality Control Guide – to help SMPs operate a QC system in compliance with ISQC 1 (Q1 2009)Quality Control Guide – to help SMPs operate a QC system in compliance with ISQC 1 (Q1 2009) Practice Management Guide – to help SMPs proficiently operate and manage their practice (Q4 2009)Practice Management Guide – to help SMPs proficiently operate and manage their practice (Q4 2009) IESBA Implementation Materials for SMPs – to help SMPs apply independence section of Code of Ethics (2009)IESBA Implementation Materials for SMPs – to help SMPs apply independence section of Code of Ethics (2009)

Provision of Practical Support Implementation Materials – Guides Member bodies free to use materials as is, adapt, translate, reproduceMember bodies free to use materials as is, adapt, translate, reproduce Guides intended to be ‘platform’ product from which derivative products (e.g., training material, forms, software) can be logically developedGuides intended to be ‘platform’ product from which derivative products (e.g., training material, forms, software) can be logically developed IFAC facilitating development & dissemination, by member bodies and others, of high quality derivatives at reasonable cost to end usersIFAC facilitating development & dissemination, by member bodies and others, of high quality derivatives at reasonable cost to end users

Provision of Practical Support Implementation Materials - Future Possible future developments:Possible future developments: –Develop ‘train the trainer’ & other CPD materials based on core content of guides –Certification of products asserting compliance with IFAC standards/guidance –IFAC and/or member body branded online professional education center (offering online courses) –Guidance on how SMPs can support SMEs – to profile role of SMP & signal business opportunities

See for:See for: –IFACnet portal –News –Resources (relevant links, free publications, discussion board, etc.); Possible future developments:Possible future developments: –Global firm directory –Online networking between SMPs (& SMEs) Provision of Practical Support Web-based Resources – International Center for SMPs

Provision of Practical Support Web-based Resources - IFACnet See Customized web search engine providing access to resources of IFAC, its member bodies, and othersCustomized web search engine providing access to resources of IFAC, its member bodies, and others Possible future developments:Possible future developments: –Menu of key search terms –Improved language capability

How Can You Get Involved? Effective communication is critical to SMP Committee achieving its strategic objectivesEffective communication is critical to SMP Committee achieving its strategic objectives Visit our website and sign up for our eNewsVisit our website and sign up for our eNews Raise awareness of our activities:Raise awareness of our activities: –To other accountancy bodies; –To other SMPs and SMEs; and –To others – students, donor agencies, regulators etc Help promote and disseminate our project outputHelp promote and disseminate our project output Provide feedback on our project outputProvide feedback on our project output

Questions