Institute of Accountants 11.00am Banquet Hall Concurrent Session 2A Rebuilding Economic Stability: How Could You Contributre as a Professional Accountant? Mr. John Cahill FCPA Deputy President and Director, CPA Australia

REBUILDING ECONOMIC STABILITY – THE ROLE OF THE PROFESSIONAL ACCOUNTANT John Cahill (FCPA) Malaysian Institute of Accountants National Accountants Conference Kuala Lumpur October 14, 2009

Regulation of the Accountancy Profession: IFAC December 2007 “… the Sustainability of the accountancy profession depends upon the quality of the services provided by its members and on the profession’s capacity to respond effectively and efficiently to the demands of the economy and society”

BUSINESS AND POLITICS Political leadership an important element Previous assumptions overturned Government use of fiscal and monetary policy

Accounting at the Summit G20 backs new growth push Countries to act aloneAccounting rules shake-up IMF funding review Tony Walker WASHINGTON GLOBAL SLOWDOWN World leaders have committed to strengthened efforts to bolster their economies and overhaul the international regulatory system to guard against further financial disasters, amid mounting fears of deeper global slowdown. But the Group of 20 nations have avoided specific commitments for additional economic stimuli and deferred detailed decisions on the regulations until next year after the new Obama administration is installed. “We are determined to enhance our co-operation and work together to restore global growth and achieve needed reforms in the worlds financial systems,” the group said in communiqué. Some leaders had pushed for broad agreements on stimulus targets – Australia has committed itself to 1 per cent of gross domestic product – but the US resisted the idea, leaving any new measures to individual countries. Prime Minister Kevin Rudd pleaded with G20 leaders to move quickly on efforts to meet the challenges of slowing growth and rising unemployment. “Our success or failure to learn from previous recessions will hang on three things – the quantity of our fiscal response, the co-ordination of our fiscal response, and the quality and immediacy of our fiscal response,” Mr Rudd said in an address to a closed session. The Washington meeting was held as concern grew over a deeper recession in the developed world. The Dow Jones Industrial Average slumped 3.8 per cent on Friday amid volatile trading after the release of the worst US retail sales figures on record, and analysts expect the falls to continue in Australia today. The convening on the G20, involving countries that account for 85 per cent to 90 per cent of the world GDP, to address a financial crisis s seen as a historic development. Prime Minister Kevin Rudd, who has pressed for a greater role for the G20, will have reason to be satisfied with the outcome. What’s needed is not a one-off response, but a framework for dynamic regulatory responses that keep pace with industry innovations.

IFAC recommendations to G20 Convergence of standards (IFRS) Considerations for SMEs Primacy of Corporate Governance More robust financial reporting – incorporating sustainability issues

ACCOUNTANTS AT THE VANGUARD Critical as key decision makers Restoring trust CPA Australia members operate globally

A REGIONAL SNAPSHOT Some differences but no part of region left untouched Demonstrates global economic co-dependence China effect

ACCESS TO CREDIT Banking sectors comparatively healthy Levels of foreign borrowing an issue Increased cost and availability of credit

CPA Australia CFO survey 2009 Accessing finance  Overall, 44% of respondents had experienced difficulty accessing finance due to tight lending conditions.  A high proportion of organisation’s based from Asia (80%) experienced difficulties relative to Australian organisations (36%).  Small firms were also more likely to have experienced difficulty accessing finance. Q9. Have you experienced any difficulty accessing finance due to tight lending conditions? N=104 N=171 N=30 N=20 N=221 N=20 N=97

GOVERNANCE & ETHICS Assessment of risk Impossible to regulate for ethics Dependent on the establishment of the right organisational culture Boards & senior management have a key role

FOCUS ON THE LONG-TERM Trend towards more immediate concerns Long-term planning more important than ever Return to protectionism? Adoption of IFRS is critical

COLLABORATION CPA Australia’s knowledge exchange focus Member to member collaboration Importance of collaboration between accounting bodies Mutual Recognition Agreements Broader Business application

THE PUBLIC INTEREST Accountants are placed in a position of trust Enron an example of what can happen if this trust is abused Accounting profession at the core of rebuilding trust

UNDERPINNING ECONOMIC GROWTH Labour market transformation means shortage of skilled accountants will continue Increasing demand for skills in strategy, ethics and governance – particularly in developing economies Developing financial & business infrastructure of new markets

CLIMATE CHANGE & SUSTAINABILITY Climate change in the spotlight in Australia as a fundamental economic issue The need for an authoritative business voice Sustainability reporting another element Improved business information

IFAC and sustainability issues IFAC and the Prince of Wales Accounting for Sustainability Project A belief that Professional Accountants have a critical role in business focus on sustainability issues – a view strongly shared by CPA Australia IFAC Sustainability Framework a guide to help professional accountants grasp the key aspects of sustainability they may encounter in their roles

REBUILDING ECONOMIC STABILITY – THE ROLE OF THE PROFESSIONAL ACCOUNTANT John Cahill (FCPA) Malaysian Institute of Accountants National Accountants Conference Kuala Lumpur October 14, 2009