1. Member Body Compliance Program
Russell Guthrie, Executive Director
IESBA Meeting
New York, USA
October 19, 2011

2. Member Body Compliance Program
A Brief History
Program and Compliance Advisory Panel launched in 2004 as part of IFAC Reforms
Established 7 Statements of Membership Obligations (SMOs):
QA, Education, ISAs, Ethics, IPSASs, I&D, IFRS
PIOB oversight

3. Compliance Program Focus
Strategic Considerations
Supporting continuous improvement of strong PAOs through SMOs
Influence PAOs’ agendas and actions
Information and knowledge sharing
Collaboration with stakeholders

4. Compliance Program Focus
Continuous Development and Improvement
Part 1 – Information Gathering: Overview of regulatory and standard-setting framework in a member’s jurisdiction
Part 2 – Self-assessment: Benchmarking against the 7 SMOs
Part 3 – Own Strategy: Action Plans for development & continuous improvement in addressing the SMOs

5. Action Plans as first step:
Impact / Achievements
Beginning of the Road
Action Plans as first step:
Transparent plans for continuous improvement (153 out of 163 published)
Annual updates by all member bodies
Monitoring of progress by the CAP
Time and resources needed to achieve meaningful change
Outreach activities and policy advice provided by the IFAC Staff

6. Impact / Achievements
Enforcement – since 2005
To date – key focus on commitment to and participation in the Compliance Program
Enforcement Actions
43 suspension warnings
18 suspensions
9 expulsion warnings
5 expulsions

7. Uptake of the Code of Ethics
Russia –Drivers of Local Modifications
Working on adoption of the recent Code
Adoption environment:
Ethics Committee of the Audit Council under Min Fin
Independence rules must eventually be aligned with Russian legislation
Initial proposal to start with existing Russian CoE (based of old and abbreviated version of IESBA Code) and then make necessary additions
Auditors and accountants need different Codes
IFAC Staff providing guidance and analysis to PAOs, Large Firms, MoF

8. Uptake of the Code of Ethics
Latin America – Multiple Stakeholders
Challenges:
Barriers of legal, institutional, cultural and financial nature
Lack of ongoing mechanism for adopting and implementing changes
Lack of current translation makes it difficult to discuss with regulators, analyze independence requirements and organize relevant communications and trainings
To achieve meaningful change a thorough cultural change is needed
IFAC coordinates formation of a Latin America Review Committee to facilitate translation at the regional level

9. Uptake of the Code of Ethics
France – More Stringent Requirements
Ministry of Justice adopts ethical requirements for CNCC:
Requirements for CNCC endorsed by MinJus in consultation with AMF (securities market regulator), and the H3C
Requirements are considered to be more stringent than IESBA Code
CSOEC drafts its ethical requirements to be approved by Ministry of Economy and Finance
Direct incorporation of IESBA code impossible due to a different structure (Ordinance of 1945, OEC bylaws, other doctrinal texts)
Both French Bodies are planning to promote the adoption of the recent IESBA CoE to the Government

10. Uptake of the Code of Ethics
Malawi – Direct Adoption
IFAC Member sets the ethical requirements through a mandate implied by general consensus
Adopted IESBA Code of Ethics in without any modifications
Issuing the current IESBA CoE with Jan effective date
Action Plan focus on implementation support

11. Uptake of the Code of Ethics
Overarching Themes
CoE clearly used as a major point of reference
Strong awareness among PAOs
Adoption challenges
Principles and rules at a national level often embedded in legislation, regulation and member body governance documents
Implementation challenges
Overcoming cultural barriers

12. Tracking of Adoption – Challenges
Complex National Environments
Government (MinFin, Ministry of Justice)
Regulators (Capital Market, Insurance, Banking)
Professional accountancy organizations
Cultural differences, even different understanding of the concept of morality

13. Tracking of Adoption – Challenges
Differing MB Constituencies
Auditors:
Big firms
SMPs
Professional Accountants in Business
Management Accountants
Public Finance Accountants
Accounting Technicians

14. Different than Standards that Tend to be Adopted en Block
Tracking of Adoption – Challenges
Different than Standards that Tend to be Adopted en Block

15. Other Matters of Interest
Moving Forward
SMO Revisions
Clarified no best endeavors where PAO has direct responsibility
Removed “no less stringent standards” langauge
How do we best track and articulate “adoption” of CoE and/or key independence provisions

16. Other Matters of Interest
Moving Forward
Who is will determine whether local modifications are substantive (i.e., lead to different outcomes)?

17. International Federation of Accountants