INTERNATIONAL FEDERATION OF ACCOUNTANTS

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World Congress of Accountants
International Standards Implementation Challenges
and Solutions Manuel Sanchez-y-Madrid
14 November 2006
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IFAC
Latin America Diversity

• Mexico, Central and South America, Caribbean
• Languages Spanish, Portuguese, Other
• National economies and not a common market
• Vary in stage of economic strength and
  development
• IFAC member countries
• 22 countries and 23 members / associates
• Represents 20 of 119 IFAC countries

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Challenges
Key Challenges

• Economic composition
• Capital markets but primarily smaller entities
• Lack of resources and capacity
• Financial and operational
• Technical and language
• Competing high priority activities
• Profession, government and regulators

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Challenges
Financial Reporting and Auditing

• Statutory reporting and auditing
• Which entities should prepare financial
  statements?
• What are the thresholds for requiring an audit?
• Convergence
• National decisions to converge or not
• IFAC membership requirements

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Challenges
Financial Reporting and Auditing

• Convergence
• Keeping pace with new and amended standards
• Increasingly complex reporting standards
• Applicability of all required auditing procedures
• Cost versus benefit considerations

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Challenges
Standard-Setting By Multiple Bodies

• Regulatory bodies banking, insurance, securities
  market
• Professional accountancy bodies
• IFAC members and non-IFAC members
• National federations and local associations /
  branches

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Challenges
Standard-Setting By Multiple Bodies

• Impact
• Conflicts
• Lack of consensus
• Market confusion
• Established standards vary in legal authority
• Duplication of efforts when resources limited

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Challenges
Education and Training

• Different university curriculum
• Lack of resources to update education programs
  for new standards and practices
• Need to implement effective continuing education
• Access to practical experience providers

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Challenges
Monitoring and Enforcement

• Required whether convergence is in place
• Increasing area of focus throughout the world
• Approaches to quality assurance reviews
• Quality control for smaller practitioners
• Education and enforcement of ethical requirements

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Latin America
Solutions Joint Efforts

• Requires the participation of all key
  stakeholders
• IFAC and professional accountancy bodies
• Government and regulators
• Donor and development community
• Education community
• Individual professional accountants

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Solutions
Understand Specific Issues and Challenges

• IFAC member self-assessments
• Impediments to convergence
• Reasons for differences
• Basis to develop action plans
• Basis for dialogue with others

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Solutions
Convergence Process

• Convergence as a process
• Understanding how convergence is happening
• Approaches adopt or eliminate differences
  between national and international standards
• Establish ongoing due processes
• Submit concerns about proposed international
  standards

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Solutions
Resources

• Minimize duplication of efforts
• Joint translation effort (e.g., French ISAs)
• Working with national standard-setters
• Valuable contributions through expert volunteers
• Technical activities
• Advocacy

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Solutions
Resources

• Donor agencies
• Inter-American Development Bank, World Bank,
  Others
• Emphasis on broader financial reporting framework
• IFAC is promoting the needs of the profession
• Members encouraged to participate in donor
  programs

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Solutions
SMP and SME Activities

• Small and Medium Practitioners Committee
• Input and involvement in IAASB processes and task
  forces
• Think small approach
• Following IASBs project on SME standards

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Solutions
SMP and SME Activities

• Develop tools for smaller practitioners
• ISA Guide (Quarter 2, 2007)
• ISA based audits
• Future possibilities
• Quality control guide under consideration but
  requires funding
• Other implementation guides

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Latin America
Conclusion

• Diversity in Latin America
• Key challenges continue to exist
• Solutions driven by joint efforts
• IFAC Activities
• Member Body Compliance Program
• Small and Medium Practices Committee
• Developing Nations Committee

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International Federation of Accountants www.ifac.o
rg
14 November 2006