INTERNATIONAL FEDERATION OF ACCOUNTANTS

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International Federation of Accountants
IFAC SMP Committees Strategy and Work
Plan Bernard Scicluna, IFAC SMP Committee
Member Paul Thompson, Senior Technical Manager,
IFAC SMP Committee IFAC Small and Medium
Practices Forum Malta, October 30, 2007
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Content

• Overview of IFAC SMP Committee Strategy
• Overview of Strategy
• Detailed Work Plan
• 2. Input to Standard Setting
• Practical Support
• Open Discussion

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1 Strategy 1 IFAC SMP Committee

• SMP Working Party (2000 2001)
• To identify the types of support some national
  accounting bodies provide their member SMPs, with
  the goal of learning how IFAC, in turn, might
  support SMPs at the international level
• SMP Task Force (2002 2003)
• SMP Permanent Task Force (2004 2005)
• Former Chair, Angelo Caso
• Formal IFAC Committee in Jan 2006

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1 Strategy 1 IFAC SMP Committee

• SMP Working Party (2000 2001)
• To identify the types of support some national
  accounting bodies provide their member SMPs, with
  the goal of learning how IFAC, in turn, might
  support SMPs at the international level
• SMP Task Force (2002 2003)
• SMP Permanent Task Force (2004 2005)
• Former Chair, Angelo Caso
• Formal IFAC Committee in Jan 2006

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1 Strategy 1 IFAC SMP Committee

• SMP Working Party (2000 2001)
• To identify the types of support some national
  accounting bodies provide their member SMPs, with
  the goal of learning how IFAC, in turn, might
  support SMPs at the international level
• SMP Task Force (2002 2003)
• SMP Permanent Task Force (2004 2005)
• Former Chair, Angelo Caso
• Formal IFAC Committee in Jan 2006

Members of the Working Party Angelo Caso,
Chairman, Italy Alex Hilman, Israel N.D. Gupta,
India Barbara Vigilante, USA Stephen Spector,
Canada Peter Langard, UK
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1 Strategy 1 IFAC SMP Committee

• Finland
• Germany
• Italy
• Malta
• UK (2)

• Canada
• USA

• China
• Hong Kong SAR

• Israel
• Turkey

• India
• Malaysia
• Pakistan

• Nigeria
• Tunisia

• Brazil

Chair Sylvie Voghel (Canada) 18 members from 17
different parts of the world Resources one
full-time senior technical manager Budget of US
350k (2007)
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1 Strategy 1 IFAC SMP Committee

• The constituents of the SMP Committee are
• SMPs who provide accounting and assurance
  services principally but not exclusively to SME
  clients
• In so far as they provide services to SMEs,
  other professional accountants are included as
  constituents.
• The Committee is charged with
• Identifying and representing the needs of its
  constituents
• Where applicable, to give consideration to
  relevant issues pertaining to SMEs.

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1 Strategy 1 IFAC SMP Committee

• Condensed Terms of Reference
• Ensure that international standard-setting bodies
  give due consideration to SMP/ SME issues.
• Advocate issues, from an SMP and SME perspective,
  to appropriate parties.
• Facilitate the communication and sharing of
  information.
• Seek to co-ordinate development of guidance on
  issues relevant to those providing accounting and
  assurance services to SMEs.

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1 Strategy 2 SMP/SME Issues

• Committee sees main issues faced by SME/SMP
• Relevance of international standards to SME/SMP
• more suited to public interest entities and
  larger practices
• complexity makes difficult and costly to apply
• Capacity of SMP/SME to efficiently implement and
  comply with these standards
• lack of in-house technical resources
• many member bodies unable to provide support
• Ability to remain competitive, client focused and
  operationally proficient

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1 Strategy 2 SMP/SME Issues

• Committee sees main issues faced by SME/SMP
• Relevance of international standards to SME/SMP
• more suited to public interest entities and
  larger practices
• complexity makes difficult and costly to apply
• Capacity of SMP/SME to efficiently implement and
  comply with these standards
• lack of in-house technical resources
• many member bodies unable to provide support
• Ability to remain competitive, client focused and
  operationally proficient

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1 Strategy 2 SMP/SME Issues

• Committee sees main issues faced by SME/SMP
• Relevance of international standards to SME/SMP
• more suited to public interest entities and
  larger practices
• complexity makes difficult and costly to apply
• Capacity of SMP/SME to efficiently implement and
  comply with these standards
• lack of in-house technical resources
• many member bodies unable to provide support
• Ability to remain competitive, client focused and
  operationally proficient

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1 Strategy 3 Strategy

• Two complimentary strategic objectives
• Increase relevance
• help shape form and content of standards
• ensure appropriate balance of cost and benefit to
  SME/SMP
• via input to standard setting processes
• Increase capacity ability

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1 Strategy 3 Strategy

• Two complimentary strategic objectives
• Increase relevance
• Increase capacity ability
• help SMPs perform high quality work and
  efficiently implement standards
• while being competitive, client focused and
  profitable
• via practical support such as implementation
  guides and web-based information resources

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1 Strategy 3 Strategy

• Strategic and Operational Plan 2007-2010 (summary
  article posted as pre-reading)
• In reflection of SMP Committees 2 pronged
  strategy
• SMP Committee work program
• 40 on input to standard setting
• 40 on practical support and
• 20 on collaboration and outreach
• Annual IFAC SMP Forum regional workshops
  conference presentations

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1 Strategy 4 Consultation

• SMP/SME high on IFAC agenda
• In accordance with the SMP Committee due process
  and working procedures the Strategic
  Operational Plan is reviewed and updated each
  year
• The annual SMP Forum and other outreach
  collaboration activities provide input and assist
  in the achievement of objectives by providing
  advice on priorities and projects

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2 Standard Setting 1 Input to Standard Setting
IAASB

• Most important element of work program
• SMP Committee inputs
• Technical comment letters on draft ISAs
  representation on/at ISA project task
  forces/IAASB and
• High level representation at IAASB CAG input
  to strategy development

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2 Standard Setting 1 Input to Standard Setting
IAASB

• SMP Committee internal position paper
• call for cost-benefit analysis
• an audit is an audit
• one set of think small first standards and
• particular concerns over relevance of
  requirements, documentation and quality control

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2 Standard Setting 1 Input to Standard Setting
IAASB

• SMP Committee has input to IAASB Strategy Review
• Committee would like to see
• moratorium on standards development
• increased focus on implementation and
• investigation into alternative assurance services

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2 Standard Setting 1 Input to Standard Setting
IAASB

• Input is proving increasingly effective
• Clarity project should help SMP/SME
• but risk of large increase in requirements

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2 Standard Setting 2 Input to Standard Setting
IESBA

• SMP Committee response to ED of proposed
  revisions to Independence section of IFAC Code of
  Ethics (Section 290)
• SMP and clients disproportionately impacted
• concerns over, amongst other things
• mandatory partner rotation for ESPI
• definition of ESPI and
• tighter restrictions on non-assurance services

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2 Standard Setting 2 Input to Standard Setting
IESBA

• SMP Committee has input to IESBA Strategy Review
• Committee would like to see
• moratorium on changes to the Code of Ethics
• increased focus on implementation and
• cost-benefit analysis of all proposed future
  changes to the Code

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2 Standard Setting 3 Input to Standard Setting
IASB

• IFAC has closely tracked and input since start
• Globally applicable standard, consistently
  implemented
• Ease compliance burden on preparers
• Ensure benefits exceed costs
• Release of ED is milestone
• IFAC supports project committed to assisting
  IASB secure optimal outcome

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2 Standard Setting 3 Input to Standard Setting
IASB

• Encouraging member bodies, regional accountancy
  organizations to contribute to debate
• Promoting conduct of field tests more member
  bodies need to join
• Getting SMEs and SMPs engaged
• Responding to ED SMP Committee led drafting
• Pragmatic approach focus on major things

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2 Standard Setting 3 Input to Standard Setting
IASB

• Micro-Entity Financial Reporting Research
  Project
• Phase 1 review of existing evidence (Information
  Paper Dec. 2006)
• More research required.
• Phase 2 focus group interviews in 5 countries
  (Information Paper Dec. 2007?)
• ED is not suitable for micro-entities
• no clear case for separate tier of micro-entity
  guidance

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2 Standard Setting 4 Input to Standard Setting
Other

• IAESB
• International Education Standards and
• International Education Practice Statements
• PAIB Committee
• International Good Practice Principles and
  Guidance
• IPSASB
• International Public Sector Accounting Standards

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2 Standard Setting 5 Conclusion

• Input to standard setting was SMP Committees
  original raison detre
• Considerable task with no guarantee of success
• Collaborative effort required
• See Session 3

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3 Practical Support 1 Implementation Guides

• Implementation guides
• ISA Guide
• QC Guide
• Practice Management Guide
• Other
• Vision suite of guides
• Guide to Ethics Code for SMPs (IESBA)

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3 Practical Support 2 Web-based Resources

• International Center for SMPs
• http//www.ifac.org/SMP/
• IFACnet
• Customized web search engine providing access to
  resources of IFAC and its member bodies
• http//www.ifacnet.com

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3 Practical Support 3 Conclusion

• SMP/SME, especially in emerging and developing
  nations, in urgent need of support
• Collaborative effort required
• See Session 4

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Open Discussion

• Do you agree with the main issues facing SMP/SME
  as suggested by the IFAC SMP Committee?
• Do you agree with the broad thrust of the IFAC
  SMP Committees Strategic Operational Plan
  2007-2010 ?
• Do you have any other questions?

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www.ifac.org