Final notes from the World Congress of Accountants

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17 Nov 2006

The World Congress of Accountants in Istanbul, Turkey, held its last session on 16 November 2006. Over 5,000 delegates from 120 countries attended the four-day meeting.

Presented below are notes from a number of the sessions on the fourth and final day of the Congress.

Notes from the XVII World Congress of Accountants

Istanbul, Turkey, 16 November 2006

Workshop: Emergence of the accounting profession in the CIS countries

Ndung'u Gathinji (CEO, ECSAFA, Kenya) chaired a session dedicated to examining how accountants in the Commonwealth of Independent States are coping with the transition from a managed demand economy to a market economy.

Frederic Gielen (UK Financial Reporting Council, on loan from the World Bank) noted that a comprehensive reform of the financial system in the CIS was needed when the region embraced the market economy in the early 1990s. He said that the World Bank recognised the link between sound financial reporting and poverty reduction and was an advocate for improved standards and compliance. Fundamental to this was the Bank's Report on Systems and Codes (ROSC) programme. Under the ROSC approach, the accounting profession is a key pillar in a stable financial architecture. ROSC assessments had been completed in five of the CIS countries and noted that progress was very encouraging although there were areas for improvement-not least in the compensation of accounting academics.

Igor Kozyrev (Deputy Chief Accountant, Lukoil, Russia) spoke of the changing and developing nature of the accounting profession in Russia, in particular the demand placed on it by moving from a managed to a market economy. He noted that under the Soviet system, accountants were part of a compliance network and were often involved in forensic investigations. The transition to a market economy was difficult because there was a lack of experience-both technical and psychological-in the use of judgement (rather than following state-dictated regulations). He noted that accounting reform in Russia had improved the quality of financial information but had also improved the quality of company management and the use of resources.

Prof Adolf Enthoven (University of Texas, USA) gave an overview of the history of the accounting profession in Russia, noting that prior to 1917 its history followed that of the profession in Europe. The 1917 Revolution had meant that the purposes of accounting had changed-accountants now served the State's central planning purposes, and served them well. He noted several challenges facing the profession-not least the lack of an official status for IFRS-based financial reporting and a formalist approach by regulating authorities. However, he observed that this was changing and that by 2010 significant reforms are expected to be in place.

Rick Gurley (US AID, Ukraine) gave an account of US AID's involvement in the development of a recognised accounting curriculum and qualification in the CIS. Based on knowledge of IFRS and ISA, the IFAC Code of Ethics and similar globally recognised foundations and working with CGA Canada, the Certified International Professional Accountant qualification had been developed. The CIPA exam is administered and marked by an independent body under the auspices of IFAC, US AID and the Eurasia Council of Certified Auditors and Accountants (ECCAA), a regional body recognised by IFAC. The CIPA exam has been very successful in the region and there is hope that it can be rolled out in other regions.

Plenary Session 3

The topic of this session was value creation through professional accountants in business.

Graham Ward (out-going President of IFAC, UK) opened the session by noting that IFAC had devoted significant resources in the past two years to highlighting the role of the professional accountant in business, noting that (because of their training) professional accountants bring a critical set of skills to businesses and use those skills to add value.

Lady Barbara Judge (Deputy Chair, Financial Reporting Council, UK) is not an accountant-she is a lawyer by training and a former Commissioner of the US Securities and Exchange Commission. She spoke from personal experience as a company director of the value of having a professional accountant – one who is a member of a body regulated by the IFAC codes of conduct and ethics – on the board of a publicly-accountable company.

She noted that today's world is about numbers and real-time reporting. The professional accountant can 'feel and see' what is wrong and ask the right questions to identify problems quickly. Boards of directors need this expertise, especially in the chair of the audit committee who, she said, should always be a professional accountant. The board is also responsible for governance and ethics-something that professional accountants bring with them as members of IFAC member bodies. The board is also responsible for enterprise strategy and professional accountants can help their board colleagues to focus on strategy and strategic risk assessments.

She concluded her remarks by reminding the audience that the board was also responsible for internal controls and that professional accountants can help their colleagues to understand these. Their expertise was something that helped her, as the chairman of one company and a director of others 'to sleep at night in a Sarbanes-Oxley environment'.

David Hastings (Shell Canada Limited, Canada) focused on how professional accountants in business create value for the business in which they work: identifying where, how and why value is created.

The professional accountant is central to identifying value drivers in today's economy: innovation, customer satisfaction, the war for talent, the effects of technology and brand investment. They have an holistic view of the business, putting customers first while understanding all dimensions of the business and managing risk effectively. As such, they can assimilate both the financial and non-financial information that is needed across a business. Value is created through the professional accountant's ability to identify and manage risk; to think and act globally and to recognise the difficulties and opportunities in a global economy.

Mary Keegan (HM Treasury, UK) spoke of the role of the professional accountant in creating value for citizens. In central government, there can be no second best. It was incumbent on government to improve the delivery performance to its citizens and to improve the financial management of the delivery of public services. She noted that the UK government uses a Value for Money model-concentrating on Economy, Efficiency and Effectiveness-and looks as much at the future value drivers as it does on historical data.

Central to this strategy is having the right systems delivering the appropriate data quickly; using this information to drive performance; and implementing good governance and proper management structures throughout the government supply chain. Ms Keegan noted that the UK has put in place a requirement that all government departments have an audit committee of non-executive members and that all government boards must have a professional accountant (a member of an IFAC member body) as finance director.

She noted that governments should govern by numbers not by instinct and consequently, accountants are properly placed at the centre of policy formulation and service delivery. She concluded her remarks by saying that governments had a responsibility to deliver value to their citizens and that there is a vital role for the professional accountant. Consequently, professional accountants must be at the policy table.

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