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Conference on accounting and auditing in Latin America – day 3

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16 Jun 2007

The World Bank, the International Federation of Accountants, and the Interamerican Development Bank are jointly sponsoring a conference on Accounting and Accountability for Regional Economic Growth in Latin America and the Caribbean.

The conference is being held in Mexico City on 13-15 June 2007. About 500 people are participating. Presented below are notes taken by Deloitte observers at the third and final day of the conference.

Conference on Accounting and Accountability for Regional Economic Growth Mexico City

Notes from 15 June 2007

How other regions of the world tackle the challenges of financial accountability

The final plenary session of the conference was a panel whose members discussed the experience of implementing financial accountability reforms in the European Union, South-eastern Europe, and Africa. The panel discussed the various approaches used and noted their advantages and disadvantages. This provided useful context to the 'next stage' of financial reporting developments in Latin America and the Caribbean.

Juan Arteagoitia (European Commission, Internal Markets DG) explained the reform of the 8th European Directive on Company Law with respect to auditing and a related directive on corporate governance. He noted the main features of the reformed Directive, including the mandated use of International Standards on Auditing (subject to Endorsement under a system similar to that for IFRS). Also included are auditor independence standards, based on IFAC requirements and the requirement that the audit committee monitor and report on the effectiveness of internal control. The reformed Directive also addresses auditor qualification and the approval of auditors who qualified in jurisdictions outside the EU. The EU's reforms provide an example of how a developed economy addressed the challenges of changing international standards.

Eric van der Plaats (World Bank) spoke of the experiences of South-eastern Europe in developing a regional approach to accountancy development. Financial reporting reform is seen as an essential building block in regional economic growth. The work is being undertaken by the World Bank's REPARIS agency, which has an objective of building a sound financial reporting system that serves the economy as a whole. REPARIS uses the Bank's ROSC assessments as the basis for developing tailored action plans. It is hoped that a coordinated effort across national boundaries can be taken to resolve common issues, such as adoption of IFRSs and ISAs, tax accounting, SME reporting, prudential reporting and the need for accounting and auditing capacity throughout the region.

Ignatius Sehoole (Chairman, Developing Nations Committee, IFAC) shared with participants the outcomes of a regional accounting conference held in Nairobi in September 2006. That conference highlighted the needs of SMEs and SMPs, in particular the access to standards; translation and implementation guidance; the need for a fundamental change of behaviour to counter corruption and strengthen professional ethics; education of the accounting profession, especially through shared curricula and expertise; building an accounting profession in each jurisdiction, with a focus on the public and private sector-not only at the CA/CPA level but also at the accounting technician level; and high-quality corporate governance. The conference stressed the need to strengthen regional cooperation as a way to achieve its objectives.

Aziz Dieye (Developing Nations Committee, IFAC) spoke of the experience of the West African Economic and Monetary Union (UEMOA), which was formed in 1994 and whose monetary union pre-dates the Euro. The union had succeeded because it was based on economic reality, whereas previous politically-inspired unions had failed. UEMOA seeks to build African unity through regional integration, including a common currency and a shared legal framework for financial reporting. However, even though UEMOA had enjoyed some success, its 'Treaty structure' meant that it could not respond quickly to changes in the international financial reporting environment, such as the changes in corporate governance, accounting and auditing standards since 2001. What was needed was a more flexible methodology that allowed for rapid change.

Closing addresses

Luis Morion Llosa (Chairman Mexican Institute of CPAs) thanked the participants for their contributions over the past several days and expressed the hope that this conference would be the first of many such meetings. He reiterated that the theme of the conference, accounting and accountability for regional economic growth, was a shared interest for all of Latin America and the Caribbean and urged the region to use the discussions at the conference as a springboard to action.

Ian Ball (IFAC Chief Executive) noted that the meeting was a major collaborative event, involving the World Bank, the Inter-American Development Bank, and IFAC. He saw this as a suitable metaphor for the desire to work together to achieve sustainable growth through enhanced financial reporting and corporate governance in the region.

Regional standard-setters meeting

Immediately after the close of the conference, accounting standard setters from the Latin American and Caribbean region met to discuss a range of issues, including:

  • Status of adoption of IFRSs in various jurisdictions, and experiences of those jurisdictions
  • Adoption of IFRSs, adoption of 'IFRS equivalents', adaptation of IFRSs for local reasons
  • The proposed IFRS for SMEs
  • Translation of IFRSs
  • Involvement of regional standard setters in the IASB's due process

Correction list for hyphenation

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