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| Time For Opportunities |
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| At the global level, the finance profession today faces many important challenges & at the same enjoys many opportunities too. This article is a quick pass over through them. |
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Much has been written about the financial scandals and the deplorable corporate frauds that have shaken the financial world over the past several years. It cannot be denied that these occurrences have had and still have a significant impact on the international accountancy profession. Whether corporate failures occur in the United States or Europe or Asia or Latin America, their impact is felt worldwide, causing governments, regulators and others to reconsider the professions role within a countrys financial infrastructure. In some jurisdictions, corporate scandals have resulted in regulatory changes that introduced more controls on the profession and higher demands regarding independence. In other instances, such as in the United States, the scandals have resulted in moving the issuance of audit standards and quality control and disciplinary systems out of the accountancy professions area of responsibility. Such changes may lead some to conclude that the profession lacks credibility and public confidence. This is not necessarily so.
A significant consequence of the increased focus on the accountancy profession has been qreater awareness among the business community and the public at large about the role of professional accountant and auditors. Heightened sensitivity to the regulation of the profession has been accompanied by a greater recognition of the accountancy professions very vita role in the effective functioning of financial and capital markets and, consequently, in contributing to healthy and vigorous economies in general. In other words, people have become aware of the real value of professional accountants and auditors. Thus, this is a time of opportunity for the profession. We should be optimistic, even if cautiously so, about the opportunities for the profession. Each and every day we deliver quality work, we art earning back public trust. As importantly, we have demonstrated that we are accountable. We are demonstrating, too, that it is not just rules and regulations that contribute to our accountability but a more fundamental commitment to ethics and specifically, to operating with integrity. For these reasons and the fact that accountants themselves understand best what accountants do, the profession needs to remain involved in the regulation of the profession.
Some have expressed concerns that accounting and auditing are too important to be left only in the hands of the accountancy profession. What many do not realise, however, is that the profession has a responsibility for the behaviour of its members. Whether at the firm level, member body level, or IFAC level, we continue to hold other accountants responsible for acting in the best interests of the public. In other words, the profession has a role to play in the regulation of its own behaviour and performance. Regulatory participation is an essential condition inherent to any profession, which considers itself a serious one. It is an irreplaceable requisite to presence and increase its quality, its usefulness and its contribution to the public interest. Even in countries where the profession has been fundamentally restructured, the profession still holds some responsibility for the performance of its members. This, I believe, is right and necessary if we are to successfully serve the public interest.
The professions involvement in the regulation of its own behaviour is not about avoiding external regulation; rather, and above all, it is about ensuring that the profession maintains its vitality, delivers quality service and fulfils its responsibility to support and even facilitate economic development and growth. It is true that when external regulation exists, duplication has to be avoided, but the profession has to make sure that this external regulation is adequate and sufficient. If this is not the case, external regulation can be supplemented by profession-wide regulatory initiatives to ensure that the public is adequately protected. Many countries have moved to a shared regulatory model. This is one in which independent external oversight is complemented by some combination of profession-wide standard-setting, compliance and quality assurance initiatives.
Of all the actors that makeup the reporting chain, of all those in charge of preparing the information advisors, management, board of directors, auditors, regulatory bodies, analysts, corporate investors, other investors and stockholders and mass media-the accountancy profession has, in fact, demonstrated that is has been the most responsive, most willing to initiate and embrace changes to better protect the public interest. IFACs actions have been a clear example of this. Some of our most important public interest initiatives include: the creation in October 2002 of the Task Force on Rebuilding Public Confidence in Financial Reporting, which produced a valuable document entitled Reluilding Public Confidence in Financial Reporting: An International Perspective; the strengthening of the International Auditing and Assurance Standards Board (IAASB); the development an implementation of the IFAC Member Body Compliance Program; and the implementation of reforms to further strengthen our standard-setting, including most recently, the establishment of the international Public Interest Oversight Board (PIOB).
The PIOB, formally established in February 2005, will oversee the activities of the IAASB, the Education Committee, the Ethics Committee and the IFAC Member Body Compliance Program, will approve appointments to these committees, will assess the due processes through which standards are set, and will provide input on work programs agendas. The PIOB includes eight individuals nominated by international regulatory and other organisations. It is chaired by Professor Stavros Thomadakis, the former chair of the Hellenic Capital Market Commission. Thus, IFAC is effectively executing a shared regulation model that facilitates its ability to fulfil its mission; to serve the public interest, IFAC will continue to strengthen the world-wide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the professions expertise is most relevant.
A fundamental aspect in the success of any regulatory system-whether it is self imposed or imposed externally - is to ensure that high ethical values, and most especially integrity, are promoted and adhered to at the Individual and corporate levels. The scandals of the past have shown that the fundamental problem is not in the rules, methods, standards or professional techniques, but rather, in the behaviour of some of its members. Therefore, when one analyses the corrective measures taken and to be taken, it is evident that any initiatives to strengthen the accountancy profession must include emphasising what is most essential: ethical behaviour. Adhering to ethics in any kind of work consists simply and plainly in doing well what one is supposed to do. Professional ethics does not allow for unfaithfulness or breaking rules. The individual who is unfaithful or breaks the rules is not a professional who makes a mistake; he is an individual who has compromised his professionalism and broken the bond of trust with the public.
The profession has today many important challenges at global level: the implementation of an appropriate international model of regulation; the achievement of international convergence, both in accounting and auditing fields; the consideration of the particular situation of small and medium-sized companies; the development of the accountancy profession all over the world and in particular in developing countries; the achievement of excellence in all levels of education of professional accountants and, most especially, in the formation of ethical values. All of these are vital issues and our profession must and will rise to the challenge. We must, however, be driven first by our commitment to the highest ethical values for that is essentially what will open doors to new opportunities and a better future for us all.
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