Reaching global representation

Whilst the IPA’s main market and activities are in Australia, the UK, China and Malaysia, we also have members in over 80 countries. What these members largely have in common is that they work in and around small business, including being advisers to help small businesses grow and contribute to their respective country and economy.

As the IPA has evolved over many years into a more global organisation, reflecting the changes in an increasingly globalised profession with a truly mobile workforce of professionals, we have sought representation on a number of key influential international organisations. In this way, we can promote the interests of our members, the profession and small business, whilst growing the IPA’s recognition and reputation at home and abroad. This adds value to every member’s designation.

Three organisations which have a large impact are the International Federation of Accountants (IFAC), the Confederation of Asian and Pacific Accountants (CAPA) and the International Council for Small Business (ICSB).

IFAC

As most members will know, IFAC is the peak body for accountants – we like to refer to it as the United Nations for the accounting, audit and finance professions. IFAC was established in 1977 and has grown to over 175 members and associates in over 130 countries, covering over 3 million accountants worldwide; with headquarters in New York City; and is funded by its member bodies. We are required to not just pay annual membership fees but also to justify our continued membership on a one to two-year cycle by completing the Statement of Member Obligations, which measures our performance against IFAC’s core requirements for membership.

Every year in March, the CEOs from the 30 largest accounting bodies (IPA is number 20) are invited to the CEO Forum in New York to discuss matters of strategic importance and concern to the profession. Andrew Conway, the IPA’s CEO, has been attending for almost a decade. Information and insights are contributed to the Forum and also brought back to Australia to inform our own strategy and direction. In addition, IPA plays a role with respect to the Small and Medium Practices Committee and the Professional Accountancy Organisation Development Committee.

One of the main functions of IFAC is its standard setting role. It is the umbrella organisation for the International Auditing and Assurance Standards Board, International Accounting Education Standards Board, International Ethics Standards Board for Accountants and the International Public Sector Accounting Standards Board, plus various committees. Why does this matter to IPA members? All of our standards are largely derived from these standard setting boards. They are then adopted (and adapted) for application in the domestic market. In Australia, this process is undertaken by Australian standard setters (AASB, AUASB, APESB), but in many countries there is no domestic layer. Another main role for IFAC is ‘global representation and advocacy’. It has greater reach than its individual member bodies on a global stage with organisations such as the G20, European Commission and the IFRS Foundation (which sets international financial reporting standards).

However, not even IFAC is immune to outside scrutiny. Currently, the body which is responsible for overall governance of the process for setting international auditing, ethics and accounting education standards, known as the Monitoring Group (MG) (consisting of international financial institutions and regulatory bodies including Basel Committee, European Commission, Financial Stability Board, World Bank and others), has questioned the accountability, transparency, governance and independence of the IFAC standard setting bodies. They are concerned about possible undue influence by the accounting profession on standard setting. The MG is proposing major changes to the audit and ethics standard setting process to better serve the public interest. Essentially, they are proposing a multi-stakeholder representation on the standard setting boards (i.e. less influence by the accounting profession); and a more independent funding model (i.e. broader and more sustainable funding which is less reliant on the profession and therefore less beholden to it). This has sparked a huge response, to the point where the MG is holding worldwide roundtables. IPA attended, and we believe the concerns of our region (apparently the most vocal) were genuinely taken on board. For details on our submission to the consultation paper, which questioned the basis and evidence for the assertions and proposals, refer to www.publicaccountants.org.au. For more information, including an independent report, go to www.ifac.org.

The next step is the release of an MG White Paper by the end of 2018 with reform proposals covering a public interest framework, funding proposals, an impact assessment and transition plan. Though reference to a ‘transition plan’ makes it sound almost like a foregone conclusion that there will be changes. The MG has released a summary of feedback and states that there is widespread support for reform, though there does not appear to be consensus on the detail or the timeline. However, an independent report commissioned by IFAC concluded that there was significant disagreement with the premises of the recommendations; there was more criticism of some of the sweeping changes being proposed; some of the specific, operational changes were generally approved by a majority; and there was widespread agreement that the MG should move slowly.

What impact this process and the uncertainty it causes will have on the credibility of the profession should also be cause for concern.

CAPA

CAPA is the largest regional grouping of accountants in the world, covering 1.6 million accountants representing 32 national professional accountancy organisations (PAOs) operating in 23 jurisdictions. It was established in 1957 in the Philippines and has a permanent secretariat in Kuala Lumpur, Malaysia. CAPA positions itself between IFAC and other PAOs and seeks to build relationships and enable the exchange of knowledge among PAOs in the region. It also has as part of its mission, advocating the value of professional accountants in the region and speaking out on public interest issues.

One of the main committees by which CAPA carries out its strategies is the Professional Accountancy Organisations Development Committee (PAODC). The current chair is the IPA’s CEO, Andrew Conway. Given that the Asia-Pacific region is the fastest-growing region in the world economically then it is critical that accountants, and the IPA, play a role in its development through the establishment of stable, regulated and effective public bodies. For more information go to www.capa.com.my.

ICSB

The ICSB was founded in 1955 in the United States ‘on the belief that enlightened small business management is necessary for successful and profitable small business; and that entrepreneurship needs to be fostered to stimulate a dynamic and growing economic system’. After its foundation, it began to play a key role in the globalisation of business which was occurring during this period. Its influence has continued to grow as an umbrella organisation, with headquarters in Washington DC, serving the interests of its stakeholders, including researchers, educators, policymakers and practitioners, in over 70 countries. It recently released the 108-page ICSB Annual Global MSME report to create a shared focus to establish Guiding Principles to help support #MSMEs.

As a mark of its influence the ICSB worked to have the United Nations (UN) declare 27 June as Micro-Small – Medium Enterprise (MSME) Day. This is not just another day on the UN calendar, and it is not just one day in the year to celebrate small business in countries around the world. It is the beginning of genuinely recognising the importance of SMEs to the world economy and cementing their role in our future prosperity. In May 2018, ICSB hosted an MSME forum at the UN with over 400 attendees centred on ‘creating a shared future for entrepreneurs and MSMEs in the framework of the UN Sustainable Development Goals (SDGs).’ The IPA has previously talked about the SDGs and the role that accountants can play in achieving them given their unique position as advisers to and influencers of small business.

The IPA has been a proud supporter of ICSB and has presented at its world conferences in New Zealand and the US. The latter presentation was based on the Small Business White Paper produced by the IPA Deakin SME Research Centre which supports the SDGs through increasing small business productivity by developing human capital, financial capital and innovation. More recently, the writer has been elected to the board of ICSB in the position of senior vice president for development. Our aim is to make a valuable contribution to the ICSB and the global small business/SME community.

Member feedback on the IPA’s global advocacy and representation is welcome. Please write to Vicki Stylianou at vicki.stylianou@publicaccountants.org.au

Vicki Stylianou, executive general manager – advocacy and technical, IPA