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The Role of Financial Reporting and Auditing in Creating Vibrant Emerging Economies

(Amman, Jordan )

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Thank you for inviting me to join this very distinguished panel.

Given that this is an audience not primarily made up of accountants, I thought it might be helpful if I spent just a few minutes explaining who the International Federation of Accountants is, and what we do. This will provide some context for the remarks that follow. 

First, IFAC is an organization of professional accountancy institutes. We have 14 members and associates in the Middle East, including two here in Jordan - the Jordanian Association of Certified Public Accountants and the Arab Society of Certified Accountants.  In total we have 157 members and associates spread across 123 countries, representing approximately 2 ½ million accountants. 

As to what IFAC does, a primary function of the organization is to set professional standards.  Most importantly we set, through our International Auditing and Assurance Standards Board, International Standards on Auditing (ISAs). We also establish a Code of Ethics for Professional Accountants, which is the basis for codes of ethics of our members. The other two areas in which we set standards are education (the International Education Standards) and public sector accounting, where we set International Public Sector Accounting Standards (IPSASs). The IPSASs are the equivalent of the International Accounting Standards Board's International Financial Reporting Standards, though the IPSASs apply to governmental organizations not companies. 

In addition, IFAC has activities that support its standard setting role.  In particular, we have a Small and Medium Practices Committee that provides input to the standard-setting bodies (and also to the International Accounting Standards Board) from the perspective of small- and medium-sized enterprises (SMEs) and small- and medium-sized accounting practices (SMP).  We believe it is critical that this perspective be reflected in our standard-setting processes. Also, we have a Developing Nations Committee which, similarly, seeks to ensure that our standard setting reflects the views and needs of developing and emerging economies.

I should note that in the post-Enron environment, IFAC made significant reforms to its standard-setting processes. These reforms could be characterized as moving from a self-regulatory model to a shared regulatory structure. A number of changes were made to our processes to ensure greater transparency but, most importantly, we established, along with the international regulatory community, an oversight structure that could ensure that our standard setting reflected the public interest. These reforms have now been in place for over three years and have done much to generate confidence in the standards set by the International Federation of Accountants. 


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