Professional accountants have a meaningful opportunity to enable more effective Enterprise Risk Management (ERM) within their organizations, according to a report published today by IFAC (the International Federation of Accountants).

Businesses face rapid change and increasing uncertainty driven by a myriad of factors, including geopolitical events, volatile financial markets, technology developments, cybersecurity, data privacy concerns, and climate change. According to the report, professional accountants can play an amplified role within their organizations to identify, measure and mitigate emerging risks through robust ERM practices.

The report underscores the reality that risk management remains underdeveloped in many organizations. A survey of mainly US-based organizations, conducted by North Carolina State University and the American Institute of CPAs, found that less than 20% of organizations view their risk process as being integrated with strategy and objectives, and 69% of organizations do not have a comprehensive ERM process in place.

To drive more effective ERM, management must draw upon the Chief Financial Officer and finance function to ensure risk management practices provide a holistic understanding of opportunity and risk linked to objectives and value creation.

“This is a particularly uncertain time for businesses as the global economy experiences heightened volatility and rapid change. In this environment, proper risk management will be increasingly important for organizations to ensure their resiliency and success over the long term,” said Kevin Dancey, IFAC CEO. “Professional accountants are well positioned to better serve the organizations they work for by enabling effective enterprise risk management that identifies both risks and opportunities for the business.”

CFOs and accountants with clear risk management responsibilities are in a better position to make individually and functionally greater contributions to risk management. The report identifies three ways in which CFOs and finance functions can enhance their contribution to ERM:

• Align risk management with value creation and preservation;
• Drive insights and enable decisions through provision of risk modeling and analytics, data governance and identification of organizational risk appetite; and
• Enable integration and interconnectivity by breaking down siloes across the organization to share information.

Enabling effective ERM will require accountants to employ various competencies, including strong leadership and interpersonal skills, and to commit to lifelong learning on risk management and emerging risk issues. In the coming decades, it will be critical to better integrate risk management into professional education and training for accountants, and to improve the relevance and quality of Continuing Professional Development (CPD). 

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of over 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

Every year, IFAC develops a work plan for the Member Body Compliance Program that is consistent with IFAC’s strategy. This work plan is developed with advice and oversight from the Compliance Advisory Panel.

In keeping with IFAC’s planned Program review during 2019 to ensure a fit-for-purpose approach to quality membership, the Compliance strategy for 2016-2018 was extended through 2019. Therefore, the Program continues its focus in three core areas.

On December 19, 2018, IFAC will host a one-hour webinar on a future model for advancing international accountancy education in the public interest. The webinar will preview planning to date and provide an outline of the model prior to approval and implementation in 2019.

This model is aimed at ensuring the global accountancy profession addresses the challenges stemming from a rapidly changing environment by harnessing a comprehensive and integrated approach.

To include as many interested parties as possible, the webinar will be available at two times (registration required):

• December 19, 2018, 0800 EST
• December 19, 2018, 1800 EST

The transition from the current structure to a future model was announced by IFAC and the International Accounting Education Standards Board in August 2018, followed by the creation of the International Accountancy Education Transition Advisory Group to advise on the model’s development and transition plans.

ISA 315 (Revised) is arguably the single most important ISA as it forms the foundation for an audit. The SMPC supports the IAASB revising the standard and commends the Board on the considerable amount of work that has been undertaken in developing the proposals and modernizing the standard. Nevertheless, the SMPC strongly urges the IAASB to take the necessary time to ensure the final version of the standard can be operationalized for audits of all different sizes and complexities.

Smart regulation, heightened transparency and inclusive growth are needed for global economic progress. These three priorities encapsulate the themes in the IFAC Call to Action ahead of the 2018 G20 Summit.

G20 countries play a crucial role in fostering institutions and governance models that can anticipate, respond to, and mitigate future crises. 

With low levels of public trust threatening confidence in the institutions that support the global economy, IFAC's ten recommendations focus on rebuilding this trust.

IFAC (the International Federation of Accountants) today calls upon G20 countries to pursue smart regulation, heightened transparency, and inclusive growth to rebuild trust in institutions and advance global economic progress.

“Low levels of public trust threaten both economic and political stability,” said Fayezul Choudhury, IFAC CEO. “Leaders in government and business must work together to bolster good governance and collaborate for effective public policies that inspire confidence in the institutions supporting the global economy.”

G20 countries play a crucial role in fostering institutions and governance models that can anticipate, respond to, and mitigate future crises. In advance of the 2018 G20 Summit in Buenos Aires, Argentina, IFAC issues 10 actionable recommendations for G20 countries to support the global economy.

Develop Smarter Regulation

Regulation must effectively support the public interest through well-targeted conception, effective design and committed implementation. To achieve smarter regulation, G20 countries must:

• Develop and adopt consistent, comprehensive, and high-quality regulation
• Create a coherent, transparent global regulatory environment that limits divergence; and
• Implement internationally-accepted standards to enhance confidence and stability in the global financial system.

Increase Transparency

Robust transparency in the public and private sectors is key to earn public trust, fight corruption, encourage good governance and promote ethical business practices. To increase transparency in the global economy, G20 countries must:

• Strengthen governance in the public and private sectors
• Embrace integrated reporting
• Enhance public sector financial management; and
• Collaborate to tackle corruption.

Enable Inclusive Growth

The fruits of a growing global economy must be shared inclusively to inspire confidence in the future. To enable inclusive growth, G20 countries must:

• Foster an environment that supports small- and medium-sized entity growth
• Create a secure and digital-ready investment environment; and
• Collaborate for a coherent international tax system.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.