November 14, 2008
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In This Issue:
Features
1. Resources To Help SMPs and SMEs Cope with the Credit Crisis
2. Share Your Thoughts on the Credit Crisis on the SMP Discussion Board
News from IFAC
3. IFAC SMP Committee Approves New Strategy
4. 2008 SMP Forum Attracts Participants from 22 Countries
5. IFAC Supports a Single Set of Auditing Standards
6. IAASB Issues Clarity Project Update; Urges Early Implementation Planning
7. Staff of National Standard Setters Develop Paper on Review Engagements
8. IFAC to Develop Improved ISA Guide
9. Quality Control Guide Set for Release in First Quarter of 2009
10. Chair of SMP Committee Wins John Leslie Award for 2008
More News from Around the Globe
11. AICPA Launches Reliability Project; Will Expose New Engagement Standard
12. Accountancy Bodies Launch Initiatives to Help SMPs Collaborate
13. UK Auditing Practices Board Issues Consultation Paper on ISAs
14. 2008 FEE SME/SMP Congress Held in Copenhagen
15. UK’s Oversight Board Publishes Report on Practical Training for Auditors
16. IASB, IFAC, EC Address Micro-Entity Reporting
17. Share SMP eNews with Your Colleagues
Features
1. Resources to Help SMPs and SMEs Cope with the Credit Crisis
IFAC, member bodies, and other organizations have generated guidance, articles and resources to help small practitioners and their clients cope with the credit crisis:
A. The staff of the of the International Auditing and Assurance Standards Board (IAASB) has released an audit practice alert, Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment, to highlight areas within the International Standards on Auditing relevant for auditing fair values. It can be downloaded free-of-charge from www.ifac.org/iaasb.
B. The Association of Chartered Certified Accountants (ACCA) has issued guidance on weathering the crisis at http://www.accaglobal.com/allnews/global/2008/NEWSQ1/News/3068177.
C. The Institute of Chartered Accountants in England and Wales (ICAEW) has compiled a selection of resources at www.icaew.com/creditcrunch and released the Enterprise Survey Report 2008, which sheds light on the impact of the crisis, at www.icaew.com/enterprise.
D. The American Institute of Certified Public Accountants (AICPA) has run a number of articles, including Can You Grow Your Practice in Troubled Times?, at http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2008/CPA/Oct/Troubled.jsp.
E. The Institute of Chartered Accountants in Ireland (ICAI) journal ran an article setting out marketing tips at http://www.accountancyireland.ie/dsp_articles.cfm/goto/1654/page/Marketing_tips_to_help_Professional_Practices_Succeed_in_Challenging_Times.htm.
F. The crisis was discussed at the most recent meeting of the US Public Company Accounting Oversight Board’s (PCAOB) Standards Advisory Group (SAG). See http://www.pcaobus.org/Standards/Standing_Advisory_Group/Meetings/2008/10-22/BP_Audit_Considerations.pdf for the agenda paper and http://www.cfo.com/article.cfm/12465140/c_12455671?f=archives&origin=archive for the news report.
G. A survey released by the Forum of Private Business (FPB) and the commercial credit agency Graydon UK indicates how practices can operate given the current malaise. See http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=190999&d=1025&h=1022&f=1026.
2. Share Your Thoughts on the Credit Crisis on the SMP Discussion Board
The SMP Committee would like to hear from practitioners worldwide on how your practice is addressing, or is affected by, the current credit crisis. Share your views on the SMP Discussion Board. The committee also welcomes your comments on other issues such as the redrafting of International Standards on Auditing (ISAs) and the effects on the audits of small and medium entities and IFAC’s efforts to improve its ISA Guide.
To post your views on these and other vital topics, please join the public discussion on the Committee’s SME/SMP Discussion Board.
News from IFAC
3. IFAC SMP Committee Approves New Strategy
At its last meeting on October 14-15 in Abuja, Nigeria the SMP Committee approved its Strategic and Operational Plan for 2009-2012. The plan outlines increased emphasis on support for SMPs in implementing international standards and maintaining best practice in practice management and client service.
4. 2008 SMP Forum Attracts Participants from 22 Countries
The SMP Committee hosted the 2008 IFAC Small and Medium Practices (SMP) Forum in Nigeria on October 13. The event was co-hosted by the Institute of Chartered Accountants of Nigeria and the Association of Accountancy Bodies in West Africa with support from ACCA and CGA-Canada. It featured 130 delegates from 22 countries. The most pressing issues confronting SMPs in the Africa region was the capacity to keep up with increasingly sophisticated international standards and the lack of high quality low cost resources to help them implement these standards. The delegates broadly agreed with the direction IFAC is taking in its support of SMPs and SMEs, especially in the provision of guides and web-based resources.
For copies of speeches, presentations and other materials, go to the International Center for SMPs at http://www.ifac.org/SMP/2008_speeches.php. The 2009 Forum will be held in Beijing on October 28.
5. IFAC Supports a Single Set of Auditing Standards
The International Federation of Accountants (IFAC) has issued a policy paper titled IFAC's Support for a Single Set of Auditing Standards: Implications for Audits of Small and Medium-sized Entities. The paper explains IFAC's view that International Standards on Auditing are designed to be applicable to audits of entities of all sizes and outlines the methods by which the International Auditing and Assurance Standards Board considers the needs of small- and medium-sized entities when developing these standards. The paper further explains that any effort to create a new set of standards for SMEs, for any reason, would confuse public expectations about what an audit means.
The paper may be downloaded from the IFAC website by going to http://www.ifac.org/Store/.
6. IAASB Issues Clarity Project Update; Urges Early Implementation Planning
The staff of the International Auditing and Assurance Standards Board (IAASB) has issued a Clarity Project Update, which outlines the final stages of the Clarity Project and urges all auditors to consider implementation plans as soon as practicable. The IAASB is expected to complete its 18-month Clarity Project, applying clarity drafting conventions to all 36 International Standards on Auditing (ISAs), by December. The final clarified ISAs will go to the Public Interest Oversight Board (PIOB) for consideration and approval of due process in February 2009. They are effective for audits of financial statements for periods beginning on or after December 15, 2009.
The Update can be accessed from: http://www.ifac.org/IAASB/Resources.php.
7. Staff of National Standard Setters Develop Paper on Review Engagements
The staff of three national auditing standard setters has developed a consultation paper to assist the International Auditing and Assurance Standards Board in its efforts to revise International Standard on Review Engagements 2400, Engagements to Review Financial Statements. The paper is titled Matters to Consider in a Revision of International Standard on Review Engagements (ISRE) 2400, "Engagements to Review Financial Statements," and comments are requested through December 15, 2008. The consultation paper can be downloaded from the IFAC website (http://ifac.org/EDs). The SMP Committee will be responding to this paper and we urge you to do the same.
8. IFAC to Develop Improved ISA Guide
Following through on the success of its December 2007 Guide to Using ISAs in the Audit of Small- and Medium-sized Entities (ISA Guide), IFAC has started work on developing an improved version of the guide for release in late 2009.
The original ISA guide was designed to assist SMPs and other practitioners in implementing and applying International Standards on Auditing (ISAs) to the audit of small and medium entities (SMEs). The guide provides a detailed analysis of all ISAs issued as of December 31, 2006, and their requirements in the context of an SME audit, along with an in-depth case study based on a typical SME. It can be accessed and downloaded free-of-charge from the IFAC publications section at http://www.ifac.org/store. A CD-ROM is also available upon request.
When completed, the new guide will conform to the ISAs newly redrafted by the International Assurance and Auditing Standards Board. It will also factor in user suggestions for improvement.
9. Quality Control Guide Set for Release in First Quarter of 2009
The committee has made significant progress on its project to develop an implementation guide on quality control. The Guide to Quality Control for Use by Small- and Medium-sized Practices (QC Guide), which is being developed by CGA-Canada, is intended to help SMPs understand and efficiently apply International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services. The plan is to issue the QC Guide in the first quarter of 2009, soon after the redrafted ISQC 1 is approved by the Public Interest Oversight Board (PIOB). The guide will be free-of-charge.
10. Chair of SMP Committee Wins John Leslie Award for 2008
The Certified General Accountants Association of Canada (CGA-Canada) announced in October that Sylvie Voghel, Chair of the IFAC SMP Committee, was the recipient of the John Leslie Award for 2008. The award is named after John Leslie, the founder and first president of CGA-Canada, and recognizes notable CGAs for exceptional service to business and the community. IFAC congratulates Sylvie Voghel on this prestigious achievement.
The press release can be viewed at http://www.cga-canada.org/en-ca/MediaCentre/CurrentMediaReleases/Pages/ca_mdr_2008-10-31.aspx.
Further, Ms. Voghel was recently appointed to the Faculty Advisory Board of the ICAEW’s newly established Financial Reporting Faculty. See http://www.icaew.com/index.cfm/route/152711/icaew_ga/en/Technical_Business_Topics/Faculties/About_the_faculty/Financial_Reporting_Faculty_Advisory_Group.
More News from Around the Globe
11. AICPA Launches Reliability Project; Will Expose New Engagement Standard
The Accounting and Review Services Committee (ARSC) of the American Institute of Certified Public Accountants has launched the Reliability Project, which will reconcile the marketplace’s expanded needs for CPA involvement in small company financial reporting with the high independence requirements of the profession. The project’s goal is to enable CPAs to perform limited assurance engagements for clients when the external CPA performs certain control services. The ARSC plans to expose a new standard in late 2008 or in the spring of 2009.
For more information, visit the AICPA's Web site and view the article at http://www.journalofaccountancy.com/Issues/2008/Oct/RefocusingonReliability.htm.
12. Accountancy Bodies Launch Initiatives to Help SMPs Collaborate
In response to the growing economic challenges facing small practices, the Malaysian Institute of Accountants (MIA) is encouraging smaller practices to investigate the possibility of merging or affiliating with their peers. To facilitate this, the MIA has created a free on-line business register, Member Firms Mergers & Affiliations Listing, to help small practices in Malaysia identify suitable local partners. See http://www.mia.org.my/e-Merger/?mid=199.
Similarly, The Institute of Chartered Accountants of Pakistan (ICAP) has launched a “networking” service to improve the student training and to enhance quality of services rendered by SMPs. See http://www.icap.org.pk/web/links/0/networkingoffirms.php.
13. UK Auditing Practices Board Issues Consultation Paper on ISAs
The United Kingdom’s Auditing Practices Board (APB), has issued a consultation paper seeking comment on whether the UK and Ireland should adopt IFAC’s clarified ISAs – and if so, when. The APB is also proposing that the same standards should apply to all entities regardless of size. The paper includes an impact assessment performed by the APB which supports the case for the immediate adoption of ISAs with some amendments to address issues required by national legislation.
The press release can be accessed at http://www.frc.org.uk/apb/press/pub1742.html.
14. 2008 FEE SME/SMP Congress Held in Copenhagen
The Fourth European SME/SMP Congress, hosted by the Federation des Experts Comptables Europeens (FEE) and the Nordic Federation of Public Accountants, was held on September 3-5 in Copenhagen. Over 300 participants from more than 22 countries attended the conference. Major focuses of the Congress included recent European Union developments of relevance to SMEs and SMPs, corporate social responsibility reporting and emerging risks and business opportunities.
The program for the Congress and all presentations can be accessed at: http://www.fee.be/news/default.asp?library_ref=2&category_ref=214&content_ref=870.
15. UK's Oversight Board Publishes Report on Practical Training for Auditors
The United Kingdom’s Public Oversight Board (POB) has published its review of practical training for auditors. The objective of the review was to consider the effectiveness of arrangements for the practical training of auditors in the UK in light of increases in audit exemption thresholds and resulting changes in the market structure for audits. The review concluded that the most significant profession-wide issue, following increases in audit exemption thresholds, is the lack of availability of audit work in small firms to ensure that trainees and staff get sufficient experience to achieve the qualification or maintain competence at a reasonable cost once qualified.
See http://www.frc.org.uk/pob/press/pub1760.html.
16. IASB, IFAC, EC Address Micro-Entity Reporting
The International Accounting Standards Board (IASB) continues to progress its project to develop an IFRS for Private Entities, with a final standard expected in early 2009. However, the European Financial Reporting Advisory Group (EFRAG) has written to the IASB encouraging it to consider further simplifications to the proposed standard. See http://www.efrag.org/news/detail.asp?id=271.
While the IASB believes the IFRS for Private Entities will be suitable for micro-entities, EFRAG and others have their doubts. In most economies micro-entities are the main source of innovation and economic growth; hence, the quality of their reporting is vital. IFAC's own research published by its SMP Committee in January of this year, Micro-Entity Financial Reporting: Some Empirical Evidence on the Perspectives of Preparers and Users provides some insights on the issue.
In addition, Charlie McCreevy, European Commissioner for the Internal Market and Services, has said he will propose to the European Commission that Member States be granted the option to exempt micro entities from the accounting requirements in the Accounting Directives. See http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/589&format=HTML&aged=0&language=EN&guiLanguage=en.
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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 158 members and associates in 122 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. Through its independent standard-setting boards, IFAC sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.