IFAC Public Discussion

The IFAC SMP committee website hosts a collection of resources for use by SMPs and SMEs at http://www.ifac.org/smp/index.php#Resources. This includes lcredit crisis and recovery resources at http://www.ifac.org/financial-crisis/smp-sme-links.php and a more general database of relevant links to free resources at http://www.ifac.org/SMP/relevant_links.php. The committee also has its own Twitter site at http://twitter.com/IFAC_SMP.

Please let us know how useful you find these resources.

Thanks Ernesto

Hi Nicolaas,

Thanks for this. We look forward to hearing about your survey. Indeed it may serve as a model for a global survey.

Cheers,

Paul

Dear Geekay,

We are encouraged to hear that you find it useful. Expect the updated version to be issued in December 2009. Meantime, please sign up for SMP eNews (see www.ifac.org/smp and go to 'news') so you get notified when it is released.

Cheers,

Paul

The introduction of the 2008 American Institute of Certified Public Accountants' (AICPA)  PCPS/TSCPA National MAP Survey (see http://pcps.aicpa.org/Resources/National+MAP+Survey/2008+National+MAP+Survey+Commentary.htm), says that while US CPA firms, most of them small- and medium-sized practices (SMPs), are thriving the findings and the state of the economy raise questions about the future economic landscape for these firms. The commentary goes on to say that:

"As part of their strategic planning, firms may wish to consider the best response to a shift or decline in demand for their services. Given the current economic uncertainty, it may not be surprising to find fee competition from other firms and fee pressure from clients. However, CPAs may also be called upon to offer additional services in the wake of the credit market crisis, as banks and other entities look for greater assurance about the companies with which they do business. There may be a greater need for agreed-upon procedures to suit specific situations and more banks may demand audits rather than reviews."

While a US view the same is likely to be true to varying degrees of SMPs everywhere. But while the credit crisis dominates the headlines and is the issue of most immediate concern, SMPs must not lose sight of their longer term strategy and think about where they want to be when the crisis blows over. The long run offers great challenges - competition, regulatory complexity and reduced compliance work. But it also presents great opportunities since many regard the SMP as a trusted and competent professional, well placed to offer business advice.  Hence, forward looking SMPs may wish to read the following articles:

• Firm of the Future, Journal of Accountancy, AICPA (see http://www.journalofaccountancy.com/Issues/2008/Nov/The+Firm+of+the+Future.htm); and
• Firm of the Future, CPA Australia Report (see http://www.cpaaustralia.com.au/cps/rde/xchg/SID-3F57FECA-9AB6E3C4/cpa/hs.xsl/724_23181_ENA_HTML.htm).

While these articles only reflect the views from two countries it is likely they are relevant to many if not most other jurisdictions. Hence, the IFAC SMP Committee is not only looking into ways of supporting SMPs and their clients during these difficult times - it has also started investigating how to position and equip SMPs for the long run to keep them relevant, sustainable and prosperous, starting with the development of a practice management guide.

Please tell us how your practice will change and what we can do to help make that change.

The SMP Committee publish its second non-authoritative implementation guide, Guide to Quality Control for Use by Small- and Medium-sized Practices (QC Guide) on March 9. See http://www.ifac.org/MediaCenter/?q=node/view/624.

The Guide 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 as redrafted under the IAASB's Clarity project. It can be downloaded free-of-charge from the resources-publications section of the International Center for SMPs (see http://www.ifac.org/smp/index.php#Resources). A word version is provided to make for easy translation and adaptation.

Let us know what you think of the Guide. In particular, we welcome views on the following questions.

1. How do you use the Guide? For example, do you use it as a basis for training and/or as a practical reference guide, or in some other way?

2. Is the cross-referencing to ISQC1 sufficient for easy use while reading the Guide?

3. Do you believe that the Guide has appropriately integrated all of the relevant standards into the quality control process? Are there elements you would like to see added to or deleted from the Guide?

4. Do you consider the Guide to be responsive to the key firm level issues of quality control for small- and medium-sized practices?

5. Do you find the Guide easy to navigate? If not, can you suggest how navigation can be improved?

6. In what other ways do you think the Guide can be made more useful?

7. Are you aware of any derivative products - such as training materials, forms, checklists, and programs - that have been developed based on the Guide? If so, please provide details.

The Auditing Practices Board (APB), the UK standard setter, has issued a consultation paper seeking comment on whether the UK and Ireland should adopt the clarified ISAs - and 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 a few pluses to address issues required by national legislation. See Press Release at http://www.frc.org.uk/apb/press/pub1742.html

Work is well underway on the project to produce viable assurance services for SMEs other than audit.

On September 29, 2008 IFAC released a consultation paper Matters to Consider in a Revision of International Standard on Review Engagements (ISRE) 2400, "Engagements to Review Financial Statements" developed by staff from the national auditing standard setters of New Zealand, Canada, and South Africa. The paper may be downloaded from the IFAC website at http://www.ifac.org/ED. The comment period closed in December 2008. Some 15 responses were received (see http://www.ifac.org/Guidance/EXD-Outstanding.php). At its June 2009 meeting the IAASB discussed an issues paper based on the responses to the consultation paper (see http://www.ifac.org/IAASB/Meeting-BGPapers.php?MID=0167&ViewCat=1085). 

You may also wish to read about the American Institute of Certified Public Accountants' (AICPA's) Accounting and Review Services Committee (ARSC) Reliability Project. This makes some radical proposals on how to revamp the review engagement. The aim is to enable CPAs to perform limited assurance engagements for clients when the external CPA performs certain control services. The accountant would still be precluded from providing any assurance service when he or she has a financial or relationship interest in the company. It is expected that current compilation and review standards will be maintained. The ARSC plans to expose a new standard in the spring of 2009. For more information, visit the AICPA's Web site.  

We would be very happy to hear any comments you may have on these developments. 

UPDATED JAN. 12, 2010

Introduction

The importance of SMPs and SMEs was made clear from the IFAC Global Leadership Survey (GLS) 2008 conducted in the final quarter of last year (see http://www.ifac.org/MediaCenter/?q=node/view/605) in which survey respondents said that the most important issue facing the profession in 2009 is addressing the needs of SMEs and SMPs. The GLS for 2009 is likely to say much the same. Bob Bunting, IFAC President, said that this will be a priority for IFAC over the termof his office (2009-2010): "The survey confirms that meeting the needs of SMPs and SMEs is a global concern and a global goal. These entities are among those likely to suffer significantly from the current financial crisis yet they are among the least at fault. We must look for ways to mitigate the effect of the crisis on SMPs and SMEs." IFAC re-iterated this point in its last submission to the G20 (see http://www.ifac.org/MediaCenter/?q=node/view/660).

Resources to Help

Potentially SMPs have a key role to play in helping SMEs cope with the economic crisis and ultimately recover. Accordingly, early in 2009 IFAC launched a website that serves as an international clearinghouse of programs, articles, speeches, and other initiatives undertaken by IFAC, its independent standard setting boards, members and associates and others that are relevant to professional accountants and its many stakeholders. See http://www.ifac.org/credit-crisis/. The website hosts resources for SMPs and SMEs at http://www.ifac.org/financial-crisis/smp-sme-links.php. These resources supplement the IFAC SMP Committee's database of relevant links to free resources at http://www.ifac.org/SMP/relevant_links.php as well as its own Twitter site at http://twitter.com/IFAC_SMP.

Please tell us your experiences coping with the slowdown and how useful these resources are.

Dear Wisam,

We hope to have other guides for SMPs in due course including on on quality control and practice management. Meantime please visit our website to see what other resources we have for SMPs (see www.ifac.org/smp). You may wish to sign-up for SMP eNews (at http://www.ifac.org/smp/index.php#Resources) and see our links to (at http://www.ifac.org/SMP/relevant_links.php). Please share these with SMPs in Iraq.

Cheers.

Paul