MINISTERIAL CONFERENCE The Road to Europe

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MINISTERIAL CONFERENCEThe Road to Europe
Program of Accounting Reform and Institutional
StrengtheningVienna16 March 2005

• Contribution of the Accounting and Audit
  Profession to Reliable Financial Reporting
  Challenges
• in the Region
• David Devlin
• FEE President

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FEE

• 44 Member Bodies of professional accountants
• From 32 countries
• With 500,000 members
• Working to build confidence in our
• profession
• integrity, and
• high standards
• www.fee.be

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Main Topics

• Financial reporting
• Auditing
• Ethics
• Smaller enterprises and audit firms
• Member Bodies of FEE
• Challenges in the Region

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Financial Reporting

• Aim of principle based, global standards to
  provide high quality financial reporting
• European input to IFRS standards
• Direct contributions of FEE to IASB
• Founding father of European Financial
  Reporting Advisory Group EFRAG
• Major position paper on enforcement to EC, CESR
• Consistent application of IFRS

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Auditing

• Aim of principle based standards to achieve high
  quality
• European input to ISAs global standards
• Direct contribution of FEE to IAASB
• Views to EC and European oversight bodies
• Major papers on external quality assurance and
  public oversight of auditors to EC and others
• Consistent implementation of 8th Directive on
  statutory audit

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Ethics and Independence

• Promotion of principles based standards, using
  threats and safeguards approach, with some
  consequent, logical prohibitions and extensive
  guidance
• European input to IESBA (IFAC) global standards
• Direct contribution of FEE
• Views to EC
• Survey on how EC Recommendation of Independence
  of Statutory Auditors has been implemented in EU
  member states

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Ethics and Independence (2)

• Avoidance of bad (for audit quality) regulations,
  such as
• Mandatory rotation of audit firms
• Artificial, narrow view of auditors proper
  function
• Conflicting and extra-territorial national
  requirements

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Smaller Enterprises and Audit Firms

• Financial Reporting by SMEs
• Application of 4th (Company) and 7th (Group)
  Directives on annual accounts a good legal basis
• Full IFRS very demanding
• Simplified IFRS standard being prepared
• Joint FEE / EFRAG input

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Smaller Enterprises and Audit Firms (2)

• Smaller Audit Firms
• Current project on forming networks of smaller
  firms to support development and quality
• Annual conference next Versailles7/8 September
  2006

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Member Bodies of FEE

• Benefit by contributing to FEEs work
• FEE involvement helps to promote consistent
  understanding and implementation of EU policy and
  laws
• FEE has a profound knowledge of EU developments
  which we wish to share with potential new members
  hence participation today
• New member bodies must be recognised by
  government so that their own members are
  qualified to conduct all categories of statutory
  audit

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Member Bodies of FEE (2)

• Planned EU membership is important
• Structure of profession, and good co-operation
  between all elements of it, also important
• FEE can help with strategic direction of
  professions development, its contribution to new
  laws and regulations and with information
• Example Oversight arrangements not
  exclusively a function of government officials

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Education and Qualification

• Aim of free movement of professionals and
  cross-border services
• Covered by 8th Directive on statutory audit and
  Directive on recognition of professional
  qualifications
• Language barriers and translation issues are
  challenges in using global standards

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Challenges in the region

• Move to IFRS is demanding due to significant
  cultural differences and the inheritance of often
  rigid historical accounting systems
• Standard setting is often state controlled and
  does not always reflect latest international
  trends
• Capital markets and investor organisations are
  underdeveloped, therefore interests of other
  stakeholders including fiscal authorities take
  often precedence
• Many professional bodies are in start-up
  situation facing large tasks and funding problems
  or dominated by state influence

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MINISTERIAL CONFERENCEThe Road to Europe
Program of Accounting Reform and Institutional
StrengtheningVienna16 March 2005

• Contribution of the Accounting and Audit
  Profession to Reliable Financial Reporting
  Challenges
• in the Region
• David Devlin
• FEE President

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