June 11, 2007
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In This Issue:
1. IFAC Launches New International Center for SMPs
The International Federation of Accountants (IFAC) has launched a new International Center for Small and Medium Practices (SMPs) on its website to provide SMPs with access to news, information and resources relevant to them. It also includes information about the work program of IFAC's SMP Committee. In addition, IFAC is seeking input to determine the level of interest in an online Community to facilitate the exchange of knowledge and best practices among SMPs through its website. The International Center for SMPs can be accessed at http://www.ifac.org/SMP.
2. IASB Releases French, Spanish and German Versions of Proposed IFRS for SMEs
The International Accounting Standards Board (IASB) has made available French, Spanish and German translations of its proposed International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). The IASB's goal is to develop a simplified, self-contained set of accounting principles that is appropriate for smaller, non-listed companies and is based on full IFRSs. IFAC encourages its members, regional accountancy bodies, SMPs, SMEs, and all those with an interest to provide comments to the IASB by October 1, 2007. For more information, visit the IASB website.
3. Field Testing Begins for Micro-Entity Reporting Project
As part of its project on micro-entity financial reporting, the IFAC SMP Committee has undertaken field testing to determine whether the proposed IFRS for SMEs is likely to meet the needs of users and preparers of micro-entity financial reports. (Micro-entities are those with fewer than 10 employees.) The field testing, which includes interviews and surveys, has already been completed in the United Kingdom and Kenya and is close to completion in India, Italy, Malaysia, Poland, and Uruguay. The research findings will be used in developing IFAC's response to the proposed IFRS for SMEs and will be summarized in an information paper to be released in late 2007.
For more information on the SMP Committee's work program, visit the International Center for SMPs at http://www.ifac.org/SMP.
4. ISA Guide for SME Audits to Be Released Later This Year
The SMP Committee is developing a non-authoritative explanatory guide to help practitioners around the world understand, comply with, and apply International Standards on Auditing (ISAs) to the audits of SMEs. The final guide should be available in the fourth quarter of 2007. More information will be available on the International Center for SMPs (http://www.ifac.org/SMP) in the coming months.
5. SMP Committee Plans Quality Control and Practice Management Guides
The SMP Committee is considering the development of explanatory guides on quality control and practice management. The planned quality control guide is intended to help practitioners, particularly SMPs, implement International Standard on Quality Control 1 and deliver high quality assurance services. The SMP Committee received nine proposals to develop the guide and will review them at a meeting later this year. The guide is planned to be released by the end of 2008. More information is available in the SMP Committee's Request for Proposal.
In the coming months, the SMP Committee plans to issue a Request for Proposal to develop a guide on practice management to help improve the operational efficiency of SMPs as well as make them more responsive to the needs of their clients. Subject to receiving a satisfactory proposal, the practice management guide will be released in early 2009.
6. IAASB Advances Project to Improve Clarity of International Standards
The International Auditing and Assurance Standards Board (IAASB) has made significant progress on its project to improve the clarity of its International Standards on Auditing. It has released 15 exposure drafts of proposed redrafted ISAs, including several that are open for comment. The SMP Committee submitted 12 comment letters to the IAASB in the first quarter of 2007 to help ensure that SMP/SME issues are reflected in the ISAs. The committee encourages SMPs and SMEs to review IAASB exposure drafts and to provide comments.
The IAASB plans to issue a further 15 exposure drafts this year, with a goal of redrafting all the ISAs by the end of 2008. More information on the IAASB's clarity project is available in the IAASB Clarity Status Report.
7. SMP Committee Comments on Proposed Independence Requirements
Together with the IFAC Developing Nations Committee, the SMP Committee submitted a comment letter to the International Ethics Standards Board for Accountants (IESBA) regarding whether some of its proposed revisions to the independence requirements in the Code of Ethics for Professional Accountants would result in overregulation of SMEs and SMPs. Of particular concern to the committee is the mandatory partner rotation for audits of entities of significant public interest and new restrictions on the provision of non-assurance services. Comment letters to the proposed independence requirements can be viewed at http://www.ifac.org/Guidance/EXD-Details.php?EDID=0075.
The SMP Committee also responded to the IESBA Strategic Review survey and expressed a preference for a moratorium on changes to the Code of Ethics, increased focus on implementation: and a cost-benefit analysis of all proposed future changes to the Code. For more information on the IESBA's work program, visit its home page.
8. IFACnet Expands Resources for SMPs and Adds New Features
IFACnet, the global, multilingual accountancy search engine developed by IFAC and its member bodies, recently expanded its resources, particularly for SMPs. SMPs can now access a wide range of articles, good practice guidance, and other resources provided by nearly 30 participating organizations. Additional organizations will be joining IFACnet in the coming months.
To keep users current on professional and marketplace issues, several new features have been added to IFACnet:
IFACnet can be accessed at http://www.ifacnet.com and on the websites of participating organizations. The SMP Committee encourages SMPs and SMEs to use the search engine and provide feedback.
9. Four ACCA Reports Explore SME Issues
The Association of Chartered Certified Accountants (ACCA) has issued several reports on issues related to SMEs, including the following:
To access these and other reports, visit the Small Business Research section of the ACCA website.
10. Australian Auditing and Assurance Board Consults on SME Audits
In March 2007, the Australian Auditing and Assurance Standards Board (AuASB) issued a discussion paper about SME audits in order to identify recent developments and to foster stakeholder and constituent discussion. The outcomes of the discussion process will be used by the AuASB to evaluate whether to recommend policy reforms in Australia. The discussion paper and responses received are available on AuASB website at http://www.auasb.gov.au/docs/submissions-smes/submissions-smes.htm.
11. KPMG Report Finds UK SMEs Not Extracting Value from Audit
According to a research report by KPMG, entitled Generating Value from the Audit, around half of SMEs in the United Kingdom are not extracting the value that they could from their audit. Fifty-six percent of the 200 SMEs surveyed see their audit as a largely mechanical process that is more or less exactly the same each year, while only 40 percent agree that the audit brings up recommendations useful for the business as a whole. Forty-seven percent of SMEs surveyed only occasionally or never meet with their auditor outside the audit season. Nevertheless, auditors are viewed as performing a robust job, and 70 percent of respondents said their auditor is prepared to challenge them on the way that their financial information is interpreted and presented.
The KPMG report is available at http://www.kpmg.co.uk/pubs/305-582.pdf.
12. Future SMP Committee Meetings and SMP Forum 2007
The next SMP Committee meeting will be held in Malta on November 1-2, 2007. Future committee meetings in 2008 are provisionally scheduled for Brazil (late January), New York (late June), and Nigeria (late September). Highlights of previous meetings can be viewed at http://www.ifac.org/SMP/Meetings.php.
The SMP Committee will also hold a one-day SMP Forum in Malta on October 30, 2007. All IFAC member bodies and regional accountancy organizations will be invited to send representatives. More information will be distributed to them in the coming months.
For more information about any of the items mentioned above or other information about the IFAC, please contact pr@ifac.org or visit the new International Center for SMPs at http://www.ifac.org/smp.
About IFAC
Founded in 1977, 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 155 members and associates in 118 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, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.