Global standards: the International Federation of Accountants' mission is to strengthen the global profession, but how does it do this? Martin Nimmo gives some facts about IFAC.

If you think the International Federation of Accountants (IFAC) is "just another minor accountancy body", think again. It has 163 member bodies in 119 countries, representing more than 2.5 million accountants. IFAC is big, and it is the accountant's ultimate arbiter on professional standards.

As an IFAC founder member, CIMA is well represented in its governance structure. Charles Tilley, the institute's chief executive, joined its board in 2004. He is also a member of IFAC's regulatory monitoring group and its strategy and planning group. And Bill Connell, who chairs CIMA's international committee, is chairman of IFAC's public accountants in business (PAIB) committee.

The federation's main activities are:

* Setting standards and giving guidance.

* Aiding co-operation among member bodies by working with them to ensure the competence and integrity of accountants worldwide.

* Commenting on public policy issues in accounting and auditing.

In 2003 IFAC's council approved reforms, including oversight of the standard-setting process. It aimed to restore public confidence in financial reporting and to increase confidence that its activities would lead to high standards in auditing and assurance.

IFAC is also involved in setting standards via the International Auditing and Assurance Standards Board (IAASB) and through its education and ethics committees. Its public-sector committee is subject to an independent review process, in conjunction with the World Bank and other parties with an interest in governmental financial reporting. Its international standards on auditing are the basis of auditing standards in over 70 countries. The public interest oversight board oversees audit standards; independence and other ethical standards for auditors; audit quality control; and assurance standards. It will also oversee the federation's proposed compliance programme.

The PAIB committee is developing a web-based resource to collate information from members and other bodies. The committee addresses issues ranging from narrative reporting and corporate governance to professional ethics and internal control. It's involved in governance projects including:

* Enterprise governance. It produced a report jointly with CIMA in 2004 highlighting the need for companies to balance and link conformance and performance.

* A corporate code of ethical conduct. This will result in a booklet on developing a code.

IFAC's statements of membership obligations (SMOs) require member bodies to use their best endeavours when promoting, incorporating and implementing its standards. They cover quality assurance; IAASB international standards; the code of ethics; international education standards; international public-sector accounting standards; investigation and discipline; and international financial reporting standards (IFRSs). The institute's new professional development scheme and education syllabus conform to SMO2.

The ethics committee's newly revised code of ethics, which is based on principles rather than rules, provides guidance for accountants in business who encounter illegal acts (see panel).

In March the IFAC board agreed to:

* Back a country-specific approach to supporting developing nations, helping countries without an established profession and those that are building a professional, financial and regulatory architecture to encourage growth.

* Continue to stress the need for IFRSs that can be implemented in developing nations.

* Establish a process for accountancy bodies to act as mentors to those in less developed countries.

* Create a blueprint that defines the steps involved in establishing a viable, high-quality accountancy profession.

"Our goal is to have a trusted investment climate in every country," explains Graham Ward, IFAC's president. "This can be accomplished only by making a long-term commitment to developing nations--and creating a strong accountancy profession in them--by working in partnership with our member institutes and other relevant organisations, such as international development and funding agencies."

CIMA TAKES PRINCIPLED LEAD

The institute's professional standards committee has committed itself to the new code of ethics published by IFAC, which it expects CIMA council to adopt in October--eight months before the deadline for all member bodies.

According to CIMA's chief executive, Charles Tilley, the new code is "ground-breaking in that it establishes principles for ethical behaviour and rejects the simple application of rules. Rule-based codes can be circumvented, but those based on principles can be successfully applied in almost all circumstances."

Martin Nimmo is head of policy and plans (professional standards) at CIMA. Visit www.ifac.org for further information.