the global body for professional accountants welcome

The global body for professional accountants

Welcome.

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Professional Accountancy

Organisations and Regulators: Experiences

and Expectations.

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Sha Ali Khan:

Director – Practice Monitoring.

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AGENDA

• Which regulators are relevant to PAOs?

• What is oversight?• Oversight of the accountancy

profession• Oversight of ACCA

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AGENDA (continued)

• UK FRC and ACCA• PAOs approach to oversight bodies• Other ACCA relevant regulators• Concluding remarks

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Regulators relevant to PAOs.

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Regulators relevant to PAOs

Accounting and audit oversight bodies (a.k.a. “lead regulators”)

Governmental departments and agencies

Other PAOs: national and international

Standard setters (?)

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Regulators relevant to PAOs

Law enforcement agencies:• police• tax authorities• anti-money laundering agencies

Other PAOs

Intelligence services

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What is oversight?.

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What is oversight?.

Regulation vs oversight

Profession is regulated, regulators are overseen

Oversight of regulators regulatory activities

Different degrees of oversight scrutiny

Powers of oversight boards: naming and shaming, recommendations, orders, fines and de-recognition

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What is oversight?.

US Public Company Accounting Oversight Board (PCAOB) - regulator

Malta Accountancy Board – oversight board

UK Financial Reporting Council – both oversight board and regulator

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Oversight of the accountancy profession.

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Oversight of the accountancy profession

Concept of public oversight

Public interest of paramount importance in professional regulation

“Chaps regulating chaps” e.g. Jordan and Stone

Composition of oversight boards

European Union Statutory Audit Directive

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Oversight of ACCA

UK Financial Reporting Council: UK audit

Irish Auditing and Accounting Supervisory Authority: Irish audit

HM Government’s Insolvency Service: UK insolvency

UK Financial Conduct Authority: UK investment business

Central Bank of Ireland: Irish investment business

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Oversight of ACCA: limited oversight

Australian Tax Practitioners Board (Tax agents scheme)

South Africa Revenue Service (Tax agents scheme)

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Oversight of ACCA by the UK Financial

Reporting Council.

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UK FRC oversight of ACCA: interaction

ACCA’s annual plan covering regulatory activities and other strategic moves

ACCA to notify FRC of major events immediately

Annual return of regulatory activities

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UK FRC oversight of ACCA: interaction

Annual inspection of all four UK audit regulators – same annual “theme”

Overly prescriptive recommendations: Not only what we do but how we do it

FRC acquired powers in 2012 to fine audit regulators and instruct them on regulatory conduct and procedures

All of the above funded by the PAO audit regulators

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UK FRC requirements of ACCA’s annual plan

Regulatory objectivesGovernance arrangementsKey priorities for the yearDetailed plans for the year

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UK FRC requirements of ACCA’s annual plan

Key targetsResourcesRegulatory costsRisksRulebook and regulation changesProgress on prior year recommendations

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UK FRC requirements: immediate notification

Changes in senior ACCA management

Mergers and acquisitions

Major fraud or financial loss

Loss of integrity and reputation of examinations

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PAO’s approach to oversight bodies.

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ACCA’s approach to (and expectation of) oversight bodies

Cooperation

Technical and regulatory competence

Challenge regulatory “creep”

Challenge inappropriate recommendations (e.g. one size fits all or cost/benefit)

Constructive engagement is ACCA’s objective

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Examples of PAO experiences of poor oversight

Cooperation between PAO and Oversight Board

Excessive costs of oversight recharged to PAO (blank cheque syndrome)

Public oversight body composition controlled by government

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Examples of PAO experiences of poor oversight or poor regulation

Technical and regulatory competence of oversight staff

Disproportionate focus on some activities (e.g. approval of all rules and regulation changes)

Named and shamed for not following own procedures

Inappropriate use of regulatory gateways

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Other relevant regulators.

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Other relevant regulators: key relationship features

Common objectives (usually exchange of regulatory information)

Cooperation essential

Cooperation restricted to relevant matters

Regulatory gateways required

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Other ACCA relevant regulators

Government agencies:

• UK Department for Business, Innovation and Skills

• Irish Director of Corporate Enforcement Other PAOs:• Other UK/Irish PAOs regulating same activities

as ACCA• International PAOs regulating ACCA members

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Other PAOs : cooperation on investigation of dual members

Investigation protocol:

• Identify primary regulator, based on licensing body for activity and jurisdiction of suspected offence

• Primary regulator investigates and then disciplines if appropriate

• Secondary regulator disciplines member on basis of primary regulators findings

ACCA always informs other regulators interested in ACCA members’ conduct

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Other ACCA relevant regulators

Law enforcement agencies:• police• tax authorities• anti-money laundering agencies

Intelligence services:• Financial Fraud Information

Network

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Concluding remarks

Operating/regulating in isolation is not an option

Cooperation essential to effective regulation

Regulatory gateways essential for inter-regulator cooperation

Oversight body’s recommendations should add real value to PAO’s regulatory processes

Public interest is paramount

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Food for thought: “Reputation is everything”

"In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward. Manufactured goods often can be evaluated before the completion of a transaction. Service providers, on the other hand, usually can offer only their reputations.”

Former Federal Reserve chairman, Alan Greenspan

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Thank you.