The Importance of Global Standards.

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AGENDA
About ACCA Importance of global standards Accounting and auditing standards convergence Corporate governance Integrated reporting / sustainability
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About ACCA.

The global body for professional accountants

About ACCA
the global body for professional accountants

core values of opportunity, diversity, innovation, integrity and accountability supporting our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills needed by employers.

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The importance of Global Standards.

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THE ROLE GLOBAL STANDARDS PLAY Global standards drive innovation and contribute to growth of markets. Global standards value have come into sharper focus in this age of globalisation. Global convergence is a critical part of finding global solutions.

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Accounting and Auditing Standards Convergence.

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Need for standardised reporting

Lessons from Asian crisis in 1997 Current turbulent financial crisis have raised needs for greater transparency and credibility in reporting. Increased interdependence of financial markets Cooperation around the world is vital!

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Why convergence is needed:

Helps raise investor confidence. Convergence creates a level playing field globally. Harmonisation assists the international mobility of acountants. Considerable progress towards convergence has also been made by the US SEC.

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All Change
2002 - 2005 2012

FINDINGS: BUSINESS BENEFITS

Spread of IFRS has helped cross-border trade

FINDINGS: BUSINESS BENEFITS

Spread of IFRS has improved access to capital

FINDINGS: REPORTING

More positive than before global crisis

The role of the public sector.

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS) The adoption of accrual-based accounting by governments and public sector institutions promoting greater transparency and accountability Adoption and implementation of IPSAS. Global adoption of IPSAS will improve the resource allocation, accountability and long-term sustainability of the public sector.

Enhancing Corporate Governance.

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TRENDS IN CORPORATE GOVERNANCE THE ROLE OF ACCOUNTANTS Governance - history and importance today ACCA and corporate governance Generally accepted principles Global trends Integrated reporting The future?
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How did we get here?

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GOVERNANCE CORPORATE EVENTS AND REGULATORY RESPONSE

Cadbury Code 1992 Turbull 1999 Barings Bank 1995 Frank-Dodds Act EC Green paper UK changes EC Directives and Recommendations UK revised Code 2003

Maxwell 1991

WorldCom 2002

Saving & loans US 1980s COSO 1992

Enron 2001

Parmalat 2003

Sarbanes-Oxley Act 2002

Many banks 2007/8

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ASPECTS OF CORPORATE GOVERNANCE

Achieving objectives

Internal governance = Internal control and risk management Accountability to share / stakeholders

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ACCA and Corporate Governance.

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ACCA AND CORPORATE GOVERNANCE

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ACCA AND CORPORATE GOVERNANCE

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ACCA AND RISK MANAGEMENT

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Generally accepted principles.

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WIDELY ACCEPTED CORPORATE GOVERNANCE PRINCIPLES

Comply or explain Shareholders enforce Separate chair and CEO Balanced boards Independent directors Audit, remuneration & nomination committees Board evaluation Financial reporting and audit Shareholder rights
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FUNDAMENTAL PRINCIPLES

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Global trends.

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GLOBAL TRENDS Global standards? Role of audit committees Narrative reporting

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GLOBAL STANDARDS
Global standards or benchmarks in corporate governance would encourage more long-term thinking.

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NARRATIVE REPORTING Going concern Remuneration Diversity/gender balance Strategic/risk reporting

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TELLING THE STORY

What does the company do? How does it generate value? What is the market share? Can market share grow and, if so, how? What are the drivers of performance? What are the risks and how are they managed? What is the current position of the company?
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CHALLENGES Volume Complexity Forward-looking information Assurance Global consistency

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Integrated Reporting.

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The rise of sustainability

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development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Brundtland Report (1987)
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What is integrated reporting?

It refers to the integrated representation of a companys performance in terms of both financial and non-financial results. It addresses companies performance for a comprehensive set of factors economic as well as social, environmental and governance and other relevant factors Integrated reporting provides greater context for performance data, clarifies how sustainability fits into the operations. It is not the mere combining of an annual report with a sustainability report!
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In a nutshell
holistic reporting connected reporting integrated reporting

= FR + CSR + ESG = financial + non-financial

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Objectives of integrated reporting

Support long-term Reflect interconnection Investors information of financial and needs non-financial factors

Provide framework for decision making process Re-balance performance metrics

Bring reporting closer to management information

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The objective of the integrated

reporting framework is to assist companies in enhancing the quality of their corporate reports so as to provide a more strategic picture of the issues that are critical to a companys long term sustainability and success.
Paul Druckman, Advisory Group, Princes Accounting for Sustainability
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Why integrated reporting in essential

Reflects interconnected nature of ESG and financial factors Links market context, company strategy & financial performance Ensure sustainability is embedded into and aligned with business

Ensure nonfinancial factors are taken into long term considerations

Prevent undue reliance on short-term financial metrics

Provides a signalling effect within the organisation and to the market

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INTEGRATED REPORTING: FOCUSSING ON THE TOP SLICE

Integrated Reporting Framework Provides the top level structure for the whole reporting pyramid

Sets a framework to encourage greater linkage between existing reporting silos.

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CONTENTS OF AN INTEGRATED REPORT

Organisational overview and business model Operating context, including risks and opportunities Strategic objectives and strategies to achieve those objectives Governance and remuneration Performance Future outlook
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In the words of the Prince of Wales, we are at present, battling to meet 21st century challenges with, at best, 20th century decision making and reporting systems.
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Ethics & The value of audit.

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Generating value from audit

One of ACCAs core research themes Audit needs to develop further. The profession needs to develop its approach to larger entity audits by paying more attention to a wider circle of stakeholders. Business should view extension of audit as an opportunity and not as a threat.

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Ethics is key
Ethics is vital for audit to be effective. Success of ethical rules and principles is entirely dependent on those who are supposed to abide by them. ACCA is commited to instilling a keen sense of ethical responsibility in our students.

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The future.

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100 DRIVERS OF CHANGE

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FORCES SHAPING THE PROFESSION 1. 2. 3. 4. 5. Trust and reporting Regulatory expectations Standards and practices Intelligent systems and big data Organisational remit

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IMPERATIVES FOR THE GLOBAL ACCOUNTANCY PROFESSION

1. Embrace an enlarged strategic and commercial role 2. Establish trust and ethical leadership 3. Focus on a holistic view of complexity, risk and performance 4. Develop a global orientation 5. Reinvent the talent pool
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SCENARIOS FOR THE FUTURE OF THE PROFESSION Public perception of the profession with a spectrum of possibilities ranging from part of the problem to guardians of integrity Scope of the accountants role ranging from a specialised compliance focus to a broad organisational remit.
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Standards for the future.

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STANDARDS FOR BUSINESS

Corporate governance

INVESTOR CONFIDENCE

Corporate reporting

Assurance

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VALUE TO BUSINESS

CREATING VALUE DELIVERING VALUE

SUSTAINING VALUE

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Conclusion.

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Thanks!

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CONTACT
Reza Ali reza.ali@accaglobal.com www.accaglobal.com

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The global body for professional accountants