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Malta takes leading role in adopting
international accounting standards
by David Kelleher
Malta has taken a leading role in adopting international accounting
standards on a national basis and has also been instrumental
in its efforts to enforce these standards among accounting practitioners
in Malta, according to the New York-based International Federation
of Accountants.
More than 150 Maltese accountants yesterday evening attended
a seminar organised by IFAC and during which they were informed
of the latest developments in the industry.
The seminar, organised by the Malta Institute of Accountants
and IFAC was held in conjunction with a meeting of IFAC’s
ethics
committee.
The Malta Business Weekly spoke to Marilyn A. Pendergast, chair
of the ethics committee and James Sylph, IFAC’s technical
director.
“We are very pleased to be in Malta. The Maltese accountancy
body invited us to hold our meeting here and we are also taking
the occasion to pass on our message to their members members,”
Ms Pendergast said.
“Malta has taken a leading role in adopting international
accounting standards, and we appreciate the efforts being taken
as a nation,” Mr Sylph said.
IFAC is the worldwide organisation for the accountancy profession.
Its membership comprises 153 professional accountancy bodies
in 113 countries, representing more than two million accountants
in public practice, education, government service, industry
and commerce. IFAC’s mission is the worldwide development
and enhancement of the profession, with harmonised standards,
to enable it to provide services of consistently high quality
in the public interest.
Establishing worldwide standards is not an easy task and Europe
and the United States have disagreed on a number of issues.
“IFAC has been working on common worldwide standards for
more than 20 years and great progress has been made. Contrary
to common perception, Europe and the US are not as diametrically
opposed as one may think. Regulators want protection and IFAC
wants protection for the consumer,” Ms Pendergast said.
She added that regulatory practices differed from country to
country.
“It is not our role to interfere in national regimes, however
we propose guidelines for regulatory bodies to adopt. At the
end of the day, what is important is that a set of financial
accounts in one country can be easily understood in another
because they were prepared using the same procedures,”
Ms Pendergast said.
The ethics committee which she chairs was set up to develop
guidance on professional ethics and to promote its understanding
and acceptance by member bodies. The Committee continually monitors
and stimulates debate on a wide range of ethical issues to ensure
that its guidance is responsive to the expectations and challenges
of individuals, businesses, institutions and others relying
on the work of the accountancy profession.
“We have had an individual code of ethics since 1980 and
this was recently revised. All our member bodies adhere to the
code which calls for integrity, objectivity and independence,”
she explained.
Auditor independence has attracted the critical attention of
regulators in many parts of the world. Questions are being raised
about conflicts of interest, about the reliability of “firewalls”,
and in particular about the feasibility of running an independent
audit practice as an integral part of the new “professional
services” firms.
“IFAC is contributing fully to this debate. In consultation
with other interested parties, IFAC’s ethics committee
has completely redrafted the existing section of IFAC’s
Code of Ethics dealing with auditor independence.
“Instead of setting out precisely defined ‘rules’,
the proposed new section takes a new and less prescriptive approach
through the introduction of a principles-based framework offering
guidance to auditors and firms in developing safeguards to ensure
that their independence is maintained.
“Rather than a problem, I would say it is a question of
perception. As long as there is proper supervision and due diligence,
independence does not become an issue,” Ms Pendergast explained.
Asked whether the breakdown of major consultancy and auditing
firms into separate companies was to consolidate the image of
‘independence’, Ms Pendergast said splitting companies
was a business decision.
During their meeting in Malta, the ethics committee of IFAC
will also be discussing multi-disciplinary practices and potential
new ethical issues which have not yet been addressed.
“The emergence of multi-disciplinary practices (MDPs) is
a complex subject involving not only issues of practice ownership
and control but also the performance of other services for attest
clients and the consideration of whether or not some services
are clearly incompatible with the attest function.
“MDPs and alternative practice structures are proliferating
in many areas of the world in the accountancy profession. As
structures and services change, new issues relating to objectivity,
potential conflicts of interest and independence need to be
considered and guidance for members developed when appropriate,”
she said.
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