International Accounting Education Standards and Accountancy Development The Role of the IAESB

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International Accounting Education Standards and
Accountancy Development The Role of the IAESB

• Role of the Accounting Profession in Economic
  Development Africa Region Learning Workshop
• Nairobi, September 28-29, 2006

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Session Outline

• About the International Accounting Education
  Standards Board (IAESB)
• Overview of International Education Standards
  (IESs)
• Other IAESB Pronouncements
• Implementation Issues (Discussion)

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International Accounting Education Standards
Board (IAESB)

• Formerly the IFAC Education Committee
• Develops standards and guidance for education and
  development of professional accountants
• Includes practicing accountants, academics,
  representatives from the forum of firms and the
  public
• Overseen by Public Interest Oversight Board

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IAESB objectives

• Establishing a series of standards and other
  statements reflecting good practice in pre- and
  post-qualification professional accountancy
  education and development
• Establishing education benchmarks for IFACs
  compliance activities and
• Fostering international debate on emerging issues
  relating to the education and development of
  professional accountants.

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International Education Standards (IES)

• Prescribe the range of professional knowledge,
  professional skills, professional values, ethics
  and attitudes required
• Develop an attitude of lifelong learning
• Focus on learning outcomes, not inputs
• Promote consistency and convergence in accounting
  education.

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International Education Standards
Pre-qualification

• IES 1, Entry Requirements
• IES 2, Content of Professional Accounting
  Education Programs
• IES 3, Professional Skills
• IES 4, Professional Values, Ethics and Attitudes
• IES 5, Practical Experience
• IES 6, Assessment of Professional Capabilities
  and Competence

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IES 1, Entry Requirements

• Requirements for entry to a program of
  professional accounting education and practical
  experience
• Aim to ensure students have background to have
  reasonable chance of achieving success
• Requires education at least equivalent to enter a
  university degree program or equivalent

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IES 1 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 1?
• Do students join accounting education programs
  after university, or instead of university?
• Discuss and agree solutions to any key issues
  identified.

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IES 2, Content of Professional Accounting
Education Programs

• Prescribes knowledge and competences candidates
  require to function competently
• Accounting, finance and related knowledge
• Organizational and business knowledge
• IT knowledge and competences
• Two years of full-time study

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IES 2 Subject Areas

• Accounting, finance and related knowledge
• Financial accounting and reporting
• Management accounting and control
• Taxation
• Business and commercial law
• Audit and assurance
• Finance and financial management
• Professional values and ethics

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IES 2 Subject Areas

• Organizational and business knowledge
• Economics
• Business environment
• Corporate governance
• Business ethics
• Financial markets
• Quantitative methods
• Organizational behavior
• Management and strategic decision making
• Marketing
• International business and globalization

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IES 2 Subject Areas

• Information Technology
• General knowledge of IT
• IT control knowledge
• IT control competences
• IT user competences
• One of, or a mixture of, competences for the role
  of
• Manager
• Evaluator/Assurance Provider
• Designer of Information Systems
• Further guidance provided in IEPS 2.1

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IES 2 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 2?
• Are there some knowledge areas that are more
  difficult to implement than others?
• Discuss and agree solutions to any key issues
  identified.

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IES 3, Professional Skills

• Prescribes the mix of professional skills
  required
• Intellectual skills
• Technical and functional skills
• Personal skills
• Interpersonal and communication skills
• Organizational and business management skills
• General education helps to develop these skills

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IES 3 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 3?
• How do candidates gain the general education
  required?
• Discuss and agree solutions to any key issues
  identified.

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IES 4, Professional Values, Ethics and Attitudes

• Prescribes the professional values, ethics and
  attitudes required
• Prescribes minimum subject areas
• Framework for exercising professional judgment
  and acting in an ethical manner
• Acknowledge different approaches will reflect
  national and cultural environment

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IES 4 Subject Areas

• The nature of ethics
• Differences between detailed rules-based and
  principles-based approaches to ethics, their
  advantages and drawbacks
• Compliance with the fundamental ethical
  principles of integrity, objectivity, commitment
  to professional competence and due care, and
  confidentiality
• Professional behavior and compliance with
  technical standards
• Concepts of independence, skepticism,
  accountability, and public expectations
• Ethics and the law, including the relationship
  between laws, regulations, and the public
  interest
• Consequences of unethical behavior to the
  individual, the profession, and society at large
• Ethics and the profession social responsibility
• Ethics in relation to business and good
  governance and
• Ethics and the individual professional
  accountant whistle blowing, conflicts of
  interest, and ethical dilemmas and their
  resolution.

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IES 4 Ethics Education Project

• Major, worldwide research project to identify
  examples of good practice in ethics education
• IEIP 4, Approaches to the Development and
  Maintenance of Professional Values, Ethics and
  Attitudes in Accounting Education
• IEPS 4.1, Developing and Maintaining Professional
  Values, Ethics and Attitudes
• Ethics Education Toolkit (CD-ROM)

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IES 4 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 4?
• What is the relationship between universities and
  professional bodies in developing professional
  values, ethics and attitudes?
• Discuss and agree solutions to any key issues
  identified.

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IES 5, Practical Experience Requirements

• Aims to ensure candidates have the necessary
  practical experience to become a professional
  accountant
• Minimum of 3 years practical experience
• Guidance from an experienced professional
  accountant (mentor)
• Need to record and assess experience

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IES 5 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 5?
• What are current practical experience
  requirements? Can trainees find suitably
  qualified mentors?
• Discuss and agree solutions to any key issues
  identified.

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IES 6, Assessment of Professional Capabilities
and Competence

• Final assessment before qualification as a
  professional accountant
• Test of theoretical knowledge and practical
  application of knowledge
• IEIP 3, Assessment Methods for further guidance

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IES 6 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 6?
• Who is responsible for assessment?
• Discuss and agree solutions to any key issues
  identified.

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International Education Standards
Post-qualification

• IES 7, Continuing Professional Development
• IES 8, Competence Requirements for Audit
  Professionals

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IES 7, Continuing Professional Development

• Mandatory CPD for all professional accountants
• Foster commitment to lifelong learning
• Facilitate access to CPD opportunities
• Ensure relevant, measurable and verifiable CPD
  activities
• Monitor and enforce CPD

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Approaches to Meeting Requirements of IES 7

• Input based approach
• 120 hours over 3 years, 60 hours verifiable
• Minimum of 20 hours per year
• Output based approach
• Demonstrate competence has been maintained
• Evidence to be objectively verified and measured
• Combination approach
• Elements of input and output approaches

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IES 7 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 7?
• What are participants views on the merits of
  input versus output based CPD systems?
• What are the main advantages/disadvantages of CPD
  programs currently in place?
• Discuss and agree solutions to any key issues
  identified.

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IES 8 Competence Requirements for Audit
Professionals

• Audit professional
• a professional accountant who has responsibility,
  or has been delegated responsibility, for
  significant judgments in an audit of historical
  financial information.
• Applies to ALL audit professionals
• effective date 1st July 2008.

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IES 8 - Knowledge Requirements

• Qualify as a professional accountant
• Hold undergraduate degree or equivalent
• Advanced level knowledge
• audit of historical financial information
• financial accounting and reporting
• IT knowledge

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IES 8 - Professional Skills

• Applying the following professional skills in an
  audit environment
• - identifying and solving problems
• - undertaking appropriate technical research
• - working in teams effectively
• - gathering and evaluating evidence and
• - presenting, discussing, and defending views
  effectively through formal, informal,
• written and spoken communication.
• Developing the following professional skills at
  an advanced level in an audit
• environment
• - applying relevant audit standards and guidance
• - evaluating applications of relevant financial
  reporting standards
• - demonstrating capacity for inquiry, abstract
  logical thought, and critical analysis
• - demonstrating professional skepticism
• - applying professional judgment and
• - withstanding and resolving conflicts.

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IES 8 - Practical Experience

• Substantial proportion of practical experience in
  the area of audit of historical financial
  information
• Usually 3 years in total, of which 2 years in
  audit of historical financial information
• Can be gained before or after qualifying as
  professional accountant
• Experience must be gained under guidance of an
  engagement partner

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IES 8 - Assessment

• Capabilities and competence should be assessed
  before individuals assume the role of audit
  professional
• Assessment may be carried out in a number of
  different ways
• By IFAC member body
• By another IFAC member body
• By audit firm
• By a third party

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IES 8 - Issues

• What are the key issues for Africa/individual
  countries in implementing IES 8?
• What will be the effects of IES 8 on current
  education and CPD programs for audit
  professionals?
• What can member bodies do to ensure the
  compliance of current audit professionals?
• Discuss and agree solutions to any key issues
  identified.

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Other IAESB Pronouncements

• International Education Practice Statements
  (IEPS)
• Assist in the implementation of generally
  accepted good
• practice in the education and development of
  professional
• accountants
• International Education Information Papers (IEIP)
• Promote discussion or debate on education and
  development
• issues affecting the accountancy profession

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More information

• IFACs web site www.ifac.org provides access
  to all standards and a wide range of free
  guidance for the worlds accountants
• The public interest activity committees of IFAC
  (IAASB, IAESB and IESBA) post agenda papers prior
  to meetings on web site
• IAESB pronouncements available at
  www.ifac.org/Education/Pronouncements.php

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Thank you

• Simon Thompson
• IAESB Technical Manager
• International Federation of Accountants (IFAC)
• 545 Fifth Avenue
• New York, NY 10017
• USA
• simonthompson_at_ifac.org

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General Implementation Issues

• What are the key issues for Africa/individual
  countries in developing accounting education
  programs?
• What progress has been made in implementing IES,
  and what are the major obstacles to full
  implementation?
• How can any such obstacles be overcome?
• What should be the role of IFAC/the IAESB? Which
  other institutions/actors have key roles to play?
• Discuss and agree solutions to any key issues
  identified.