International Professional Accountants in BusinessPosted: March 31, 2014
I was back in New York last week beginning my third year of service on the International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB) committee as the AICPA representative. IFAC “members” are 147 professional accountancy organizations from around the world and the PAIB includes representatives of member organizations from Europe, India, Australia, Hong Kong, Africa and North America. It is always interesting to hear the differing viewpoints and global perspectives. For example, the focus on Integrated Reporting and Sustainability Reporting is much greater among PAIBs outside of the U.S. Their stakeholders are demanding such reporting and the PAIBs are taking it on, unlike many U.S. companies where such reporting is often handled by non-financial departments within a company.
It is also interesting to understand the different meaning given to the same terms. For example, in the U.S. we talk about public companies and private companies. We all know that public companies have shares and or debt traded in securities markets and private companies don’t, but that is not what the rest of the world means when they use those terms. To the rest of the world public companies are government owned enterprises (in many parts of the world utilities, telecommunications and energy companies are often wholly or partially owned by the government), while private companies are everything else which includes what we would call both private and public companies.
Running a public (government owned) company can be very different especially when it comes to governance of such an entity. The PAIB is planning to issue a document outlining Guidance on Good Governance in the Public Sector in April in order to help PAIBs in those entities understand the best ways to handle the unique issues such entities face in their governance process.
One of the true differentiators between PAIBs and AIBs (note they are missing the “P” for professional) is that PAIBs must abide by a code of ethics. If you are a CPA you should be familiar with your state code of ethics as well as the AICPA code of ethics. Did you know there is also an international code of ethics? There is, and IFAC member organizations code of ethics generally must comply with the requirements in the IFAC code of ethics. The PAIB has been working with the International Ethics Board on updating “Section C” of the international code of ethics that deals specifically with PAIBs. The idea is to provide better, more practical guidance for PAIBs when they are dealing with ethical dilemmas like being pressured to “make the numbers look better” or come across other types of illegal acts at their employer. Such issues must be dealt with carefully. While we talk about the problems whistleblowers deal with in the U.S such as retaliation or being fired, that is nothing compared to what can happen in other parts of the world where retaliation might mean bodily injury or even death.
Finally, the PAIB plans to issue an exposure draft on how supplementary (non-GAAP) financial measures should be handled. There is a growing call for some perspectives on results that are not always in accordance with GAAP and that can put PAIBs in a difficult position. The hope is that this guide will provide principles that a PAIB can follow to supply such information when it is helpful to stakeholders’ understanding of the business. That way we can feel more comfortable being involved with such disclosures and know we are giving them appropriate rigor and not using them to mislead investors.