Professional Accountants in BusinessPosted: September 28, 2015
I recently attended the Fall International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB) Committee meeting in New York. We discussed many topics related to PAIBs including continuing efforts to advocate for PAIBs across the world both to the professional accounting organization members of IFAC (like the AICPA) and the business, not-for-profit and government entities we all work for. I wanted to pull out five topics we discussed. All five include a link to a relevant website with much more detail about the topic.
As PAIBs, how we deal with Non-Compliance with Laws and Regulations (NOCLAR) is always a topic of passionate discussions among the public, let alone PAIBs. Ultimately because we are professionals we have a responsibility to the public, and that means we can’t be silent when laws and regulations are broken. Fortunately a vast majority of the time, the issues are resolved appropriately within the organizations we work for, but for those rare occasions when the issues are not resolved, the NOCLAR guidance will help you determine what actions you need to take.
While not yet required in the U.S., the International Auditing Standards have been updated to include a discussion of Key Audit Matters (KAM) in the auditor’s report. KAMs are supposed to be a short description of the matters most important to the audit. They are matters which were the subject of the most frequent and robust discussions with audit committees. However, they are not a complete summary of all the discussions with the audit committee, nor a replacement of management’s perspective. More importantly, they are not a scorecard on management’s aggressiveness or conservatism when it comes to their accounting judgments. KAMs will be coming to the U.S. soon, but we will get the benefit of the international work already done in this area including their actual publication in reports from companies based in the U.K. and other countries.
Bob Hirth, Chairman of COSO, made a presentation to the PAIB Committee about the project to update the COSO Enterprise Risk Management (ERM) framework. Unlike internal control over financial reporting, ERM isn’t a regulatory mandate. In fact, the SEC declined to be an observer on the ERM advisory panel because they didn’t want people to think they would be requiring regulation to mandate ERM. The exposure draft will be coming out in early 2016. While not a regulatory mandate, ERM is probably one of the most important business mandates to be discussed in years. You should consider checking out the ED when it comes out.
Related to ERM, the PAIB recently released a paper on how ERM should be built into an entity’s operating processes. I have written about this paper in the past, but I wanted to bring it to your attention again. Bob Hirth thought the paper was very useful and it might serve as a short primer you can look at now in advance of the COSO ED.
Finally, I wanted to bring your attention a document recently released by the PAIB on Accounting for Sustainability. This document is focused on the need and how to be a resilient organization. No matter your views on sustainability, it is a great, relatively short read on the topic to give you ideas of how to get your organization ready for whatever changes come to the world.