Jean Bouquot, President of the International Federation of Accountants says that IFAC membership represents a ‘badge of recognition’ for accounting firms and explains how the Federation is working to set and maintain high standards and attract new talent to the profession.
Tell us about the role that the International Federation of Accountants (IFAC) plays for its members and how it is helping them streamline their practices.
As the global organisation of the accountancy profession, we connect and unite our 187 member organisations and the millions of professional accountants they represent. We believe IFAC membership is a “badge of recognition” that an organisation is committed to integrity and professional quality. And our members shape our collective voice, which we use to advocate for the profession and the public interest. Our members are organisations, rather than individuals, but we do support individual practitioners with a wealth of practical tools and guidance hosted on our website. The latest is our interactive Small Business Sustainability Checklist, which uses a simple self-assessment to provide tailored advice to businesses at any stage of embracing sustainability. It’s useful to accounting firms for examining their own progress and helping their clients to do the same.
We advocate globally on behalf of small- and medium-sized accounting practices (SMPs) through input to international standard-setting processes. Our goal is to ensure that standards are relevant and proportional to SMPs and to the small businesses they serve. This segment of the profession is enormously important to the growth and stability of every local economy as well as of the global economy.
How have technological advancements – and especially AI – affected the accounting profession?
AI is, above all, an opportunity for us to add more value and increase our relevance. To give you an example: auditors can leverage AI to uncover hidden insights, which can then support predictive analytics, risk evaluation and fraud detection. Generative AI is also proving to be a valuable tool for drafting audit reports and distilling complex information. Other important changes are happening outside of formal systems and processes – in emails and spreadsheets, in team meetings, in presentations and in countless one-off tasks that AI is transforming.
Our profession needs to seize these opportunities. Individually, we need to keep increasing our digital literacy and get more practical experience with AI. But we do not need to reinvent ourselves! AI is ultimately a tool, not a solution. Our value as trusted advisers – those with the uniquely human qualities of deep expertise, integrity and professional ethics – has never been more important. At the same time, we should not underestimate the new and emerging risks of AI, including cybersecurity, threats to privacy, bias and a lack of transparency within AI models.
What other challenges are affecting the accounting profession?
The profession is grappling with the best way to attract talented people in sufficient numbers to match the demand for our skills and retain them in the profession over the long term. This is a high priority for our member organisations, so we are paying close attention at IFAC. In some emerging economies, we are working with our members to expand pathways into accounting careers through intermediate professional qualifications. In some developed economies – including much of Europe – we are looking at how the profession can appeal to the next generations by reframing our narrative in terms of the profound social and environmental purpose of an accounting career. We have a compelling story to tell about our purpose-driven profession and I think we can do a better job telling it.
Public trust in audit has taken hits in recent years. What reforms or innovations does IFAC champion to restore confidence?
I suggest taking an ecosystem-wide approach to the many interconnected factors in audit quality. The work of the auditor is one important factor alongside internal governance, audit committee member expertise, management practices and much more. We have a point-of-view paper on audit quality that goes into more detail about the diverse components of a successful audit. I think it’s important to keep the complete ecosystem in mind when considering reforms or innovations with respect to any one area within it.
What role do you see for accountants in helping companies transition to net-zero and deliver credible sustainability reports?
In short: it is a central role. Accountants are at the centre of information flows and decision-making, so we are uniquely positioned to capture, analyse and report sustainability information. We have skills and competencies that are critical for connecting financial and sustainability information, including our grasp of business models, risk management, systems and processes and performance measurement – along with growing specific knowledge of environmental, social and governance (ESG) factors and the ability to collaborate with experts. Our public interest mandate also imbues the reporting process with greater credibility. As a regulated profession, we are subject to an ethical code and public oversight, and we are charged with acting in the public interest with professional judgement, scepticism and independence.
What safeguards are needed to ensure such auditor independence and quality amid commercial pressures?
At the level of each jurisdiction, building a healthy legal and regulatory environment for audit firms is crucial. There are explicit safeguards in most jurisdictions guiding the behaviour of companies, audit firms and individuals. It’s common for jurisdictions to require that companies rotate audit firms and that the audit firm’s partners rotate among their clients. High-quality international standards for auditor independence are, of course, a key factor. The principles of independence and integrity outlined in the International Code of Ethics for Professional Accountants of the International Ethics Standards Board for Accountants (IESBA) are extremely important. The adoption and implementation of the IESBA Code are obligations for IFAC membership, so it governs the professional behaviour of millions of accountants around the world. The adoption and implementation of International Audit and Assurance Standards Board (IAASB) standards is also an obligation for IFAC member organisations. Finally, the role of professional accountancy organisations in reviewing their members’ compliance with these requirements is critical. Trust in the profession relies on the addition of all these steps and on permanent attention. Reliance on our profession’s fundamental purpose of serving the public interest is not a given, so we all need to keep earning our reputation.
- This article was published in the July issue of GOLD magazine. Click here to view it.
