Past events: 15 May 2009 in Paris
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On 15th May in Paris, EFAA in cooperation with its French member Experts-comptables de France (ECF) and the Conseil Supérieur de l'Ordre des Experts-comptables (CSOEC) organised a conference on Auditing, Accounting and Advising: the Educational Challenge.
After a welcome message by CSOEC President Joseph Zorgniotti, EFAA President Federico Diomeda opened the conference.
The first speaker Jean-Philippe Rabine from the European Commission's DG Internal Market Auditing Unit spoke about the future of accounting and auditing in the EU. On accounting, he stressed that the revision of the EU Accounting Directives is part of the EC simplification initiative aiming to modernise outdated and burdensome legislation, to eliminate discrepancies, to remedy the lack of consistency and to get rid of costs. Asked about the proposal of the EC to give Member States the option to exempt micro entities from the accounting directives, in particular as regards the preparation and publication of the accounts, which will make the information available only to public authorities and not to the public, Mr Rabine motivated such proposal by the fact that the main partners of micro entities are local partners and therefore a Euroepan public release is irrelevant.
On auditing, Mr Rabine said that the adoption of the International Standards on Auditing (ISAs) is the main topic now, since the IAASB clarity project is completed. On this issue, he noted that there is a classic division between northern Europe (UK, Netherlands, Denmark, Sweden and Finland) that implement the ISAs directly and southern Europe (France, Italy, Spain for instance) that implements the ISAs but with changes. For the latter, the impact of the adoption will therefore be more important.
Mr Rabine also mentioned the role of the EC as a member of the monitoring group supervising the ISAs and through the EGAOB ISA subgroup, of which EFAA is also a member. He also talked about the study commissioned by the EC and carried out by the University of Duisburg on costs and benefits of the implementation of ISAs in the EU, which should be released in the coming month. The main result of the study is that the adoption of ISAs would have a positive effect as it will create confidence in the quality of the audit. However, Mr Rabine reported that the Duisburg University did not get results on the impact for SMPs. Mr Rabine also informed the audience that the EC is monitoring the process of translation of the ISAs into EU languages.
EFAA chairwoman of the Education Expert Group Anne-Marike van Arkel from NOvAA, Netherlands, presented the first results of the EFAA survey on ISAs, which aims to investigate the perception, knowledge, facts and potential problems that SMPs could face when the ISAs are adopted, with a special attention to education and training. Mrs van Arkel said that most SMPs have a very practical approach and do not monitor standard setting developments nor they concentrate on the applicable framework. The results show that they are convinced about ISAs penetration into their local standards but that they do not know how integrated the two systems are and what the differences are, she added. Then she stressed that in certain areas such as availability of training and IT audit support, the results are very heterogeneous. As regards the translation of ISAs, a large majority of SMPs answered that it is very important that they can work in their own domestic language. However, by and large, many SMPs declared that they do not back ISAs as they fear the standards will be too difficult for them to apply .They would make them quit audit.
During the discussion, participants said that a significant majority of small practitioners shows scepticism towards ISAs and that it is the responsibility of European organisations such as EFAA to propose relevant guidance at the earliest stage to help them get rid of doubts and understand the logic of the ISAs. They also stressed that the reason why most of small practitioners do not know which standards they are using is because they rely on their audit software and do not feel the need to know what is behind it. One participant also raised the question of the implementation of ISAs and of the standard on quality control (ISQC1) as in some Member States both sets of standards were implemented and made mandatory at the same time and it created confusion. Mr Rabine answered saying that the EC is trying to separate the two issues.
Federico Diomeda concluded this first discussion stressing that the biggest issue today is to raise awareness among SMPs and SMEs and to prepare proper guidance, translation and IT tools to allow a smooth implementation of the ISAs in Europe.
In the second part of the conference, Prof. Paul Gooderham from the Norwegian School of Economics and Business Administration and Jørgen Lund from EFAA member NARF addressed the question of the relations between accountants and their SME clients beyond standardised accounting services. Based on studies carried out in Norway, they identified up to 15 different services that can be provided by the accountant and they offered a classification of the profession ranging from "traditionalist practitioners" providing only traditional accounting services to "experimenters" to "innovators" providing financial, organisational and management advising services. Prof Gooderham introduced the concept of "dynamic capabilities" in accounting firms, which refers to the ability to generate timely responses to meet the requirements of a changing environment, and he pointed out that so far only a very short proportion of small accountants act as innovators although the demand from the clients is high and income from "innovative" services are higher. Jørgen Lund stressed that in general, accounting firms need to engage more with their clients.
Paul Gooderham and Jørgen Lund concluded their presentation stating that there is a lot to learn from a European cross national survey and they call upon EFAA to start the process to better understand where the business sector is heading and what the main drivers for the profession to move toward consulting are.
This suggestion was strongly backed by the audience during the discussion. Participants also insisted on the fact that it is to the profession to tell universities what is expected from accountants so that when that enter the profession they are ready to answer the needs of their clients. Nowadays, accountants are the travel-mates of the small entrepreneurs and EFAA together with its national members should be the initiator of such vision. Several participants mentioned ongoing debates at national level on whether to develop more the consulting role of the accountant and the consequences, mainly in terms of educational challenge. They suggested that the best way to reach the profession and to avoid an increase of costs would be to introduce relevant training within the Continuing Professional Development's requirements, beyond pure technical accounting and auditing skills.
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