Action Plan Developed by The Institute of Financial Accountants

BACKGROUND NOTE ON ACTION PLANS Action Plans are developed by IFAC members and associates to address policy matters identified through their responses to the IFAC Compliance Self-Assessment Questionnaires. They form part of a continuous process within the IFAC Member Body Compliance Program to support the ongoing development and improvement of the accountancy profession around the world. Action Plans are prepared by members and associates for their own use based on the national frameworks, priorities, processes and challenges specific to each jurisdiction. As such, they will vary in their objectives, content and level of detail, consistent with their differing national environments and stages of development, and will be subject to periodic review and update. Refer to responses to the Part 1 Assessment of the Regulatory and Standard-Setting Framework Questionnaire and Part 2 SMO Self-Assessment Questionnaire for background information on each member and associate their environment and existing processes. These responses may be viewed at: http://www.ifac.org/about-ifac/membership/compliance-program/compliance-responses Use of Information Please refer to the Disclaimer published on the Compliance Program website. ACTION PLAN IFAC Member/Associate: Approved by Governing Body: Original Publish Date: Current Publish Date: Next Update: Institute of Financial Accountants (UK) Chief Executive November 2010 March 2012 March 2013

Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

Glossary ACCA CPD IASB IAESB ICAEW ICAI ICAS IESBA IES IFA IFRS IPSAS ISA I&D ISA RQB SMP SMT Association of Chartered Certified Accountants Continuing Professional Development International Accounting Standards Board International Accounting Education Standards Board Institute of Chartered Accountants in England and Wales Chartered Accountants Ireland Institute of Chartered Accountants of Scotland International Ethics Standards Board for Accountants International Education Standard Institute of Financial Accountants International Financial Reporting Standard International Public Sector Accounting Standard International Standards on Auditing Investigation and Discipline International Standard on Auditing Registered Qualifying Body (for auditors in the UK) Small or Medium-sized Practice Senior Management Team (of IFA)

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK) Action Plan Subject: Action Plan Objective: SMO 1 Quality Assurance To show the IFAs commitment to quality assurance in relation to its Members in Practice certification and monitoring scheme. Actions Completion Date Responsibility Resource

Start Date

Background: The IFA is not an UK Registered Qualifying Body (RQB-for auditors); any of its members who offer audit services do so under the auspices of an RQB (eg. Institute of Chartered Accountants in England and Wales (ICAEW), Institute of Chartered Accountants (ICAS), the Association of Chartered Certified Accountants (ACCA), the Institute of Chartered Accountant in Ireland (ICAI). However a significant proportion of its members offer other accountancy and assurance services to the public. All members in practice in the United Kingdom must hold the Institutes Practising Certificate. The IFA is, however, one of 25 designated Supervisory Authorities under the UKs Money Laundering Regulations 2007, and undertakes monitoring and regulation on behalf of the UK Treasury. The aim of the IFAs policy is to reinforce the confidence of the public in the high standards of ethical compliance and professional competence of practising members through the demonstration of best practice and regulation. Regulation of Practising Members 1. November 2009 Detailed registration forms sent out to all UK practising members to request information relating to their anti-money laundering supervision Completed June 2010, then subsequent annual monitoring Recruitment completed November 2009 and succession planning ongoing Completed January 2011 Director Professional Standards Staff

2.

November 2009

Recruitment of a Director of Professional Standards, to meet an appropriate job description. Make provision for succession as and when appropriate.

Chief Executive

Council

3.

June 2010

Rationalise the issue of IFA Practising Certificates, so as to remove the ambiguity of a separate Compliance Certificate (agreed by IFA Council June 2010)

Director Professional Standards

Staff

Maintaining Ongoing Processes 4. May 2010 New on-line Members Handbook written and Ongoing (most Director Staff, website Page 3 of 16

Action Plan Developed by The Institute of Financial Accountants (IFA) (UK) # Start Date Actions published, to give practical guidance to members 5. 2009 Review, add to, delete or replace if necessary, online information and guidance provided for the benefit of IFAs Members in Practice. Publicise the IFAC Practice Management Guide and other appropriate IFAC guidance for SMPs on the IFA website Review the working of the Institutes Continuing Professional Development (CPD) scheme in order to comply more closely with IFAC SMO 2. IFA Council agreed June 2011 to change from input to output CPD, and to extend monitoring to all non-retired or non-academic members worldwide. Apart from UK Practising Members (all of whom will continue to be monitored annually), a statistically-valid sample will be checked each year from 2013. Review whether it would be appropriate, advisable and indeed feasible to introduce a mandatory quality assurance review programme for members, given that none are registered auditors Completion Date recent update February 2012) Ongoing Responsibility Professional Standards Director Professional Standards Director Professional Standards Resource

Staff, members, website

6.

2010

7.

2011

Initial completion 2010 (to be updated as necessary) End 2013

Staff, website

Director, Professional Standards Director Education

Staff, website

8.

2011

End 2013

Director Professional Standards

This would require considerably more staff and member resource than we at present have available, together with financial resources at present beyond our budget. Senior Management Team, especially Director of Professional Standards and supporting staff

Review of IFAs Compliance Information 9. Ongoing The IFA recognises the need for it to perform periodic reviews of responses to the IFA Compliance Self-Assessment questionnaires, and to update sections relevant to each SMO. It undertakes to inform IFAC Compliance staff, insofar as resources permit, about the updates necessary to enable re-publication of updated information. Ongoing Senior Management Team

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

Action Plan Subject: Action Plan Objective:

SMO 2 International Education Standards for Professional Accountants and other EDCOM Guidance To update and raise the standards of the qualifying examinations, and to ensure that members understand and commit themselves to the CPD requirements Actions Completion Date Responsibility Resource

Start Date

Background: The IFA is committed to raising its educational standards for all applicants for membership, whether students or prior-qualified, to include specific papers on Ethics. The Ethics programmes at both Diploma and Professional levels will gradually become available at an increased number of centres with the aim of creating accessibility for all students. Distance Learning versions will also be added. The Ethics programme embeds the Code of Ethics of the International Ethics Standards Board for Accountants (IESBA) and looks at the practical application of ethical principles in realistic business related scenarios. Continuing Professional Development (CPD) is currently mandatory for all practising members in the United Kingdom, and evidence of the previous years CPD is required on application and renewal of the Practicing Certificate. The IFA has changed the CPD requirement from input to output from 2012, as part of which the members will be asked to reflect on their development and gauge the value of the outcomes in terms of personal career development. The new CPD requirements will also reflect best practice as determined by IFAC. The extension of the Practising Certificate regime including CPD to other states outside the UK will be considered. IFA also intends to extend the CPD requirements to members in business, with a likely target date of 2012. The IFA core education programme itself was re-launched in 2010 and now embeds International Financial Reporting Standards for Small and Medium Entities (IFRS for SMEs) within the syllabus. Such standards are explicitly examined. Dedicated programmes covering IFRS and IFRS for SMEs have also been launched. IES 6 Assessment of Professional Capabilities and Competence 10. 2009 Replacement of the examination syllabus and structure with a more relevant and more testing version which will better equip students to act in the capacity of members when qualified. The IFA is seeking accreditation from the UK OFQUAL for its programme during 2011. This was part completed during 2011 and will be completed entirely before end 2012. First examination 2010 To be completed by end 2012 Director Education, Council Director Education, Council Director Education and Staff

11.

2009

Director Education and Staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK) # 12. Start Date 2010 Actions Reassessment of the Accredited Prior Learning route to membership and introduction of revised criteria from early 2013. Completion Date 2012 Responsibility Director Education, Director Professional Standards Council Director Education, Director Professional Standards, Council Director Professional Standards, Council, Membership Panel (to be appointed) Resource Directors Education and Professional Standards

13.

2011

The introduction of Professional Experience Requirements will be discussed by IFA Council in late 2012 and, if agreed, the Institute will aim to introduce them by 2014.

2014

Director Education, Director Professional Standards

14.

2012

Initiate new member resource for vetting the current process of admission of new UK members by a CV only route (ie admission on the grounds of adequate relevant experience). The ultimate aim is to cut off this route entirely by the end of 2015/6.

2015/6

New Membership Panel, Staff

IES 7 CPD 15. 2010 2.14.3.1 Type of CPD Requirement Change of CPD system from input (hours, points) to output; this involves not only clear record-keeping but the member must clearly justify the CPD undertaken through assessment of the relevance of outcomes. 2.14.3.8 Monitoring of CPD All members in practice in the UK are currently checked to ensure they have completed the required amount of CPD; this will have to change to closer scrutiny (monitoring) when the CPD requirement changes from input to output. A statistically-valid sample of members in business will also be monitored from the proposed change to include them in the scheme from 2013. 2012/3 Director Professional Standards, Council Staff

16.

2011

2013

Director Professional Standards, Council

Staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK) # Start Date Actions Completion Date Responsibility Resource

Maintaining Ongoing Processes 17. 2011 An ongoing review of examination syllabus and structure will assure the continuation and stability of the new raised standards. Appointment of new teaching colleges to the list and their accreditation; accreditation of new examination centers. The Bye-laws have been amended as necessary to ensure that members comply with CPD requirements, including the specific requirement on them to maintain a record, whether or not they are asked to supply information in any one particular year Ongoing Director Education Staff and senior members as appropriate

18.

2010

Ongoing

Business Development Director Director Professional Standards, Council, AGM

Staff

19.

2011

Ongoing

Director Professional Standards

Review of IFAs Compliance Information 20. Ongoing The IFA recognises the need for it to perform periodic reviews of responses to the IFA Compliance Self-Assessment questionnaires, and to update sections relevant to each SMO. It undertakes to inform IFAC Compliance staff, insofar as resources permit, about the updates necessary to enable re-publication of updated information. Ongoing Senior Management Team CEO, Director of Professional Standards, Director of Education and supporting staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

Action Plan Subject: Action Plan Objective: # Start Date

SMO 3 International Standards, related Practice Statements & Other papers issued by the IAASB N/A Actions Completion Date Responsibility Resource

Background SMO 3 is not directly relevant to the IFA, which, as a United Kingdom-base body, is subject to the statements and issued Reporting Standards of the UK Auditing Practices Board (APB) and Accounting Standards Board (ASB) (both operating boards of the Financial reporting Council). The APB and ASB manage the interface with the IAASBs International Standards, Practice Statements and other papers on behalf of the UKs professional accountancy bodies. Maintaining Ongoing Processes 21. Continue to support the relevant standard setting bodies in the UK the APB and ASB, encouraging and supporting where possible ongoing convergence to the International Standards on Auditing (ISAs). Review of IFAs Compliance Information 22. Ongoing The IFA recognizes the need for it to perform periodic reviews of responses to the IFA Compliance Self-Assessment questionnaires, and to update sections relevant to each SMO. It undertakes to inform IFAC Compliance staff, insofar as resources permit, about the updates necessary to enable re-publication of updated information. Ongoing Ongoing Director Professional Standards, Council Director Professional Standards

Ongoing

Senior Team Management

CEO, Director of Professional Standards, Director of Education and supporting staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

Action Plan Subject: Action Plan Objective:

SMO 4 IESBA Code of Ethics To inform and notify members, affiliates and students of the provisions of the IESBA Code of Ethics (as the IFA Code of Ethics) and to support their compliance with this. Actions Completion Date Responsibility Resource

SMO4

Start Date

Background: The Institute of Financial Accountants is a professional accountancy body that qualifies and regulates professional accountants, and it therefore has a responsibility to the public to ensure its members and students appreciate and abide by their ethical responsibilities. The IFA, as a Member Body of IFAC (International Federation of Accountants), has adopted the Code of Ethics and its Fundamental Principles for this purpose. The Code of Ethics is reviewed on a regular basis by the independent IESBA which is supported by IFAC (composed of both practising and business accountants from among its worldwide membership) and is therefore applicable in all countries. The application of consistent standards and demonstration of attitudes and conduct that are appropriate for a professional accountant are recommended in this Code of Ethics. The IFA expects its members and students to have a good understanding of the fundamentals of professional ethics and to know the constraints placed on them as individuals, whether in practice or employed in business. Appropriate values, ethics and attitudes should influence everything IFA members and students do irrespective of sector, job role or level of seniority. Section A of the Code outlines the fundamental principles on which the Code is based. For IFA professional accountants in business, Section B provides core advice on how the conceptual framework should be applied in their areas of activity. Accountants in practice should be aware that the principles outlined in Section C do not only apply to auditors, but to all practising accountants and tax advisers. The Code of Ethics, having been adopted by the IFA Council, may be regarded as part of the laws of the Institute; failure to observe the Code may be regarded as a disciplinary offence Adopting the IESBA Code of Ethics 23. Early 2010 Reviewed new revised IESBA code, drafted preface Adopted IFA Code of Ethics closely based on IESBA Code of Ethics (Sections 2 and 3 reversed in IFA Code) Completed Director Education, President Council, Director Education, Director Professional Standards, Chief Executive Staff

24.

2010

Completed

Staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK) SMO4 Start Date Actions Completion Date Completed June 2010 Ongoing Responsibility Resource

Promoting the Code of Ethics to Members and Students 25. June 2010 Code of Ethics available online at www.ifa.org.uk (members section, but accessible openly) New code promoted in Institute e-newsletters and magazine Director Education Director Education, Director Professional Standards, Chief Executive Staff

26.

June/July 2010 and ongoing

Staff

Ethics support services 27. Ongoing Guidance on resolving ethical conflicts in institute newsletters and magazines, using case studies Ongoing Director Education, Director Professional Standards Director Professional Standards, Director Education in alliance with Institute for Business Ethics (UK) Director Education, Examiners Staff and guest writers

28.

Ongoing

Ethics workshops for UK members

Ongoing

Staff. Financial resources to be allocated once forward programme is decided

29.

30.

Announced September 2009 for examination from June 2010 Ongoing

New Education Syllabus introduced to include paper D5 (Ethics in the Workplace) in Diploma syllabus, and paper P6 (The Ethical Professional) in the Professional Financial Accountant syllabus

Completed

Staff and Examiners

Review of the IESBA Code of Ethics as changed to ensure compatibility of IFA Code of Ethics.

Ongoing

Director Education

Staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK) SMO4 Start Date Actions Completion Date Ongoing Responsibility Resource

Review of IFAs Compliance information 31. Ongoing The IFA recognises the need for it to perform periodic reviews of responses to the IFA Compliance Self-Assessment questionnaires, and to update sections relevant to each SMO. It undertakes to inform IFAC Compliance staff, insofar as resources permit, about the updates necessary to enable re-publication of updated information. Senior Team Management CEO, Director of Professional Standards, Director of Education and supporting staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

Action Plan Subject: Action Plan Objective: # Start Date

SMO 5 IPSAS and other PSASB Guidance N/A; IFA has no public sector members and does not propose to recruit in this area. Actions Completion Date Responsibility Resource

Background The IFA has no public sector members and does not propose to recruit in this area. The IFA complies with the requirements of the UK Accounting Standards Board. Review of Organisations Compliance Information 4. Ongoing The IFA recognizes the need for it to perform periodic reviews of responses to the IFA Compliance SelfAssessment questionnaires, and to update sections relevant to each SMO. It undertakes to inform IFAC Compliance staff, insofar as resources permit, about the updates necessary to enable re-publication of updated information. Ongoing Senior Team Management CEO, Director of Professional Standards, Director of Education and supporting staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

Action Plan Subject: Action Plan Objective:

SMO 6 Investigation and Discipline To use our best endeavours to bring the IFA into line with best disciplinary practice within as short a timescale as possible, taking into account the resources available, enabling compliance with the requirements of SMO 6. Actions Completion Date Responsibility Resource

Start Date

Background The IFA is committed to an open and accountable regulatory system with procedures which are timely, seen to be fair and which are effective. The IFA is at present operating a conduct system which aims to be fair and open, but which still needs to be reformed to align with best practice developments. The ultimate aim is independence from the Institute. Alignment of SMO recommendations with IFAs Bye-laws, Regulations and Articles of Association 32. 2010 onwards Review and modify practice, Bye-laws, Regulations and (where necessary) Articles of Association in accordance with the recommendations of SMO 6 Obtain Councils agreement to a Scheme of Delegations to clarify and codify responsibilities. Completed Appointments and Governance Committee, Council, staff Appointments and Governance Committee, Council Director of Professional Standards and supporting staff

33.

2011

2012

Chief Executive, Company Secretary, Director of Professional Standards

Maintaining Ongoing Processes 34. 2012 onwards Specifically, if agreed, to re-introduce an Investigatory Committee, reform the Disciplinary Committee and to remove Council members from involvement (the latter was agreed by Council June 2011) To re-write the Disciplinary Rules to accommodate the necessary changes (approved by Council and Appointments and Governance Committee June 2011). New Regulations published on IFA website. Provide information and guidance to members, their employers and clients on disciplinary processes, to By end of 2013 Appointments and Governance Committee, Council, staff Staff Director of Professional Standards and supporting staff

35.

2010 onwards

Completed

Director of Professional Standards and supporting staff

36.

2011

Ongoing

Staff

Director of Professional Standards and supporting staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK) # Start Date Actions Completion Date Responsibility Resource

obtain transparency and accessibility, using the IFAs website and the Financial Accountant magazine 37. 2010 Liaise with other professional bodies and regulatory onwards bodies and if appropriate amend regulations to reflect changes in the wider regulatory environment 38. 2012 Recruit new members (including a significant proportion of lay members) to the Institutes conduct committees, giving training as necessary 39. 2012 Set a realistic and meaningful timeline for dealing with complaints and the disciplinary process. Review of the IFAs Compliance Information 40. Ongoing The IFA recognises the need for it to perform periodic reviews of responses to the IFA Compliance SelfAssessment questionnaires, and to update sections relevant to each SMO. It undertakes to inform IFAC Compliance staff, insofar as resources permit, about the updates necessary to enable re-publication of updated information.

Ongoing

Staff

Director of Professional Standards and supporting staff Director of Professional Standards Director of Professional Standards Director of Professional Standards and supporting staff

Ongoing

Staff

2012

Staff

Ongoing

Senior Management Team

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

Action Plan Subject: Action Plan Objective:

SMO 7 (International Financial Reporting Standards) The IFA expects its members to keep themselves up to date with IFRS, stimulated by appropriate publicity and comment Actions Completion Date Responsibility Resource

Start Date

Background UK Accounting Standards Board has the responsibility for setting the financial reporting standards in the United Kingdom. For more information please refer to the UK Accounting Standards Boards website http://www.frc.org.uk/asb/ Maintaining Ongoing Processes 41. Late 2010 All IFRSs are to be indexed on the IFA website. Material standards are reported through articles in the various e-newsletters available to members and the IFA magazine Financial Accountant. The IFAs qualifications focus specifically on the IFRS for SMEs. Introduction of the IFAs new IFRS Diploma for accountants Ongoing Staff Staff, contracted out technical services to members (including ICAEW Library and Information Service)

42.

2009

Completed

43.

2010

44.

Ongoing

Introduction of new syllabus including Professional Financial Accountant level P1 paper (Financial Accounting and IFRS for Small & Medium Size Enterprises (SMEs)). The IFA complies with the requirements of the UK Accounting Standards Board

Completed

Director International, Director Education Director Education and Examiners Council, Senior Management Team Senior Management Team

Staff

Staff and Examiners

Ongoing

Staff

Review of the IFAs Compliance Information 34. Ongoing The IFA recognises the need for it to perform periodic reviews of responses to the IFA Compliance SelfAssessment questionnaires, and to update sections relevant to each SMO. It undertakes to inform IFAC Compliance staff, insofar as resources permit, about the updates necessary to enable re-publication of updated information. Ongoing CEO, Director of Professional Standards and supporting staff

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Action Plan Developed by The Institute of Financial Accountants (IFA) (UK)

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