The NZICA and ICAA merger: Will emerging PAO strategies improve financial reporting?

Transcription

1 Audit oversight and quality assurance: from setting the requirements to practical implementation The NZICA and ICAA merger: Will emerging PAO strategies improve financial reporting? STAREP is supported with funding provided in part by European Union, Austria s Federal Ministry of Finance, Austrian Development Cooperation, Luxembourg s Ministry of Finance, SECO - State Secretariat for Economic Affairs John Hodge Senior Financial Management Specialist CFRR, The World Bank Chisinau, 9 October 2015

2 Introduction»Significant drivers for change compelled the New Zealand and Australian Chartered Accounting professions to merge and create a new strategy»leading PAOs around the world appear to be evolving new operating models»emerging PAO models may create opportunities for economies of scale in quality assurance, but more importantly increase the capacity of the profession to improve financial reporting and auditing 2

3 Objectives» Understand the drivers behind the merger of the New Zealand Institute of Chartered Accountants (NZICA) and the Institute of Chartered Accountants Australia (ICAA)- the first cross-border PAO merger» Understand the evolution of a PAO from a traditional registration body model to a more corporate model» Understand how evolving PAO strategies can boost the capacity of members to prepare quality financial statements and undertake quality audits 3

4 The merger

5 Creating Chartered Accountants Australia and New Zealand 5

6 Facts and figures 6

7 The pre-merger environment»nzica had reformed its governance structure significantly leading up to the merger»nzica and ICAA had worked together and made significant investment to create a new Chartered Accountant program»a Closer Economic Relations agreement between the countries was driving more alignment in legal frameworks for business, but important differences were being addressed too slowly 7

8 What were the drivers for merging?»globalization and its impact on members and membership bodies worldwide»evolving member needs and changing member demographics»the changing competitive landscape for the Chartered Accountants designation locally and overseas 8

9 Vision and strategy»members of CA-ANZ to be viewed as trusted leaders in business and finance»positioning Chartered Accountant as the profession s pre-eminent designation 9

10 Merger process»membership proposal and voting»amendments to the statute constituting NZICA»Significant media attention»time consuming and difficult for staff of both PAOs 10

11 Post-merger»Governance»Business activities» New brand launch» Thought leadership» New education initiatives» New offices in South East Asia» New relationship model 11

12 So what does this mean?

13 Key thoughts»paos globally are changing because of globalization and opening markets, deregulation (e.g. SMEs) and a move away from self-regulation»paos will increasingly adopt a more corporatized model in order to remain relevant to members and be sustainable»membership scale is important because it provides economies and increased resources and can be achieved through expansion of the profession (i.e. entry pathways for those in practice and those in business) and through consolidating membership bodies 13

14 Key thoughts (continued )» Ongoing financial viability is critical, beyond increases in scale, PAOs look for revenue growth to invest in important technology» Providing technology enabled guidance and tools helps professional accountants comply with requirements and improves quality» Successfully positioning the Chartered Accountant designation as pre-eminent in finance and business may help attract this much needed talent into the profession» Talented, well educated professionals that engage in life-long learning are at the foundation of quality financial reporting but how to attract talent and provide good education? 14

15 Key thoughts (continued )»Being able to influence policy nationally, regionally, internationally can lead to improvements in quality»the designation can be branded to reflect aspects like quality of work, professionalism and ethical leadership. This is where quality assurance intersects because sustained poor quality work and bad professional behavior will impact reputation and if not addressed will ultimately lead to the demise of the profession 15

16 Let s discuss