Presentation given by Giancarlo Attolini, chair of the Small and Medium Practices Committee of the International Federation of Accountants to the IFAC Chief Executives Strategic Forum in New York, NY, February 27, 2012.

1. The Changing Face of Auditing
and Ethics: Implications for
SMPs
Giancarlo Attolini, Chair, Small and
Medium Practices (SMP) Committee
IFAC Chief Executives Strategic Forum
New York, USA
February 27, 2012
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2. Introduction
• Regulation and standards
– Capable of being applied in manner proportionate to size and complexity of
entity and practice (regulatory burden is main concern of SMEs & SMPs)
– Stable platform (pace of change is main source of burden for SMEs & SMPs)
– Relevant to SMEs and SMPs
• Policy/regulatory proposals need to be appraised in terms of
– Public interest
– Impact on small- and medium-sized entities (inc. micro)
– Sufficient appropriate evidence
– Benefits versus costs (not burdens!)
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3. General Observations
• Regional consultation, global implications
• EC’s objectives include
– Reduced administrative burden (SMEs); audit of “small undertaking” seen
as “significant administrative burden” in draft EU Accounting Directive
– Increased choice/competition in audit market (PIEs)
• High stakes
– Change will be highly disruptive so must be sure of benefits of change
• … but lack of evidence to support many proposals
• Relatively low impact on SMPs versus larger firms ...
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4. Proposals of Most Relevance to SMPs (and SMEs)
• Restriction on non-audit services
– SMP Committee research/polls reveal SMEs want “one-stop shop”
– Risk of disproportionate outcome for SMEs
• Mandatory rotation
– Risk of greater audit market concentration (unless coupled with other
measures
• ISA adoption
– Risk of diverging practices at SME level (different approaches to
proportionality inc. use of review)
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5. Proposals of Most Relevance to SMPs (and SMEs)
• Mandatory tendering/abolition of Big Four clauses
– Help improve competition and challenge perception that size means quality
• European “passport”
– Greater cross-border mobility of auditors
• Audit oversight
– Risk that public oversight will prove disproportionate for SMEs
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6. Conclusion
• Global Accountancy Profession needs to
– Speak with one voice, setting aside differences
– Focus on evidence-based, public interest motivated arguments
– Better articulate the value of the profession (competence, integrity, etc.)
and its services (audit, business advisory, etc.)
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7. Thank-you
www.ifac.org/smp
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