New Era for the Profession

Fermín del Valle, President

International Federation of Accountants

Institute of Chartered Accountants of India International Conference on "Role of Profession in New Milieu"

Chennai, India – January 12, 2007

Thank you very much for inviting me to participate in this conference. As evidenced by the membership of the Institute of Chartered Accountants of India (ICAI), the profession here in India is continuing to grow and thrive. It mirrors, I believe, India’s own growth and development.

To talk about the new era of the accountancy profession means talking about its future. It means considering the possible challenges and opportunities. Talking about the future does not necessarily imply the existence of a visible path, a well-defined road, but it does entail the need to define a destination, a goal, an objective. And it has to be a clear one.

As an organized profession, we need to know clearly where we stand and where we want to go. We need to understand our present, our current situation as professional accountants, and we need to analyze the context, so that we are able to face the future with the right understanding and the proper tools.

In the long term, our first objective is the sustainability of the profession, in a broad sense, and through that sustainability, to achieve a more efficient collaboration in the integral development of our societies. When I speak about integral development, I refer to a development that reaches both the economic, the social and the cultural spheres. We must remain committed to these precepts to be effective agents of the development of our societies. If indeed as professionals we are effective agents of that development, then the sustainability of our profession is a matter of public interest.

Professional accountants here in India, in my home country of Argentina and around the world are living in challenging times that obligate us to put all of our energy, talents and resources in motion. I believe we are doing this and doing it well. The world permanently needs and seeks our answers to the ongoing challenges it faces, and it is our role to both anticipate and help it meet those challenges. In so doing, we demonstrate our value and enhance the profession’s sustainability.

There are at least three topics that the International Federation of Accountants (IFAC) deals with under the strategic theme of sustainability of the profession that in my opinion are related to a vision of the future.

The first topic is the need to better understand and shape society’s expectations of the profession.

The profession can and must move ahead in new areas in order to build a better future. It should keep looking to the markets it serves, both within organizations and from public practice. We should identify and design more efficient ways to deliver our services and we must generate new services that better respond to the changing demands of the market. We need to be prepared to provide relevant services within the new technology environment.

Looking to the future, we can identify two areas that we should work on with similar decisiveness and commitment. On the one hand, we should continue to work steadfastly on strengthening public confidence in the profession and in IFAC. On the other hand, we should encourage innovation and flexibility so that our profession can readily respond to the future demands that society will place on it.

We must be alert to the needs of the market, and the community in general, and we must identify which of those needs are related to our specific competencies. We should adapt our services and design new services to satisfy those needs, always having in mind the common good.

Professional accountants play an essential role in society, providing reliable and transparent information, both in the public sector and in the private one. The accountancy profession facilitates and makes economic activity possible at any level. And it does this in a way that protects the public interest, serves the common good and contributes to the integral development of the society. The accountancy profession is also essential to supporting economic and social policies and to assisting in their best implementation.

The field of accountancy is not limited to its role in the functioning of the capital markets. It necessarily extends to numerous other fields in which each of us actively contributes, as auditors, accountants in management (including in business and the public sector), consultants (especially with respect to taxes, information systems, management, insolvency, corporate finance), internal auditors, and accountants working in academia.

The scope of the accountancy profession is very broad, and the reality for each of us, as professional accountants, is diverse.

This should be reflected in the definition of the accountancy profession, and it should be discussed in terms of education, so that every specialization is properly considered.

IFAC should represent all professional accountants, no matter what their area of expertise. This means collaborating with our member bodies to obtain the involvement of a broad range of professional accountants with a wide range of expertise. It also means enhancing the outreach of our current boards and committees so more accountants understand IFAC and how we serve the profession.

In addition, IFAC should also look to see if some of these specializations require a committee or another form of representation in our organization so that we may fully address matters that may have a global interest. At the same time, we have to respect the principle that IFAC should only undertake new initiatives that can add real value to the profession and to the public we serve.

The second topic is the emphasis on values.

Knowledge will remain a fundamental factor in the future sustainability of the profession. But the focus will not be placed so much on knowledge, as behavior. And we must keep in mind that it is ultimately values and not rules that drive behavior.

For professional accountants, IFAC encourages adherence to three fundamental values: integrity, transparency and expertise.

Expertise implies knowledge and experience and, consequently, permanent education. It is a necessary condition for the provision of professional services.

Integrity is where word and action meet. To have integrity is to honor commitments, to promise that which one truly proposes to do and to do what one promises.

Finally, where transparency exists, corruption is not possible. Corruption is one of the largest obstacles to development. If the accounting profession is committed to development, then it should commit itself to combat corruption.

Corruption is development’s worst enemy. It hampers any form of economic growth. Corruption affects the economies of all countries. Those most likely to suffer the most, however, are developing and emerging economies.

I am happy to note that Transparency International’s 2006 Global Corruption Report noted India as one of a handful of countries that significantly improved its rating since 2005. I congratulate you on this success and urge you to take the necessary steps to continue the momentum.

The accountancy profession has a significant role to play in anti-corruption. Accountants work in many aspects of business. As public practitioners, accountants are auditors and business advisors in a number of areas. They also hold positions as tax advisors. In addition, accountants serve in key internal positions in organizations in the public and private sector, are internal auditors, and work as educators. Each of these accountants can all play a role in combating corruption.

What the accountant should do when confronted with corruption is covered in IFAC’s professional guidance. It requires that we act decisively in the best interests of the public. We should recognize, however, that the perception in some minds is that accountants do not do enough to fight corruption. To counter this misperception, we must never compromise our values. And we must never compromise our character by even appearing to be associated with a corrupt activity, on any level, in any way.

The profession, here in India, throughout Asia and around the world should foster an environment in which corruption cannot exist.

That leadership role, however, must extend to other elements of government and civil society. The accountancy profession is but one of many elements that must participate in the fight against corruption. Nevertheless, if the profession can demonstrate its own commitment, it can very effectively demand participation by the other groups, whether they are other professions, governments, regulators or other private sector organizations.

Ultimately, however, it is the individual accountant that must carry out his or her responsibility. This means adopting a new attitude and renewed commitment towards anti-corruption. Each individual has a particular responsibility to contribute to anti-corruption efforts.

I have a special hope that the accountant profession in India will continue to assume a leadership role on this matter and become champions of this objective, leading by example.

The last topic that I would like to discuss with you today is the relevance of education.

Education is directly related to the topics I have discussed thus far.

On the one hand, shaping society’s expectations implies the need of knowledge and it also requires the necessary competencies. On the other hand, the education system should also be capable of giving ethical sense to knowledge, stimulating people to want to develop as professionals, not only as practitioners, and it should do so in a way that gives greater meaning to our work from both a moral and societal perspective. Therefore, a commitment to education is fundamental. We must seek to ensure that as the profession develops, it is supported by high quality educational requirements.

Education provides the means to meet the challenges of the 21st century. If we do not see education as a priority, then we will be making a serious mistake.

We have accomplished numerous objectives in this area, but there is still a lot more thought and analysis to be done, since education has a strong impact on the long-term quality of the profession and the services its members provide.

As accountants, we can do our part in what pertains to our discipline. To have sufficient and appropriate education and training before assuming our professional role and to obtain continual education throughout our professional careers is what is required to develop and maintain the competencies that permit us to offer professional, high quality work, and most importantly, to do it with integrity and in service to the public interest. IFAC’s International Accounting Education Standards Board provides important guidance in this area.

As we look ahead, education will help to keep our profession on the right and relevant track. It will contribute to the fostering of skills, attitudes, values and expertise that distinguishes our profession from others and qualifies us to serve the public interest. Over one hundred years ago, the American President James Garfield said, “Next in importance to freedom and justice is education, without which neither freedom nor justice can be permanently maintained.”

I agree with this statement. Your attendance at this conference is a symbol of your value of ongoing education. I urge you to continue to make education a priority and to use that education and your professional skills and values to contribute to creating greater economic freedom and prosperity here in India and around the world.

As we look ahead, we must keep working to keep our profession on the right and relevant track.

Both the Institute of Chartered Accountants of India and the International Federation of Accountants must continue to collaborate to contribute to the fostering of skills, attitudes, values and expertise that distinguish our profession from others and that qualifies us to serve the public interest.

In order to face the future with the right understanding, we must aim to contribute to creating greater economic freedom and prosperity here in India and around the world.

Thank you for your attention.

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