Accounting and Auditing Standards Community of Practice Workshop
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Audit oversight and quality assurance: from setting the
requirements to practical implementation
8-9 October 2015, Chisinau, Republic of Moldova
Radisson Blu Leogrand Hotel
The Strengthening Auditing and Reporting in the countries of the Eastern Partnership (STAREP)
program has been working with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine since
October 2013. STAREP supports a regional Community of Practice (A&ACoP) to address shared
challenges in corporate financial reporting and audit reform and provide relevant knowledge and
technical advice for the transposition of the accounting and auditing elements of the acquis
communautaire especially the 2013 accounting directive and the recently revised directive on
statutory audits.
Effective financial reporting underpins the development of the best businesses - those that others
are willing to invest in and to do business with. It informs decisions that are made, for example, by
shareholders, directors, investors and suppliers. Audit is an essential safeguard to provide
independent assurance that the financial reporting of businesses properly reflects their
circumstances and it is important that audit is a sustainable business, with adequate capacity and a
diversity of suppliers meeting a variety of preferences.
A&ACoP seeks to guide the STAREP countries on how their Governments can put in place the best
and most appropriate regime, one that will most effectively respond to the modern fast moving,
highly developed business economy.
In the EU, the Regulation1 and the revised Auditing Directive2 have considerable implications for the
structure of existing audit regulation frameworks. They set out a regime where: (i) Governments
must either be, or must designate, a “single competent authority” with ultimate responsibility for all
the regulatory tasks provided for in the Directive; and (ii) the country can delegate to other
authorities some oversight and quality assurance tasks, subject to oversight by a competent
authority. Thus, the country may: (i) delegate tasks; or (ii) require or allow the single competent
authority to delegate tasks to: (a) other authorities; or (b) bodies designated or otherwise authorised
by law to carry out such tasks. Any delegation of tasks must specify the conditions under which the
tasks are to be carried out.
One of the aims of the new regulatory regime is to achieve a higher level of consistency particularly,
but not exclusively, in relation to audits of public interest entities (PIEs). A single competent
authority in each Member State is required to take ultimate responsibility for the key regulatory
tasks for all audits. But for audits of PIEs in particular it must inspect the audit firms and investigate
and sanction misconduct using strengthened regulatory powers.
This A&ACoP workshop is an opportunity for STAREP countries to consider how they can bring
together European and in-country reforms to develop a new auditor regulatory regime, especially
important for Georgia, Moldova and Ukraine whose Association Agreements with the EU require
1 http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1404990348987&uri=CELEX:32014R0537 2 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02006L0043-20140616
Accounting and Auditing Standards Community of Practice Workshop
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them to align their legislation with the EU acquis. The regime must serve the needs of companies,
those who work in them and those who do business with them. It must increase confidence and
trust as the basis for business growth.
The workshop will give participant countries’ representatives (CoP members) legal and practical
insights on the institutional arrangements and main activities of the public oversight function. It will
also discuss what constitutes a sound professional accountancy organization (PAO) and its role and
main responsibilities. PAO’s possible contribution to public oversight and quality assurance, and the
conditions in which some oversight functions and tasks could be delegated to PAOs will be also
discussed.
www.worldbank.org/cfrr
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Agenda
Thursday, 8 October 2015 – Day 1
08:30 Registration and Welcome Coffee
09:00 Welcome Remarks
Veronica Ursu
State Secretary, Ministry of Finance, Republic of Moldova
Alexander Kremer Country Manager for Moldova, The World Bank
Wicher Slagter Head of Political and Economic Section of the Delegation of the European Union to the Republic of
Moldova
Samia Msadek Practice Director, Governance - Public Resources Mobilization and Management, The World Bank
(address by video)
Gerhard Schaumberger Head of Office, Coordination Office for Technical Cooperation, Austrian Embassy Chisinau
09:30 Public Oversight in FRANCE: institutional and legal arrangements, and activities
Laurence Duflo
Deputy Secretary General, High Council for Statutory Audit /Haut Conseil du Commissariat aux Comptes (H3C), France
Moderator: Henri Fortin
Head, CFRR
This session will discuss the French experience of implementing public oversight, including the institutional set-up, functions and operations, and will also outline the role of PAOs in France. There will also be discussion of recent proposals for changes as part of audit reform in the EU.
11:00 Coffee Break
11:30 Reforming audit regulation in UKRAINE
Representatives of Ukrainian delegation
Moderator: Natalie Manuilova
Senior Financial Management Specialist, CFRR
Ukraine’s Association Agreement with the EU, signed in 2014, requires them to align legislation with the EU acquis communautaire. The delegation from Ukraine will share their new concept for public oversight and the main provisions of the draft Auditing Law, developed based on the Statutory Auditing Directive and the Regulation on PIE audits. The community will then discuss the planned changes and offer their Ukrainian colleagues feedback on the proposed concept and the draft law.
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12:10 Reforming audit regulation in GEORGIA
Representatives of Georgian delegation
Moderators: Natalie Manuilova
Senior Financial Management Specialist, CFRR
Galina Alagardova Financial Management Specialist, World Bank, Tbilisi Office
Georgia also signed an Association Agreement with the EU 2014 which requires alignment of legislation with the EU acquis communautaire. Georgia does not yet have a competent authority, independent from the profession, to perform the audit oversight function. The delegation from Georgia will share with the community the recently drafted concept for the public oversight, based on the 2015 A&AROSC findings and recommendations. Participants and experts will be invited to discuss the concept and offer Georgian colleagues feedback.
12:50 Lunch
14:00 Reforming audit regulation in MOLDOVA
Representatives of Moldovan delegation
Moderators: Andrei Busuioc
Senior Financial Management Specialist, CFRR
Svetlana Platon Consultant, CFRR
Moldova’s Association Agreement with the EU, signed in 2014, similarly requires alignment of legislation with the EU acquis communautaire. While most elements of an audit oversight system as set out in the EU’s Statutory Audit Directive are incorporated in the Law on Auditing, implementation of the law is challenging. The delegation from Moldova will outline the key aspects of the concept for re-designing the public oversight function, which is currently under development. They will also ask for the community’s feedback and invite discussion of their plans.
14:40 Establishing appropriate audit oversight system in ARMENIA
Representatives of Armenian delegation
Moderator: Andrei Busuioc
Senior Financial Management Specialist, CFRR
During this session the participants from Armenia will update the community on their recent efforts to establish audit oversight and quality assurance systems, notably a recent draft law and proposed institutional structure for audit oversight and quality assurance. The delegation will highlight issues on which they would welcome feedback and invite the community to discuss these.
15:20 Coffee Break
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15:50 Establishing appropriate audit oversight system in BELARUS
Representatives of Belarusian delegation
Moderator: Natalie Manuilova
Senior Financial Management Specialist, CFRR
During this session the participants from Belarus will brief the community on their efforts to modernize audit oversight and quality assurance, highlighting the questions on which the delegation is seeking community’s feedback.
Moderators will allow participants and experts to discuss in group and to provide colleagues from Belarus with feedback on the presentation.
16:25 Establishing appropriate audit oversight system in AZERBAIJAN
Representatives of Azerbaijan delegation
Moderator: Tural Jamalov
Financial Management Specialist, World Bank, Baku Office
In this session the participants from Azerbaijan will update the community on their recent efforts to establish audit oversight and quality assurance systems. They will brief the community on the institutional framework and expected changes, and seek feedback from the community on a range of questions.
17:00 End of Day 1
17:30 Group Dinner (details will be announced)
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Friday, 9 October 2015 – Day 2
08:30 Morning coffee
09:00 Realizing the power of professional accountancy organizations (PAO)
John Hodge
Senior Financial Management Specialist, CFRR
Moderator: Andrei Busuioc
Senior Financial Management Specialist, CFRR
This session will discuss how PAOs can contribute to a stronger business climate by increasing confidence in corporate financial reporting. The role PAOs play will also consider what oversight tasks can be delegated to PAOs and how this delegation can be done effectively.
10:30 Coffee Break
11:00 The NZICA and ICAA merger: Will emerging PAO strategies improve financial reporting?
John Hodge
Senior Financial Management Specialist, CFRR
Moderator: Natalie Manuilova
Senior Financial Management Specialist, CFRR
The presenter will provide an overview of the recent merger of the New Zealand Institute of Chartered Accountants (NZICA) and the Institute of Chartered Accountants Australia (ICAA) - the first transnational merger of Professional Accounting Organizations. The presentation will cover the evolution of the modern PAO and increasing corporate nature of their operating models and strategies and consider how modern PAOs contribute to better financial reporting and auditing.
12:30 Lunch
14:00 Open session: establishing and developing a strong Professional Accountancy Body - identification of main benefits and challenges
Facilitators:
Andrei Busuioc Senior Financial Management Specialist, CFRR
John Hodge Senior Financial Management Specialist, CFRR
This open session will build on the key messages from previous sessions, giving participants the opportunity to discuss in groups the main benefits and challenges in establishing and developing a sound PAO and to present these to the wider group.
15:30 Coffee Break
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16:00 A&ACoP Open Session
Moderators:
Andrei Busuioc Senior Financial Management Specialist, CFRR
Svetlana Platon Consultant, CFRR
This session will draw together the key takeaways for the community and the team, and will invite feedback on the workshop against the stated objectives to help shape the agenda for the next workshop.
16:40 Summary of the Workshop and Next Steps
Andrei Busuioc
Senior Financial Management Specialist, CFRR
16:50 Closing remarks
A&ACOP team
17:00 End of the Workshop
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Bios of the Speakers
Laurence Duflo
Deputy Secretary General, High Council for Statutory Audit /Haut Conseil du
Commissariat aux Comptes (H3C), France
Laurence DUFLO became Deputy Secretary General of the H3C in November
2010. Prior to this, Laurence worked with Société Générale. From 2001 to 2004,
she took part to the IFRS implementation proje ct in the Corporate and
Investment Banking Division. During this period, she was appointed co-
chairwoman of the European Securitization Forum accounting committee and
was a member of the ISDA accounting committee. She then held other positions within the
Corporate and Investment Banking Division, notably as Secretary General of one of the main
business lines.
Laurence started her career in 1991 as an auditor with Arthur Andersen. From 1995 to 2001,
Laurence held various positions at the Commission Bancaire, the French Banking supervisor. She
conducted inspections in French banks. She also contributed to the development of the regulatory
framework in Europe and worked on European cooperation matters.
Laurence graduated from ESCP Europe, one of the leading French business schools. She also holds a
law degree.
John Hodge
Senior Financial Management Specialist, Centre for Financial Reporting Reform,
the World Bank
Mr. Hodge joined the World Bank in June 2015 as a Senior Financial
Management Specialist with the Center for Corporate Financial Reporting
Reform (CFRR). Before joining the World Bank he spent 4 years with the main
Professional Accounting Organisation in New Zealand including 3 years as a
member of the Executive at the New Zealand Institute of Chartered
Accountants (NZICA) and the recently formed Chartered Accountants Australia and New Zealand
(CAANZ), with responsibility for leading New Zealand’s co-regulation and self-regulation functions
for over 33,000 member Chartered Accountants. He has direct experience in working closely with
the Financial Markets Authority, the Public Oversight Body in New Zealand, to undertake delegated
and contracted audit regulation work.
Prior to his time at NZICA/CAANZ, Mr Hodge worked for PricewaterhouseCoopers for 13 years based
in New Zealand, Canada and Italy. He mainly worked in the assurance division and spent some time
in the capital markets team. During his seven years in Italy he was a Senior Manager on the audits of
some of PricewaterhouseCoopers larget global clients; ENI and Telecom Italia. Mr. Hodge holds a
university degree in business majoring in accounting from the Auckland University of Technology
and was admitted into the College of Chartered Accountants in New Zealand in 2002.