DRAFT Issued November by jennyyingdi


									SMP Committee Meeting                                                               MINUTES
October 2008 – Abuja, Nigeria
                                                                   FINAL: November 14, 2008

                                     SMP COMMITTEE
                                  MINUTES OF MEETING

MEETING:                            Abuja, Nigeria
PLACE:                              Transcorp Hilton Abuja
HOSTS:                              Institute of Chartered Accountants of Nigeria
DATES:                              Tuesday October 14 – Wednesday October 15, 2008
CHAIR:                              Sylvie Voghel, Canada
 Canada                Sylvie Voghel (Chair)              Dawn McGeachy-Colby
 Germany               Jens Poll (Deputy Chair)           -
 India                 Sunil Goyal                        -
 Israel                Alex Hilman                        -
 Italy                 Giancarlo Attolini                 Matteo Pozzoli
 Malaysia              Peter Lim                          Johnny Yong
 Malta                 Bernard Scicluna                   -
 Nigeria               Ibironke Mojisola Osiyemi          -
 Nordic Federation     -                                  Göran Kjellén
 Tunisia               Hechmi Abdelwahed                  Ali Cherif
 UK                    Robin Jarvis                       Pino Messina
                       David Chitty                       Katharine Bagshaw

 IFAC Staff
 IFAC                  -                                  Paul Thompson

 Brazil                Ricardo Rodil                      Antonio Ranha
 China                 Ye Xin                             Chen Longwei
 Germany               -                                  Helmut Klaas
 Hong Kong             Paul Chan                          -
 Nordic Federation     Joakim Rehn                        -
 Spain                 Lucio Torres-Rodríguez             -
 Turkey                Masum Turker                       Yahya Arikan
 USA                   Harold Monk                        Brian Bluhm

1.1    Chair’s Introduction
1.2    Member Responsibility Schedule
       The Chair welcomed all present. Apologies had been received from members Ricardo
       Rodil, Ye Xin, Paul Chan, Joakim Rehn, Lucio-Torres Rodriguez, Masum Turker, and

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SMP Committee Meeting                                                                 MINUTES
October 2008 – Abuja, Nigeria
      Harold Monk1 and technical advisors Antonio Ranha (newly appointed to support
      Ricardo), Chen Longwei, Helmut Klaas, Yahya, Arikan and Brian Bluhm. The Chair
      introduced Robert Bunting, the IFAC Deputy President. The Deputy President addressed
      the committee. He noted its broad mandate and that it would never be able to fully
      satisfy the appetite of its constituents. The key challenge would be to deliver value with
      limited resources and this demanded that the committee focus its efforts and collaborate
      effectively. He concluded by guaranteeing that he would listen but would not be able to
      promise to meet all the committee’s resource requests.
        The Chair then briefly introduced the meeting agenda. The key item would be to
        consider for approval a draft SMP Committee Strategic and Operational Plan for 2009-
        2012. The Chair concluded by requesting that members check the accuracy of the
        Member Responsibility Schedule. This schedule will be updated after the present
        meeting, circulated and ultimately be used to help evaluate members in the 2009 round
        of the Board and Committee Member Performance Program.
2.1     IFAC Strategic Plan for 2009-2012
        The Chair provided an overview of the IFAC Strategic Plan for 2009-2012 which would
        supersede the 2007-2010 one. This plan had been approved by the IFAC Board at its
        last meeting in September in Kuala Lumpur and would be presented for approval by
        IFAC Council at its meeting in Rome in November. The Chair stressed those aspects
        most pertinent to the SMP Committee so that members could see where the committee’s
        activities fitted. From an SMP perspective perhaps the most important difference from
        the outgoing plan was the addition of a strategic theme on support for adoption and
        implementation of IFAC standards. Much of the SMP Committee’s work program, in
        particular the projects to develop implementation guides, was directed at this theme. The
        Chair concluded by noting that the IFAC Board will approve this plan, together with
        accompanying operational and implementation plans, at its September 2008 meeting.
2.2     IFAC Operational Plan for 2009-2010
        Paul Thompson outlined the IFAC Operational Plan for 2009-2010 which was also
        approved by the IFAC Board and awaits IFAC Council endorsement. This plan provides
        the detailed work program of IFAC for the period 2009-2010. Paul talked the committee
        through this document highlighting those aspects relevant to the committee.
2.3     SMP Committee Strategic and Operational Plan for 2009-2012 – Draft for Approval
        Paul presented a draft SMP Committee Strategic and Operational Plan for 2009-2012 for
        approval. The draft is the culmination of a year-long strategic review that commenced
        with extensive strategy discussion in São Paulo followed by consideration of a first draft
        in New York. The draft tabled in New York had been revised in the light of comment
        received at that meeting.
        Like the IFAC Strategic Plan for 2009-2012 the committee plan spans a four year period.
        The entire plan will be reviewed and revised every two years according to the same
        development cycle as IFAC while the operational component will be updated annually.
        This plan will replace the Strategic and Operational Plan for 2007-2010. The proposed
        plan envisages a significant increase in activity, especially in the area of support for
        implementation. However, Paul stressed that short-term operational capacity constraints
        at IFAC would mean that much of this increased activity would not happen until 2010.
        Paul added that some of the initiatives listed could be viewed as an aspiration and/or
 While 7 members were absent Joakim Rehn has assigned his voting rights to Goran thereby ensuring there were 12
participants with voting rights, just enough to approve documents per the committee’s terms of reference.

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SMP Committee Meeting                                                                 MINUTES
October 2008 – Abuja, Nigeria
      ultimately be deemed unnecessary, and that IFAC’s role in some may be confined to
      facilitation. In most instances IFAC would seek to collaborate with other relevant parties.
       The Chair asked the committee for its comments on the proposed plan while stressing
       that discussion on matters of detail – such as the committee’s policy on auditing
       standards etc. – be confined to the relevant agenda item.
       Ali Cherif asked in what way the committee was being pro-active in shaping the standard
       setting agenda. Robin Jarvis cited the micro-entity financial reporting research project as
       an example. Paul added that the committee had also made substantial input to the
       development of the future plans of the IAASB and IESBA. Ben Scicluna questioned
       whether items that were less likely to happen should be excluded. Paul replied that at its
       last meeting the committee had decided to retain all the proposed initiatives but to
       categorize them according to their likelihood. Accordingly, the text had been modified to
       make it clear that certain items are less likely to happen than others.
       The Chair proposed that the committee approve the plan. The committee agreed
2.4    SMP Committee Communications Strategy and Work Plan for 2009
       Paul emphasised that effective communications were essential to achieving the SMP
       Committee’s strategic objectives. Since 2006 the SMP Committee has had a
       communications plan to support its strategic and operational plan. The committee was
       now being asked to approve a draft SMP Committee Communications Strategy and
       Work Plan for 2009. The plan is an adaptation of the 2008 one and includes objectives,
       messages, vehicles and activities. The plan envisaged an even bigger outreach effort
       than in 2008 so as to get maximum possible awareness of the committee’s existence
       and activities. The plan also recognized those engaged in education and training – both
       providers and trainees/students – as a key audience. Paul encouraged anyone that was
       about to present on the committee should refer to the resources on the intranet first and
       then contact him to help with tailoring material. Post event Paul would catalogue all such
       presentations so as to ensure the materials could be shared and presenters recognized.
       The Chair invited comments. The Deputy President suggested that the first bullet under
       internal messages was also an external message. The committee agreed and
       determined that the plan be modified to reflect this. The Chair stressed that while
       individually an SME may not be considered a public interest entity collectively they are of
       significant public interest. Pino Messina suggested that in its public interest framework
       and related policy positions IFAC embed SMEs: Paul confirmed that this was already the

           Publish, communicate, and execute the draft SMP Committee                      PT
            Strategic and Operational Plan for 2009-2012 (ongoing).

           Revise the SMP Committee Communications Strategy and Work                      PT
            Plan for 2009 in the light of comments received and then execute

3      IAASB
3.1    Input to IAASB Standard-Setting
       Jens Poll updated the committee on its input to IAASB standard setting. Jens was
       pleased to inform the committee that the task of inputting will get easier in the coming
       year since the Clarity project was drawing to a close. Overall we can expect few
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SMP Committee Meeting                                                             MINUTES
October 2008 – Abuja, Nigeria
      changes to standards in the coming few years and so the committee can focus on fewer
      projects. More SMPs were needed on IAASB project task forces since this is the most
      effective way of shaping the outcome of the standards. Jens invited comments.
      Ali questioned whether IAPS 1005 would be updated. Jens responded that IAPS 1005
      would not be updated. Rather once the redrafted ISAs take effect at the end of 2009 this
      would be withdrawn since small entity considerations are now built directly into the
      application material section of the redrafted ISAs.
3.2   Strategy and Work Program, 2009-2011
      Ben provided an update on the form and content of the IAASB Strategy and Work
      Program, 2009-2011 which was published in July. Ben stressed that the published plan
      was much the same as the one that he presented to the committee at the last meeting.
      He was satisfied with the content: SME issues and implementation support in general
      feature prominently.
3.3   Matters to Consider in a Revision of ISRE 2400 Engagements to Review Financial
      Statements – Consultation Paper
      Dawn McGeachy presented the consultation paper, Matters to Consider in a Revision of
      ISRE 2400 which was developed by three national auditing standard setters (NSS) and
      issued by IFAC in late September. Dawn proceeded to go through the paper section by
      section stopping to pose the questions contained within so as to discuss and agree key
      points for inclusion in the committee’s response to this paper.
      Question 1 – David Chitty argue that many SMPs and SMEs do not understand the
      concept and have little interest in gaining an understanding rendering the question
      pointless. The concept needs to understandable to the end user for them to have an
      informed view on it. Katharine Bagshaw wondered whether the question mattered. She
      added that the ICAEW Assurance Service, a form of limited assurance engagement,
      was generating a great deal of interest but taking time to become established.
      had a low uptake. Dawn accepted that one needs to articulate the concept and
      communicate it: Canada has done this quite well. Ben agreed there was a big education
      gap and that he was keen to learn more. Johnny Yong feared that the use of reviews
      risked confusing an already confused market place. In India, Sunil Goyal advised that
      reviews were neither widely used nor understood and so the challenge was to broaden
      the awareness of SMPs so that they may offer appropriate advice to SMEs. Meanwhile
      in Germany, Jens noted that not only were reviews popular but that a range of
      alternatives to audit were available.
      Giancarlo felt there was a need to update the standard for those that already use it as
      well as those that might use it. Many European countries are eagerly awaiting the
      outcome of the European Commission’s (EC) simplification project: the
      recommendations on audit thresholds/exemptions will impact the role of review
      engagements. David stressed that globally thresholds were either being introduced or on
      the rise and that one should avoid allowing self-interest to resist this trend. It would be
      hard to introduce reviews where presently SMEs have nothing. Banks show little
      appetite since many are more concerned with collateral rather than whether the
      accounts are assured. Hence there needs to be a demand for reviews and a willingness
      to pay for one. Demand will be contingent upon the perceived benefits to the client of
      having one. David concluded that he saw no demand for reviews from the general public
      but thought it might be suitable for some specialist situations. Robin Jarvis pointed to
      the problem of compliance and enforcement problem with SME financial statements.
      25% of accounts lodged with Companies House have fundamental errors. There is,
      therefore, a case for standard setters to improve the quality, and hence credibility, of

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SMP Committee Meeting                                                               MINUTES
October 2008 – Abuja, Nigeria
      published financial reports. The question is how. Ben noted that the required to publish
      financial statements that had been subject to some form of assurance introduced a
      discipline that reduced the risk of fraud and tax evasion. The Maltese Inland Revenue
      demands that all limited liability companies have an audit and has said that if the audit
      were to go it must be replaced with some form of assurance.
       Goran Kjellen remarked that the subject was highly topical in the Nordic countries due to
       the introduction of audit exemptions for SMEs. While Sweden has opted to exempt most
       SMEs from the audit requirement, Denmark, like Switzerland, is considering a ‘limited
       audit’. Notwithstanding individual country experiences revision of the standard is
       Question 2 – Dawn felt that the notion of moderate assurance was theoretical and as
       such difficult it would prove difficult to determine and agree. On the other hand negative
       assurance is plausible and relatively easy to understand. Sunil believed that
       fundamental issues of audit need addressing first.
       At this point the Chair proposed, in the interests of getting through the entire agenda,
       that a task force be formed to oversee the development of the committee’s comment
       letter. It was agreed that the Review Engagement Task Force (RETF) comprise Dawn
       (chair), Katharine, Jens, Hechmi Abdelwahed and Brian Bluhm. The RETF will develop a
       first draft based on comments from all committee members, discuss this over a
       conference call in mid-November and circulate a draft to the whole committee for their
       views in late November/early December. Dawn concluded by saying that comments
       need to be driven by what they think is in the public interest. She also encouraged the
       committee to consider the value of an opinion where the reviewer is not independent.

           Draft a committee comment letter on the consultation paper,                RETF
            Matters to Consider in a Revision of ISRE 2400 Engagements to
            Review Financial Statements, circulate for committee approval,
            and post (by December 15, 2008).

3.4    Framework for SMP Committee Input to Standard Setting and the Overall
       Structure of ISAs and SME Audits
3.5    A Single Set of Auditing Standards – Implications for Small- and Medium-sized
       The Chair informed the committee that at its last meeting in September the IFAC Board
       had approved for issue an IFAC policy position A Single Set of Auditing Standards –
       Implications for Small- and Medium-sized Entities. This was duly issued in late
       September. The Chair reminded the committee that the final document was largely the
       same as that which the committee had viewed and expressed satisfaction with at its last
       meeting in New York in June. The Chair duly expressed her support for the proposed
       document at the Board meeting. The document briefly mentioned the issue of alternative
       assurance for SMEs. The Chair proposed we discuss the implications of this IFAC
       document before considering the proposed committee level document.
       Ben asked whether the Swiss assurance service was in effect a review packaged as an
       audit. Jens confirmed this. Goran was concerned that the IFAC policy position effectively
       cemented IFAC to a clear position from which it would struggle to retract if subsequently
       it was felt necessary to do so. Robin agreed: one needs to keep querying the notion of a
       single set of auditing standards. Goran felt that we need to know what the market wants.
       Giancarlo concurred: research on alternative assurance services should ensure against

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SMP Committee Meeting                                                               MINUTES
October 2008 – Abuja, Nigeria
      making un-informed decisions like the EC. Jens added that there is a lack of common
      understanding as to what something is and what to call it. He stressed the need to keep
      the clarity of distinction of an audit and to research and learn from what is working in
      different jurisdictions.
       Katharine noted that it was the Europe wide push for deregulation generally that had led
       to the move away from audits for SMEs. What clients are looking for is something with
       the status of an audit without the cost hence the focus on finding low cost alternatives.
       Presently there is a lack of distinction between a review and compilation. Much research
       has already been done on review/moderate/limited/negative assurance. It is vital that
       one retains the clarity between audit, alternative assurance services, and compilation.
       Robin lamented that the profession lacked the ability to communicate clearly what things
       are and failed to be pro-active. Consequently the regulators have filled the void and
       made the decisions. Hence, in order to influence outcomes we need to canvass the
       views of users and present the findings to the regulatory community.
       David remarked that there are a lot of cultural issues at play and a tendency for
       countries, such as the Swiss, to do what they believe to be in their own best interest.
       Audits of public interest entities (PIE) are justified for various reasons but are of limited
       value for most non-PIE. Therefore, one should research so as to focus on benefits of
       various alternatives. Poor quality reporting will not necessarily be fixed through an
       assurance requirement. The UK has benefitted from the SME audit exemption and the
       US has been successful without ever having one: SMPs in both countries focus on
       providing added value business support services to their SME clients. David concluded
       by saying we should avoid promoting restrictive practices.
       Giancarlo also thought that users would want a low cost high value service. He
       encouraged research into the public interest of audit regulation. Paul concurred with
       David’s sentiments, stressing that SMPs should focus more on how to help their clients
       perform rather than simply conform. He indicated that the upcoming IFAC Council
       meeting in November included parallel workshop sessions one of which is dedicated to
       the subject of alternative assurance services for SMEs. The Chair and Giancarlo would
       likely be speakers in this session. This event should provide some input to SMP
       Committee policy. There may also be scope to collaborate with FEE which was
       considering research into this area.
       The Chair proposed that at its next meeting the committee reflects on the reaction at the
       Council and considers collaborating with FEE, subject to the availability of resources.
       The committee agreed.
       Katharine explained that in an effort to ensure consistency of our input to the IAASB’s
       standard setting the SMP Committee has a Position Paper on Auditing Standards. This
       paper was last revised in January 2007 and so in need of extensive updating due largely
       to the imminent conclusion of the Clarity project. At the last meeting in New York
       Katharine presented a draft Framework for SMP Committee Input to Standard Setting
       and the Overall Structure of ISAs and SME Audits and suggested this could serve as a
       replacement for the existing position paper. This paper has been revised in the light of
       comments received at the New York meeting and is compatible with the aforementioned
       IFAC policy position. However, rather than ask the committee to consider the revised
       draft she and Paul jointly proposed that it might be better to commence development of
       an information paper that set out the principles and variables jurisdictions should
       consider when devising a framework for reporting and assurance. Such a paper would
       seek to inform – on different assurance services, tiers of accounting standards, audit
       thresholds and exemptions – rather than opine. It would aim to help jurisdictions
       determine an appropriate reporting and assurance model. It would ‘borrow’ from the

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SMP Committee Meeting                                                                 MINUTES
October 2008 – Abuja, Nigeria
      internal position papers and be published It was agreed that Katharine would develop an
      outline table of contents for such an information paper for the committee to discuss at its
      next meeting. It was also agreed to retain the existing internal position paper and to
      update this in due course.

           Draft an outline table of contents for an information paper setting           KB
            out the principles and variables jurisdictions should consider when
            devising a framework for reporting and assurance and present for
            the committee’s consideration at the next meeting (January 30,

           Revise the existing Position Paper on Auditing Standards in the               KB
            light of the IFAC policy position and the end of the Clarity project
            and table a revised paper for consideration at a future meeting (to
            be determined).

           Consider, at the next meeting, what steps to take in the light of           ALL
            reaction at the IFAC Council workshop on alternative assurance for
            SMEs and FEE’s decision as to whether to progress a proposed
            research project (January 30, 2009).

3.6    Rapid Response Teams
       Paul presented a summary of the rapid response teams (RRTs) tracking each ISA
       project. Most projects were Clarity redrafts and were close to completion. The end of
       2008 would see the establishment of new project task forces to support the new, post
       Clarity work plan. Paul would monitor developments so that the committee can make
       timely nominations to the IAASB as well as establish new RRTs.
       Written activity reports, many reports tabled at the last IFAC Board meeting, were tabled
       for each of IFAC’s other committees and boards.
4.1    Compliance Advisory Panel
       The report was taken as read. Paul informed the committee that the Compliance
       Program is now well into its third phase, that of issuing policy recommendations and
       agreeing action plans with member bodies. The Member Body Development team is
       now starting to focus on how to help member bodies, especially developing ones,
       execute their plans on a timely basis. No comments were received.
4.2    International Accounting Education Standards Board
       The report was taken as read. Paul flagged the projects to revise IES 8 and to develop
       education guidelines for accounting technicians as being of particular SMP relevance.
4.3    Developing Nations Committee
       The report was taken as read. Paul pointed out the collaborative work between the SMP
       Committee and the DNC: the latter was assisting with input to standard setting, providing
       feedback on the ISA Guide, and helping to review draft guidance material. It was hoped
       to meet jointly with them again like in Prague in 2005 and to ensure they are on the 2009
       Forum program.
4.4    International Ethics Standards Board for Accountants

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SMP Committee Meeting                                                                MINUTES
October 2008 – Abuja, Nigeria
      Jens provided an overview of the work of the IESBA in particular, the revision of Section
      290 (S290) of the Code of Ethics for Professional Accountants, the re-exposure of 3
      specific aspects of S290, redrafting of the Code, and steps to facilitate convergence.
      Since the New York meeting the committee had sent a letter in response to the re-
      exposure asking for application of the materiality principle for internal audit services.
      Jens noted that the project to redraft the Code was well advanced. The IESBA hopes to
      approve the revised and redrafted Code in early 2009. It would take effect at the end of
      2010. He welcomed the redrafting project: it should make the Code clearer and less
      ambiguous. Paul noted that in 2009 the IESBA, per its Strategic and Operational Plan
      2008-2009, would take significant steps to promote convergence and develop
      implementation material(s) to help SMPs implement the revised S290. No further details
      were available at this time for the latter but Paul impressed on the need to get
      membership on the relevant task force.
       Ben was concerned by IESBA’s stated intent to allow early adoption of the revised and
       redrafted Code. This would lead to confusion as to what services a practice was
       permitted to provide. Large firms would likely adopt immediately thereby disadvantaging
       SMPs. Paul agreed to informally raise this with IESBA staff.
4.5    IPSASB
       The report was taken as read. No comments were received.
4.6    Professional Accountants in Business Committee
       The report was taken as read. Paul noted that the committee continues to monitor the
       project to develop good practice guidance. This guidance could be used by SMPs when
       providing business advice to SMEs. The IFAC Board is mid-way through an
       effectiveness review of this committee. No comments were received.
4.7    Forum of Firms / Trans-national Auditors Committee
       The report was taken as read. A recent development of much interest is the new network
       definition and how to implement and comply with it. No comments were received.
5.1    SME Financial Reporting – Project Update
       Robin Jarvis presented an update on the committee’s activities in the area of SME
       financial reporting together with some suggestions, framed as questions, on the next
       steps based on the committee’s discussions in New York and recent developments.
       IASB Staff has analyzed the 162 comment letters and field test results from 115
       companies spanning 20 countries and presented its recommendations for changes to
       the ED to the Board over several Board meetings since May 2008. The Board plans to
       vote to approve a final IFRS for Private Entities in the fourth quarter of 2008 and publish
       in the first quarter of 2009.
       Recently both FEE/EFRAG and the German institutes have sent public letters to David
       Tweedie, IASB Chair expressing concern over the direction of the project, in particular
       the Board’s propensity to reject simplifications recommended by IASB Staff. The letters
       call for the Board to revisit some their earlier decisions.
       Meanwhile Robin noted the whole issue of micro-entity reporting was high on the EC’s
       agenda: proposals have been made as part of the simplification project. The committee’s
       Information Paper entitled Micro-Entity Financial Reporting: Some Empirical Evidence on
       the Perspectives of Preparers and Users concluded that the ED would be much too
       complicated for such entities. This paper has proved very popular as indicated by
       downloads from the IFAC website. In New York the committee had agreed to maintain

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SMP Committee Meeting                                                               MINUTES
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      liaison with UNCTAD/ISAR and help them update SMEGA Level 3, guidance directed at
      micro-entities that do not have to produce general purpose financial statements (GPFS).
       Robin explained that the International Accounting Standards Committee Foundation
       (IASCF) will be assisting implementation by developing a suite of ‘train the trainer’
       materials translated into multiple languages that will be provided free of charge to
       whomever wishes to use them. The IASCF is looking to IFAC and others to help deliver
       these materials via a series of regional training workshops. Robin indicated that IFAC
       support will, owing largely to a lack of funds, likely amount to no more than facilitating
       and promoting this initiative, for example by encouraging member bodies, regional
       organizations, and others to host them.
       Robin then posed the questions outlined in the agenda paper and asked for the
       committee’s reaction.
       Question 1 – most members saw a need to express IFAC’s concerns to the IASB and to
       do so quickly and publicly like EFRAG/FEE and the German institutes. David Chitty was
       the most vocal opponent of such a move, preferring a private discourse. Meanwhile
       Robin saw a public letter as having more credibility since IFAC preached transparency.
       The Chair proposed that Paul, on behalf of the committee, suggest to Ian that IFAC
       express its disagreement, in a manner he saw appropriate, with some recent decisions
       while acknowledging the progress achieved. The committee agreed.
       Question 2 – the committee agreed that IFAC should publicly indicate its support in
       principle for the IASCF train the trainer initiative and promote the initiative by
       encouraging member bodies, regional organizations and others to organize workshops.
       While many members had concerns over the likely content of the final standard most
       accepted that a number of jurisdictions would use the standard in some way and that,
       therefore, SMPs involved in preparing the financial statements would appreciate some
       implementation support. Any IFAC promotion would make it clear that this did not
       amount to endorsement of the content of the standard.
       Question 3 – Robin noted that the IASB will not consider a third tier directed at micro-
       entities. Hechmi advised that the micro-entity standard used in Tunisia was a cash-
       based standard that was driven by the tax authorities. In Malta, Ben said that a Malta
       National GAAP was being developed which was a simplified version of the IFRS for PEs.
       Robin suggested, and the committee agreed, to monitor developments, especially
       national experiences, and communicate these via IFAC communications vehicles. At
       some stage the committee may wish to consider the suitability of the final IFRS for PEs’
       for micro-entities that have to produce GPFS.
       Question 4 – Robin advised that UNCTAD had effectively dropped their SMEGA Level 2
       since the IFRS for PEs usurps it. UNCTAD is now focused on Level 3 and has the
       resources to improve it. Robin and Giancarlo proposed ongoing dialogue with UNCTAD
       – both of them were likely to attend their Annual Session in November. The committee

           Suggest to the IFAC CEO that IFAC express its disagreement, in                 PT
            a manner he saw appropriate, with some recent decisions while
            acknowledging the progress achieved (as soon as possible).

           Support, as appropriate, regional ‘train the trainer’ workshops              ALL
            using IASCF training materials (as required).

                                                                                       Page 9 of 13
SMP Committee Meeting                                                                     MINUTES
October 2008 – Abuja, Nigeria
           Monitor developments as they relate to micro-entity reporting and                ALL
            communicate national experiences via IFAC communications
            vehicles (as required).

           Liaise with UNCTAD regarding SMEGA Level 3’s development for                SMERTF
            use by micro-entities that do not produce GPFS (as required).

5.2    Role of the SMP in Providing Business Support – Draft Project Proposal
       Robin presented a draft project proposal on the Role of the SMP in Providing Business
       Support. This proposal was developed on the basis of discussions at the last meeting.
       The project entailed developing an information paper aimed at promoting the role and
       expertise of SMPs to regulators, clients and the public as well as helping SMPs identify
       new markets/services and developing the skill set to serve/deliver them. This was in
       recognition of the declining amount of compliance work due to, for example the
       introduction and increasing scope of audit exemptions for SMEs.
       Robin advised that the information paper would focus on the needs of SMEs and the role
       of SMPs in meeting these needs by being a trusted business adviser. In particular, it
       would comprise a set of case studies, based upon in-depth interviews, showcasing how
       some innovative SMPs support their SME clients. ACCA and CGA-Canada may be
       willing to provide some financial support. Robin then asked for comments.
       The committee was highly supportive of the project and agreed that Robin develop a
       formal project proposal, with approximate costing, suggested interviewer and
       interviewees, etc. for consideration and approval at the Berlin meeting. Paul stressed the
       need to have this circulated to all other IFAC committees and boards for comments
       ahead of that meeting. Giancarlo stressed the potential synergy with the Practice
       Management Guide. Accordingly, Robin would liaise with Paul and Giancarlo in
       developing the proposal.

           Draft a project proposal on the Role of the SMP in Providing                   RJ,
            Business Support and circulate to other IFAC committees and                  GA, &
            boards (December 12, 2008).                                                    PT

6.1    ISA Guide - Project Update
       In December 2007, the Guide to Using International Standards on Auditing in the Audits
       of Small- and Medium-sized Entities (ISA Guide) was published. Demand for the ISA
       Guide has proved very strong: it is on track to become IFAC’s second most popular
       publication after the IFAC Handbook. In addition, a number of translations, reproductions
       and adaptations had either been done or were underway. Of particular note, since it sets
       a good example as to how a member body can make use of the ISA Guide, is the way
       the Institute of Chartered Accountants of Australia’s (ICAA) has adapted it for the local
       market and packaged it with training sessions and checklists/forms based on those
       being sold by the CICA. Work is due to commence on updating the ISA Guide, both to
       conform it to the newly ‘clarified’ suite of ISAs and to generally improve it in line with the
       feedback received. An updated Guide, to support the redrafted ISAs, would be issued in
       Q4 2009. Much feedback, some critical but constructive, has been received. Paul then
       asked the committee to consider the various questions set out in the agenda paper
       relating to its updating.

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SMP Committee Meeting                                                            MINUTES
October 2008 – Abuja, Nigeria
      Question 1 – most supported the idea of separate guidance on how member bodies
      could use the ISA Guide. Jens suggested that we should look to the experiences of the
      DNC and Compliance Program for further guidance on this matter.
      Question 2 – most felt that the general focus of the ISA Guide should be kept as it is
      and it be left to individual jurisdictions to adapt it to suit their own preferences. Hechmi
      suggested that the ISA Guide make it clear that it can be used for PIE audits. Paul noted
      that IFAC was considering developing education and training materials to complement
      the ISA Guide.
      Question 3 – Katharine and others believed the ISA Guide should be aimed at a mid-
      range audience that is, those with some knowledge of ISAs.
      Question 4 - Ben noted that the current ISA Guide covers the entire audit process and
      virtually all the ISAs. Individual jurisdictions are at liberty to adapt the ISA Guide, scaling
      it up or down. Others agreed.
      Question 5 – most preferred to see the existing ISA Guide improved and its focus
      retained. The IAASB may be the appropriate author of any document communicating the
      main changes and implications of moving to redrafted ISAs.
      Questions 6 & 7 – Ben suggested the case study needed to be improved and extended
      to cover areas presently not included such as internal control. He also encouraged
      consideration be given to inclusion of a second case study and/or alternative
      approaches dependent upon size of entity. He hoped that it could incorporate some
      material from the Auditing Practice Board’s (APB) Practice Note 26 (PN 26) on small
      entity audit documentation. He also felt that the final section on reporting deserves
      attention and more tailoring. Other concurred.
      Question 8 – most felt the ISA Guide’s coverage of ISA 220 should be expanded.
      Paul said he would communicate the committee’s views, and those of the DNC which
      was being asked the same, to the author along with all other feedback received. All
      feedback would be discussed with the author in the coming months and the author
      asked to propose changes in the light of these and the redrafted ISAs. The ISAGTF
      would then get to consider these proposals.

           Discuss all feedback and the implications of the redrafted ISAs                  PT
            with the ISA Guide author and request they propose changes for
            consideration by the ISAGTF (by December 31, 2008).

6.2   Quality Control Guide - Project Update
      Ben, Chair of the Quality Control Guide Task Force (QCGTF), provided a project update.
      The committee continues to make good progress on the project to develop an
      implementation guide, Guide to Quality Control for Use by Small- and Medium-sized
      Practices (QC Guide). The QC Guide, which is being developed by CGA-Canada, is
      intended to help SMPs understand and efficiently apply International Standard on
      Quality Control (ISQC) 1. A second draft is presently being reviewed by the QC Global
      Advisory Panel. The plan is to approve the final draft in Berlin and issue soon after the
      redrafted ISQC 1 gains final approval from the Public Interest Oversight Board (PIOB).
      The redrafted ISQC 1 will require firms to have a QC system in place by December 15,
      Dawn confirmed that the second draft was significantly different from the first. The main
      changes included: focusing on establishing a firm quality control system, that is

                                                                                         Page 11 of 13
SMP Committee Meeting                                                                MINUTES
October 2008 – Abuja, Nigeria
      restricting to ISQC 1 and eliminating ISA 220 material; changing the sample QC policy
      and procedures manual for a sole practitioner with professional staff (there are two
      manuals, the other for 2-5 partners) to one without professional staff; removing detailed
      ISA 220 forms and replace with some high level ISQC 1 ones; and including a case
      study to illustrate the key points.
       Paul, Dawn, and the author would meet in November to discuss what changes to make
       to the second draft. The proposed changes would be agreed with Ben.

           Progress the QC Guide project in line with the process and             QCGTF
            timetable outlined (as required).

6.3    Practice Management Guide – Project Update
       Giancarlo updated the committee on the project to develop a Guide to Practice
       Management for Use by Small- and Medium-sized Practices (PM Guide). The PM Guide
       is intended to help SMPs operate proficiently and profitably as well as make them more
       responsive to the needs of their clients. At the last meeting the committee agreed to
       award the contract to CPA Australia: contracts were duly signed in September.
       The Practice Management Guide Task Force (PMGTF) - currently comprising himself,
       Masum Turker, Sunil, Ye Xin, David, Joakim Rehn, Lucio Torres-Rodriguez and Peter
       Lim - met with the project manager from CPA Australia, their Director of Public Practice,
       just before the FEE SME/SMP Congress in early September to discuss the table of
       contents. The TOC is expected to be finalized before the end of October. Giancarlo
       stressed that where a topic is jurisdiction sensitive, for example driven by local
       regulation, then the coverage would be high level and member bodies would be given
       guidance on how to tailor such chapters and develop the material to suit their
       circumstances. Giancarlo set out an outline plan for development through to publication
       in Q4 2009. So far CGA-Canada and CNDCEC have each offered to fund 12.5% leaving
       a funding shortfall of around 15% ($30,000) in 2009. Other IFAC member bodies are
       encouraged to contribute. All sponsors would be credited in the preface.
       The Chair stressed that the composition of the PMGTF would be reviewed once the
       composition of the committee for 2009 was confirmed.
           Progress the PM Guide project in line with the process and              PMGTF
            timetable outlined (as required).

7      IFACnet
7.1    IFACnet – Project Update
       Alex Hilman and Paul updated members on recent and possible future development of
       IFACnet and the International Center for SMPs. At the last meeting of the SMP
       Committee, it was decided to establish an Information Sharing Task Force (ISTF). The
       ISTF is tasked with discussing and suggesting some specific ways in which IFACnet and
       the International Center for SMPs may be improved. The ISTF has since held two
       conference calls. Alex asked the committee to consider the suggestions and additional
       questions pose in the agenda paper.
       Suggestion 1 – the committee agreed.
       Suggestion 2 – the committee agreed subject to the survey being short and informative.

                                                                                     Page 12 of 13
SMP Committee Meeting                                                               MINUTES
October 2008 – Abuja, Nigeria
      Suggestion 3 – the committee agreed, especially regarding listing products yielding
      royalties. Giancarlo suggested links to appropriate open access social networks.
       Suggestion 4 – the committee agreed.
       Question 1 – the committee agreed that the search engine, like Google, is not perfect
       and will need to be continually improved.
       Question 2 – no comment.
       Suggestions 6, 7, 8 and 9 – the committee agreed.
       Question 3 – many saw the utility of online networking across border and suggested
       that the survey would provide a better idea of likely take-up.
       Suggestion 10 – the committee agreed.
       Question 4 – no comment.
       It was decided that the committee’s views be communicated to the IFAC
       Communications’ Team and that Paul would report back to the committee on the

               Communicate    the    committee’s  views    to  the    IFAC            PT
                Communications’ Team and report back to the committee on the
                outcome (January 30, 2009).

8.1    Future Events and Meetings for 2009
       For 2009 the Chair informed the committee that the meeting venues and dates will be:
              Berlin, Germany hosted by IDW – January 29-30 (possibly with IFAC/FEE/IDW/WPK
               Practitioners’ Symposium on afternoon/evening of January 28);
              New York, USA, hosted by IFAC – May 21-22; and
              Beijing, China, co-hosted by CAPA and CICPA – October 29-30 (with IFAC SMP
               Forum 2009 on October 28).
       The Chair noted that to build the visibility of the SMP Committee the plan is to be
       represented at various key international events in 2009 including the 5th FEE Annual
       European SME/SMP Congress (subject to it being held) and the CReCER (Accounting
       and Accountability for Regional Economic Growth in the Latin American and Caribbean
       Region) in Brazil in September.

               Post meeting registration form for Berlin (by November 14, 2008).      PT

Chair’s Signature:                                            Date:

                                                                                    Page 13 of 13

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