IFAC changes membership obligations

The International Federation of Accountants is revising its Statements of Membership Obligations, starting today, requiring professional accounting organizations worldwide to align with its quality management standards and offer more flexible pathways to the accounting profession.

The revised SMOs 1-7, which take effect April 1, set global benchmarks for IFAC members to support adoption and implementation of international standards, along with stringent quality assurance, investigation and disciplinary systems. They come after a public consultation last year to gauge feedback on an exposure draft and to support continuing modernization of the IFAC Member Compliance Program. 

Some of the main changes include alignment with international quality management standards to strengthen firm-level systems; encouragement of more flexible pathways into the accounting profession, in accordance with international education standards; along with integration of expanded public sector reporting standards issued by the International Public Sector Accounting Standards Board and expanded corporate reporting standards from the International Sustainability Standards Board.

"These revisions help IFAC members continue to lead with integrity and excellence, ensuring their organizations remain resilient, innovative and trusted worldwide," said IFAC CEO Lee White in a statement Tuesday. "By following the SMOs, our members strengthen the adoption of international standards, reinforce quality and public interest systems, and demonstrate the collective strength of a truly global accountancy profession." 

The IFAC board approved the revisions to Statements of Membership Obligations in February. IFAC has posted a table summarizing the revisions along with a frequently asked questions document to help its members understand the changes. IFAC also plans to host webinars for members in May.

The AICPA is a member of IFAC, and it has been encouraging more states to offer alternative ways to qualify for a CPA license as a way to overcome the talent shortage. Also in the U.S., the Securities and Exchange Commission has been encouraging U.S. standard-setters such as the Public Company Accounting Oversight Board and the Financial Accounting Standards Board to leverage the work done by international standard-setters such as the International Auditing and Assurance Standards Board and the International Accounting Standards Board and work more closely with them. On Tuesday, the new PCAOB chair, Demetrios Logothetis, presided over his first open meeting and discussed his priorities. He proposed to overhaul the PCAOB's QC 1000 standard and align it more closely with the IAASB's International Standard on Quality Management 1. 

"Since the Board issued a concept release in 2020, one goal of this project was to establish a robust standard that requires firms to design quality management systems tailored to the specific risks of their practices," he said. "At the same time, the PCAOB also sought to minimize differences with the International Standard on Quality Management, or ISQM1, to promote one globally consistent standard for designing and maintaining an effective quality control system. That remains an important objective. We continue to want a standard that is rigorous, principles-based, and harmonized, to the extent appropriate, with ISQM1. As some stakeholders have observed and articulated in comment letters throughout the standard setting process, certain requirements included in QC 1000 may be unnecessary for the standard to meet the regulatory objectives of the PCAOB and may not contribute to audit quality."