The International Federation of Accountants (IFAC) has published guidance for professional accountancy organisations (PAOs) on best governance practices through twelve key principles.
The guidance ‘Focusing on Performance’ includes a self-assessment tool for PAOs when reviewing their governance framework. The twelve key principles to enhance governance included are; creating and optimising stakeholder value, balance stakeholder interests, effectively and efficiently manage risks, utilise resources aligned with strategic direction, and fully integrating good governance into the PAO.
According to the principles, the PAOs board should; establish fundamental values, structure to achieve balance between performance and conformance, understand the business model and operating environment, provide strategic direction and oversight in performance and conformance, measure business operations and follow up with actions to ensure progress, and ensure reasonable demands from stakeholders for relevant, understandable and reliable information are met.
According to IFAC, there are 60 countries without PAOs, and an additional 93 PAOs that do not have the sufficient capacity to function effectively at all levels. IFAC stated: “Effective governance is a “make or break” factor for PAOs. Strong governance enriches PAOs’ mission and vision, resulting in improved quality of financial management systems in emerging economies.”