Training Future and Current Accountants in Sustainability

Google+ Pinterest LinkedIn Tumblr +

By Jim McFie, a Fellow of ICPAK

IFAC’s Proposals Aim to Provide Balance

I am sure you know that the Institute of Certified Public Accountants of Kenya (ICPAK) is a member of the International Federation of Accountants (IFAC). IFAC was founded on 7 October 1977, in Munich, Germany, at the 11th World Congress of Accountants.  IFAC comprises over 180 member organizations in more than 135 jurisdictions, representing millions of professional accountants in public practice, education, government service, industry, and commerce. In Kenya, the Kenya Accountants and Secretaries National Examinations Board (KASNEB) had been established as a state corporation under the National Treasury by the Government on 24 July 1969: it was formally established by the Accountants Act, Chapter 531 of the Laws of Kenya, which received the Presidential assent of His Excellency Jomo Kenyatta on 1 March 1977, and came into operation by notice in the Kenya Gazette on 1 July 1977. Mr. M. J. Njenga was the first Chairman of KASNEB; the first Chief Executive Officer (in KASNEB, the Secretary to the Board) was Mr. Stanley Nyaga from 1969 to 1970; the second was Mr. Gardner Johnston from 1970 to 1978; the third was the legendary Mr. Erastus K. Gitau from 1978 to 2007, a span of 29 years; the fourth was Mr. Pius M. Nduatih from 2008 to 2019; the fifth and current CEO is FCPA Dr. Nicholas K. Letting’- the string of the qualifications after his name would take a full line on any page.

The first meeting of ICPAK took place at 11.00 a.m. on Friday 17 November 1978. It was presided over by His Excellency Honourable Mwai Kibaki, E.G.H., M.P., the then Vice President of the Republic of Kenya and Minister for Finance; the meeting had been by convened Mr. S. K. Mbugua, who went on to be elected the first Chairman of ICPAK at the meeting. ICPAK’s function is to regulate the activities of all of its members by ensuring that they carry out their work with credibility, professionalism and accountability. Also, since it is a member of IFAC, it has a number of membership obligations. In relation to educating future and working accountants, Statement of Membership Obligations number two sets out requirements for IFAC member organizations with respect to International Education Standards for Professional Accountants and Aspiring Professional Accountants. IFAC member organizations must identify and undertake actions to have the International Education Standards adopted and implemented in their jurisdictions and they must notify their members of all new, proposed, and revised international standards and other pronouncements. IFAC has established five boards and maintains a separate web page for each board. There is the International Public Sector Accounting Standards Board (IPSASB) which sets Public Sector Accounting Standards; a second is the International Auditing and Assurance Standards Board (IAASB) which sets international standards on auditing, assurance engagements and related services; the International Ethics Standards Board for Accountants (IESBA) which develops the international Code of Ethics for Professional Accountants; the Public Interest Oversight Board (PIOB) which oversees IFAC’s compliance and standard-setting activities; and the International Accounting Education Standards Board (IAESB), which develops International Education Standards. 

On 24 April 2024 the International Federation of Accountants (IFAC) published an exposure draft on changes to the international Education Standards to embed sustainability, from analysis to reporting to assurance, across aspiring and working professional accountants’ training. The proposed revisions prescribe requirements for the first level of learning, the entry to professional accounting education programs, the second, the initial Professional Development (“IPD”) of aspiring professional accountants, and the third level, continuing development (“CPD”) of professional accountants. A study was carried out on the matter and the findings were summarized in IFAC’s publication, “Equipping Professional Accountants for Sustainability: What We Have and What We Need”, which is available, free of charge, on the internet. The paper stressed the importance of professional accountants being systems-thinkers, who recognize the connectivity of finance and sustainability. Sustainability is not a topic to be considered in isolation. Rather, the professional accountant should consider the impact of the global sustainability landscape on business models, value chains, and strategies, as well as on governance, risks, and opportunities.

IFAC’s proposals aim to provide balance, by setting out an appropriate minimum education standard at a global level based on demand for accountants to perform high quality, sustainability related services. IFAC recognizes that some individual IFAC member organizations may wish to adopt (or may have already adopted, which is the case for companies listed on the Nairobi Securities Exchange and for banks operating in Kenya) sustainability learning outcomes that go beyond the proposals. Demand for sustainability assurance engagements is likely to grow, both to meet regulatory requirements (Safaricom plc is the only company in Kenya at the moment which has its Sustainability Report audited by PricewaterhouseCoopers), as well as to address investor needs. The accounting profession needs to make sure aspiring professional accountants receive adequate education to address this new area of concentration by a large number of stakeholders. The current International Educational Standards (IESs) combine audit and assurance into one competence area. The extant learning outcomes are heavily weighted towards one specific type of assurance, the audit of financial statements. Out of the seven learning outcomes in the extant competence area, only one addresses general assurance principles. IFAC discussed how to incorporate a greater focus on assurance. Audit is often viewed as a core subject for many accounting curriculums and forms a key area of practical experience for many aspiring professional accountants. Accordingly, it was determined that the overall balance and proficiency should remain weighted towards the audit of financial statements. However, given the importance of assurance, its coverage should be expanded.

If you wish to express your opinion on the new standards, you can do so up to 24 July 2024. Just download from the IFAC website the exposure draft entitled “International Education Standards (IESs) Proposed Revisions to IES 2, 3, and 4 – Sustainability”. It is a document of 66 pages and is easy to read: then submit your views to IFAC.

 Let me give you a tip: do not leave it until 23 July.


About Author

Leave A Reply