As the president and chief executive officer of CPA Canada, Kevin Dancey took a keen interest in one of the organization’s beneficiaries, the CPA Martin Mentorship Program, designed to help Canadian students from indigenous backgrounds to excel at high school, pursue post-secondary education, learn about career options, including accounting, and benefit from connecting with CPAs in their communities.
“I’ve always believed in volunteering, and accountants have great skills to help make charities sustainable and effective,” says Dancey, who held the top role at CPA Canada from 2013 to 2016 and has been, since 1 January, Chief Executive Officer of the International Federation of Accountants (IFAC).
At IFAC, Dancey intends to ensure that education remains a priority. “We’ve made an early start, for example, by setting out a new direction for education,” he tells A Plus from the federation’s headquarters in Manhattan, New York. “We believe there are benefits to be realized from a comprehensive and integrated approach to international accounting education.”
As Canadian Institute of Chartered Accountants president and CEO, Kevin Dancey led the Canadian accounting profession’s unification, becoming the unified body CPA Canada’s first president and CEO.
IFAC, he adds, is in a great position to offer its services as an educator. “The spirit of volunteerism that fuels the work of all IFAC’s standard setting boards and committees is profound,” he says. “Tens of thousands of voluntary hours are committed by our volunteer experts from the four corners of the earth. IFAC’s staff itself is also very diverse culturally, speaking many different languages.”
In September last year, IFAC’s International Accounting Education Standards Board announced the creation of the International Accountancy Education Transition Advisory Group to advise IFAC on the development of, and transition to, a new model to assist the global profession to address the challenges of a rapidly changing environment. “The new model will be operational later this year,” says Dancey.
One of the education challenges for the profession is increasing specialization, fuelled by evolution in fields such as data analytics, international taxation, forensics, fraud and valuation. “As our education initiative shows, IFAC fully understands the need to prepare the profession for these big and challenging issues,” says Dancey. “The good news is that our member organizations are taking these issues seriously too.”
The new IFAC leader cites major events that have focused on areas such as new technology and corruption-fighting issues. “Last year, in Argentina, IFAC signed an agreement with the International Bar Association that will help us explore further ways in which the profession and lawyers can partner together to combat fraud.”
Restoring public trust
The subject of fraud reminds Dancey of the issue of public trust. He believes professional accounting bodies can respond to perceptions of falling confidence, but insists accountants are still widely trusted. Dancey cites the G20 Public Trust in Tax report conducted by IFAC, the Association of Chartered Certified Accountants and Chartered Accountants Australia and New Zealand.
“There is strong evidence of a profound public trust deficit,” he says. “The report found that 67 percent of people in G20 countries distrust politicians to make the right decisions on tax policy, but that accountants, the top-graded cohort, are regarded highly by almost 60 percent of survey respondents.”
This, he adds, is just one example that shows how accountants and professional accounting organizations are uniquely positioned to rebuild trust in the global economy that has been weakened by the financial crisis and stock market volatility.
“Ours is a profession rooted in strong skills and backed by a code of ethics that has been revised and restructured to make it even more relevant in the global economy,” says Dancey. “Accountants are part of the solution to the public trust crisis; we have a strong story to tell.”
“Accountants are part of the solution to the public trust crisis; we have a strong story to tell.”
The IFAC leader rejects calls, such as those in the United Kingdom, to break up the Big Four firms – Deloitte, EY, KPMG and PwC – to increase competition or the creation of audit-only firms. “It’s important to note that big companies can employ thousands or hundreds of thousands of employees all around the world,” he says. “They are large, complex entities operating a complex business environment. It is their demand for global audit services that has driven the growth of the large firms.”
Dancey doubts the calls for the Big Four to dissolve, or significantly restructure, would actually improve the market. “All the ideas doing the rounds, including audit-only firms, have the very real potential to add cost, complexity and confusion to a fragile business environment without any hard evidence that they would increase audit quality.”
Audit quality, says Dancey, is always a subject up for discussion and refinement. “There are always lots of ideas out there, but most of them don’t start with the obvious: we must always regard audit quality as the paramount objective,” he says. He insists that any change must be thoughtful and measured. “The International Auditing and Assurance Standards Board’s A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality should be compulsory reading by everyone involved in this big and important conversation.”
Dancey’s international accounting experience includes the Public Interest Oversight Board, the IFAC Board and the Global Accounting Alliance, where he was also chair from 2008 to 2012.
Emphasis on quality
The pursuit of higher audit quality is a key theme of IFAC’s Strategic Plan 2019-2020. “The plan emphasizes the importance of being more nimble and agile in both its anticipation of change and response to it,” says Dancey. “The plan, entitled Build Trust. Inspire Confidence, sets out the IFAC vision and purpose, and our aspirations for a dynamic, future-focused global profession. Our three strategic objectives centre around international standards development, adoption and implementation; preparing a future-ready profession; and speaking out as the voice for the global profession on major public interest issues, like tax and audit quality, which I’ve been speaking about recently.”
Dancey says that while the plan’s timeframe officially covers this year and next, it’s been developed to be relevant well beyond that period and aligns with the goals of the Monitoring Group, the forum of international regulatory bodies and related organizations committed to advancing the public interest in areas related to audit quality.
The Monitoring Group released a consultation last year on the international standard setting approach. Dancey says he has been encouraged by recent collaborative dialogue with the group and other stakeholders. The group’s final recommendations are expected to be issued by the end of this month. “The good news is that on many issues, IFAC and the Monitoring Group agree: we all seek a standard setting model that continues to serve the public interest, produces high-quality standards, and is fit for the future.
“A key driver of our success will be how successfully we leverage the talents and experience of our member organizations, like Hong Kong.”
One priority for Dancey is ensuring the full engagement of national accounting bodies, such as the Hong Kong Institute of Certified Public Accountants. “IFAC is relentlessly focused on stakeholder satisfaction, and that means ensuring our recently-approved strategy delivers for our members and our broader stakeholders,” he says. “A key driver of our success will be how successfully we leverage the talents and experience of our member organizations, like Hong Kong.”
Dancey says member organizations are critical to standards adoption and implementation. “It’s always great to see the Hong Kong Institute of CPAs’ deep commitment to high-quality standard setting by both commenting on exposure drafts of proposed new standards and also conducting training to prepare members for new standards,” he says. “I understand they recently welcomed an International Ethics Standards Board for Accountants (IESBA) board member to a meeting of its Ethics Committee ahead of the June effective date for the revised and restructured code of ethics – a great example of the IESBA’s forward thinking.”
Dancey hopes to leverage his Canadian experience – “I came from a bilingual country with many different provinces, each with their own priorities” – to embrace the diversity that IFAC offers. “The IFAC family represents more than three million accountants,” he says. “That’s a lot of languages and cultures representing a wide economic spectrum in which to balance priorities and chart a course for the future. It also, of course, represents the most tremendously exciting opportunity.”
Progress via diversity
With global economic growth expected to slow down in 2019 as tighter monetary policy, weaker earnings growth and political challenges confront the world’s major economies, accountants might well have to be prepared for another looming crisis. “IFAC has identified global financial regulatory divergence as a key threat to economic stability,” says Dancey.
While business and finance are increasingly global, he notes regulation frequently isn’t. “IFAC developed 10 principles for good regulation based on an excellent roundtable hosted by the Hong Kong Institute of CPAs in 2015, which brought together business leaders, regulators, academics and investors,” he says. “From that idea, we were able to project concrete suggestions into the global discussion.”
Last year, IFAC partnered with the Organization for Economic Cooperation and Development to estimate the cost of regulatory fragmentation just in the financial sector. “The cost was conservatively estimated at more than US$780 billion a year. IFAC’s members, like Hong Kong CPAs, are already trusted advisors to businesses and government, so I think it’s less about IFAC helping its members prepare for the next crisis, but IFAC supporting their efforts to prepare government and business for it.”
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Dancey sees benefits from the profession engaging with each other and sharing ideas, such as at the World Congress of Accountants (WCOA) held in Sydney last November. “One of the biggest lessons from WCOA was that there is no magic bullet that will solve every accountants’ technology skills gap,” he says. “Every accountant needs to have their own personal plan on how they will learn new trends and keep abreast of new technologies.” The good news is, IFAC’s members like the Institute are really focused on this issue and, around the world, are offering high-quality conferences to learning and development programmes for their members. “It certainly pays to belong to a professional accounting organization!”
Despite serving as a member of the IFAC Board from 2006 to 2012, Dancey says he is impressed by the effectiveness of its small team. “Most people are surprised to learn that our headcount, including those engaged in standard setting, is about 80 people,” he says. “IFAC’s phenomenal output is derived from a group of outstanding employees who care very much about our members.”
Dancey says IFAC’s leadership, from the board down, has a passion for more diversity, both in terms of gender and culture, on the boards and committees. “As the board’s Nominating Committee has observed, there will always be more need for women to be empowered at the national level to aim high for senior management and increased experience levels. IFAC realizes so much is being done by our members to support greater diversity, including Hong Kong.”
With his work with indigenous Canadians in mind, Dancey hopes to lead the organization into an era of greater diversity. “From our education initiative to the many Global Knowledge Gateway articles submitted by member organizations, it’s clear that promoting diversity is taken seriously by our members too.”
In January, IFAC published Enabling the Accountant’s Role in Effective Enterprise Risk Management, a report identifying three ways in which CFOs and finance functions can enhance their contribution to enterprise risk management: 1. Align risk management with value creation and preservation; 2. Drive insights and enable decisions through provision of risk modeling and analytics, data governance and identification of organizational risk appetite; and 3. Enable integration and interconnectivity by breaking down siloes across the organization to share information.
