KARACHI, Feb 16: International Federation of Accountants (IFAC) — the New York-based world-wide organisation for accountancy profession has released its updated “Code of Ethics for Professional Accountants”, which features new rules on independence of the accountant.

IFAC claims membership of 156 professional accountancy bodies in 114 countries, representing more than two million accountants. Pakistan’s premier accountancy bodies: Institute of Chartered Accountants of Pakistan (ICAP) and Institute of Cost and Management Accountants of Pakistan (ICMAP) are the members of IFAC.

“This international Code of Ethics for Professional Accountants, is intended to serve as a model on which to base national ethical guidance for accountants”, IFAC said. And Marilyn Pendergast, chairperson of IFAC’s Ethics Committee observed: “Although the accountancy profession throughout the world operates in an environment with different cultures and regulatory requirements, it is vital that all accountants share a commitment to a strong code of ethics”. The IFAC Code was said to outline the fundamental principles that should be observed by professional accountants to meet their responsibility to ‘protect the public interest’. The President IFAC, Aki Fujinuma hoped that the changes would contribute to “increased public confidence in the assurance services provided by the world’s accountants”.

Commenting on the IFAC’s new code, a partner at a big accountants firm in Karachi admitted that the world-wide private sector body for accountancy profession is trying to bolster the sagging public confidence in the accountancy industry. Following the Enron debacle, the financial statements prepared by accountants have become suspect. Shocking new revelations are pushing investor morale to their new lows.

The accounting rule making body in US is the Financial Accounting Standards Board (FASB). But it hardly has enjoyed the pride associated with British accountancy regulators — the IASB — whose International Accounting Standards (IAS) — now transformed into International Financial Reporting Standards (IFRSs) — are being gradually applied to the financial statements in most part of the world, including Pakistan.

But a disturbing report published this week in Financial Times London, says that the congressional investigators have uncovered that Enron executives last year had thought about donating $500,000 to the London-based International Accounting Standards Board (IASB) but only if they could gain access to officials at the self-regulatory body and influence its policies in drawing up Accounting Standards that suited the energy company best.

Although it is unclear whether Enron executives could influence the IASB, it is seriously being argued everywhere if self-regulation of the accountancy profession has been effective and whether ‘Code of ethics’ for accountants holds any meaning where the corporate cash can buy any one, from auditor to the legislator.