The International Federation of Accountants has been trying to build the reach and influence of the accounting profession in emerging markets in Africa, Asia and other parts of the world.

“Capacity building has been an increased focus for us over the past four or five years, to strengthen the profession in areas where it is still emerging and to actually establish the profession in countries where there’s really not a formal profession of any kind,” said IFAC CFO Russel Guthrie. “There’s still quite a number if those that need that kind of time and attention. From an advocacy standpoint, but also as a substantive standpoint, we’ve tried to bring more resources to the table and bring greater attention to the importance of that work to governments and to donor agencies.”

IFAC has been working with donor agencies such as the World Bank, the African Development Bank, the U.S. Agency for International Development (USAID) and the United Kingdom’s Department of International Development (DFID) to contribute funds for this type of work.

“We’ve been having an ongoing dialogue to work with them to see how accountancy capacity development fits with their strategies for economic development in emerging economies,” said Guthrie. “Through that work we did come to a sort of shared understanding that if the policy intent is to grow a country’s economy and stimulate foreign direct investment and create investor confidence, then actually having a strong accountancy profession was one important element to support that kind of growth.”

About two years ago IFAC received a grant from DFID for nearly 5 million pounds over 7 years to undertake direct direct capacity-building in up to 10 countries.

“We’ve launched initial projects with partner organizations in Uganda, Rwanda and Ghana,” said Guthrie. “The initial focus has been on Africa and that’s because as a region it probably is the least developed, generally speaking, although there are pockets. South Africa has a strong accountancy profession. Kenya has a strong accountancy profession. But Rwanda is obviously a more emerging country in the development sense. West Africa is very underdeveloped, except perhaps for Nigeria when it comes to the accountancy profession.”

He anticipates that IFAC will expand this type of development work to Southeast Asia and remote parts of East Asia in the future. “Those would be next regions where probably some serious development work is needed,” said Guthrie.

However, he recognizes the accounting is suffering from an image problem is some parts of the world, exacerbated by revelations such as the Panama Papers, which exposed efforts by a Panamanian law firm to set up offshore tax havens and shell companies.

“When those stories come out, often the profession is cast in a negative or an unflattering light,” said Guthrie. “That’s understandable. One of the things we’re interested in doing, though, is not running from those issues, but making sure that we’re also talking about the positive things the profession does and the positive impacts they have on organizations and economies in terms of supporting growth and being part of the solution and not just a source of the problem.”

Guthrie has written online about both international tax regulation and corporate governance.

“We actually think that regulation is important,” he said. “Financial markets, including the profession, need a level of external oversight and supervision. We’re not against regulation per se, but what we’re talking about is the need for smart regulation. There definitely is a point where too much can inhibit innovation and stifle growth.” Many companies spend gar more time trying to fulfill their compliance burden, he noted, as opposed to innovating, creating and becoming more efficient.”There definitely is a tipping point, but what we’ve been trying to talk about is more smart regulation that follows a good collaborative, consultative approach where there’s dialogue between the regulator and the regulated to make sure that the regulation is achieving its intended effects, that it’s proportionate.”

IFAC would like to see regulation more globally coordinated. “One of the real issues we’re seeing is not so much too much regulation per se, but differing approaches to regulation in different jurisdictions, which then makes it that more challenging for multinational companies, international audit firms and so forth to operate in a globalized environment,” said Guthrie. “They’re trying to cope with the same regulatory measure, but it’s designed and implemented in 50 different jurisdictions.

He pointed to what is happening with the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting projects, also known as OECD BEPS, and the recent rules on country-by-country reporting of tax information.

“You’ve got countries moving at different speeds, and there’s a real risk of fragmentation,” said Guthrie. “It actually may make things worse and not better.”

He thinks the OECD BEPS recommendations are generally sensible and balanced on a global basis, but objected to the piecemeal way in which they are being adopted in various jurisdictions. “Tax being such a nationally driven topic, and with countries trying to make decisions for the benefit of their country, you see a mix and match of the U.S. taking this piece and not another piece while Australia is moving far ahead,” said Guthrie. “If you get that kind of fragmentation, it makes the landscape ven more fragmented that is currently is. The opportunities for tax arbitrage or not meeting public expectations around the tax fairness will not only remain, but may get worse.

IFAC would like to see improvements in governance in both the private and public sectors. “That is one of the keys to financial stability: sound risk management and good internal control, and sound decision making around tax policy,” said Guthrie. “We think it’s important as a profession to advocate for that, simply because it is the best way institutionally to safeguard against the things that do end up in the papers, i.e., a corporate failure or a fraud or an accounting scandal. We need to try to help the public, policy makers and governments understand that while we as accountants understand that we have an important watchdog role, we are much better as a profession when we have other lines of defense besides just us. You can analogize it to a soccer team. While we might be the goalie and need to play that last line of defense, you want your first line of defense to be strong accountants working inside the organization, a strong internal audit function, a strong board of directors, strong internal control structures, sound governance arrangements and so forth. If you have all actors in that financial reporting supply chain strengthened and doing their part, it allows us as a profession to play our role even more effectively.”