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Preface
to Pronouncements on Management Accounting
ISSUED BY THE
INTERNATIONAL FEDERATION OF ACCOUNTANTS
This Preface to Pronouncements on
Management Accounting is issued to facilitate understanding of the objectives
and operating procedures of the Professional Accountants in Business Committee
and the scope and authority of pronouncements issued by the Committee.
INTRODUCTION TO THE PROFESSIONAL
ACCOUNTANTS IN BUSINESS COMMITTEE OF THE INTERNATIONAL FEDERATION OF
ACCOUNTANTS
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The mission of the International
Federation of Accountants (IFAC) as set out in paragraph 2 of its Constitution
is "the worldwide development and enhancement of an accountancy profession
able to provide services of consistently high quality in the public interest."
The Professional Accountants in
Business Committee
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The Professional Accountants in
Business Committee (PAIB) is a standing committee of the Board of IFAC. Its
mission is:
The vision of
the Committee is :
The general objectives of the
Committee are:
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To achieve increased
recognition of the professional capabilities of management accountants.
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To provide a source of comment
and suggestions from a management accounting point of view on issues that
fall within the terms of reference of other committees of IFAC.
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To encourage management
accounting research, by member bodies and others, into matters of importance
and assist in disseminating the results internationally.
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To select and disseminate
information on best practices in management accounting.
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To identify the future
directions of management accounting practice, and communicate the
implications of this to the profession at large.
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To influence and assist IFAC
member bodies in developing and promoting the financial and managerial
aspects of the profession.
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PAIB
Committee has also been given the
specific responsibility to issue, on behalf of the Council* of IFAC,
pronouncements on management accounting in the form of "practice statements",
"studies" and other publications.
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The members of the
PAIB Committee are those
nominated by the member bodies in the countries selected by the Council* of
IFAC to serve on the
PAIB Committee. The representative designated by a member body or
bodies to serve on the
PAIB Committee must be a member of one such body.
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To obtain a broad spectrum of
views, it is contemplated that, whenever appropriate, subcommittees of
the PAIB Committee
will include representatives from countries which are not members of
the PAIB Committee.
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For additional information on the
PAIB Committee, visit the Committee’s website at
http://www.ifac.org/PAIB/index.tmpl.
* Effective May 2000, the IFAC
Council was renamed the IFAC Board.
EXPLANATORY FOREWORD TO
PRONOUNCEMENTS ISSUED BY THE PROFESSIONAL ACCOUNTANTS IN BUSINESS COMMITTEE OF IFAC
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Pronouncements on management
accounting cover the application of technologies and accounting principles as
they relate to the management and control of organizations in both the private
and the public sectors. They are aimed at promoting practices and techniques
in the field of work, but do not override the local statements referred to in
paragraph 2 below.
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PAIB
Committee adopts and/or builds upon
the work of professional accounting bodies of various countries.
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Pronouncements issued by
the PAIB Committee
give attention to the broad array of work conducted and structures adopted by
an organization to manage progress and of the contribution thereto of the
accountant. Statements may be issued in the following fields:
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External Reporting: |
the design and operation of
information and reporting systems directed to external parties. Such systems
include financial and non-financial information and involve accountability
for environmental as well as for fiscal matters. |
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Internal Control: |
the establishment and separate
evaluation of, and reporting on, financial and managerial control, processes
and systems. |
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Management Control: |
the efficient and effective use
of limited resources.
This involves supporting the
processes, methodologies, and techniques through which management, by
working with and through others, determines and achieves organizational
objectives in a changing environment.
Included in this category is
work related to strategic planning, organizational structure and design,
operational accountability and control and the tools and practices that
provide for the effective alignment of activity to strategy and objectives. |
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Taxation Management: |
the design and operation of
systems that assure compliance with prevailing law and regulations and,
minimizing tax expenditures while achieving strategies and objectives of the
enterprise. |
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Treasury Management: |
the organization and control of
activity related to the sourcing and management of funds and of the
management of financial risk.
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In producing pronouncements to
guide practice in its sphere of responsibility,
the PAIB Committee will seek to amplify and
supplement work that is undertaken by IFAC member bodies to:
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develop research findings or
emerging practices within organizations into operation principles and
procedures for practical use;
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specify relevant information,
including operating procedures, for problem areas or issues, to assist in
arriving at an appropriate decision in given circumstances; and
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offer guidance on "good" or
"best" practice, based on accumulated practical experience and distilled
wisdom.
The pronouncements issued by the
PAIB Committee
may cover any of the types of work described in paragraph 3. Three types of
Pronouncements are produced, differentiated as follows:
International Management Accounting
Statement
These address basic issues about
matters in the work area. They seek to represent widespread accepted practice
based on a careful study of options across many sites and circumstances. They
reflect accumulated practical experience and distilled wisdom, and seek to
provide guidance on "good" or "best" practice.
Studies
These are intended to contribute to
the growth or accessibility of knowledge about matters in the work area. They
draw from the following range of activities, or their synthesis: literature
searches, questionnaire surveys, interviews, experiments, field or case studies,
or critical analysis. They are expected to provide new information or fresh
insights, in accessible formats for practitioners.
Other Publications
Other publications are intended to
provide information that contributes to the body of management accounting
knowledge and also serve such objective of the
PAIB Committee as to disseminate, on an
international basis, documents that do an excellent job in assisting managers in
the field of financial and management accounting.
Working Procedures: International
Management Accounting Practices
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The working procedure of
the PAIB Committee
related to the issuance of International Management Accounting Practice
Statements is to select subjects for detailed study and then form a
subcommittee which has the initial responsibility for the preparation and
drafting of the statement. The subcommittee studies background information in
the form of statements, recommendations, studies or standards issued by member
bodies, regional organizations, or other bodies, and as a result, an exposure
draft is prepared for consideration by
the PAIB Committee. If approved by at least
three-quarters of the total voting rights of
the PAIB Committee, the exposure draft is
widely distributed for comment to member bodies of IFAC, to the
PAIB Committee network
of senior financial and management accounting executives (PAIB/Network), and
to appropriate international agencies. Adequate time is allowed for each
exposure draft to be considered by the persons and organizations to whom it is
sent for comment.
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The comments and suggestions
received as a result of this exposure are then considered by the subcommittee
and the exposure draft is revised as appropriate. Provided that the revised
draft is approved by at least three-quarters of the total voting rights of
the PAIB Committee, it is issued as a definitive statement on International Management
Accounting Practice Statements.
Working Procedures: Studies
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The initial steps in the
preparation of a study is similar to that detailed for the statements on
International Management Accounting Practice Statements in paragraph 6.
Namely, PAIB Committee is to select subjects for detailed study, develop an outline for
the project and then form a subcommittee. PAIB Committee delegates to the subcommittee
the responsibility for the preparation of the study. The subcommittee reviews
the material submitted by the author(s) in light of studies or standards
issued by member bodies, regional organizations, other bodies and what is, in
their view, good management accounting. Suggested modifications or revisions
to the manuscript are then passed on to the author(s) for consideration and,
where appropriate, are incorporated into the manuscript.
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The revised manuscript, if
approved by the subcommittee, is then submitted to the PAIB Committee and if approved by at
least three-quarters of the total voting rights of the PAIB Committee, the study is
published and released.
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For the purpose of voting
referred to in paragraphs 5, 6 and 8 above, each country represented on the PAIB
Committee
has one vote.
Working Procedures: Other
Publications
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Other publications are issued as
determined by the PAIB Committee, if approved by at least three quarters of
the total voting rights of the PAIB Committee.
Language
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The approved text of an exposure
draft or statement is that published by the PAIB Committee in the English language. Member
bodies of IFAC are authorized after obtaining IFAC approval to prepare
translations of exposure drafts and statements, at their own cost, to be
issued in the language of their own countries as appropriate. These
translations should indicate the name of the accountancy body that prepared
the translation and that it is a translation of the approved text.
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