1 The Role of Auditors in Economic development & Social Justice Jan. 2006 By: Gholam hossein Davani Member of High Council of Iran Association of Certified.

1

The Role of Auditors in

Economic development &

Social Justice

Jan. 2006

By: Gholam hossein Davani

Member of High Council of Iran Association of Certified Public

Accountants (IACPA)

IMA, AAA, BAA, EAA, IIA, CAAA, AAFM

Dayarayan Auditing & Financial Services Firm

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Corporate Governance

Law sovereignty

Justice & Fairness

Participate

Accountability

Responsibility

Supreme

Transparency

Efficiency & Effectiveness

Au

dit

ing

Supreme thought on governmental resources & consumption have been come from constitution that culminate in establish public Accountants tribunal and review of governmental accounts

Public accounts tribunal have been establish according article 101,102,103 supplementary to the constitution law

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Role of Auditors in good governance process

Information Transparency

Assurance

Financial evaluation of investment project

Tax auditing

Culture

Accountability

Management decision

Stock Market

Reduce of Administrative

Banking, Commerce, Financial & Economic entity

Financial accountability of government & Privatation sec.

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Type of Institute Controller

Ministry of Finance Supreme of Funds &

Executive of Financial regulation

Ministries & Governmental

InstitutePublic accounts

tribunal Control Budget &

Regulation Variance

State Chief inspectorate

Irregularities Cases Control

Government & Public economic entity

*Audit organizationFinancial Audit, Tax Audit, operational

audit

Private Economic entity

Iranian Association of Certified Public

Accountants

Financial Audit, Tax Audit, operational

audit

ShareholdersManagement Control

Mofid Rahbar Auditing Firm**Special Audit

Islamic Revolution Foundation

Audit Organization

Iranian Association of Certified Public Accountants

Financial Audit, Tax Audit, operational

auditMunicipalitities

Financial Supreme & Control Foundation in Iran

Type of Super & Control

*Audit Organization= Biggest Governmental Audit Firm in Middle East **Mofid Rahbar = Affiliated to Islamic Leader Office

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Effected law on Governmental Co.

Constitution Law

Public Account

s tribunal

The customers &

producers protection

Org. (CPPO)

Budgets Law

Commercial Law

Banking &

Marketing regulation

Commerce Law

Social Securitie

s Law

Tax ActAudit

Organization Law

Tehran Stock

Exchange Law

State Chief inspectorat

e

Punishment

organization

Economic development

plan

Iranian Association of Certified

Public Accountant

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Task of Auditors in Development Process

Tax Incomes

Anti-corruption

Anti-Money Laundry

Supreme on Budget

Comply Public InterestA

ud

itin

g

Tax is development instrument

* * *

Auditing is collection tax instrument

Privatization

Financial Assessment of Investment project

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Role of Auditors on Foundation Supreme Governmental

Tax Instrument

Financial Supreme in Capital Market

Financial Supreme in Money Market

Performance supervision on budget of governmental Co.

Financial Supreme in E-Governance

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Auditors Social Responsibilities in Development Process

Social responsible

Professional responsible

Legal responsible

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Auditors’ Social responsibilities in Globalization

Comply with Law & Regulation (Governor of Law)

Comply with professional rules

Supreme in human right

Supreme in Comply Environmental natural law & regular

Supreme on ISO & Others Quality Control Standards

Supreme on world bank & IMF Loan

Supreme on executive of Management Accountability

TaxLabour & Social law

Other governmental

duties

Financial International Court

Struggle with Corruption & Money Laundry

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Table of Professional Accountants in UK & USA 2005

CPA ACCA CIMA CIPFA ICAEW ICAI ICAS TOTAL

130,343 238,425 81,117 2,927 10,019 3,240 2,626 475,697

Table of Graduate of Chartered Accountants & ACCA 2005

LocationAffiliated Member &

StudentMember Total

Africa 43,327 4,907 47,234

USA 18,050 5,309 23,359

South East Asia 70,411 31,323 101,734

North Europe 9,423 2,571 11,994

Middle East 3,494 490 3,984

South Asia 18,067 479 18,546

UK & West Europe 78,969 59,534 138,503

Total 240,741 104,613 345,354

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Table of AICPA’s Graduation

1999-2005

1999 2000 2001 2002 2003 2004 2005

Total AICPA Membership (excluding student and other affiliates)

336,635 337,454 336,081 337,867 335,111 334,635 327,135

Public Accounting 39.5% 39.4% 38.9% 38.8% 38.4% 39.0% 39.2%

Business & Industry 46.2% 46.4% 46.6% 47.4% 47.7% 41.6% 42.8%

Education 2.4% 2.3% 2.3% 2.3% 2.4% 2.3% 2.4%

Government 4.3% 4.2% 4.1% 4.0% 4.1% 3.9% 3.9%

Retired & Miscellaneous 7.6% 7.7% 8.1% 7.5% 7.7% 13.2% 11.6%

Membership in Public Practice 133,036 132,943 130,870 130,995 128,730 130,343 128.292

Firms with one member 22.8% 21.8% 21.6% 21,3% 21.4% 22.6% 23.0%

Firms with 2-9 members 34.7% 34.1% 34.1% 33.9% 34.1% 29.9% 31.6%

Firms with 10 or more members, except the 25 largest firms

21.6% 22.8% 22.8% 24.0% 24.5% 26.0% 24.7%

25 Largest Firms 20.9% 21.3% 21.5% 20.8% 20.0% 21.5% 20.7%

CPA in the worldCountry No. Firm Office

USA

World

3670

297

5808

636

Total 3967 6444

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Active PartnerActivate in

Public

Active in Audit

OrganizationNon-Active Individual Total

424 64 296 358 220 1,368

Estimate of Audit Market

Share of Private Public

Accountants

Share of Audit

Organization

Market Value of

Accounting

Total Personal in

Public Accountants

No of Public Accounting

Firms

150,000,000$ 20,000,000 $ 30,000,000 $ 50,000,000 $ 3,475 139

Table of Iranian Association of Certified Public Accountants (IACPA)

BDO KPMGERNEST &

YOUNGDELOITTE PWC

3.3 15.6 16.9 18.2 20.3

Moores Harwath Baker tilly Grant thornton

RSM

1.9 2 2.1 2.4 2.5

Big Ten Accounting Fee Income 2005

Total Market 100($B)

OtherManagement Consulting

Tax ServicesAudit

Accounting

17% 11% 23% 49%

Table of World Accounting Services 2005

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Big Ten revenue per partner 2005 (M$)

Overall Fee split 2005 (MS)

DelloitteErnst & Young

PWC KPMG RSMGrant

Thornton BDO

7,810 6,337 6,167 4,700 1,213 828 440

USA Accounting Firm Fee 2005

Firm Amounts Firm Amounts

PWC 3,055,000 RSM 1,100,000

DT 3,005,000 Harwath 1,007,000

EY 3,011,000 Baker tilly 970,000

KPMG 2,920,000 Moors Rowland

1,350,000

Grant thornton

1,990,000

Tax services

Audit & Accounting

Managing Consulting

Others

27 43 21 9

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Overall Market Share 2005

Mid time KPMGErnst & Young

Deloitte PWC

%34 %12 %17 %21 %16

Ranking Big Four in The World

Country Firm Fee income ($M)

USA Deloitte 7,8

UK PWC 3,2

Germany PWC 1,372

Canada Deloitte 1,151

France KPMG 834

Netherland DT 829

Australia PWC 761

Spania DT 296

Korea PWC 289

Denmark DT 286

Switzerland KPMG 284

South Africa PWC 261

Belgium PWC 233

Sweden E&Y 232

Italy PWC 203

Ireland PWC 182

Mexico PWC 152

Japan DT 652

Norway DT 93

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Global Eight•The UN Global Compact

•ILO conventions

•The OECD Guidelines for Multinational Enterprises

•ISO 14000 Series

•Account Ability 1000

•The Global Reporting Initiative

•The Global Sullivan Principles

•Social Accountability 8000

•Audit & Accounts Standards

Comply World Standards•Principles (Global Compact and Global Sullivan Principles

•Standards (GRI, OECD Guidelines, SA8000, AA1000S, ILO Conventions)

•Foundation (ILO Conventions, AA1000S)

•Process (SA8000, AA1000S, ISO 14000S)

•Performance (SA8000, OECD Guidelines, ILO Conventions)

•Audit & Accounting Standards GAAP, IAS, IFRS

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ILO Law & Regulation•Freedom of association (Convention 87)

•Right to collective bargaining (Convention 98)

• Prohibition on forced labour (Convention 29 and 105)

•An environmental policy

•An assessment of environmental aspects

•An assessment of legal and voluntary obligations

•A management system

•A series of periodic, internal audits and reports to top management

•Prohibition on child labour

•Freedom from discrimination (Convention 111)