By George W. Russell
Olivia Kirtley, the recently elected President of the International Federation of Accountants, looks ahead to her two-year term and the future of the global profession with George W. Russell.
In 1972, when Olivia Kirtley started her career after graduating from Florida Southern College in the United States, a manager at a then-Big-Eight firm told her that women were not hired for the professional staff. “Fortunately, the managing partner at another firm, who had three daughters, had the courage to go against the status quo and gave me a chance,” she recalls.
Today, 40 percent of all certified public accountants in the U.S. are women, but they make up only about 20 percent of partners and remain under-represented in other senior positions. Women head less than 5 percent of Fortune 500 companies and Kirtley notes that they comprise less than 15 percent of executive officer positions in business. “I feel very strongly about the need for diversity in the senior ranks of the profession and business.”
Even the International Federation of Accountants elected its first woman president only last year. “I am honoured and excited to be the first female President,” she tells A Plus. “I also feel a tremendous responsibility to be a good role model for women to aspire to and have opportunities for leadership positions throughout our profession – both in public accounting and business,” she says. “The profession is attracting women to it, but we must do better at retaining and promoting them.”
Kirtley cites a McKinsey & Co. study from 2012 that reviewed 180 publicly traded U.S. companies and found that those in the top quartile of executive board diversity – measured by a percentage of women and non-U.S. nationals – had an average return-on-equity 53 percent higher than those in the bottom quartile. “So it’s clear that it’s not just common sense to have a more diverse leadership team, it is a financially smart thing to pursue too.”
The Louisville, Kentucky-born Kirtley is a unique IFAC leader not only through her gender. She is also the federation’s first president in its 38-year history drawn from the ranks of professional accountants in business, although she began her career in a public accounting firm. That, she says, signifies the breadth of the community the profession encompasses.
“I believe that my experiences – as an independent non-executive director and chair of audit committees – give me a balanced perspective
and sensitivity to issues, not only as a member of the profession but also as a customer of the profession, as well as an investor who relies on the profession,” she says.
Kirtley also believes her business experience enables her to command the attention of IFAC’s external partners. “I believe this gives me a very credible voice in discussing issues with regulators, legislators, investors and the media,” she says, a priority set out in her acceptance speech after being voted in as IFAC President in November 2014.
“IFAC’s role as the global organization for the accountancy profession means we need to keep working hard to maintain links with regulators, governments and key decision makers, media and investors,” she stresses. “We must ensure they understand the wide range of activities being undertaken by the profession that contribute greatly to maintaining and strengthening capital markets and economies.”
IFAC’s alliance with its representative Asia-Pacific jurisdictions can ensure its international links are strengthened, she says. “IFAC has long enjoyed an outstanding relationship with its Asia-Pacific stakeholders, and there is a strong and on-going representation of the region throughout IFAC committees and taskforces,” Kirtley points out.
Hong Kong plays an important role not only in its Asia-Pacific home ground but also on the global stage, says Kirtley, citing the election of the Hong Kong Institute of CPAs Chief Executive and Registrar Raphael Ding to the IFAC board in November 2014. “He has been a strong contributor to the global profession for many years and we will benefit greatly from the experience and insights he will bring from the Asia-Pacific region to our board discussions.”
Moreover, Kirtley adds, IFAC representatives and staff have visited the region regularly so they can stay connected with issues and allow stakeholders in jurisdictions such as Hong Kong to have an important voice. “In September 2014, IFAC responded to Hong Kong’s Financial Services and the Treasury Bureau consultation paper on proposals to improve the regulatory regime for listed-entity auditors,” she notes.
The importance of Hong Kong to the global accounting profession is underlined by its status as an international financial centre. “You only need to look at what a powerhouse for the regional economy Hong Kong is to understand why it’s important that high professional standards are upheld and enforced,” says Kirtley.
With international standards adopted in more than 100 jurisdictions, IFAC “plays a really important role in coordinating support for the independent standard-setting boards and promoting adoption and implementation of those standards,” says Kirtley, adding that ensuring adherence to those standards is crucial. “The Hong Kong Institute of CPAs takes enforcement seriously,” she points out.
Supporting national standard setters, says Kirtley, is an important plank of the IFAC agenda moving forward. Other major goals of her presidency, which ends in November 2016, include trying to improve public sector financial reporting. “It is exciting to talk to public sector leaders and politicians about the profession’s ability to help them provide better, clearer information to their stakeholders and citizens,” she says.
“We’re encouraging countries and governments all over the world to adopt high-quality public sector reporting via our ‘Accountability. Now’ campaign, which brings together the profession and civil society organizations that share our interest in government transparency and accountability.
IFAC’s global mandate extends to another priority: helping to develop professional accounting organizations worldwide. “I’m incredibly proud of the work that IFAC and its member bodies are doing to support the development of professional accountancy organizations in emerging markets,” says Kirtley. “We see very strong interest in adoption of world-class standards and practices in emerging countries that want to enter the global market.”
The Forum of Firms, an association of international networks of accounting firms that perform transnational audits, will also be supported, says Kirtley, through the forum’s Transnational Auditors Committee. “They play a major role in the application of high-quality audit practices worldwide.”
Kirtley says that she is committed to IFAC’s goal of improving the financial reporting environment through effective regulatory underpinnings. However, she notes, “we are concerned about the spread of regulatory fragmentation and regulations that are not based on evidence that they will improve audit quality. Otherwise, there is a great risk for regulations to have unintended negative consequences on public interest issues and the profession.”
Another ambition for Kirtley’s term of office is to identify additional ways for supporting the diverse needs of accountants, whether they are professional accountants in business, small- and medium-sized accounting practices or those working in small businesses. She cites the value of IFAC’s annual survey of SMPs. “The results of the 2014 survey, published in early 2015, will help IFAC better understand the regional and industry-wide needs and challenges of SMPs, and help shape future programmes and initiatives.”
The final major priority, says Kirtley, is IFAC’s support for the International Integrated Reporting Council. “Integrated reporting helps facilitate better quality, more meaningful corporate reporting that acts as a catalyst for behavioural change and long-term thinking that reflects business as a vital part of society.”
Taking a broad look at accounting, Kirtley says she sees no reason to be anything other than very optimistic. “Throughout my years in the profession, I’ve seen incredible change for the better,” she says. “I intend to use my presidency to encourage the best and the brightest to continue joining it – we need their energy, enthusiasm and ideas to continue our progress and, especially to see more diversity in leadership roles.”
However, the IFAC President sees issues ahead that could undermine confidence in the profession if not dealt with. “Reputational risks, regulatory fragmentation and attracting top talent remain continuous challenges for our profession,” she says. “In addition, maintaining an independent standard-setting process with transparency and robust due process, free from political or other agendas, is a critical issue.”
Accountants need to be prepared for the next economic downturn, she warns. “Financial crises and corporate failures will never completely go away,” says Kirtley. “The severity may vary, but the occurrence will not. As a result, the profession will always be the subject of close examination and will undoubtedly come under fire.”
To counter criticism, she adds, accountants need to be able to command respect. “The profession’s reputation is only as good as our ability to uphold our high standards,” she says.
“I think that as long as we continue to focus rigorously on ethics and standards; continue to call for sensible reforms and continue to learn from mistakes and build on our successes, our profession will earn the respect it deserves.”
Kirtley believes IFAC’s agenda for improving the profession will also help ensure it remains an attractive career prospect. “I would encourage any young person to consider accountancy as a profession,” she maintains, listing its “good job prospects, great professional support, good earnings potential, and the ability to understand businesses as few others can, plus the opportunity to travel and learn in a diverse global marketplace.”
Those attributes, she adds, make accounting a desirable proposition for any smart young person looking for a genuinely rewarding career. As IFAC President, Kirtley will try to ensure that both men and women feel the same way. “I’m hoping that I can help encourage women and girls – and all under-represented groups – in every part of the world to consider a career in accounting. It’s a profession that I’ve found empowering, fulfilling and one that can offer a tremendous springboard for success.”
This article was originally published in the March 2015 issue of A Plus. You can see the pageflip edition here.
Waving Flag of the Global Profession
The International Federation of Accountants, formed in 1977, is the global organization for the accounting profession, representing about 2.5 million accountants in public practice, business, government, education and other sectors worldwide.
The organization’s vision is that the global accounting profession be recognized as a valued leader in the development of strong and sustainable organizations, financial markets and economies.
IFAC is also committed to protect and serve the public interest by helping to develop, promote and enforce high quality, internationally recognized standards for auditing and assurance, education, ethics and public sector accounting. The organization supports several independent standardsetting boards, such as the International Auditing and Assurance Standards Board, International Accounting Education Standards Board, International Ethics Standards Board for Accountants and International Public Sector Accounting Standards Board.
IFAC promotes convergence to the standards issued by the boards as well as to International Financial Reporting Standards set by the International Accounting Standards Board.
IFAC also issues tools, guidance and resources to support member bodies and their members who are professional accountants in business or employed in small and medium practices.
In addition, it collaborates with member bodies and works with organizations throughout the world to support the growth and development of the accountancy profession in emerging economies.
Founded with 63 members from 51 countries, including the Hong Kong Institute of CPAs, its membership has grown to now include more than 175 members and associates in 130 countries and jurisdictions worldwide.
IFAC’s President, who is nominated by a member body and appointed by the federation’s council, serves a two-year term. The current President, Olivia Kirtley, is the 17th person to be elected to the role.
As well as the first woman, she is the third American to hold the position. “The presidency rises above the office-holder’s nationality,” says Kirtley. “My only concern is to be the best possible president I can be, and the only flag I’ll be waving is for our global profession.”