KARACHI, March 15: The International Federation of Accountants (IFAC) — New York-based representative for the worldwide accountancy profession — said it was planning to form an international task force of investors, directors and auditors to make recommendations on the role and composition of audit committees and how they should report to the shareholders.

In what appears to be the first public reaction to the mounting pressure that has been brought about on the accountancy profession following the fall of Enron, Aki Fujinuma, president, IFAC, said that his organization (which claims membership of 156 professional accountancy bodies in 114 countries, representing 2.4 million accountants — those in Pakistan included) readily accepted that the profession must contribute to reducing the occurrence of major failures such as Enron and would play its part in the drive for greater quality and consistency of accounting and auditing services.

“It will also take steps to encourage improved corporate governance,” the IFAC president said, adding that the collapse of Enron Corporation in the US had made it incumbent upon all accountancy organizations to assess what they could do to ensure the soundness of financial reporting worldwide and to encourage and support accountants in their efforts to protect the public interest.

IFAC observed that the US was already scrutinizing the regulation of the accounting profession and the auditing standard-setting process. “In addition, those investigating the Enron case must take a closer look at corporate disclosure rules, the effectiveness of various securities laws, and the responsibilities and accountability of boards of directors and audit committees,” the President IFAC affirmed. He stated that a sound global financial architecture depended upon an independent accounting profession supported by the highest professional standards, an efficient regulatory framework, and strong corporate governance.

IFAC is not alone in tightening regulations. In UK, government efforts are underway to prevent the Enron-like bankruptcies. At the end of February, Patricia Hewitt, British trade secretary, unveiled plans for review of financial reporting and auditing.