By Adam Williamson AAT news Governance is only as good as those who govern 5 Jul 2017 IFAC has recently produced guidance encouraging leaders in government, business and professions to inspire confidence through robust governance. Starting from the premise that trust has eroded from institutions that support the global economy, the guidance urges governance which is collaborative, consistent and transparent. And one that empowers organisations and individuals, while inspiring growth and confidence in investment. These are worthy goals and certainly the financial crash of 2008 and its aftermath, coupled with a growing belief that wealth is being concentrated within an increasingly small group of super-rich organisations and people, with little or no trickle-down effect, means that the guidance on trust is timely. The 10 actions identified in the guidance are: Collaborate to tackle the corruption and advance responsible conduct Create a secure and digital-ready investment environment across G20 countries Embrace integrated reporting in all G20 countries Strengthen governance in the public and private sectors Enhance public sector financial management Create an environment for small and medium sized entity growth and inclusiveness Collaborate for a coherent international tax system Make regulation smarter and more effective in G20 countries Create a consistent, transparent global regulatory environment Implement internationally – accepted standards to enhance confidence, growth and stability in the global economy and finance system It is unclear why the guidance is aimed solely at G20 countries, and perhaps this unfairly suggests those outside of the core economies are not as capable of leadership in these areas. Such assumptions in themselves may work against the collaborative systems being suggested. Nonetheless, the concept of governance is key to AAT. It forms the bedrock of our organisation and is the first thing to be drawn up when membership bodies such as ours come into existence. The governance structures are vital for ensuring that members, their clients, and the public feel they can trust us. In order for that to happen, governance needs to be robust but not inflexible, transparent and honest, built around clear objectives and decision making processes. The IFAC guidance comes at an opportune time for AAT in light of recent decisions to amend our own governance structures. Reading the guidance, it is heartening to know that the reasons for AAT’s changes reflect some of the themes that IFAC have highlighted – encouraging responsible, collaborative, flexible and agile decision making, open and consistent purpose and, crucially, an increased focus on independent oversight. One innovation designed to support such levels of openness and commitment to public benefit, and something that IFAC is also keen to promote, is the use of Integrated Reporting by businesses in the global financial sector. For many years, the company annual report was a glossy representation of successes, backed up with often dense financial reporting. Integrated reporting encourages businesses to open themselves up to more detailed scrutiny, reporting both the good and the bad within a framework of value – whether diminished, preserved or created – across six ‘capitals’; financial, manufactured, intellectual, human, social and relationship, and natural. This type of reporting is worlds away from good old profit and loss, and a framework that AAT is looking to for the future. Only through this level of honesty with the wider world can trust realistically be built or rebuilt. Of course, business is only one piece of the jigsaw and political governance also plays a key role, providing clear public policy objectives and stable regulatory environments which promote investment in value among businesses. Reactionary and protectionist governments are the enemy of collaboration, innovation and trust, particular in the global context. Ultimately, in considering these laudable aims, we should not forget – governance can only go so far. If organisations make bad decisions which harm others, the governance structures that produced those decisions become irrelevant. Governance is only as good as those who govern, and truly effective governance requires a diversity of backgrounds, knowledge and skills alongside independent , critical oversight. Adam Williamson is AAT's Head of Professional Standards.