key steps and challenges ahead reparis corporate financial...

Key Steps and Challenges Ahead

REPARIS Corporate Financial Reporting Workshop

Content: Background Information on Audit Profession in Albania

Law no. 10 091, dated 5 March 2009 “On Statutory Audit, Professions Organization of Chartered Auditor and Chartered Accountants”

By-Laws of Albanian Institute of Chartered Auditors (IEKA)

Compliance of Albanian Law with EU 8th Directive – CFREP project, component 1 – supported by REPARIS

Compliance of IEKA By-Laws with IFAC Guidelines

Romeo Mitri CPA to CFRR - REPARIS 2

Background Information The audit profession didn’t existed at all, before 1994.

There were no standards on auditing or legislation

There was not any professional in practice

There was not any auditors’ professional organization or body.

In 1994 Albania implemented an EC Project to establish the auditor profession and organization.

For the period 1994 to 1997 there were temporary annual licenses to perform audit engagements.

In 24 November 1997 we established the Albanian Institute of Certified Public Auditors.


Background Information Two EC Projects on Audit Profession in Albania:

First, 1994 – 1996 with main objective to train and certify the Albanian auditors, and to prepare auditing standards, with final aim to establish the professional organization.

Second, 1997 -1998 with main objective to strengthen organizational capacities of IEKA, and supporting international recognition and acceptance (IFAC Membership).

Mid – Term Achievements Full organization structure and functionality

Co-Founders of SEEPAD

Full Members of IFAC

Members of FCM and other initiatives


Law “On Statutory Audit. . .” Regulatory background prior to Law. The law was an joint initiative of the profession,

Government of Albania, the World Bank, EU Commission and IMF.

The objective of the law is to ensure the public oversight of statutory audits and to enhance the implementation of international benchmarks in the areas of corporate governance, accounting and financial reporting, and statutory audits.

‘Acquis Communautaire’ is a must for Albanian integration to the European Union.

Based on the 8th Directive (Revised 2006).




Proposed Activities in 2012:

Prepare transposition tables for alignment of Albanian audit

legislation with chapter 6 of the EU Acquis Communitaire

Identify amendments required to the legislative framework

Draft an action plan to bridge the gaps over the short and

medium term

Raise awareness of the EU alignment process and

requirements

The process is based in the commitment of all stakeholders

to integration and transposition.



Update on progress (Nov 2012)

Transposition tables drafted - reasonable degree of compliance found Compliance issues highlighted (some minor):

POB Appointment, POB independence, POB funding, POB reporting, Certification, Discrimination, Exemptions, Competent authority, Third country registration, Auditor CPD, Transparency report, Public interest entity, Audit fee, Auditor signature

Training and awareness events held with key stakeholders

Proposed amendments to the legislative framework and implementation action plan drafted

Stakeholder sign off in progress at present

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Highlights of Action Plan

Independence of Public Oversight Board Independent legal status Appointment process refined Operational independence (from audit profession)

Funding of Public Oversight Board Sustainable funding model set out in law

Operational activity of Public Oversight Board Office, technical unit, secretariat

Romeo Mitri CPA to CFRR - REPARIS

9



Addressing acquis communautaire non-compliance issues in the legal framework:

Third country registration Transparency report Audit fee Auditor signature


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Refinement of legislation to improve practicality of legal framework (Definitions: PIE’s etc.; Reducing unnecessary detail

in primary legislation)

Drafting decrees and regulations underpinning the revised primary legislation

Detailing operational support required by key stakeholders (POB, IEKA, Registration Authority etc.)


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Implementation Plan


Q4 2012

Approve report and agree the

timeline for changes

Q1 2013

Agree changes to audit law

On going operational reform in institutes

Q2 2013

Propose law to parliament and

agree new Decrees and regulations


Q3 2013

Enact articles of law and enact new

Decrees and regulations


Q4 2013

Refined framework for

audit professional operational

On-going support

required to maintain progress

EU framework itself is changing as we try to finalize our action plan – we had tried to remain consistent with the changes we believe are in the pipeline

The need to demonstrate that it has not only adopted the acquis

communautaire in law (statutory framework) but also that Albania has taken measurers to ensure the acquis communautaire is actually implemented (institutional framework).

Support capacity building in key stakeholders

Public Oversight Board IEKA Certification and Registration Authority Accounting Professional bodies


Underpinning our work...

Presenting the work of the Professional Body (IEKA) Compliance of IEKA By-Laws with IFAC Guidelines

Constitution and By-laws prior to law

By-laws are prepared on the basis of: law requirements,

previous statutes, and

IFAC guidelines for professional bodies.

Organizational structure General Assembly

Governance The Council

The President



Committees: Quality control,

Investigation and disciplinary, and

Professional education and training.

IEKA is represented in: Public Oversight Board

Certification Authority

Registration Authority

The administration structure The chief executive officer

Staff support



Financing: Annual membership fee of ALL 100,000; (≈ $1,000) and

0% up to 3% of statutory audits fees (actually 2%)

160 CPA members and 48 audit firms

IEKA is a full member: International Federation of Accountants (IFAC)

Signed and endorsed the Memorandum of Understanding to International Accounting Standards Board (IASB)

Mediterranean Association of Expert-Comptable

South-east Europe Partnership for Accountancy Development (SEEPAD)

Federation of Accountancy professions of Francophone countries


IFAC Compliance Program - IEKA

SMO 1 - Quality Assurance

Action Plan Objective to:

Adopt ISQC 1 and improve the existing regulatory requirements for audit firms so as to comply with ISQC1 and review the functioning of the Quality Assurance Review System

Continue to ensure that IEKA’s QA review system and quality control are operating effectively and continue to be in line with SMO 1 requirements.



SMO 2 - International Education Standards

Make continuous improvement with the ongoing incorporation of International Education Standards (IES) into IEKA education standards

IEKA is in the course of reviewing its education requirements to ensure they comply with International Education Standards (IES) and with the new audit law, and to improve delivery of accountancy education and CPD training.

The professional body also promotes relevant requirements to Universities.



SMO 3 - IAASB Pronouncements

Action Plan Objective: Developing an ongoing process for convergence with IAASB pronouncements

IEKA Published in Albanian language the Handbook of International Auditing Standards And Ethics Pronouncements (2010 Edition).

Updated the pre-qualification program and CPD courses in accordance with new and amended IAASB pronouncements.


IFAC Compliance Program - IEKA SMO 4 - IESBA Code of Ethics Action Plan Objective: Update IEKA Code of Ethics in accordance with the revised IESBA Code of Ethics and continue to support implementation of ethics requirements. IEKA have adopted IESBA code with modifications to allow

in some instances for more stringent requirements than what is required by IESBA Code.

Modified sections include those on professional ethics and incompatibility, conflicts of interest, and confidentiality and professional secrecy.

IEKA has included some courses on ethical requirements in its CPD program. Further courses are going to be introduced on pre-qualification of candidates as well.



SMO 5 - IPSASs

Action Plan Objective: Continue to promote the use of IPSAS to the Albanian Ministry of Finance and to assist them with the translation, adoption and implementation of IPSAS’s.


IFAC Compliance Program - IEKA SMO 6 – Investigation and Discipline Action Plan Objective: Continue to improve IEKA’s

system on Investigation and Discipline. The new Audit Law has transferred disciplinary powers

from the Commission for Disciplinary Issues to the POB. The Investigation Committee of IEKA is responsible for

investigating its members and forwarding the cases to the POB which judges them.

IEKA has reviewed the investigation and disciplinary regulation to ensure they meet SMO 6 and submitted a new regulation to the POB for formal approval .

IEKA will also undertake additional activities to raise its member’ awareness about disciplinary rules.



SMO 7 – International Financial Reporting Standards

Action Plan Objective: Continue to assist the National Accounting Council and other authorities in adopting and implementing IFRS’s and to promote the ongoing convergence process with IFRS’s.


The End Questions and queries

Answers

End of Presentation

www.minfin.gov.al

www.ieka.org.al


http://www.minfin.gov.al/

http://www.ieka.org.al/

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