Consiglio Nazionale dei Dottori Commercialisti e Degli Esperti Contabili

The CNDCEC has no regulatory responsibility for establishing a quality assurance (QA) review system in Italy. Any of its members who are registered as statutory auditors (Revisori Legali) and conduct audits of Public Interest Entities (PIEs) are subject to QA reviews by the Commissione Nazionale per le Società e la Borsa (CONSOB), and those conducting audits of non-PIEs subject to QA reviews by the Ministry of Economy and Finance (MEF).

The CNDCEC reports that CONSOB’s system is aligned with SMO 1 best practices. QA reviews by the MEF for audits of non-PIEs have not yet been undertaken but would be conducted according to the ministerial decree.

The CNDCEC has actively participated in the special advisory panel tasked with drafting the decrees and regulations implementing the QA review systems and relevant standards. The institute indicates that it promotes the SMO 1 requirements during these dialogues and has offered to operate the proposed QA review system for non-PIEs supporting the MEF.

To support its members that are statutory auditors, the CNDCEC: developed a sample quality control manual for firms led by a sole practitioner, based on IFAC Guide for Quality Control for Small- and Medium-Sized Practices (Third edition); offers continuing professional development focused on QA reviews and relevant standards (previously ISQC 1 and now ISQM 1); and translated the IFAC SMP Committee’s Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Third Edition.

The CNDCEC is encouraged to provide updates on the progression of the adoption and implementation of the QA system for firms carrying out audits of non-PIEs as this is an important component of ensuring high-quality services and public confidence in the profession.

Current Status: Sustain

In Italy, the Ministry of Education, University, and Research is responsible for implementing initial professional development (IPD) requirements, and the CNDCEC is responsible for adopting continuing professional development (CPD) requirements. Professional accountants—qualified as either Dottori Commercialista or Esperti Contabil—are subject to educational requirements, delivered by the universities, practical experience requirements, and passing state final examinations. Both are also subject to the CPD requirements of the CNDCEC, which, as reported by the CNDCEC, are aligned with the latest IES. The CNDCEC reports that it regularly monitors and engages with the authorities to encourage the incorporation of the full scope of IES requirements.

The CNDCEC cooperates with universities and its territorial chapters to promote bilateral agreements for defining specific educational content that permits candidates to be exempt from certain sections of the state examination based on the knowledge gained during their practical experience internship. The CNDCEC has also signed a framework agreement with the Ministry of Education, University, and Research and the Ministry of Justice, which will be used as a guideline for the territorial chapters and universities. The agreement establishes the exemption from one written examination and the possibility of starting the practical experience during university studies.

The CNDCEC has established regional schools to provide CPD courses that emphasize a solid practical approach in a selected number of professional matters requiring high specialization.

The CNDCEC reports that it regularly monitors, reviews, and takes necessary actions to strengthen the IPD and CPD arrangements.

Lastly, the institute has participated in the international standard-setting process by submitting comments from its experience and perspective.

The CNDCEC has demonstrated an ongoing process to maintain the fulfillment of its respective SMO 2 obligations and is committed to continuous improvement.

Current Status: Sustain

Although the Ministry of Economy and Finance (MEF) formally approves and issues applicable auditing standards, the CNDCEC plays an active role in the standard-setting process by participating in the special advisory panel responsible for drafting and translating auditing standards. Based on the special advisory’s proposals, the MEF has adopted ISA for application in Italy. In line with its responsibilities as a panel member, the CNDCEC reports that it has established an ongoing process to monitor, incorporate, and translate new and amended standards into national requirements on an ongoing basis – the latest being the 2021 IAASB Handbook with quality management standards becoming effective for audits of financial statements for periods beginning on January 1°, 2025, with the possibility of early adoption already on January 1° 2024.

The CNDCEC indicates that it supports its members with the implementation of the audit standards by providing training and guidelines. In addition, the CNDCEC confirms its participation in the international standard-setting process by providing comments on IAASB Exposure Drafts.

The CNDCEC has demonstrated an ongoing process to maintain the fulfillment of its respective SMO 3 obligations and is committed to continuous improvement.

Current Status: Sustain

The CNDCEC is responsible for setting ethical requirements for its members and adopted the CNDCEC Code of Ethics in 2009, with subsequent updates in 2015 and 2019. The CNDCEC reports that the combination of the legal requirements and the rules incorporated in its Code of Ethics are set in accordance with the 2018 IESBA Code of Ethics requirements and are more restrictive in some respects.

Furthermore, the institute is also part of a special advisory panel responsible for drafting and proposing the ethical requirements for statutory auditors. In 2023, the special advisory panel developed ethical requirements, including independence rules, for statutory auditors based on the 2018 IESBA Code of Ethics.

To support its members in implementing the Code of Ethics, the CNDCEC provides training and guidance and has translated the 2016 and 2018 versions of the IESBA Code of Ethics. Its Ethics Working Group has also conducted research on ethical requirements related to taxation and anti-money laundering. In addition, it monitors new, proposed, and revised international standards, considers the need for adaptation at the national level, and provides comments to IESBA Exposure Drafts.

The CNDCEC is encouraged to update and revise the ethical requirements, given the 2022 International Code of Ethics, and raise awareness of the latest changes.

Current Status: Review & Improve

Public sector accounting standards in Italy are set in Law No. 196/2009. The current implementation of the national standards is supported by the Corte dei Conti (Auditor General) and Ragionera Generale dello Stato (State Comptroller), a Ministry of Economy and Finance unit. In 2021, a new decree (Decree Law No. 152 of 2021) created the Italian Public Sector Accounting Standards Board as established by the State Comptroller with responsibility for setting public sector accounting standards. The CNDCEC reports that the board is planning to issue a new set of accrual-basis standards based on IPSAS by 2023, which will be progressively implemented between 2024 - 2026.

The CNDCEC reports that it contributes significantly to advocacy, consultation, and research activities to encourage the adoption of IPSAS and has a working group related to the public sector. For example, the CNDCEC participated in a project with academia to assess the applicability of IPSAS to different public sector entities. The project was launched at the end of 2015, and the first draft of this study was finalized in December 2016. The CNDCEC subsequently participated in a task force regarding the impact of applying IPSAS to different public sector entities.

The CNDCEC translated the 2013 IPSAS Handbook and, subsequently, additional revised standards for stakeholders and organized continuing professional development courses, conferences, and guidance on the topic. Additionally, the institute monitors new and amended pronouncements issued by the IPSASB and disseminates them to its members and the public.

The CNDCEC is encouraged to provide updates on how it plans to support its members with implementing the changes. The CNDCEC may also find IFAC’s Train the Trainers: Introduction to IPSAS and IFAC’s Pathways to Accrual resources helpful for any training and educational activities it offers.

Current Status: Sustain

The CNDCEC’s territorial chapters are responsible for establishing an investigative and disciplinary (I&D) system for its members, while the CNDCEC acts as a secondary hearing/disciplinary mechanism (first appeals). The institute reports that in 2013, its own procedures were updated to address the composition of the Board that issues sanctions, thereby ensuring that its system meets all SMO 6 best practices.

Meanwhile, the CNDCEC’s 144 territorial chapters operate their own I&D procedures based on guidance from the CNDCEC. An assessment of its territorial chapters’ I&D policies and processes against the best practices of SMO 6 has identified gaps, such as no linkage with the possible deficient results from QA reviews and no separation of investigative and disciplinary functions. Additionally, there may be instances where only accountants are serving on the disciplinary committee.

The CNDCEC also collaborates with the Ministry of Economy and Finance and the Commissione Nazionale per le Società et la Borsa in an advisory role regarding the I&D of statutory auditors, as it is not directly responsible for the management of these procedures. The CNDCEC supports the regulators to ensure that their systems are aligned with SMO 6 requirements and regularly assesses the need for coordination regarding disciplinary actions for any of its members that are registered as statutory auditors.

I&D procedures that meet the SMO 6 benchmark are foundational to maintaining public trust and confidence in the profession. The CNDCEC’s territorial chapters continue to have areas for improvement in their enforcement procedures since the last Action Plan update in 2020. It is recommended that it invest time and resources in strengthening these procedures. The CNDCEC is encouraged to report on the guidance and steps it has taken to harmonize the territorial chapters’ I&D systems with the best practices of SMO 6. In addition, the CNDCEC is encouraged to leverage its advisory role in liaising with the Ministry of Economy and Finance and the Commissione Nazionale per le Società et la Borsa to conduct a formal assessment of their I&D policies against the best practices of SMO 6 and promote policies and improvements if needed.

Current Status: Consider

The EU Regulation EC 1606/2002 and the Legislative Decree 38/2005 required companies to apply IFRS as endorsed by the EU. Following this regulation, Legislative Decree 145/2018, restricted the scope provided by Legislative Decree No. 38/2005 and required that IFRS are mandatory only for listed companies monitored by the Commissione Nazionale per le Società e la Borsa (CONSOB). All other companies can choose to apply IFRS or Italian Accounting Standards. The Organismo Italiano di Contabilità (OIC) is the entity formally responsible for the adoption of corporate accounting standards, but the CNDCEC actively participates and contributes to its standard-setting process and technical activities as one of the founding members of the OIC.

The CNDCEC reports that it monitors and reviews changes to EU legislation and promotes the necessary changes to the national legislation. Additionally, since 2010, the CNDCEC has been participating in public consultations regarding accounting standards for Small-and Medium-Sized Enterprises. CNDCEC has established a committee to analyze and understand the impact of international pronouncements on chartered accountants. The committee engages with the OIC.

To support its members implementing applicable standards, the CNDCEC organizes continuing professional development courses and develops guidelines on IFRS-related topics. In addition, the CNDCEC reports that it monitors new and amended standards and participates in the international standard-setting process by providing comments on IASB Exposure Drafts.

CNDCEC has demonstrated that it has an ongoing process in place to maintain fulfillment with its respective SMO 7 obligations and is committed to continuous improvement.

Current Status: Sustain