Institute of Financial Accountants

The Financial Reporting Council (FRC) and the four Recognized Supervisory Bodies (RSBs) in the UK (ACCA, CAI, ICAEW, and ICAS) share responsibility for the quality assurance (QA) review system governing audits and assurance engagements in accordance with the Companies Act of 2006 and the Statutory Auditors and Third Party Auditors Regulations 2016 (SI 2016/649). All have indicated that they have a fully operational QA review system in place, and that the QA review systems are compliant with SMO 1 requirements.

Having no direct responsibility for the quality assurance of auditors in the UK, the IFA focuses on monitoring compliance of its members with ethical requirements and the UK’s Money Laundering Regulations. The IFA periodically carries out a review of its ethical requirements and Member’s Handbook. The organization provides comprehensive information to its members on anti-money laundering, performs reviews (questionnaires and random visits), and investigates complaints. It also responds to exposure drafts and consultations, in particular to those of the IESBA, the IFAC’s Professional Accountants in Business Committee and Small and Medium Business Practices Committee.

The IFA reports that it is piloting a QA program to be formalized during 2019-2020.

The IFA is encouraged to provide an update on the QA program that has been piloted during the next SMO Action plan update.

Current Status: Sustain

The six Recognized Qualifying Bodies (RQBs) deliver the initial and continuing professional education (IPD and CPD) for statutory auditors in the UK. The FRC has an agreement with the six chartered bodies (ACCA, the Association—CIMA, CIPFA, ICAEW, CAI, and ICAS) and the AIA to oversee IPD and CPD for accountants.

Five RQBs (ACCA, CAI, ICAEW, ICAS, and CIPFA) as well as AAT, the Association—CIMA and IFA are members of IFAC, and all confirm that their professional accountancy qualifications meet the IAESB’s requirements set out in the revised 2015 IES.

IFA reports that it continuously reviews and updates its qualifications in line with Ofqual requirements, IFAC educational pronouncements and local regulations, laws, guidance and best practices. IFA indicates that the existing Ofqual regulated qualifications and the new IFA learning programme are compliant with the learning outcomes included in IAESB’s 2017 Handbook.

All IFA members are required to fulfill CPD requirements which are monitored and recorded in a member only CPD log. Each year the IFA chooses a random sample of members and reviews their CPD records to ensure that they have complied with the IFA's CPD requirements. Members that have not completed their annual online CPD declaration are automatically selected for review and subject to disciplinary action.

Current Status: Sustain

The Financial Reporting Council (FRC) is the authorized body for setting auditing standards in the UK in accordance with the Companies Act of 2006 and Statutory Instrument on Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012 (SI 2012/1741). All financial statement audits must be conducted in accordance with International Standards on Auditing (UK) issued by the FRC. ISAs (UK) are based on ISAs issued by the IAASB, with specific changes to account for UK Company law.

IFA has no responsibility for the adoption of ISA or for the training of auditors, given that IFA members do not provide audit services. Nevertheless, the institute supports the implementation of ISA through the provision of information on standard-related topics and news. It prepares a highlights of key pronouncements issued by the IAASB on its website and disseminates occasional articles on audit-related topics in its online journal and in its magazine. In addition, IFA provides opportunities for discussion of audit issues that are relevant to its members in its online community.

IFA provides updates to its members on standards issued by the IAASB.

Current Status: Sustain

In accordance with their charters and by-laws, professional accountancy organizations (PAOs) in the UK are authorized to establish ethical requirements for their members. All PAOs in the UK indicate that they have adopted the requirements of the IESBA Code of Ethics (2018 version). Furthermore, all PAOs indicate that they have an ongoing process to consider and incorporate new and amended requirements issued by the IESBA where they are not in conflict with national laws and regulations.

IFA assesses its members’ knowledge of the IESBA Code of Ethics and requires ethics as part of its continuing professional development. It also promotes online courses to members on ethical issues for accountants, professional skepticism, ethical compliance, and professionalism and ethics.

To support its members, IFA developed enhanced website content in 2016 which includes e-learning material towards the study of the IFA ethics assessment, articles, and resources such as the Consultative Committee of Accountancy Bodies (CCAB) Ethical dilemmas case studies.

IFA monitors IESBA’s activities and seeks to participate in consultations in representation of the Small and Medium Practice/Small and Medium Enterprise (SME and SMP, respectively) community.

Current Status: Sustain

The UK Treasury is responsible for developing standards and policies for Central Government financial statements. The Chartered Institute of Public Accountancy (CIPFA) and the Local Authority Scotland Accounts Advisory Committee (LASAAC) work together on the Local Authority Code Board, a standing committee of CIPFA and LASAAC, to set accounting standards for local governments in the UK. The Code of Practice is based on EU-adopted IFRS and draws on IPSAS and Financial Reporting Standards issued by the Financial Reporting Council.

The IFA has no responsibility for the adoption of public sector accounting standards, nor does it have any members in the public sector. Nevertheless, it supports the implementations of applicable standards through the dissemination of information about public sector accounting standards to the public.

Current Status: Sustain

In accordance with their charters and by-laws, professional accountancy organizations (PAOs) are authorized to establish systems of investigation and discipline (I&D) for their members for failure to comply with applicable standards of professional conduct. The PAOs (both RSBs and others: AAT, the Association—CIMA, CIPFA, and IFA) have reported that they have I&D systems in place that fulfill the requirements of SMO 6 requirements.

IFA’s Disciplinary Regulations for its members were revised in 2013 to ensure compliance with SMO 6 requirements. The regulations were further enhanced in 2017 (effective date of January 2018) to include minor clarification points, following feedback from the disciplinary case manager, Conduct Committee members, and other staff.

IFA provides information and guidance to its members and the public through its website and other publications. It liaises with other professional bodies and authorities where members are involved in misconduct, disclosing information as required. IFA has ongoing processes in place to review the effectiveness of its I&D system regularly, which includes recruitment of new members for its Conduct Committee, providing training to committee members, and reviewing regulations, processes, and documentation.

Complaints are reviewed on a regular basis and there is a tracking and record keeping mechanism in place to document the investigations and disciplinary process. Proven disciplinary findings are published on the IFA website and the IFA “Financial Accountant” Magazine.

Current Status: Sustain

The Financial Reporting Council (FRC) has the authority to adopt accounting standards in the UK in accordance with the Companies Act of 2006 and Statutory Instrument on Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012 (SI 2012/1741). 

EU-endorsed IFRS are required to be applied in consolidated financial statements of parent companies with securities that are traded on a regulated market. Other entities apply ‘reduced disclosure’ EU adopted IFRS, or simpler Financial Reporting Standards (FRS) developed by the FRC, depending on the size, type of company, and the nature of activities that is conducted. FRS is based on the IFRS for SMEs, with significant modifications.

While the IFA has no responsibility for IFRS adoption, it supports implementation of IFRS by its members by including both IFRS and IFRS for SMEs into its qualification program and continuing professional development program. The most recent update of its programs to include the latest standards was conducted in 2018.

The IFA also promotes adoption and use of IFRS in the UK to its members, promotes IASB consultations to its members, and responds to IASB consultations.

Current Status: Sustain