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International Federation of Accountants

Lesotho

Member Organizations

Member Organization Associate

  Lesotho Institute of Accountants

Legal and Regulatory Environment

In progress

Adoption of International Standards

  • Quality Assurance

    Although there is no legal mandate to establish a quality assurance (QA) system, the Lesotho Institute of Accountants (LIA), in accordance with the Accountants Act 1977, may take steps as needed to regulate the profession in the public interest.

    Therefore, LIA introduced mandatory practice reviews in 2009 for audit firms that provide audit services to public interest entities. Under a contractual arrangement, the Association of Chartered Certified Accountants (ACCA) conducted practice reviews from 2012–2014. Throughout 2017, LIA arranged a partnership with the Public Accountants and Auditors Board (PAAB) of Zimbabwe to continue conducting QA reviews. LIA reports that the PAAB’s first reviews were done in June 2018 with the second round being conducted in December 2018. The LIA affirms that QA reviews are carried out in accordance with SMO 1 requirements.

    The Accountants Act 1977 is being re-drafted to provide legal backing to the institute’s role in running the QA system in the jurisdiction. The timeline for the passage of the Act is tenuous.

    Current Status: Adopted

  • International Education Standards

    Section 6 of the Accountants Act 1977 establishes that Lesotho Institute of Accountants (LIA) is responsible for determining initial professional development (IPD) and continuing professional development (CPD) for professional accountants.

    LIA has established a three-tier qualification framework for entry into the profession: (i) Technician Accountant; (ii) General Accountant; and (iii) Chartered Accountant, each with specified educational background and practical experience. LIA only began offering its own local professional accountancy qualification (Lesotho Professional Accountancy Programme (LePAP)) in 2018.

    Technician Accountants must either (i) hold a technician qualification recognized by the LIA; or (ii) hold a bachelor’s degree in accounting. Technician Accountants must have one year of practical experience. General Accountants must (i) have completed the fundamental papers of the LIA / ACCA Joint Examination Scheme; (ii) hold a graduate qualification in accounting; or (iii) hold a qualification from a Chartered Institute of Secretaries and Administrators. General Accountants need two years of relevant work experience. Finally, candidates for Chartered Accountant must pass the full professional LIA – ACCA Joint Examination Scheme or other professional qualification recognized in Schedule II of the Accountants Act and have a minimum of three years’ work experience. To offer public practice services, all individuals – regardless of designation – must pass LIA competency examinations and hold a practicing certificate.

    The LePAP framework offers the same designations with pathways (i.e. initial education) that are locally tailored for private or public sector specialization. The LIA states that the LePAP subscribes to the IES requirements and includes learning outcome approaches.

    The LIA - ACCA joint qualification scheme runs through September 2023 and LIA works with the Council on Higher Education—which accredits tertiary education programs—to ensure that the accountancy education in universities complies with the latest IES. Practical training experience is monitored by the institute’s technical department. LIA also operates a compulsory CPD program for its members which is aligned with the IES 7 and 8 requirements and monitors non-compliance.

    Current Status: Adopted

  • International Standards on Auditing

    The Companies Act 2011 grants authority to the Lesotho Institute of Accountants (LIA) to set auditing standards and rules and regulations for the conduct of audits. The LIA states that it adopts and publishes ISA as issued by the IAASB without modifications on an ongoing basis for application in Lesotho.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    A 1984 amendment to the Accountants Act 1977 grants the Lesotho Institute of Accountants (LIA) the authority to set ethical standards for the profession. LIA adopted the IESBA’s Code of Ethics in 2010 with minor modifications and implemented processes to adopt subsequent amendments to the Code on an ongoing basis. LIA reports its members are required to adhere the 2018 International Code of Ethics in June 2019.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    The Financial Management and Accountability Act 2011 establishes the Lesotho Institute of Accountants (LIA) as the public sector accounting standard setter. The Act requires government financial statements to be prepared in accordance with IPSAS. LIA states that presently statements are prepared on a modified cash-basis and eventually transitioning to accrual basis (IFAC, CIPFA 2018).

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Accountants Act 1977 requires the Lesotho Institute of Accountants (LIA) to establish an investigation and disciplinary (I&D) system for the profession. The institute established a Risk and Compliance Committee to monitor member compliance with laws, regulations, the Code of Ethics, and professional standards and an adhoc investigations committee to investigate reported cases of noncompliance. Subsequently, the Disciplinary Committee is empowered to conduct disciplinary processes and issue sanctions for members that are found guilty of misconduct.

    LIA reports that it amended its Disciplinary Procedures to incorporate the revised SMO 6 requirements and put forth the amendment for approval and adoption of by its Council and general membership in 2017.

    Current Status: Adopted

  • International Financial Reporting Standards

    The Companies Act 2011 requires companies to prepare financial statements in accordance with the accounting standards prescribed by the Lesotho Institute of Accountants (LIA). In 2005, the LIA Council adopted IFRS and IFRS for SMEs as issued by the IASB. This Council decision requires automatic adoption of all new and revised IFRS. Except for financial institutions, which are required to apply full IFRS, companies may choose to apply IFRS or IFRS for SMEs.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

 

Methodology

Methodology
Last updated: 08/2020
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