Member | Established: 1994 | Associate since 2013
AARL is a professional accountancy organization whose main objective is to improve the professional skills of accountants and offer the Certified Professional Accountant Certification launched in 2000. Membership in AARL is voluntary and is open to all representatives of the accounting profession, including internal auditors, tax consultants, bookkeepers, members of the academia, etc. AARL is advocating a licensing scheme for accounting services providers and has developed its own voluntary certification. For the last 20 years, it has been actively involved in the development of the Latvian accounting profession, participated in the work of the former Accounting Board in the development of Latvian accounting standards, contributed to development and implementation of public policy on accounting issues in Latvia. AARL is an associate member of Accountancy Europe, a member of the European Accounting Association, International Association for Accounting Education and Research, and European Institute for Advanced Studies in Management.
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Statements of Membership Obligation (SMO)
The Statements of
Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a
framework for credible and high-quality professional accountancy organizations focused on serving the
public interest by adopting, or otherwise incorporating, and supporting implementation of international
standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their
individual members.
Methodology
Last
updated: 10/2020
We welcome feedback. Please email membership@ifac.org
SMO Action Plan
Status of Fulfillment by SMO
-
SMO 1: Quality Assurance
AARL as an organization uniting mostly accountants does not have direct responsibility for establishing a QA review system for statutory auditors in Latvia. However the association is a member of the consultative body, the Audit Advisory Council (AAC) since 2009 and plays an important role in collaborating with the Ministry of Finance and Latvian Association of Certified Auditors (LACA) in advancing the quality of audit services, raising public awareness of issues in the field of auditing, and protecting the public interest. The President of AARL has been the Chairman of AAC since the establishment of the body in 2009.
While AARL does not have a QA review system in place, it does require its members, specifically professional accountants who are acting in public practice to comply with ISQC 1 in the part which relates to provision of accountancy services and ISRS 4410 (revised). To support its members, it has prepared a guide which includes the translation of the revised ISRS 4410 which requires the application of ISQC 1 and is updated on an ongoing process. AARL also conducts regular seminars for its members on the practical implementation of ISRS 4410 and the IFAC Guide to Compilation Engagements.
AARL reports that it is in the process of developing a QA review system for its members and the association has established a partnership with the Institute of Certified Accountants from England and Wales (ICAEW) for technical support. In addition, AARL also has partnership agreements with LACA and ICAEW to cooperate on education and professional matters related to QA topics for accountants.
AARL is highly recommended to update its next SMO Action Plan with its progress, including concrete activities and timelines on establishing a QA review system for its members. AARL is also encouraged to collaborate with LACA for technical support and to ensure that its QA review system will be aligned with the system of LACA.
Current
Status: Review & Improve
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SMO 2: International Education Standards
AARL reports that since 2000, the professional accounting certification program of AARL, offered as part of its voluntary membership requirement, was developed in accordance with IES requirements. The association reports that it has established an ongoing process to update its initial and continuing professional development (IPD and CPD, respectively) requirements against the revised IES and the past few years have shown the progress made of AARL in this endeavor.
In 2013, the association aligned its CPD requirements with IES 7. AARL has a mandatory CPD requirement for its members and has in place an annual reporting and monitoring system for actual education activities undertaken (reported in terms of number of hours spent and by subject).
In addition, the association has established an ongoing process to promote and disseminate information about IES and other IAESB pronouncements to its members (http://www.lrga.lv/sertifikacija/sertifikacijas-programma).
In 2017, AARL has also signed a Memorandum of Understanding with the Institute of Certified Accountants from England and Wales (ICAEW) to adapt its learning programs with ICAEW’s so that AARL’s certified professional accountants who wish to pursue ICAEW’s qualification could be exempt from certain subjects.
AARL is encouraged to perform a self-assessment against the revised IES and if any gaps are identified, to reflect in its SMO Action Plan, concrete activities with specific timeline on how it plans to fulfill the gaps. In addition, AARL is also recommended to participate in the international standard-setting process by providing comments on exposure drafts and other pronouncements issues by the IAESB.
Current
Status: Review & Improve
-
SMO 3: International Standards on Auditing
As a member of the Audit Advisory Committee (AAC), AARL actively participates in the national standard-setting process and supports the Ministry of Finance and the Latvian Association of Certified Auditors (LACA) in the adoption and implementation of ISA and other IAASB pronouncements. It has recently supported the implementation of the EU Audit Reform by providing technical feedback, on behalf of the AAC, concerning the Law on Audit Services of 2017. In addition, the association reports that it also participated in the development of the oversight rules over auditors of PIEs.
Through the AAC and the Ministry of Finance, AARL has also supported the technical review of the country implementation of the 2016 ISA Handbook and the New Auditor’s Report which was adopted by LACA. In addition, to support its members, the association regularly disseminates ISA-related guidance and news from LACA.
AARL reports that it also participates in policy dialogues and public consultations on auditing with the government, regulators and other stakeholders.
Current
Status: Sustain
-
SMO 4: Code of Ethics for Professional Accountants
While ethical requirements for professional accountants are not established at the jurisdiction level, AARL has been proactive with the adoption of the IESBA Code of Ethics for its members. The association reports that every year AARL adopts the most recent version of IESBA Code of Ethics. The currently effective version is the 2016 IESBA Code of Ethics.
The association has adopted the 2014 version of the IESBA Code of Ethics and reports that it continues to support the ongoing adoption and implementation of the IESBA Code of Ethics for its members. It has disseminated the English version of the IESBA Code to its members with permission from IFAC, while previously the 2010 IESBA Code, as translated by the Latvian Association of Certified Auditors in Latvian, was made available to its members.
To ensure the effective implementation of the IESBA Code of Ethics, through its Committee of Ethics, AARL organizes workshops and training seminars for its members. The association also ensures that its education and continuing professional development program include courses on the revised IESBA Code.
AARL also publishes articles for its members on ethics and key aspects of the IESBA Code of Ethics http://www.lrga.lv/ifac/ifac-publikacijas.
AARL is encouraged to establish plans to raise awareness of the new NOCLAR standard to its members if it has not already done so.
AARL is also recommended to participate in the international standard-setting process by providing comments on exposure drafts and other pronouncements issues by the IAESB.
Current
Status: Review & Improve
-
SMO 5: International Public Sector Accounting Standards
While it has no responsibility for the adoption of public sector accounting standards in the jurisdiction, AARL reports that it cooperates closely with the State Treasury under the Ministry of Finance to support the public sector accounting standard-setting activities in Latvia. It actively promotes the adoption of IPSAS with the State Treasury and participates in improvements of the existing public sector accounting legislation by providing comments on draft legislation.
In addition, AARL also supports its members by providing training seminars on IPSAS and IPSAS-related topics. In 2018, the association plans to organize a training workshop on IPSAS for its members in cooperation with the Institute of Chartered Accountants from England and Wales.
In its SMO Action Plan, AARL is encouraged to provide an update on plans to adopt IPSAS, if any, as well as to provide examples of recent activities the association has undertaken to further assist the State Treasury and Ministry of Finance to support the implementation of IPSAS.
Current
Status: Review & Improve
-
SMO 6: Investigation and Discipline
AARL reports in its SMO Action Plan that it has established a complaints-based approach and an information-based approach for its I&D system. The examination of complaints, objectives and misconduct (e.g. breaches of professional standards) against AARL members is based on the Disciplinary Regulations of AARL and is conducted by the association’s Ethics Committee.
AARL also indicates in its SMO Action Plan that it has established plans to further align its I&D system to SMO 6 requirements. Specifically as the association is developing a QA review system for its members, AARL plans to link its current I&D system with the planned QA review system. It will develop I&D guidance for its members which will be incorporated in its QA guide.
To further advance its efforts to align its I&D system with SMO 6 requirements, AARL is encouraged to establish plans to perform a benchmarking exercise against the SMO 6 requirements and to develop specific actions with a defined timeline if any gaps are identified. It is also recommended that AARL collaborates with other stakeholders responsible for the I&D system at the jurisdiction including the Latvian Association of Certified Auditors (LACA), Ministry of Finance and AAC, to ensure that the I&D systems for LACA and AARL are aligned.
Current
Status: Plan
-
SMO 7: International Financial Reporting Standards
The Law on Annual Financial Statements and Consolidated Financial Statements of January 1, 2016 sets the requirements for the preparation of corporate financial statements in Latvia. The law outlines accounting standards to be applied based on company size and type: EU-endorsed IFRS or Latvian Accounting Regulations, which constitute the Latvian Generally Accepted Accounting Principles. The Ministry of Finance (MoF) is responsible for setting accounting and preparation of financial statements both for private and public entities.
While it does not have direct responsibility for the adoption of IFRS, AARL uses its best endeavors to broaden the adoption and mandatory application of IFRS in the jurisdiction. The association participates in working groups organized by the MoF on the development of amendments or new laws on financial reporting. In June 2017, AARL presented a proposal to the Ministry of Finance corresponding to the draft amendments (planned to be in force as of 1 January 2018) to the 2016 Law on Annual Financial Statements and Consolidated Financial Statements.
According to AARL, their proposal advocated for the preparation of both consolidated and separate financial statements in accordance with EU-IFRS for all companies, regardless of size. The AARL proposal was supported by the Ministry of Economics and the Nasdaq Riga stock exchange. The final version of the amendments, which will be in force as of 1 January 2018, states that large companies may choose IFRS as adopted by the EU as a basis for the preparation of financial statements.
In addition, AARL focuses on raising awareness of its members and the general public on developments related to IFRS through its continuing professional development programs and publications.
AARL is encouraged to update its SMO Action Plan with the outcome of the amended Law on Annual Financial Statements and Consolidated Financial Statements including any changes on the scope of application of IFRS. AARL is also encouraged to participate in the international standard-setting process by providing comments to IASB Exposure Drafts on new and revised pronouncements.
Current
Status: Sustain
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.
