Association of Accountants of the Republic of Latvia

The Association of Accountants of the Republic of Latvia (AARL) does not have direct responsibility for establishing a quality assurance (QA) review system for statutory audits in Latvia. The QA system for statutory audits is established under the Law on Audit Services and is aligned with SMO 1 requirements.

Within the scope of its mandate, AARL contributes to the overall quality of professional services through its participation in the Audit Advisory Council (AAC), where it collaborates with the Ministry of Finance and the Latvian Association of Certified Auditors (LACA) on matters related to audit quality, public interest, and professional standards.

AARL requires its members in public practice to comply with applicable professional standards, including International Standard on Related Services (ISRS) 4410 (Revised), and supports implementation through guidance, translations, and regular training activities. The association also promotes awareness of quality management standards and collaborates with LACA and international partners on related initiatives.

AARL is in the process of developing a QA review system for the services provided by its members, supported by international cooperation and participation in regional initiatives. Methodologies and tools have been developed to support future implementation.

Given the nature of its mandate and the legal and regulatory environment, AARL is not directly responsible for QA reviews of statutory audits. Through its ongoing activities, AARL demonstrates a sustained commitment to supporting quality in the accountancy profession.

Current Status: Sustain

The Association of Accountants of the Republic of Latvia (AARL) has established a voluntary professional certification program to support the development of professional accountants in the jurisdiction, where initial and continuing professional development requirements are not mandated in law for non-auditors.

The certification program includes requirements for higher education, relevant professional experience, and successful completion of professional examinations. AARL reports that the program has been developed and reviewed in alignment with the International Education Standards (IES), including a competency-based approach to the assessment of professional skills and knowledge.

AARL maintains continuing professional development (CPD) requirements for its members and has established systems to monitor and enforce compliance. The association supports implementation through preparatory courses, ongoing training, and collaboration with educational institutions to enhance the quality and relevance of accountancy education.

AARL also engages with stakeholders, including universities and international professional accountancy organizations, to ensure that its education framework remains aligned with evolving professional requirements and international best practices.

Through these activities, AARL maintains established processes to fulfill its SMO 2 obligations and demonstrates a sustained commitment to high-quality professional education in line with the IES.

Current Status: Sustain

International Standards on Auditing (ISA) are required for statutory audits in Latvia under the Law on Audit Services and are adopted and implemented by the Latvian Association of Certified Auditors (LACA) under the oversight of the Ministry of Finance.

The Association of Accountants of the Republic of Latvia (AARL) does not have responsibility for the adoption or implementation of auditing standards, and its members do not perform statutory audits. Members providing accounting services are required to comply with applicable standards, including the International Standards on Quality Management and International Standard on Related Services (ISRS) 4410 (Revised), as relevant to their professional activities.

Within the scope of its mandate, AARL contributes to the broader standard-setting and implementation environment through its participation in the Audit Advisory Council, supporting the Ministry of Finance and LACA on matters related to auditing standards and their application. AARL also engages in consultations and policy discussions on auditing developments.

To support its members, AARL provides guidance and training on applicable standards and disseminates relevant updates and materials issued by LACA and international standard-setters.

Given the nature of its mandate and the legal and regulatory framework, AARL is not directly involved in activities related to the adoption and implementation of ISA.

Current Status: Sustain

Ethical requirements for professional accountants in Latvia are not established in law for non-auditors. Within this context, the Association of Accountants of the Republic of Latvia (AARL) has adopted the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) for application by its members.

AARL has adopted and translated recent versions of the IESBA Code, in collaboration with the Latvian Association of Certified Auditors (LACA), and supports implementation through training, workshops, and continuing professional development activities. The association promotes awareness of ethical requirements through its Ethics Committee and regularly updates its educational offerings to reflect revisions to the Code.

While AARL maintains established processes to support the implementation of the IESBA Code, the version applied is not the most current version in effect as of the time of the assessment. As such, further efforts are needed to ensure timely adoption and incorporation of updates to the Code.

AARL is encouraged to reduce the time lag between the issuance of revisions to the IESBA Code and their adoption and to continue strengthening implementation support to ensure alignment with the latest ethical requirements.

Current Status: Review & Improve

Public sector accounting standards in Latvia are developed by the State Treasury under the Ministry of Finance (MoF). The applicable framework consists of national standards based on accrual principles that are broadly aligned with International Public Sector Accounting Standards (IPSAS).

The Association of Accountants of the Republic of Latvia (AARL) does not have direct responsibility for the adoption of public sector accounting standards. Within the scope of its mandate, AARL engages with relevant stakeholders, including the State Treasury and the State Audit Office, and contributes to the development of the public sector financial reporting framework through consultation on draft legislation and standard-setting initiatives.

AARL promotes awareness of IPSAS and supports professional development in this area through training and collaboration with international partners. The association also monitors regional developments, including initiatives related to European Public Sector Accounting Standards, to assess their potential impact on the jurisdiction.

Through these activities, AARL maintains established processes to support the advancement of public sector financial reporting and demonstrates a sustained commitment to fulfilling its SMO 5 obligations within the scope of its authority.

Current Status: Sustain

The Association of Accountants of the Republic of Latvia (AARL) has established an investigative and disciplinary (I&D) system for its members, which is outlined in its internal regulations and SMO Action Plan. The system is operational and includes procedures for the investigation of complaints, disciplinary decision-making, and appeals.

Currently, both investigative and disciplinary functions are performed by AARL’s Ethics Committee. While the system incorporates many elements of SMO 6, it does not yet fully align with best practices, including the separation of investigative and disciplinary functions.

AARL is in the process of enhancing its I&D framework, including plans to establish a clearer distinction between investigation and disciplinary roles and to link the I&D system with the results of a planned quality assurance review system for services provided by its members.

Through these efforts, AARL demonstrates a commitment to strengthening its I&D system.

AARL is encouraged to continue progressing planned reforms to fully align its I&D system with SMO 6 requirements, including establishing separate investigation and disciplinary functions and enhancing the overall effectiveness and transparency of the system.

Current Status: Review & Improve

Corporate financial reporting requirements in Latvia are established under the Law on Annual Financial Statements and Consolidated Financial Statements, which transposes the EU Accounting Directive and sets out the applicable accounting framework. Entities are required or permitted to apply International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), depending on their size, type, and public accountability.

The Association of Accountants of the Republic of Latvia (AARL) does not have direct responsibility for the adoption of accounting standards. Within the scope of its mandate, AARL contributes to the development and implementation of the financial reporting framework through participation in working groups and consultations organized by the Ministry of Finance and other stakeholders.

AARL supports the implementation of IFRS through its education and professional development activities, including incorporating IFRS into its initial and continuing professional development programs, offering training and seminars, and disseminating relevant updates and guidance to members. The association also engages with practitioners to identify implementation challenges and promote consistent application of standards.

AARL collaborates with other professional accountancy organizations to support the development of the profession and the financial reporting environment in Latvia.

Through these activities, AARL maintains established processes to support the application of IFRS and demonstrates a sustained commitment to fulfilling its SMO 7 obligations within the scope of its authority.

Current Status: Sustain