Bahrain Accountants Association
Member | Established: 1971 | Member since 1986
BAA was established in 1971 and re-registered with the Ministry of Labor under Law No.78 of 1992 in accordance with the provisions of the Law of Societies and Social and Cultural Clubs. It is membership is voluntary and comprises both accountants and auditors.
BAA reportedly undertakes the following activities for its members: (i) delivering initial professional development and setting continuing professional development requirements; (ii) setting ethical requirements for members; (iii) investigating and disciplining members where necessary through its participation in the Ministry of Industry and Commerce Auditors Disciplinary Board; and (iv) maintaining a registry for members.
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.
- SMO 1: Quality Assurance
The Quality Assurance Department of the Ministry of Industry and Commerce (MIC) initiated the Quality Management System in 1996 as stipulated by Legislative Decree No. 26 of 1996 to ensure that auditors and firms comply with regulations, applicable auditing standards, professional rules, and instructions issued by relevant authorities.
As of September 2018, BAA requires members engaged in statutory audits to complete 90 hours of continuing education on quality control and are subject to reviews once every three (3) years.
While QA reviews are primarily conducted by the MIC, BAA reports to support implementation by raising awareness of the QA review system, ISQC 1, and best practices in the area of quality control. Since December 2018, BAA began meeting with various regulators such as the Central Bank, Ministry of Commerce, universities, and large public accounting firms, to encourage them to provide more training on QA processes and help increase awareness. BAA also reports to meet with relevant authorities to promote alignment with SMO 1 requirements.
In line with its internal strategic plan, in March 2019, BAA stated that its technical committee on QA continues to be responsible for: (i) organizing seminars to raise awareness of the importance of ISQC 1 and enhance understanding of the QA review process; (ii) providing continuing professional development courses on QA; and (iii) liaising with the MIC, CBB, Auditors Disciplinary Board, and the Auditors Affairs Committee to promote adoption of ISQC 1 and foster convergence with SMO 1.
During the next submission of its Action Plan, it is recommended that BAA develop and include action steps it will take to encourage the MIC to address the existing gaps of the QA review system that were identified in the self-assessment against the requirements of SMO 1.
- SMO 2: International Education Standards
Legislative Decree No. 26 of 1996 establishes the role of the Ministry of Industry and Commerce as the key regulatory authority that enforces educational requirements for auditors. Since only auditors are regulated by law, other professional accountants are self-regulated if they voluntarily join the Bahrain Accountants Association (BAA).
Although BAA does not offer its own qualifications, it established a system to recognize foreign qualifications and maintains its own registry for accountants. In the absence of a mandatory requirement for professional exams, BAA developed a high-level strategic plan aimed at introducing an assessment of professional capability and competence of its members.
All members are subject to its initial and continuing professional development (IPD and CPD respectively) requirements of 20 CPD hours annually. BAA reports that it has established plans to gradually increase the CPD requirement to 40 hours per year recorded over a yearly period rather than every three years, however, it is unclear if a timeframe has been established.
In March 2019, BAA indicated that it will operationalize a system for monitoring CPD fulfillment via a web-based portal by Q4 2019. The portal will allow members to record external training to fulfill CPD requirements.
As the first step, BAA is encouraged to review the national requirements against those of the revised 2015 IES and, if gaps exist, consider working with other stakeholders to bring the national requirements in line with those of the revised standards. At a minimum, BAA should bring its CPD requirements fully in line with the revised IES and to work with universities to ensure that the university accounting education curricula is updated on an ongoing basis to incorporate new international pronouncements.
- SMO 3: International Standards on Auditing
The Commercial Companies Law of 2001 (as amended in 2018) stipulates that auditors must comply with internationally recognized auditing principles and standards or the standards approved by the competent authority. Legislative Decree No. 26 of 1996 for Auditors directly references the pronouncements issued by the IAASB as the relevant auditing standards to be adhered to. The Ministry of Industry and Commerce monitors implementation of ISA as issued by IAASB.
BAA supports its members with implementation of ISA through the design, development and delivery of seminars on audit standards and related topics. It provides members with seminars every six (6) months as well as guidance material via the BAA portal on new or revised audit standards such as the new auditor reporting standards that became effective in December 2016.
Lastly, BAA reports that it participates in the international standard-setting process through its reviews, and provision of comments on new and revised Exposure Drafts issued by the IAASB.
BAA is encouraged to update the SMO 3 section of its Action Plan to indicate its actions and its efforts around supporting the adoption and implementation of auditing standards in the jurisdiction. For example, it is encouraged to provide examples of implementation support it provides to its members, especially considering the 2016 ISA and the new auditor’s report.
- SMO 4: Code of Ethics for Professional Accountants
Under the Commercial Companies Law of 2001 (as amended in 2018), the Ministry of Industry and Commerce monitors implementation of the ethical requirements by auditors.
As for accountants, they may voluntarily join the BAA and be subject to its ethical requirements. BAA reports that it requires members to adhere to its code of ethics handbook, which is based on the 2016 version of the IESBA Code of Ethics. It reports to be establishing plans to converge with the 2018 restructured IESBA Code of Ethics which comes into effect in June 2019.
BAA reports that it has established a formal ongoing review process to ensure that any new and revised standards are converged with the BAA Code of Ethics in a timely manner. To assist its members with understanding ethical obligations such as identifying threats to independence and building safeguards, BAA provides seminars, training, continuing professional development courses, and implementation guidance.
Effective June 2019, IESBA’s restructured Code of Ethics will require due consideration and review by BAA to promote adoption, and/or support implementation. BAA is encouraged to progress with its plans to review the restructured IESBA Code in order to converge with the latest ethical requirements in a timely manner. It is also encouraged to provide training on proper application of the structured code amongst its members.
- SMO 5: International Public Sector Accounting Standards
The BAA reports that the Ministry of Finance is responsible for establishing public sector accounting standards in the jurisdiction. More information is needed to determine which standards are currently applicable as it is not the IPSAS.
BAA reports that it continues to raise awareness of the potential benefits of IPSAS adoption through discussions with regulatory authorities. It also plans regular seminars as part of its strategic plan of engagement with each regulator to increase awareness and promote adoption of IPSAS.
To keep members aware of developments in the public sector, BAA plans to inform its members of all new, proposed, and revised IPSAS and other pronouncements issued by the IPSASB through training courses.
The association indicates that it participates in the international standard setting process by providing comments on new Exposure Drafts issued by the IPSASB.
BAA is encouraged to indicate if there is an official timeline or roadmap in place for IPSAS adoption. It is also encouraged to consider a strategy outlining its involvement in public sector accounting issues and support it can provide to public sector accountants in the jurisdiction. For example, the BAA is encouraged to indicate if it provides trainings on IPSAS for its members that may work in the public sector, update its website to include relevant information on IPSAS, and demonstrate how it has engaged with universities to incorporate the standards into accounting education curriculum.
- SMO 6: Investigation and Discipline
Legislative Decree No. 26 of 1996 stipulates that the Ministry of Commerce (MIC) is responsible for establishing and operating a board called the Auditors Disciplinary Board comprising representatives from the Ministry of Commerce, Ministry of Finance and National Economy, Bahrain Monterey Agency, Bahrain Chamber of Commerce and Industry, and BAA.
BAA reports that it provides its members with trainings on the investigations and disciplinary (I&D) process and sanctions. BAA informs staff that it is in the process of developing a “whistleblower” platform that will allow members to submit anonymous complaints and receive guidance on the process and way forward. It also intends to publish outcomes of disciplinary proceedings and have any members found in non-compliance create a plan for improvement. However, the extent of implementation of this plan is unclear.
BAA reports that it promotes compliance by its members with applicable ethical, professional, and technical standards as well as relevant laws through its continuing professional development program. However, as mentioned above, BAA does not indicate how it monitors compliance and whether any cases have been raised and/or resolved. The institute also indicates that it raises awareness of the consequences of non-compliance to its members and the general public.
In 2019, BAA conducted a self-assessment of the I&D system against SMO 6 requirements and identified gaps in (i) making information about the types of misconduct which may bring about investigative actions publicly available; (ii) linking the results of QA reviews to I&D proceedings; (iii) establishing a separate disciplinary committee to make disciplinary decisions on referrals from an investigations committee; (iv) setting a timeframe for disposal of cases; (v) establishing tracking mechanisms to monitor progress in I&D and establishing related procedures; (vi) establishing a process for the independent review of complaints on which there was no follow-up; (vii) making the results of the investigative and disciplinary proceedings available to the public; and lastly (viii) conducting regular reviews and corrective actions of implementation and effectiveness of the system.
During the next submission of its Action Plan, it is recommended that BAA develop and include action steps it will take to encourage the MIC to address the existing gaps of the I&D policies that were identified in the self-assessment against the requirements of SMO 6.
- SMO 7: International Financial Reporting Standards
The BAA does not have direct responsibility for the adoption of IFRS and IFRS for SMEs which are adopted by the Ministry of Industry and Commerce in line with the Commercial Companies Law of 2001 (as amended in 2018).
BAA indicates that it provides support to its members with the implementation of IFRS through guidance material, educational programs, seminars, and continuing professional development trainings. BAA disseminates new and revised IFRS via its member portal and offers pre-recorded training videos and presentations.
BAA also reports that it cooperates with regulatory authorities to promote and support the implementation of IFRS and other IASB pronouncements.
If deemed feasible, BAA is encouraged to consider how it may participate in the submission of comments on IFRS exposure drafts in order to contribute its experiences and perspective.
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.