Chamber of Auditors of the Czech Republic
Member | Established: 1993 | Member since 1994
CACR was founded in 1993 for the purpose of governing the audit profession in the Czech Republic. Its authority is stipulated in the Act on Auditors of 2009 as amended in 2021. Statutory auditors are required to be licensed members of CACR by law. CACR is responsible for (i) issuing licenses to practice auditing; (ii) maintaining registries of auditors and registries of revoked licenses; (iii) organizing and conducting examinations for auditors; (iv) developing and delivering continuing professional development (CPD) activities; (v) enforcing compliance with applicable auditing and ethical standards as well as CPD requirements; (vi) initiating investigation and disciplinary procedures for members; (vii) carrying out quality assurance reviews of its members; and (viii) undertaking any other activities that promote high professional standards and improve the quality of auditing services.
In addition to being a member of IFAC, CACR is a member of Accountancy Europe.
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
In accordance with the Act on Auditors of 2009 as amended in 2016 the Public Audit Oversight Board (PAOB) carries out quality assurance (QA) reviews of audits of PIEs (every 3 years) while CACR will maintain responsibility for QA reviews of non-PIEs (every 6 years). A risk-based approach is also being followed as related to compliance with AML regulations.
CACR established its QA review system in 1993 and reports that it is in line with the requirements of SMO 1 and the European Union Directive on Statutory Audit. The CACR’s Supervisory Committee conducts meetings monthly to ensure that the QA review system is operating effectively. The Supervisory Committee also collaborates with the PAOB in sharing information about the QA review system, drafting the review cycle and plan, semi-annual reporting, jointly attending selected inspections for PIEs, and organizing seminars for inspectors.
The institute states it conducts ongoing activities to support its members in the process of QA reviews by providing updates, templates, and tools to create and maintain an effective quality control system and offers continuing professional development programs and seminars based on review findings.
The new quality management standards (ISQMs) will be adopted upon the standards’ effective date of 15 December 2022. CACR is preparing to update its QA review program as a result. All quality inspectors will be trained on how the adoption of ISQM 1 and 2 may apply to QA reviews. CACR has translated standards and implementation guidance published by the IAASB to support adoption and implementation efforts.
CACR publishes annual reports on QA reviews and subsequently strives to publish 2-3 articles per year pertaining to the main issues identified during reviews of auditors and audit firms and provides training modules based on the findings. CACR has also organized regional seminars in Prague, Brno, and Ostrava pertaining to sharing knowledge and professional experience gained from inspections. For additional details and other examples, please refer to CACR’s SMO Action Plan.
SMO 2: International Education Standards
The initial professional and continuing professional development (IPD and CPD respectively) requirements are established for auditors in the Act on Auditors of 2009 as amended in 2021 and are implemented by CACR under the oversight of PAOBs along with local universities that set the tertiary accountancy curricula. These requirements include obtaining a bachelor’s or master’s degree recognized in an EU Member State; completing three years’ work experience in auditing; and passing the professional exam organized by CACR.
CACR reports that it compared the requirements of the 2019 IES, inclusive of revisions effective in January 2021, with its IPD requirements and subsequently incorporated amendments. CACR provides preparatory courses in advance of each of the 12 written exams that candidates must pass. In 2021, CACR modified the structure and content of its audit exam. The first module is focused on general knowledge in the field of financial accounting and reporting, managerial accounting, corporate finance, commercial law and taxation. The second module emphasizes knowledge and professional skills in the field of auditing, information technology and statistics. The third module then assumes the connection of general knowledge with knowledge in the field of audit activity, including the application of independent judgment, professional scepticism and professional judgment. CACR also notes that its preparatory courses were also updated accordingly.
Additionally, CACR has been transitioning from paper-based written exams to computer-based exams, where candidates also have to demonstrate skills in using computer softwares. CACR expects to complete this transition by December 2023.
As noted, universities are responsible for the defining the university accounting education curricula. According to the 2013 Report on the Observance of Standards and Codes on Accounting and Auditing (ROSC) the curricula follow education requirements in line with earlier versions of the IES.
The World Bank ROSC report also indicates that CACR’s CPD aligns with IES 7 and 8. In 2016, CACR amended its CPD policies to permit auditors to participate in soft skills training courses as part of their CPD requirements for up to 5 hours annually to align with the IES requirements. In line with IES 8, starting in 2023, engagement partners are obliged to demonstrate minimum of 8 hours spent on learning outcomes from audit, governance and risk management, business environment, information and communication technologies and professional skepticism, professional judgement, commitment to the public interest and ethical principles. As part of supporting practical understanding of standards and legislation, CACR publishes scenarios and case studies in its magazine.
To ensure that members can meet their CPD obligations, CACR offers a CPD calendar of available trainings. Where an auditor has not met the minimum of 40 hours of annual CPD, the missing number of hours is added to the 40 hours required for the following year. If an auditor has not met the CPD requirement for two successive years, CACR reports it to the Disciplinary Committee for further action. CPD results, which include those who failed to meet the requirements, are published annually in the Auditor magazine published by CACR. CACR's Supervisory Committee monitors the participation of auditors in CPD programs, as well as their compliance with the CPD regulations of CACR.
CACR has taken several significant steps to keep its accountancy education up-to-date with the IES requirements. CACR may consider utilizing the IFAC Accountancy Education E-Tool to share these requirements with stakeholders such as universities that may be applying pre-2019 IES requirements to its curricula.
SMO 3: International Standards on Auditing
The Act on Auditors of 2009 as amended in 2021 delegates audit standard-setting authority to CACR under the supervision of PAOB which approves final auditing standards. CACR has established an ongoing process to adopt and publish the ISA as issued by the IAASB. The 2020 Handbook is effective as of 2022.
CACR reports that it organizes and delivers annual training on ISA and other relevant topics to enhance members’ understanding and implementation, especially around any updates and changes to the standards. It also has provided its members with several tools and manuals such as a translated version of the Guide to Quality Control for Small and Medium Practices. In addition, articles dealing with major changes and critical issues are regularly published in its professional magazines.
SMO 4: Code of Ethics for Professional Accountants
Auditors are subject to ethical requirements as per the Act on Auditors of 2009 as amended in 2021 that are set by CACR under the supervision of PAOB which has the final approval of the ethical requirements.
CACR has translated and adopted the International Code of Ethics (version 2018) in addition to the revisions and updates that took effect as of December 2021 (i.e., the revisions to Part 4B to align terms and concepts used in International Standard on Assurance Engagements (ISAE) 3000 (Revised) and the revisions to Parts 1 and 2 to promote the role and mindset expected of professional accountants). CACR indicates that revisions with an effective date of December 2022 (in the 2022 Handbook) will be translated and adopted by end of 2022. CACR maintains an ongoing process to ensure that approved changes to the IESBA Code of Ethics are translated into Czech language in a timely manner. In 2022, CACR’s Committee on Regulation and Professional Development established a Subcommittee on AML and Ethics.
CACR notes that any amendments to the Code are regularly communicated to members and implementation is supported through publications in its Auditor magazine, training courses, and conferences.
SMO 5: International Public Sector Accounting Standards
The Ministry of Finance is responsible for accounting standard-setting for public sector entities and the CACR has no legal authority in this area. Nevertheless, CACR reports that it focuses on providing technical advice to its members through its Public Sector Committee, and publishes implementation guidance since a significant number of members provide services to public sector entities.
CACR states that it promotes IPSAS through its participation in Supreme Audit Office meetings. Two of CACR’s Public Sector Committee members are employees of the Ministry of Finance and work to promote IPSAS directly to relevant authorities in the ministry as well as provide comments and proposals to draft legislation.
CACR also provides information on the latest developments pertaining to IPSAS via its website and magazine.
CACR is encouraged to continue its advocacy with the MoF and the SAO to converge national standards with accrual-basis IPSAS. Adoption of accrual IPSAS as issued by the IPSASB would ensure the application of global best practice. It may find IFAC’s Pathways to Accrual and IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for advocacy, training and, educational activities it offers.
SMO 6: Investigation and Discipline
Under the Act on Auditors of 2009 as amended in 2021, investigation and discipline (I&D) of auditors is performed by CACR, under the oversight PAOB. PAOB conducts its own proceedings for auditors of public interest entities.
In line with CACR's internal regulations, the Supervisory Committee conducts investigations while the Disciplinary Committee conducts disciplinary hearings and may issue sanctions. The Supervisory Committee has 11 members responsible for monitoring the quality of auditors’ work, compliance with relevant legislation, and CACR’s internal regulations. Upon referrals from the Supervisory Committee, the Disciplinary Committee will hear cases and issue any decisions no later than 30 days from the commencement of the proceeding and may add up to 30 additional days if local inquiries are needed or a case is particularly complex. The PAOB acts as the appeals body when an auditor disagrees with a decision.
The I&D system has been operational since 2009 — in 2020, 52 cases were heard and in 2021, 33 cases were heard and resolved.
CACR completed a self-assessment of its I&D system against SMO 6 requirements and reports that its processes meet the majority of the SMO 6 best practices. The Disciplinary Committee is composed of 7 members elected from the statutory auditors. However, the Disciplinary Committee uses support in its work including CACR employees who have legal education.
Enforcement mechanisms that meet the SMO 6 benchmark can help further public trust and confidence in the accountancy profession. Per SMO 6, disciplinary tribunals should comprise a balance of professional expertise and outside judgment. As feasible, CACR is encouraged to consider including non-professionals as Disciplinary Committee members.
SMO 7: International Financial Reporting Standards
The Ministry of Finance is responsible for the adoption and promulgation of accounting standards in the Czech Republic in accordance with the Accounting Act of 1991 as amended in 2021. EU-endorsed IFRS are required for the preparation of separate and consolidated financial statements of public interest entities as defined in the jurisdiction. Companies are also required to keep accounting records in accordance with Czech GAAP for tax purposes or reconcile their IFRS financial statements to Czech GAAP.
CACR’s activities are predominantly focused on supporting ongoing adoption and implementation of the standards as it has no legal standard-setting authority in this area. Historically CACR participated in meetings of the National Accountancy Council (NAC) and provided comments on proposed changes in the accounting legislation. With the passage of the abovementioned laws, NAC no longer exists however CACR indicates that it will continue to cooperate with the Ministry of Finance to support endorsement of IFRS in relevant accounting legislation.
CACR reports that it also supports implementation by providing in-person and e-training on IFRS, information on the latest developments related to IFRS through its website and magazine, and guidance publications for its members on how to conduct audits of financial statements in accordance with IFRS. For example, CACR organized training on new IFRS 9, 15, and 16. The institute also offers training on the relationship between IFRS and Czech GAAP and to familiarize members with most major differences between IFRS and Czech accounting standards.
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.