Chartered Institute of Public Finance and Accountancy
Member | Established: 1885 | Member since 1977
CIPFA is a voluntary membership organization established in 1885. It is the only professional accountancy body in the UK that specializes in public services and aims to advance public finance and best practices. CIPFA works with the accountancy profession and governments around the world to promote and support implementation of international public sector accounting standards. The institute provides education and training for professional accountants and offers a range of high-quality advisory, information, and consultancy services to public sector organizations. CIPFA is also 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
The Financial Reporting Council and the five Recognized Supervisory Bodies in the UK (the AAPA (an ACCA subsidiary), ACCA, CAI, ICAEW, and ICAS) share responsibility for the quality assurance (QA) review system of audits and assurance engagements in accordance with the Companies Act of 2006 and Statutory Instrument on Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012 (SI 2012/1741). The requirements of Statement of Membership Obligations (SMO) 1 appear to have been adopted for the QA review system in the UK.
Most CIPFA members are professional accountants in business and are not subject to direct QA reviews; therefore, the institute does not maintain a QA system for its members. About 400 members are, however, self-employed, providing accountancy services to clients. CIPFA members who work for audit firms are subject to standards and guidance issued by the RSB, and are subject to audit practice assurance.
In 2016, CIPFA entered a strategic alliance with Institute of Chartered Accountants of Scotland (ICAS) to offer an integrated qualification for auditors. As part of the strategic alliance, CIPFA members in practice can register with ICAS for Anti Money Laundering Supervision as an alternative to registering with Her Majesty’s Customs and Revenue as the default regulator.
- SMO 2: International Education Standards
CIPFA has direct responsibility for the initial professional development and continuing professional development of its members. The institute requires its aspiring members—students and trainees—to follow its Professional Qualification Program, which is an integrated program of education and workplace experience that ensures the range of International Education Standards (IES) requirements are reflected in the training. The Practical Experience Portfolio, which the institute reports is fully compliant with IES, blends input and output-based approaches, and the latter includes a requirement for students to reflect on the ethical considerations in their practical experience.
CIPFA reports that its Professional Qualification is reviewed on an incremental basis, and the content is checked annually as part of ongoing syllabus maintenance. The institute reports that IES are at the core of the CIPFA syllabus development process and as part of any review are taken into direct consideration. Most recently, the institute updated its professional qualification syllabus in 2015. Furthermore, CIPFA reports that its new integrated qualification with the Institute of Chartered Accountants of Scotland, for members in public practice as auditors, is fully compliant with IES and reflects the expectations of the UK’s Financial Reporting Council.
The institute provides responses to IAESB consultations and takes advice from volunteer practitioners through its Members and Students Development Board (MSDB), which represents members in the qualification development process. CIPFA reports that it communicates updates and notifications on IES, International Education Practice Statements and International Education Information Papers to the MSDB. New requirements are communicated as necessary through CIPFA newsletters and website. Moreover, Adrian Pulham, CIPFA’s Education and Membership Director, is a technical adviser to the Chair of IAESB.
CIPFA is encouraged to include specific information in its SMO Action Plan on its plans to review and adopt the revised IES, which were issued in 2015.
- SMO 3: International Standards on Auditing
The Financial Reporting Council (FRC) is the authorized body for setting auditing standards in the UK in accordance with the Companies Act of 2006 and Statutory Instrument on Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012 (SI 2012/1741). The FRC developed and adopted International Standards on Auditing (ISA) (UK and Ireland) as the applicable auditing standards for the conduct of all audits in the UK. ISA (UK and Ireland) are based on Clarified ISA issued by the IAASB, with specific changes to account for UK Company Law. In sum, ISA are considered to have been adopted in the UK and CIPFA has no direct responsibility for their adoption. Only a small percentage of CIPFA members are in public practice and require implementation support on ISA. To support these members, the institute has an integrated qualification with the Institute of Chartered Accountants of Scotland.
Although CIPFA has no direct responsibility in setting auditing standards in the UK, it plays an active role in the national and international standard-setting process and promotes the adoption of ISA to national standard-setters. CIPFA reports that it supports the adoption of IAASB requirements in discussions with the FRC and the National Audit Agencies—the entities that determine which standards should be used for public sector audits.
CIPFA’s Accounting and Auditing Standards Panel (AASP) develops most of the institute’s responses to consultations on UK standards for financial reporting and audit, working in partnership with other CIPFA panels and working groups where appropriate. A key initiative of the AASP is to respond to the work of the IAASB and related work by the FRC which seeks to improve audit quality and auditor reporting. The AASP also pursues other projects as part of CIPFA's thought leadership and promotion of good practice, which in 2013 included developing an updated and revised edition of the publication Accounting and Auditing Standards: A Public Services Perspective. Information on AASP activities and priorities in previous years, including all of the standards to which it has submitted comments, can be found in AASP's Annual Reports. CIPFA reports that it also contributes to IAASB discussions by participating on the Consultative Committee of Accountancy Bodies, which is an umbrella group of the chartered professional bodies of British qualified accountants.
To further support implementation of the standards amongst audit professionals, CIPFA produces a magazine for the audit practitioner, Audit Viewpoint, which communicates expert, practical advice on a wide range of audit issues. Each edition discusses topical issues, introducing new concepts and disseminating good practice. It is also used to update readers on the activities of CIPFA's Audit Panel.
Finally, CIPFA also engages in international development and training work and through this work it promotes ISA where relevant to ‘client’ governments.
- SMO 4: Code of Ethics for Professional Accountants
In accordance with their charters and by-laws professional accountancy organizations (PAOs) in the UK are authorized to establish ethical requirements for their members. All PAOs in the UK indicate that they have adopted the requirements of the IESBA Code of Ethics (2009 version or subsequent). In 2011, CIPFA adopted the 2009 version of the IESBA Code of Ethics into its Standard of Professional Practice on Ethics (SOPP on Ethics) for its members. The institute is planning to adopt the most recent version of the Code in the first half of 2017, including the new NOCLAR standard due to come into force in July 2017. All relevant CIPFA-developed supporting guidance will also be updated.
CIPFA maintains ongoing processes to support adoption of ethical requirements. It reports that is monitoring the work of the IESBA and participating in the international standard-setting process by way of its involvement in the Ethic’s Group of the Consultative Committee of Accountancy Bodies, which submits comments as a group on behalf of the UK bodies to the IESBA.
To support implementation of the SOPP on Ethics, the institute provides information, guidance, training, and other resources to its members. Updates are shared with members via newsletters and online resources, and ethics are included as part of the professional qualification syllabus. CIPFA develops and maintains a resource called Ethics and You for its members and the public, which is a compilation of case studies and explanatory material to provide guidance in the application of the SOPP on Ethics. The guidance was last updated in 2016 with revised and new cases, and publication of the subsequent revision is expected in 2017. The institute also provides information on whistleblowing policies via its website. Furthermore, to support its members in dealing with ethical dilemmas, it provides access to professional staff as well as access to an Ethics Sounding Board, which is a panel of senior members willing to discuss ethical issues confidentially.
Lastly, as part of its process for monitoring issues related to adoption and implementation, CIPFA monitors the types of issues reported by members against the coverage of the SOPP on Ethics. The institute also works through the Public Accountants in Business Committee of IFAC, and in 2014, jointly published The International Framework: Good Governance in the Public Sector, which addresses the importance of ethical issues and resources in effective public sector governance.
- SMO 5: International Public Sector Accounting Standards
The UK Treasury is responsible for developing national standards and policies for the Central Government financial statements which are specified in the Government Financial Reporting Manual (FReM). The FReM uses standards based on the EU as adopted by the EU, and IPSAS form the second tier of accounting guidance to be applied in circumstances where IFRS do not address a public sector issue. CIPFA and the Local Authority Scotland Accounts Advisory Committee (LASAAC) work together on the Local Authority Code Board, a standing committee of CIPFA and LASAAC, to set accounting standards in the Code of Practice for local governments. The Code of Practice issued by CIPFA and LASAAC for local governments is based on IFRS as adopted by the EU, and draws on IPSAS and UK Financial Reporting Standards issued by the Financial Reporting Council.
CIPFA strongly supports the standard-setting work of the IPSASB. As of 2017, the IPSASB Chair is the CIPFA Chair of Standards, and his Technical Advisor is the Chair of CIPFA’s Accounting and Auditing Standards Panel (AASP). From 2005–2011, CIPFA seconded a Technical Director to the staff of the IPSASB until he was hired full-time onto the IPSASB staff. CIPFA provides input to the steering committees and task forces of the IPSASB and responds to all IPSASB consultations, after seeking advice from its volunteer practitioners through the AASP. Information on AASP activities and priorities in previous years, including all of the standards to which it has submitted comments, can be found in AASP's Annual Reports.
To support implementation of IPSAS amongst its members, the institute offers an IPSAS Diploma, an IPSAS Certification, and an IPSAS Certification in Spanish. All three qualifications are accessible anywhere through a flexible online learning and assessment program. CIPFA also includes IPSAS in the initial professional development and continuing professional development of its professional accountancy qualification for its members. The institute’s members are also regularly notified about the IPSASB’s activities through its newsletter and website.
Lastly, the institute reports that it promotes the use of IPSAS where relevant to the client governments as part of CIPFA’s international development and training work.
CIPFA is encouraged to update its SMO Action Plan to showcase its ongoing activities to promote and support full adoption of IPSAS in the UK.
- SMO 6: Investigation and Discipline
In accordance with their charters and by-laws, professional accountancy organizations (PAOs) in the UK are authorized to establish systems of investigation and discipline (I&D) for their members for failure to comply with applicable standards of professional conduct. CIPFA members and registered students must comply with the institute’s Charter and Bye-Laws. This includes a requirement to comply with the institute’s ethical and technical standards, including the Standards of Professional Practice, a duty to self-report (if a member or student becomes liable to regulatory action) and a duty to cooperate with the institute.
The institute’s I&D system is overseen by the UK Financial Reporting Council (FRC) and the Irish Accounting and Auditing Supervisory Authority, both of which carry out regular inspection visits. The institute is a participant in the FRC’s Accountancy Scheme, an independent disciplinary scheme for the UK accountancy profession for the consideration of public interest cases. Such cases may be referred to the FRC Accountancy Scheme for independent investigation and prosecution.
CIPFA conducted a detailed self-assessment within its 2017 SMO Action Plan indicating how its I&D system meets and maintains fulfillment with SMO 6 requirements. The institute also has detailed information about its system on its website, including information for the public and members and students on how to submit complaints.
- SMO 7: International Financial Reporting Standards
The Financial Reporting Council has the authority to adopt accounting standards in the UK in accordance with the Companies Act of 2006 and Statutory Instrument on Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012 (SI 2012/1741). While CIPFA has no responsibility for adoption of IFRS in the UK, it has been active in incorporating IFRS into national standards, particularly for the public sector. The institute reports that it responds to consultations issued by the IASB, especially on issues that are relevant to the public sector, taking advice from volunteer practitioners through the Accounting and Auditing Standards Panel (AASP). Information on AASP activities and priorities in previous years, including all of the standards to which it has submitted comments, can be found in AASP's Annual Reports. CIPFA is also involved in providing a secretariat role for addressing accounting and financial reporting for not-for-profit organizations in the UK and internationally.
Furthermore, CIPFA has also been active in delivering implementation support to relevant stakeholders. When the government adopted IFRS in 2007, the institute provided implementation training to the Central Government, public health sector, and local governments. Between 2008 and 2011, CIPFA co-hosted joint forums with the Institute of Chartered Accountants of England and Whales to discuss lessons learned on IFRS implementation in private and public sectors. Additionally, the institute provides its members with information about the activities of the IASB and a forward look at standards through its conferences, seminars, newsletters, and its website. Lastly, IFRS are also incorporated into the syllabus of the professional accountancy qualification of its members and students, including the international professional qualification.
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