Associate | Established: 1943 | Associate since 2019
The CCPPE, established by Ministerial Decree No.1638 of 1943, is a voluntary professional accountancy organization representing accountants and accounting technicians, with responsibilities such as: (i) establishing membership requirements; (ii) issuing professional and ethical standards for its members; (iii) investigating and disciplining its members; (iv) providing training programs; and (v) representing and promoting the accounting profession. The CCPPE is an Associate member of IFAC, a member of the Inter-American Accounting Association and the Integration Committee Europe—Latin America, and a member of the Group of Latin-American Accounting Standard Setters.
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 Ecuador, the financial sector regulators—Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB)—are empowered to regulate auditors and audit firms providing services to regulated companies, which include the establishment of a quality assurance (QA) review system.
Although the CCPPE has no legal authority or responsibility to establish a mandatory QA review system for all audits of financial statements, in 2018, the CCPPE conducted a comparison of the SCVS’s QA review system against the requirements of SMO 1 and identified gaps, such as audit reviews are only carried out when a suspicion or risk is identified, and the scope of reviews does not cover all audits of financial statements, among others. The CCPPE indicates that it regularly promotes the need to adopt a mandatory QA system at the jurisdiction level by meeting with the financial sector regulators to promote the best practices; providing technical support and training activities on ISQC 1; and disseminating information on quality control standards.
The CCPPE supports the financial regulators by meeting regularly with working groups to increase the discussion and understanding of the QA review system and provides training to regulatory officials and its members on ISQC 1 and ISA 220.
As of 2022, the CCPPE reports that it has created a Quality Control subcommittee within its Audit and Quality Control Committee to promote quality control among regulators and audit firms. The CCPPE indicates it plans to provide audit manuals for small and medium practitioners and support members’ understanding of QA reviews.
As the financial sector regulators have the authority for developing and operating QA review systems, the CCPPE should continue using its best efforts to collaborate with regulators and relevant stakeholders to promote the SMO 1 requirements, especially if the SB has yet to establish QA review procedures.
Importantly, the new suite of IAASB Quality Management standards that will become effective in December 2022 will require significant change management for regulators and firms. The CCPPE is encouraged to refer to the new changes from quality control standards to quality management standards as it progresses with implementing the QA reviews and preparing members and other relevant stakeholders for the change.
SMO 2: International Education Standards
In Ecuador, universities and the Ministry of Education have a role in establishing initial professional development requirements for professional accountants, which are outlined in the Accountants Law of 1966. A university accounting degree for accountants (including auditors) and a secondary education degree for accounting technicians are the only requirements to practice in Ecuador. Auditors that are providing services to the financial sector are subject to additional registration requirements issued by the Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB). These include a practical experience component.
As an entity established by general consensus and with voluntary membership, the CCPPE lacks authority to further adopt IES requirements for its members. Therefore, its activities primarily include promoting an update of the universities’ curricula, disseminating the IES requirements, and proposing legal changes to the government that would require the accountancy profession in Ecuador to adopt and implement IES requirements. The CCPPE has a Continuing Education and Professional Development Committee, comprised of academics, which promotes the IES to regulators and disseminates the standards to universities for implementation support. The Colegio has a memorandum of understanding with the FEUE of the Universidad Central del Ecuador in this regard.
The CCPPE reports that it is also advocating for an update of the Accountants Law to incorporate practical experience requirements and a qualification exam before practicing. Furthermore, the CCPPE indicates it is developing a new initiative to strengthen the registry of professional accountants maintained by the SCVS and the SB and raise awareness of the importance of mandatory CPD among the national regulators.
Lastly, the CCPPE indicates it has developed a qualification exam for the financial sector regulators’ consideration, as part of their requirements to register auditors.
The IESs improve the quality of professional accountancy education worldwide by prescribing requirements for initial and continuing education & development that ensures accountants have the proper competencies to provide high-quality services. The CCPPE should continue collaborating with regulators and universities, specifically the SCVS and SB, to at least adopt education requirements for auditors that meet the latest IES and align with global best practice. Ideally, these requirements would be extended to all professional accountants.
CCPPE can refer to examples in the region for best practices and learnings regarding the adoption of IES — there are examples on voluntary certifications/examinations, mandatory CPD requirements, and accrediting universities’ curricula. The Accountancy Education E-Tool and the IES Checklist developed by IFAC may be useful to identify implementation support materials and the CCPPE Continuing Education and Professional Development Committee should review these available tools as part of its determining the next steps in its work plan.
SMO 3: International Standards on Auditing
The financial sector regulators—Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB)—are responsible for setting auditing standards in Ecuador. The SCVS and SB require auditors providing audit services to all companies to apply ISA by reference and without modification.
As part of its efforts to support ongoing ISA adoption, the CCPPE indicates that it: (i) monitors new and amended standards issued by the IAASB; (ii) advocates that regulators maintain ongoing, consistent adoption of ISA (iii) disseminates information on updates to the standards and international developments in the area through printed materials and its website; and (iv) develops guidelines and materials to support the implementation of the standards.
To facilitate further support implementation, the CCPPE has ongoing processes to include the most recent amendments to the standards in its training programs and developed ISA courses, which are specialized 40 hours of training on the ISA. In addition, the CCPPE organizes training with providers of auditing tools and software to advance the application of ISA in audit practices, develop training courses for Small- and Medium-sized Enterprises on the implementation of ISA, and is working to participate in the international standard-setting process by providing comments on exposure drafts and other IAASB.
The CCPPE has demonstrated an ongoing process to maintain its fulfillment with the SMO 3 obligations and is committed to continuous improvement.
SMO 4: Code of Ethics for Professional Accountants
The CCPPE is responsible for setting ethical requirements for its members and has adopted the 2018 International Code of Ethics issued by the IESBA. As reported by the CCPPE, financial sector regulators—Superintendence of Companies, Securities and Insurance, and the Superintendence of Banks—are also empowered to set ethical requirements for auditors of entities under their supervision; however, the regulators have not issued a specific regulation in this regard.
The CCPPE has established a Legislation, Investigation, Ethics and Professional Practice Committee responsible for monitoring new and amended standards issued by the IESBA and disseminating new information and developments on the standards. This is currently done through printed materials and the CCPPE’s website. The CCPPE reports that it plans to continue the ongoing adoption of the IESBA Code of Ethics, pending the publication of the Spanish version.
To support the effective implementation of the Code, the CCPPE reports that it raises awareness amongst its members and key stakeholders and includes ethical requirements in its training programs. The CCPPE has also developed publications covering ethical matters.
It is essential to the public interest that professional accountants adhere to the latest ethical requirements. CCPPE is commended for advancing the adoption of the 2018 Code of Ethics from its earlier 2014 version. Now, the 2021 Handbook is currently effective, with changes in the terms and concepts used in the IAASB's International Standard on Assurance Engagements (ISAE) 3000 (Revised), and revisions to promote the role and mindset expected of all professional accountants that were effective in 2021. In addition, the CCPPE should also take note of changes that will be effective in December 2022, including the objectivity of an engagement quality reviewer and other appropriate reviewers, revisions to the non-assurance services, and revisions to the fee-related provisions.
The CCPPE is also encouraged to include actions/plans in its SMO Action Plan related to promoting the importance of adopting the International Code of Ethics for all professional accountants in the jurisdiction to relevant authorities and stakeholders.
SMO 5: International Public Sector Accounting Standards
The CCPPE is not responsible for adopting public sector accounting standards in Ecuador, which the Ministry of Economy and Finance (MoF) adopted. The MoF adopted accrual IPSAS in 2016 with an effective application date set for 2020; however, the version of the IPSAS that was adopted is unclear.
The CCPPE actively advocated for and supported the adoption of IPSAS through its engagements with the MoF and the General Comptroller’s Office. One prominent example is that the CCPPE co-organized the 2015 Accounting and Accountability for Regional Economic Growth (CReCER) conference with the MoF and the General Comptroller's Office, during which IPSAS-related topics were discussed. Additionally, the CCPPE also participated in public discussions on the benefits of adoption and implementation of IPSAS for Ecuador and joined the MoF’s Harmonization Committee, which discusses government policies and work plans.
Now that IPSAS are effective in the jurisdiction, the CCPPE is supporting the ongoing adoption of the standards by: maintaining its regular contact with the MoF and General Comptroller's Office; disseminating new information and developments on the standard’s translations; and including IPSAS in its training programs, in cooperation with the MoF. In addition, the CCPPE created a public sector commission to participate in the international standard-setting process to provide comments to the IPSASB.
The CCPPE has demonstrated an ongoing process to maintain its fulfillment with the SMO 5 obligations and is committed to continuous improvement.
The CCPPE is encouraged to clarify the version of IPSAS adopted by the MoF. The IFAC’s Train the Trainers: Introduction to IPSAS and IFAC’s Pathways to Accrual resources might be helpful to the CCPPE to continue providing support to public sector accountants in the jurisdiction.
SMO 6: Investigation and Discipline
The CCPPE is responsible for establishing and operating an investigative and disciplinary (I&D) system for its members. In addition, financial sector regulators—Superintendence of Companies, Securities and Insurance, and the Superintendence of Banks—are responsible for the I&D of auditors and audit firms providing services to companies under their supervision; however, it is unclear if the regulators operate any I&D mechanisms.
As part of its bylaws, the CCPPE has in place a Court of Honor to operate its I&D system. The Court of Honor conducts complaints-based investigations related to misconduct/ethical issues and recommends sanctions to the CCPPE Board of Directors, who has the ultimate responsibility for the resolutions. The CCPPE has outlined a strategic plan to address the identified gaps in its I&D policies. The CCPPE has established a Legislation, Investigation, Ethics and Professional Practice Committee responsible for preparing bylaws and internal reforms by early 2023 to propose enhancements to the I&D system. As part of this initiative, the CCPPE plans to sign cooperative agreements with other accountancy regulators to jointly address any disciplinary issues and disseminate this information to its members and the general public through its website.
The CCPPE reports that as part of its memorandum of understandings with the local chambers of commerce in Quito, Ibarra, Santo Domingo, and Ambato, the CCPPE plans to start leveraging the chamber of commerce’s arbitration processes to deal with significant I&D cases in order to have the legal power to impose sanctions.
I&D procedures that meet the SMO 6 benchmark are foundational to maintaining public trust and confidence in the profession. The CCPPE’s enforcement mechanism continues to have a number of areas for improvement that remain outstanding since its last Action Plan update in 2019. CCPE is strongly recommended to prioritize organizational initiatives that will result in a strengthening of these procedures.
The CCPPE may also consider its role regarding enforcement at the jurisdictional level and provide more details and information about its plans either to recommend and support the implementation of I&D processes in line with the SMO 6 requirements to the financial sector regulators, or to promote a unified national system that can investigate and discipline all professional accountants while being in line with SMO 6.
SMO 7: International Financial Reporting Standards
The financial sector regulators—Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB)—are responsible for setting corporate accounting standards in Ecuador. The SCVS has adopted IFRS and IFRS for Small- and Medium-sized Enterprises (SMEs) by reference all companies (including listed and insurance companies), while the SB has developed accounting norms for application by banks and financial institutions, with IFRS used as a supplement.
To support the adoption of the standards, the CCPPE reports that it has established a technical group that monitors new and amended standards issued by the IASB and discusses the standards with the regulators to establish their applicability in the country. In addition, the CCPPE disseminates information on updates to the standards and international developments in the area through printed materials and its website. The CCPPE is also a member of the Latin American Accounting Standard Setters Group and participates in the international standard-setting process by providing comments to exposure drafts on a regional level.
The CCPPE reports it has begun to approach SMEs and banking institutions to raise awareness of the benefits of improving the quality of financial information by applying the IFRS.
The CCPPE plays a prominent role in supporting IFRS implementation and is recognized by regulators for keeping professionals up-to-date. The CCPPE includes the most recent amendments to the standards in its training programs and has developed IFRS courses, which are specialized courses comprising 114 hours of training on IFRS. Over the past 10 years, the CCPPE has trained over 5,000 professionals on IFRS nationwide.
Efforts to adopt IFRS Standards for public interest entities like banks and other financial institutions are strongly encouraged as part of bringing transparency, accountability, and efficiency to national, regional, and global markets. The CCPPE should continue its best efforts to advance the SB’s adoption of IFRS as the primary standards adopted for these entities.
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