Félag Löggiltra Endurskodenda
Member | Established: 1935 | Member since 1977
The Institute of State Authorized Public Accountants in Iceland (FLE) was established on July 16, 1935 in Reykjavik and is the only professional body representing auditors in the country. FLE membership is mandatory for individual auditors who are qualified as state-authorized public accountants. Under Auditing Act No. 79/2008, the FLE is entrusted with the following tasks in consultation with the Public Auditors Oversight Board: (i) establish a Code of Ethics for auditors following confirmation by the Minister of Finance and Economic Affairs; (ii) promote the regular organization of courses of study that comply with continuing professional development (CPD) requirements specified in Article 7; (iii) keep CPD records; and (iv) undertake quality control reviews of the work of auditors. The FLE is a member of the Nordic Federation of Public Accountants.
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
Having adopted a quality control standard for all of its members and developed new quality assurance (QA) guidance based on ISQC1 and the EU 8th Directive, the FLE’s focus in the area of QA since 2010 has been on continuous improvement of its QA process, supporting its member audit firms with guidance and instructions on quality control and QA issues. It teamed up with the IFAC member in Norway—Den Norske Revisorforening (DnR)—to roll out the audit methodology software Descartes based on the English language ISQC1. In addition, the FLE supports on an ongoing basis its members with the implementation of the standards by developing training activities and disseminating information on developments in the international standard-setting area.
During the next round of updates, the FLE is encouraged to assess the existing QA review system in Iceland against the requirements of SMO 1 and report its findings to IFAC’s Quality and Membership staff. Upon completion, the FLE is encouraged to consider areas of less than full compliance (if relevant) and develop action steps to eliminate gaps. If no gaps are identified, the FLE is encouraged to incorporate a qualifying statement in its Action Plan background note, confirming that its system is in line with SMO 1 requirements.
- SMO 2: International Education Standards
The FLE is responsible for continuing professional development (CPD) for auditors. It indicates that it has developed and issued guidance on the CPD programs to its members. Currently, the FLE’s Action Plan needs more information on its activities to promote implementation of IES in Iceland.
The FLE’s SMO 2 activities should focus on promoting the adoption of the IES to the Auditors Public Oversight Board and other responsible stakeholders. During the next round of updates, the FLE is also encouraged to provide more information on Iceland’s accounting education compliance with the requirements of the revised IES.
- SMO 3: International Standards on Auditing
Given that ISA have been adopted in Iceland, the FLE continues to further develop the ongoing processes for ISA implementation. It facilitates the translation of ISA by the Auditors Public Oversight Board and publishes ISA on its website. As noted in the SMO 1 section above, to assist its SMP auditor members, the FLE has provided new audit software to facilitate implementation of ISA and ISQC 1. In addition, the FLE supports on an ongoing basis its members with the implementation of the standards by developing training activities and disseminating information on the developments in the international standard-setting area. The FLE will be implementing the new EU directive 56/2014 on statutory audits of annual accounts and the new EU regulation 537/2014 on specific requirements regarding statutory audit of public interest entities before June 2016.
During the next round of updates, the FLE is encouraged to specify the version of ISA that has been adopted in Iceland. In addition, the FLE is encouraged to describe its activities to support ISA implementation.
- SMO 4: Code of Ethics for Professional Accountants
Having adopted and translated the 2009 IESBA’s Code of Ethics for Professional Accountants without modifications, the FLE continues to further develop the ongoing processes for the implementation of ethical principles for its members. It arranges training courses on the Code of Ethics, with the participation of speakers from universities, and holds discussions with its Ethics Committee.
During the next round of updates, the FLE is encouraged to indicate whether the IESBA Code of Ethics has been adopted for all professional accountants in Iceland. In addition, the FLE is encouraged to promote the work it is doing by providing details of the continuing professional development courses and training events that it delivers on ethics.
- SMO 5: International Public Sector Accounting Standards
Although the FLE has no responsibility for the adoption of IPSAS in Iceland, it continues to lobby the government to do so. The FLE also has plans to support the government in implementing IPSAS, assuming the Parliament agrees to adopt them.
During the next round of updates, the FLE is encouraged to showcase the activities that it has conducted, or plans to carry out, to support the adoption of IPSAS, including those that raise awareness of its members in Iceland. It is suggested that such a description should include specific actions planned or conducted, and key individuals/committees involved in advocating IPSASB standards to the relevant ministry/government agency.
- SMO 6: Investigation and Discipline
The FLE states in its Action Plan that it does not undertake any special activity to promote its investigation and discipline (I&D) requirements, since investigations and disciplinary actions according to the Auditing Act in Iceland are under the authority of the Auditors Public Oversight Board (ER). The FLE reports that, to support the regulator in the I&D function, it performs quality assurance reviews, and maintains a list of the continuing professional development its members take, under the supervision of the ER, thus contributing to the ER’s I&D process.
During the next round of updates, the FLE is encouraged to assess the existing I&D system in Iceland against the requirements of revised SMO 6 and report the findings to IFAC’s Quality and Membership staff.
- SMO 7: International Financial Reporting Standards
The FLE has no direct responsibility for adoption or promulgation of IFRS in Iceland; this responsibility lies with the Ministry of Finance and Economic Affairs. The FLE supports the implementation of the standards through the design, development, and delivery of seminars and courses on IFRS and related topics. It cooperates with the regulatory authorities to promote and support the implementation of IFRS and other IASB pronouncements.
During the next round of updates, The FLE is encouraged to provide additional information on the legal and regulatory framework for the adoption and implementation of IFRS in Iceland. Furthermore, it would be beneficial for the FLE to demonstrate the activities that it conducts on a periodic basis to support implementation of the 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.