Félag Löggiltra Endurskodenda

The quality assurance review system in Iceland is established under the Auditing Act No. 94/2019 and is administered by the Auditors Oversight Board (Endurskoðendaeftirlitið) (ER). The system covers all statutory auditors, with reviews conducted every three years for public interest entities and every six years for other audit firms. Publicly available information continues to indicate that it has not been demonstrated whether the jurisdiction-level system fully incorporates all requirements of SMO 1.

The Institute of State Authorized Public Accountants in Iceland (Félag löggiltra endurskoðenda) (FLE) no longer operates the mandatory review system directly but continues to play an active support role. FLE develops and delivers continuing professional development programs and provides ongoing technical support to members, including training and guidance on audit quality, implementation of international standards, and regulatory expectations. In particular, FLE has supported the transition from quality control to quality management through dissemination of updates and training on International Standard on Quality Management 1, International Standard on Quality Management 2, and International Standard on Auditing 220 (Revised). FLE also facilitates knowledge sharing through seminars, technical materials, and engagement with members to support readiness for quality assurance inspections.

Regulatory responsibility for the quality assurance system remains with ER, while FLE’s role is focused on implementation support and member preparedness. Based on the available evidence, FLE has continued to undertake relevant support activities; however, it has not yet demonstrated that the jurisdiction-level system is fully aligned with the SMO 1 benchmark. Accordingly, SMO 1 fulfillment is assessed as Execute.

FLE should continue working with ER to document and demonstrate alignment of the quality assurance review system with all SMO 1 requirements, including the operationalization of quality management reviews and the linkage between inspection findings and corrective and disciplinary actions.

Current Status: Execute

Initial and continuing professional development requirements for statutory auditors in Iceland are established under the Auditing Act No. 94/2019 and implemented by the Auditors Oversight Board (Endurskoðendaeftirlitið) (ER). The legal framework requires completion of approved university education, practical experience, a final professional competence examination, and ongoing continuing professional development. The Act also requires auditors to maintain records of continuing professional development and be able to demonstrate compliance.

The Institute of State Authorized Public Accountants in Iceland (Félag löggiltra endurskoðenda) (FLE), under delegation from ER, supports implementation by developing and delivering continuing professional development activities and maintaining continuing professional development records for its members. FLE requires members to complete at least 120 monitored hours of continuing professional development over a rolling three-year period and reports to ER on compliance. FLE’s current IFAC Action Plan continues to indicate that the jurisdiction’s requirements are aligned with the 2019 International Education Standards, and that FLE maintains an ongoing monitoring process for members’ compliance.

Regulatory responsibility for education requirements remains with ER, while FLE’s role is focused on implementation support, course development, and monitoring of member compliance. Based on the available evidence, FLE has maintained an ongoing process to support and monitor implementation of the education requirements in the jurisdiction, and no recent regulatory developments were identified that would weaken fulfillment. Accordingly, SMO 2 fulfillment is assessed as Sustain.

Current Status: Sustain

The Auditing Act No. 94/2019 establishes that statutory audits in Iceland are to be conducted in accordance with generally accepted auditing standards, and the jurisdiction applies International Standards on Auditing in practice. Regulatory responsibility for the audit framework rests with the Auditors Oversight Board (Endurskoðendaeftirlitið) (ER).

The Institute of State Authorized Public Accountants in Iceland (Félag löggiltra endurskoðenda) (FLE) continues to support implementation of International Standards on Auditing through audit software made available to members, training activities, and dissemination of developments in the international standard-setting area. Recent public information also indicates that FLE has continued supporting implementation of the quality management standards and related audit updates as part of its broader implementation activities for auditors.

While FLE does not have direct authority to adopt auditing standards, it has maintained an ongoing process to support implementation and member readiness within the jurisdiction’s regulatory framework. No recent regulatory developments were identified that would weaken fulfillment. Accordingly, SMO 3 fulfillment is assessed as Sustain.

Current Status: Sustain

Ethical requirements for statutory auditors in Iceland are established under the Auditing Act No. 94/2019, which requires auditors to observe the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants. Regulatory responsibility rests with the Auditors Oversight Board (Endurskoðendaeftirlitið), while the legal framework continues to support application of the Code at the jurisdiction level.

The Institute of State Authorized Public Accountants in Iceland (Félag löggiltra endurskoðenda) (FLE) continues to support implementation among its members through training courses on the Code, monitoring new, proposed, and revised international ethics standards, and disseminating information on changes to members. FLE’s current action plan also indicates continued cooperation with IFAC on ethics-related updates and publication matters.

Based on the available evidence, FLE has maintained an ongoing process to support implementation of ethical requirements and to help members keep pace with changes in the international ethics framework. Although public sources do not clearly identify the exact current handbook edition in force in Iceland, no recent regulatory developments were identified that would weaken fulfillment. Accordingly, SMO 4 fulfillment is assessed as Sustain

Current Status: Sustain

Public sector accounting standards in Iceland are established by the Government of Iceland under the Public Finance Act No. 123/2015, and the jurisdiction applies accrual-basis International Public Sector Accounting Standards (IPSAS) modified for the local context. Regulatory responsibility for adoption therefore remains with the state rather than the professional accountancy organization.

The Institute of State Authorized Public Accountants in Iceland (Félag löggiltra endurskoðenda) (FLE) reports that it successfully advocated for adoption of IPSAS through the Public Finance Act and continues to support the government in implementation. While public sources do not provide extensive detail on specific recent implementation activities, the current IFAC member and jurisdiction profiles continue to reflect an ongoing support role by FLE in relation to IPSAS-based public sector reporting.

No recent regulatory developments were identified that would weaken fulfillment. Based on the available evidence, FLE continues to demonstrate an ongoing process of support in an area where it does not have direct adoption authority, and the jurisdiction continues to apply accrual-basis IPSAS modified for the local context. Accordingly, SMO 5 fulfillment is assessed as Sustain.

Current Status: Sustain

The investigative and disciplinary system in Iceland is established under the Auditing Act No. 94/2019, and responsibility for investigation and discipline of statutory auditors and audit firms rests solely with the Auditors Oversight Board (Endurskoðendaeftirlitið) (ER). Public information indicates that ER may initiate cases on its own initiative where it considers that an auditor or audit firm may have violated the Act, the International Code of Ethics for Professional Accountants (including International Independence Standards), or other applicable rules. However, publicly available sources still do not demonstrate that the jurisdiction-level system fully incorporates all elements of SMO 6.

The Institute of State Authorized Public Accountants in Iceland (Félag löggiltra endurskoðenda) (FLE) does not operate a separate enforcement mechanism, as this function is assigned by law to ER. FLE nevertheless continues to support the framework indirectly through its delegated responsibilities for continuing professional development, including maintaining records of members’ continuing professional development and reporting compliance information to ER. FLE’s current action plan does not indicate any expanded direct role in investigation or discipline since the previous assessment.

Based on the available evidence, FLE continues to support the regulator within the limits of its mandate, but it has not demonstrated an ongoing program of activity sufficient to close the remaining jurisdiction-level gaps in alignment with SMO 6. Accordingly, SMO 6 fulfillment is assessed as Execute.

FLE should continue engaging with ER to better document how the investigative and disciplinary system aligns with SMO 6 best practices and identify whether additional support activities, such as liaison on outcomes, awareness-raising, or follow-up training linked to disciplinary findings, could further strengthen the framework.

Current Status: Execute

Financial reporting requirements in Iceland are established under the Annual Accounts Act No. 3/2006, which provides that International Financial Reporting Standards are to be used as additional accounting rules where the Act does not provide sufficient guidance. The jurisdiction also requires IFRS for relevant publicly accountable entities in line with the European Economic Area framework.

The Institute of State Authorized Public Accountants in Iceland (Félag löggiltra endurskoðenda) (FLE) continues to support implementation by monitoring developments in European Union legislation, promoting corresponding updates to national requirements with the regulatory authorities, and supporting the translation of IFRS. FLE also reports that it organizes continuing professional development courses, develops guidance on IFRS-related topics, and disseminates International Accounting Standards Board pronouncements to members.

No recent regulatory developments were identified that would weaken fulfillment. Based on the available evidence, FLE has maintained an ongoing process to support implementation of financial reporting standards and to assist members in applying IFRS in practice. Accordingly, SMO 7 fulfillment is assessed as Sustain.

Current Status: Sustain