Member | Established: 1998 | Member since 2000
The GFPAA is a non-governmental, non-for-profit PAO in Georgia. Prior to 2016, it was the only accredited professional organization authorized to regulate auditors. The GFPAA membership is mostly comprised of audit firms, auditors employed by audit firms, sole practitioners, and consultants. The GFPAA offers a certification program under the local accountancy qualification, based on the UK Association of Chartered Certified Accountants (ACCA) qualification curricula translated into the Georgian language. The GFPAA has been an IFAC member since 2000.
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 GFPAA has played a leading role in the establishment of a quality assurance (QA) review system in the Republic of Georgia. In 2008 the GFPAA established a voluntary system for its members and subsequently developed a mandatory system, including a Quality Control Committee and adoption of ISQC 1, following legislative amendments in 2012. However, the GFPAA discontinued conducting QA reviews following the adoption of the new Law on Accounting, Auditing and Reporting No. 5386 in 2016, which transferred the responsibility for setting relevant standards, certifying quality reviewers, performing quality review of audit firms and maintaining a register of auditors to the Service for Accounting, Reporting and Auditing Supervision (SARAS) under the Ministry of Finance. GFPAA reported in 2022 that the QA system in the jurisdiction fully complies with the requirements of SMO 1, apart from the QA team’s expertise.
The GFPAA reports that its role now is to support its membership to prepare for QA reviews providing a preliminary inspection and giving recommendations to members before SARAS-conducted reviews. GFPAA has translated and published several resources from IFAC, ACCA, and the World Bank in support of small- and medium-practices regarding inspections and application of standards. Between 2020-2022 14 trainings were provided on quality control for SMEs. Key issues covered practical training on the use of the HAT audit manual, the HAT audit methodology, and preparation for new quality management. These topics were also covered in CPD courses, which are conducted annually.
The SARAS did adopt ISQM 1, 2 and ISA 220 (revised) for application beginning December 2022. GFPAA has been supporting its membership through consultations, publications, trainings, and updating IPD modules.
The GFPAA has noted that the SARAS QA review team’s expertise could be reviewed and improved upon as the QA team does not have any practicing auditors. SMO 1 best practice regarding the QA Review Team refers to ensuring that the QA team has competencies including appropriate professional education, understanding and practical experience of audit engagements experience, and training performing QA reviews. As feasible, the GFPAA should refer the SARAS to the SMO 1 best practice and consider if it may recommend other individuals to join the team so that the jurisdiction’s QA review system may be brought fully into line with global best practice.
SMO 2: International Education Standards
Through the Order on Approving Procedure for Recognition of Certification Programs and Examination Process of 2017, GFPAA is recognized by the Service for Accounting, Reporting and Auditing Supervision (SARAS) as a professional body entrusted with administering certifications, qualification exams, and continuing professional education of its members. These programs by law must be in line with IES, EU Directives, and comply with the Professional Certification Standard and the Continuous Education Standard set by SARAS. In this regard, GFPAA reports that its overall educational programming for certified accountants (i.e., IES 2 – 8) aligns with IES: with initial professional development programs at universities (i.e., IES 1) still to be brought fully in line.
According to the CFRR / World Bank publication National Education Initiatives – Georgia (2019), there are improvements that can be made to the educational requirements to better align with the latest, competency-based IES requirements. For universities (IES 1), the areas of Management Accounting Techniques, Management and Ethics, Financial Accounting Concepts, and Preparation of Financial Statements need strengthening as well as developing training in professional values, ethics, and attitudes. In 2022, under the joint organization of GFPAA and the World Bank, memorandums of understanding and cooperation were signed between GFPAA and seven universities related to accountancy education and certification. 46 lecturers across the seven universities received training materials and coaching related to preparing students for modules of the GFPAA’s certification program and exam. GFPAA also indicates it is working with SARAS to do a joint accreditation of universities/curricula that will meet the standards.
GFPAA’s certification program constitutes a translation of the Association of Chartered Certified Accountants (ACCA) syllabus which aligns with latest IES requirements, a three-year practical experience requirement, and a final assessment administered by GFPAA. Exams are conducted in accordance with the Professional Certification Standard and GFPAA reports that its certification program is updated at least once in three years to incorporate changes in national legislation and international standards. The need to change the program is also identified through a survey of employers of certified accountants. The GFPAA certification program was last updated in 2022. The same CFFR/World Bank report does note that monitoring and assessment of competencies developed during practical experience (IES 5) also could benefit from improvements.
GFPAA also indicates that its CPD requirements fulfill IES 7 and 8 requirements and the national Continuous Education Standard, respectively. GFPAA has implemented a system of CPD monitoring via its Education Committee to confirm members’ compliance with CPD requirements, fully effective from 2020. This process is also monitored by SARAS. GFPAA, other professional organizations, and Big 4 firms jointly develop CPD programs, which are reviewed and approved by SARAS, thus achieving a unified approach to CPD programming.
Significant progress has been made in bringing accountancy education requirements in the Republic of Georgia in line with IES by introducing a legal requirement for compliance of professional education with IES and developing specific standards by the regulator. GFPAA is encouraged to continue to lead the effort to fully bring the education of professional accountants in line with the international best practices as formulated in IES and continue to collaborate with the stakeholders in this regard. As it has started engagement with universities, GFPAA is also encouraged to consider a workstream related to enhanced collaboration with employers and universities. This includes ensuring young graduates obtain some practical experience before graduation as well as developing tools to develop and document competencies learned.
Conducting an updated formal comprehensive gap analysis of the overall national requirements against the latest IES in cooperation with other stakeholders and completing IFAC’s IES Self-Assessment resource may also be a helpful exercise.
SMO 3: International Standards on Auditing
The GFPAA was actively involved in the development of the Law on Accounting and Financial Audit of 2012, which adopted ISA for application in the Republic of Georgia, and subsequently played a leading role in promulgating the standards for application in the jurisdiction through monitoring of international developments and translating the international pronouncements into Georgian.
With the adoption of the Law on Accounting, Auditing and Reporting No. 5386 in 2016, the responsibility for the promulgation of the standards was transferred to the Service for Accounting, Reporting and Auditing Supervision (SARAS) under the Ministry of Finance. To date, the SARAS has translated and adopted the 2020 IAASB Handbook, in addition to ISA 315 (revised; effective December 2021) and International Standards for Quality Management (effective December 2022).
To assist its members with the implementation of the international standards, the GFPAA reports that it updates its IPD and CPD programming at least once every three years to include the developments in national and international standard-setting.
The association actively works with several donor organizations—such as the Asian Development Bank (ADB) and the World Bank—to update its working materials and offer training. For example, in 2019, within the framework of the project funded by the Institute of Chartered Accountants of England and Wales (ICAEW) and the ADB, two trainings for trainers were conducted to be followed by trainings for companies and auditors to improve audit quality.
In 2017, GFPAA translated into Georgian the audit program “E-dok,” which is available for audit companies, and conducted trainings on how to use the program. To further assist small audit firms, GFPAA translated into Georgian and shared an ISA-related audit manual on its website. Trainings related to the use of the manual were delivered to all audit firms and practitioners throughout 2020 as part of the ADB-funded project, with the joint efforts of GFPAA and its partner ICAEW.
In 2022, GFPAA established a new committee specifically focused on Small and Medium Practices (SMPs). GFPAA reports that this committee analyzes challenges within the small audit firm market to plans measures to address these challenges. GFPAA is committed to proactively improving its support for small audit firms by fostering open communication and targeted initiatives.
GFPAA has demonstrated that, within the scope of its authority, it is committed to meet the SMO 3 obligations and has established ongoing processes to maintain compliance. As one of the main accredited professional accountancy organizations in the jurisdiction, the GFPAA is encouraged to continue to identify opportunities to enhance implementation support for its members as related to ISA and other related pronouncements.
SMO 4: Code of Ethics for Professional Accountants
The Law on Accounting, Auditing and Reporting No. 5386 adopted in June 2016 transferred most of the regulatory responsibilities from GFPAA, including the responsibility for adoption of ethical requirements, to the Service for Accounting, Reporting and Auditing Supervision (SARAS) under the Ministry of Finance. As of 2023, the 2022 version of the International Code of Ethics for Professional Accountants in Georgian language has been translated and adopted. GFPAA collaborates with SARAS with activities related to translation of the Code to support adoption and carries out other activities related to implementation support of the Code of Ethics.
For example, in 2022, the GFPAA reported that it conducted trainings for its members on the revisions in the 2022 Code of Ethics and on an annual basis will conduct 8–10 seminars and trainings dedicated to ethical matters. Ethics is included in both initial and continuing professional education, which is updated at least once every three years to include the developments in national and international standard-setting.
The association also disseminates information on the latest developments in the area through its monthly magazine “Accounting Journal” and its website.
The GFPAA has demonstrated it is fulfilling its obligations under SMO 4 within the scope of its responsibility and has established processes to review and improve compliance on an ongoing basis. GFPAA may consider how to enhance activities to support implementation of the Code by its members as well as more robust agenda in raising awareness of the profession and business community.
SMO 5: International Public Sector Accounting Standards
The Ministry of Finance and the Treasury are responsible for adopting public sector accounting standards in the Republic of Georgia. According to the World Bank/CFRR’s Book on Public Sector Accounting Reforms Implementation Status in PULSAR Countries (2022), public sector accounting and reporting regulations were approved in 2020, which cover 24 accrual basis IPSAS chosen based on their relevance to the Georgian public sector. These standards were introduced in 2021 for government entities. To date, the accounting and reporting framework for central government entities is conducted on a full accrual basis while local government entities are using partial accrual. There are ongoing reforms, supported by international development partners, to achieve full implementation of accrual-basis IPSAS.
GFPAA is collaborating with the Ministry of Finance to support the implementation of IPSAS. GFPAA has a representative on the Georgian Public Sector Accounting Standards Board (GPSASB), which advises on public sector matters. GFPAA also collaborates on an ongoing basis with other professional organizations in the region to exchange experiences related to implementation of IPSASs as part of actively participating in the World Bank PULSAR project.
The association states that it plans to continue to monitor public sector accounting developments and enhance its relationship with the Ministry of Finance in this area. It will also continue to provide ad hoc support and consulting services to public sector accountants.
The GFPAA is encouraged to continue its advocacy and support toward the full implementation of accrual-basis IPSAS as part of fulfilling the SMO 5 obligations. It may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for training and educational activities it offers to public sector accountants and IFAC’s Pathways to Accrual helpful in its engagements with the MoF.
SMO 6: Investigation and Discipline
Prior to 2016, GFPAA was the sole entity responsible for setting mechanisms for investigating and disciplining its members for misconduct and breach of the rules, in accordance with the requirements of the Law on Accounting and Financial Audit of 2012. The Law on Accounting, Auditing and Reporting No. 5386 adopted in June 2016 transferred most of the regulatory responsibilities, including the overall responsibility for investigation and discipline of certified accountants, to the Service for Accounting, Reporting and Auditing Supervision (SARAS) under the Ministry of Finance. Professional organizations—such as GFPAA—continue to be responsible for I&D procedures of their members, namely for detecting violations and imposition of disciplinary actions on their members and setting the respective rules and regulations that are to be approved by SARAS.
Subsequently, in 2017, GFPAA’s Ethics and Disciplinary Committee developed and approved rules for identifying any deficiencies (non-compliance or misconduct) of GFPAA members and determining disciplinary actions. The rules were agreed with the SARAS.
In 2019, GFPAA conducted a self-assessment of the I&D system in the jurisdiction against international best practices for I&D formulated in SMO 6. According to the association, the I&D system in the jurisdiction partially complies with the requirements of SMO 6 and there were areas for further improvement. Subsequently, the I&D system was reviewed and revised to include an independent appeals body; “complaint-based" and "information-based" approaches, a disciplinary commission/entity that makes a disciplinary decision; and deadlines for the completion of all work were established. GFPAA now reports that its enforcement procedures align with the SMO 6 benchmark.
GFPAA states that the public is aware that an investigative and disciplinary system exists in the jurisdiction. Between 2020– 2022, the Ethics and Disciplinary Committee reviewed 6 cases and issued two warnings.
The GFPAA has demonstrated that, within the scope of its authority, it is committed to meet the SMO 6 best practices and has made very recent progress in bringing its I&D system in line with the requirements. As outlined in SMO 6, GFPAA is encouraged to keep up with regular reviews of the proper implementation and effectiveness of the investigation and disciplinary system are an important component to ensure that the system is functioning as intended.
Effective enforcement is part of what supports public trust and confidence in the accountancy profession. At the jurisdiction level, GFPAA is encouraged to raise awareness about best practices in investigation and discipline of professional accountants, including those formulated in SMO 6, of other stakeholders such as the SARAS and other professional associations of accountants so that all professionals would be subject to the same trustworthy enforcement measures.
SMO 7: International Financial Reporting Standards
Under the Law on Accounting and Financial Audit of 2012, as an accredited professional organization, GFPAA was responsible for translating IFRS and IFRS for SMEs that were adopted by law. With the adoption of the new Law on Accounting, Auditing and Reporting No. 5386 in 2016, the responsibility for the promulgation of the standards was transferred to the Service for Accounting, Reporting and Auditing Supervision (SARAS) under the Ministry of Finance. The latest IFRS and 2015 IFRS for SMEs as translated into Georgian are available for application.
GFPAA reports that the latest versions of IFRS and IFRS for SMEs have been incorporated into its educational programming, both initial and continuing. The association also worked with the regulator in drafting the standards for non-entrepreneurs’ legal entities and micro enterprises.
GFPAA’s primary role now is to support its members with the implementation of the standards and, to this effect, GFPAA’s Standards and Practice Committee surveys the members to identify the topics of interest and develops training and educational programming based on the demand. To date, GFPAA has offered over 80 hours of trainings on IFRS for SMEs for its members offering their services in the regions. GFPAA also offers technical support to members to advise members on practical sides of implementing IFRS and IFRS for SMEs.
GFPAA has demonstrated that, within the scope of its authority, it is committed to meet the SMO 7 obligations and has established ongoing processes to maintain compliance. As one of the main accredited professional accountancy organizations in the jurisdiction, the GFPAA is encouraged to continue to identify opportunities to enhance implementation support for its members as related to IFRS, IFRS for SMEs, and other related pronouncements.
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