Georgian Federation of Professional Accountants and Auditors

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.

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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.

Methodology
Last updated: 12/2019
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SMO Action Plan

Status of Fulfillment by SMO

  • 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. Prior to the adoption of a mandatory requirement to establish review system for all audits, in 2008 the GFPAA established a voluntary system for its members and worked with relevant authorities on drafting the amendments to the Law on Accounting and Financial Audit of 2012 to introduce a mandatory QA review system for all audits.

    Following the adoption of the revised Law in 2012, the GFPAA, as the only accredited professional organization authorized to conduct QA reviews, worked to develop a QA review system. As one of the first steps, the GFPAA established a Quality Control Committee and adopted ISQC 1 as the quality control standard, in line with the requirements of the law, and translated the international standard in accordance with the IFAC Translation Policy.

    GFPAA was also responsible for certifying quality reviewers, performing quality review of audit firms, and maintaining a register of auditors, both for statutory and for non-statutory audits. In 2016, the GFPAA conducted a self-assessment of its system against the requirements of SMO 1 and reported that the system complied with most of the requirements, except for the independence of the QA team and the linkage of the QA review system with the investigative and discipline system.

    The GFPAA has 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 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 2019 that the QA system in the jurisdiction complies with the requirements of SMO 1, except for assessment and documentation of the QA team.

    The GFPAA reports that its role now is to support member audit firms with the implementation of the quality control standards through consultations, publications, trainings and developing/translating guidance such as the 2009 Guide for small and medium-sized audit firms on the quality control standards; HAT Audit Methodology Manual; Comparing Audit, Review, Compilation and Agreed-Upon Procedures Services, Agreed-upon Procedures Engagements (SMPs), among other.

    Preparing corporate members for SARAS QA review by providing preliminary review of QA system and giving recommendations to the members is another area of GFPAA’s activities. A review of the quality control system of 18 corporate members has been conducted in 2018–2019 and the diagnostic reports have been submitted. Overall, between 2017–2019, 12 trainings, totaling 256 hours, have been conducted on quality control of SMEs. Key issues covered included audit and assurance services; quality control standards; audit methodology; audit program and others. These topics were also covered in CPD courses, which are conducted annually.

    The GFPAA is encouraged to provide an update on the establishment and implementation of the QA review system by SARAS, work with SARAS to confirm the assessment of the alignment of the QA review system against with the requirements of SMO 1, and work to bring the system fully in line with the international best practices.

    Current Status: Review & Improve

  • 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 their 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 overall educational programming for certified accountants is almost in line with IES: with initial professional development programs to be brought fully in line by 2022 as prescribed by SARAS.

    GFPAA’s certification program constitutes a translation of the Association of Chartered Certified Accountants (ACCA) syllabus, a three-year practical experience requirement, and the final assessment administered by GFPAA. GFPAA reports that is certification program is updated minimum 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 the employers of certified accountants. The GFPAA certification program was last updated in 2018–2019.

    Exams and CPD are conducted in accordance with the Professional Certification Standard and Continuous Education Standard, respectively. Compliance with the SARAS’s requirements is confirmed on an annual basis.

    GFPAA, other professional organizations, and Big 4 are jointly developing CPD programs, which are being reviewed and approved by SARAS, thus achieving a unified approach to CPD programming.

    In its SMO Action Plan the GFPAA indicated that in 2019 it translated the 2015 IES.

    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 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. Conducting a formal comprehensive gap analysis of the overall national requirements against the revised IES in cooperation with other stakeholders is also recommended. As suggested by the World Bank in 2015, there is also a specific need to establish plans to collaborate with the universities and the Ministry of Education to strengthen accountancy academic curricula and align university programs with relevant IES.

    Current Status: Execute

  • 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. In 2010, the GFPAA translated and made publicly available the 2009, 2015, and 2017 IAASB Handbooks.

    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 website of SARAS indicates that as of 2019, the translated 2018 IAASB Handbook was adopted effective October 2018.

    To assist its members with the implementation of the international standards, the GFPAA reports that it updates its IPD and CPD programming minimum 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 to conduct various 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 who are interested in improving 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 assist small audit firms, GFPAA translated into Georgian and posted an ISA-related audit manual on its website, which was offered by the UK audit firm HAT. Trainings related to the use of the HAT Manual will be delivered to all audit firms and practitioners throughout 2020 within the framework of the ADB-funded project, with the joint efforts of GFPAA and its partner ICAEW.

    GFPAA is encouraged to continue to offer its support to the regulator in the process of adoption of international standards and to seek and implement opportunities aimed at supporting its members with implementation of ISA and other related pronouncements. Disseminating information on the international developments in the area to its members and the general public is also recommended.

    Current Status: Review & Improve

  • SMO 4: Code of Ethics for Professional Accountants

    Prior to 2016, in accordance with the Law on Accounting and Financial Audit of 2012, the GFPAA as an accredited professional organization, had the responsibility for translating and publishing the IESBA Code of Ethics, which was adopted for application by certified accountants providing auditing services only. In its SMO Action Plan, the GFPAA reports that it initially planned to translate and publish the IESBA Code in 2013, with the implementation subsequently rescheduled and finally competed in 2015.

    The new Law on Accounting, Auditing and Reporting No. 5386 adopted in June 2016 transferred most of the regulatory responsibilities, including the responsibility for adoption of ethical requirements, to the Service for Accounting, Reporting and Auditing Supervision (SARAS) under the Ministry of Finance.

    The website of SARAS indicates that the 2018 International Code of Ethics for Professional Accountants in Georgian language was adopted in October 2019 by the SARAS Decree n-15.

    In 2019, the GFPAA reported that it conducted trainings for its members on the implementation of the 2018 Code and in general on an annual basis conducts 8–10-hour seminars and targeted trainings on ethical matters.

    The association also disseminates information on the latest developments in the area through its monthly magazine “Accounting Journal” and its website.

    Ethics is included in both initial and continuing professional education, which is updated minimum once every three years to include the developments in national and international standard-setting.

    The GFPAA is encouraged to enhance its activities to assist members with the implementation of the code of ethics. Such activities may include holding seminars and focused trainings, establishing a hotline for confidential questions, and disseminating information on the developments in the area through different communications means, among other activities. Advocacy activities are also recommended to raise awareness of the profession, other stakeholders, and the general public about the importance of ethics.

    Current Status: Execute

  • SMO 5: International Public Sector Accounting Standards

    The Ministry of Finance is responsible for adopting the public sector accounting standards in Georgia. IPSAS have not been adopted but the Ministry of Finance has established a strategic plan to adopt the international standards by 2020. In the context of the implementation of this strategic plan, the GFPAA reported in 2019 that its representative is a member of the Methodological Council of the Ministry of Finance and was involved in advising on public sector matters, including adoption of IPSAS. The GFPAA also participated in a tender to conduct the translation of IPSAS in 2011; however, the Ministry of Finance opted to translate the standards itself. The GFPAA experts were invited to participate in the process of translation.

    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 consulting services to public sector accountants through its consulting arm, which offers ongoing in-person and phone service during GFPAA’s working hours.

    The GFPAA is encouraged to strategically consider its role in further assisting the regulator with the adoption of IPSAS and supporting their implementation.

    Current Status: Review & Improve

  • SMO 6: Investigation and Discipline

    The GFPAA has historically been 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.

    In 2009–2010, as the first step in the process of developing an I&D system, GFPAA reviewed the requirements of SMO 6 and developed a policy statement on its I&D system. There was a delay in developing the statement, which was finalized in November 2015. In 2016, the GFPAA reported that its self-assessment of the rules and regulations indicated that the statement falls short of the requirements of SMO 6. However, at the time the GFPAA had postponed further advancing with the development of its system due to expected regulatory changes.

    The new 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.

    In 2017, GFPAA’s Ethics and Disciplinary Committee developed and approved The Rules for identifying delinquencies of GFPAA members and determining disciplinary responsibilities against them, which was also 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. Areas where further improvements are needed include establishment of a process for the independent review of complaints on which there was no follow-up; defining a process for liaison with outside bodies on possible involvement in serious crimes and offences; and a regular review of implementation and effectiveness of the system and implementation of corrective actions.

    Although the system appears to be established, GFPAA is encouraged during the next round of update of its SMO Action Plan to provide information on its operations and specific plans with defined timeline to achieve full compliance with the SMO 6 requirements. The existing arrangements for I&D of professional accountants in Georgia could be further detailed and, if deemed necessary, plans to introduce a single unified I&D system for the profession that is compliant with SMO 6 requirements could be considered.

    Current Status: Plan

  • 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 and issuing the translations of IFRS and IFRS for SMEs that were adopted by law. Over the time, GFPAA translated and made publicly available the 2010, 2014, 2015, and 2017 versions of IFRS and in 2015 completed translation of IFRS for SMEs.

    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. As of December 2019, the 2019 IFRS and 2015 IFRS for SMEs as translated into Georgian are being applied.

    GFPAA reports that as of 2019, 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 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. GFPAA also offers consulting services to members to advise members on practical sides of implementing IFRS and IFRS for SMEs.

    Between 2017–2019, GFPAA offered about 80 hours of trainings on IFRS for SMEs for its members offering their services in the regions.

    GFPAA is encouraged to consider supporting the regulator in the process of adoption of international standards and to seek and implement opportunities aimed at supporting its members with implementation of IFRS and IFRS for SMEs and other related pronouncements. Disseminating information on the international developments in the area to its members and the general public is also recommended.

    Current Status: Review & Improve

Disclaimer

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.

 

Contact

61 Tsereteli Ave.
Tbilisi 380064
Georgia
Tel: 995-31/350-157
Fax: 995-32/350-157
gfpaa@gfpaa.ge
http://www.gfpaa.ge/

 

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