Georgian Federation of Professional Accountants and Auditors
Member | Established: 1998 | Member since 2000
The Georgian Federation of Professional Accountants and Auditors (GFPAA) is a non-governmental, non-for-profit professional accountancy organization 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 is actively involved in developing accounting and auditing regulations; supporting accounting and auditing reforms; promoting the interests of the profession; and developing certification standards. 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. 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 worked to develop a QA review system. As one of the first steps, the GFPAA adopted ISQC 1 as quality control standard, as required by the Law, and translated the international standard in accordance with the IFAC Translation Policy. 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 of SMO 1, except for the independence of the QA team and the linkage of the QA review system to the investigative and discipline system.
The GFPAA reports that it assists its members with the implementation of the quality control standards by undertaking various activities, including the publication of implementation guidance, the development of quality control questionnaires and the organization of trainings on IFAC’s Guide to Quality Control for Small- and Medium-Sized Practices. The certification program for quality reviewers and the methodology for the monitoring process were drafted in 2013–2014, and since 2015 action have been undertaken to select and translate audit software.
However, in June 2016, a new Law on Accounting, Auditing and Reporting No. 5386 was adopted that assigned the responsibility for QA review to the newly established Public Oversight Authority (POA), which is expected to become fully operational in January 2017. With the adoption of the new law, the GFPAA ceased to conduct QA reviews and is expected to focus mainly on providing support to its members with improving their existing quality control systems through review, consultations, and trainings.
During the next round of updates, the GFPAA is encouraged to provide an update on the establishment and implementation of the QA review system by the POA and the role that the GFPAA plays in the process. The SMO Action Plan will need to be updated accordingly. The GFPAA should work to ensure that the QA review system being developed by the POA is compliant with the requirements of SMO 1.
- SMO 2: International Education Standards
As a professional organization, the GFPAA is responsible under Law on Accounting, Auditing and Reporting No. 5386 for implementing the initial and continuing professional development requirements, which by law must be in line with IES. Candidates for the GFPAA membership have to complete a professional accountancy education program set in accordance with a translation of the Association of Chartered Certified Accountants (ACCA) syllabus, a three-year practical experience requirement, and pass the final assessment administered by a specialized examination body. As a professional organization, the GFPAA is required to ensure their members’ compliance with the continuing professional development (CPD) requirements that, under the new Law, are to be established by the Public Oversight Authority (POA). As of 2015, however, these requirements, according to the World Bank (2015), were not fully in line with those of IES.
In its SMO Action Plans, the GFPAA indicated a number of activities aimed at bringing the educational requirements in line with those of IES. In 2013–2014, the GFPAA focused on developing a new system of CPD, which was successfully developed. It also planned to approve a new system for CPD monitoring in 2014 and to bring its requirements in line with IES 8; however the implementation of these actions has been postponed to 2017. Translation of the revised IES, originally planned for 2014, was also postponed to December 2016.
The GFPAA is encouraged to implement the plans indicated in the SMO Action Plan and to consider its role and related strategy for achieving compliance with the SMO 2 requirements. It should also consider ways to collaborate with other stakeholders in the jurisdiction such as other PAOs and regulators to bring the existing system of education of professional accountants in the jurisdiction in line with the requirements of IES. There is also a need to establish plans to collaborate with the universities and the Ministry of Education to strengthen accounting academic curricula and align university programs with relevant IES. The association may also consider, possibly in collaboration with other professional organizations, to promote the requirements of IES to the POA and to participate in the standard-setting activities of the International Accounting Education Standards Board by providing comments on Exposure Drafts and participating in other public consultations.
- 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 the leading role in promulgating the standards for application in the jurisdiction through monitoring and translating the international pronouncements into Georgian, although with a time lag. In 2010 the GFPAA translated and made publicly available the 2009 IAASB Handbook and plans to complete the translation of the 2015 Handbook by December 2016. To assist its members with the implementation of the international standards, the GFPAA reports that it conducted one training on Clarified ISA in December 2013 and trained its members in the new audit software prepared by the Federation. No other activities to support its members with the implementation of ISA have been reported.
The GFPAA is encouraged to clarify its expected role in the process of promulgation of international standards (e.g. participation in the translation activities) given that under the new Law the responsibility for the promulgation of ISA has been assigned to the Public Oversight Board and to develop activities to support its members with the implementation of the standards such as, for example, development of seminars, conferences, continuing professional development courses and implementation guidance. Disseminating information on the international developments in the area to its members and the general public is also recommended.
- 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 (APO), had the responsibility for translating and publishing the IESBA Code of Ethics, which was adopted for application by auditors 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. In 2016, the GFPAA reports that it is in the process of preparing training materials to support the implementation of the new Code and plans to include the new Code into its continuing professional development (CPD) activities. No other activities to support its members with the implementation of the Code have been reported.
The GFPAA is encouraged to clarify its expected role in the process of promulgation of the IESBA Code (e.g. participation in the translation activities) given that under the new Law the responsibility for the promulgation of the IESBA Code has been assigned to the Public Oversight Authority and to develop activities to assist its members with the implementation of the code of ethics (e.g., CPD courses, trainings and development of implementation guidance).
- 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 reports that its representative is a member of the Methodological Council at the Ministry of Finance and is involved in advising on practical implementation of IPSAS. The GFPAA also participated in a tender to conduct the translation of IPSAS; however, the Ministry of Finance opted to translate the standards itself. The GFPAA experts were invited to participate in the process.
The GFPAA is encouraged to clarify in its Action Plan whether it provides support to its members who provide services to the public sector entities. Overall, the GFPAA needs to consider its role in further assisting the regulator with the adoption of IPSAS and supporting their implementation.
- SMO 6: Investigation and Discipline
The GFPAA has 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 as well as the new Law on Accounting, Auditing and Reporting No. 5386 adopted in June 2016.
In 2009–2010, as the first step in the process of developing an I&D system, it reviewed the requirements of SMO 6 and developed a policy statement on its I&D system. Since 2013, the GFPAA reports that it has been working on developing I&D regulations; however, according to the self-assessment conducted by the GPFPAA as part of the update of its SMO Action Plan in 2016, the rules and regulations developed as of the time of the update fall short of the requirements of SMO 6.
The GFPAA attributes the delay in establishing the I&D system to the adoption of the new law, which assigned the overall responsibility for I&D of the profession to the Public Oversight Authority (POA). As of Q4 2016, the POA is working on developing the I&D system. Pending the adoption of the regulations by the POA, the GFPAA has postponed further advancing with the development of its system.
GFPAA is strongly encouraged to work towards the establishment of the I&D system for its members. The GFPAA should also work with the POA to ensure that SMO 6 requirements are taken into consideration in developing the new system.
- 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. In 2011, the GFPAA made publicly available the 2010 version of IFRS and in 2014 and 2015 completed translation of IFRS and IFRS for SMEs, respectively. Given the fact that with the adoption of the new law, the Public Oversight Authority (POA) is legally responsible for the translation process, the GFPAA does not indicate plans to adopt the more recent versions of the international standards.
As far as activities to support its members with the implementation of applicable accounting standards are concerned, the GFPAA reports that has hired a consultant to advise members on the implementation of IFRS and IFRS and IFRS for SMEs, included topics related on IFRS for SMEs into its continuing professional development (CPD) programs, and conducts trainings on IFRS, mostly in the regions.
The GFPAA is encouraged to clarify its expected role in the process of promulgation of international standards (e.g. participation in the translation activities) given that under the new Law the responsibility for the promulgation of the IESBA Code has been assigned to the POA and to further develop activities to support its members with the implementation of the standards such as, for example, development of seminars, conferences, CPD courses and implementation guidance. Disseminating information on the international developments in the area to its members and the general public is also recommended.
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