Institute of Certified Accountants of Montenegro
Member | Established: 2006 | Associate since 2011; Member since 2017
ICAM is an independent, voluntary professional association of accountants and auditors established in 2006 to promote accounting and auditing knowledge, abilities, and skills of its members in accordance with applicable international accounting, auditing, ethical, and quality control standards. It serves the public interest by strengthening and developing the accountancy profession to provide high-quality services. The institute’s membership is comprised by professional accountants, management accountants, and bookkeepers.
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
Although ICAM has no direct responsibility for quality assurance (QA) reviews, it has actively promoted the importance of establishing a QA system amongst relevant authorities. Now that the legal requirement for a QA review system is in line place, the roles and responsibilities of key stakeholders in the area are being considered by the government. ICAM reported that it expects to be involved in the reviews of non-public interest entities (PIEs), while the Council for Audit will inspect audits of PIEs. ICAM reports that it will support the Council in its QA activities through its representation in the Council by one member from the ICAM Board of Directors (as of July 2017).
Prior to the adoption of the Law on Auditing No. 001 of 2017, in the absence of the legal requirement, ICAM proactively designed and operationalized a voluntary system of QA reviews for its members in 2011 and reported to have reviewed one percent of its members as of 2015. The voluntary system of QA reviews is reportedly linked to ICAM’s investigation and disciplinary system.
ICAM developed a QA questionnaire designed to identify areas of weakness in quality control and audit practices of firms. The process includes asking the members offering audit services to complete the questionnaire once a year with details about the professional/firm, income/client types, income/activities, employees and methodology of work, and development of human resources. ICAM then conducts field investigations into the quality of work of ICAM members and adopted ISQC 1 as a self-regulatory requirement. ICAM educates members on the importance of QA and submits annual reports on the reviews to the Ministry of Finance.
To ensure operation of its QA review system, ICAM reports to have (i) provided training to members of its Quality Control Commission; (ii) organized seminars (in collaboration with other IFAC member organizations and the World Bank) for Certified Auditors on various technical and legal aspects of auditing, quality control, QA review systems, and independent public oversight of the profession; and (iii) encouraged members’ participation in workshops on QA.
To support its members in preparing for a mandatory QA system, ICAM also published and disseminated QA guidance material and offered continuing professional development courses. Between January and February 2017, ICAM conducted several seminars focused on raising awareness of the requirements of the Law on Auditing No. 001 of 2017 to prepare for its implementation.
It periodically collects and analyzes information from Certified Auditors and audit firms to identify areas of weakness related to compliance with ISQC 1, which feeds into the guidance material published. Together with the Serbian Association of Accountants and Auditors and the Association of Accountants and Auditors of Republika Srpska, ICAM translated IFAC’s “Guide to Quality Control for Small-and Medium-Sized Practices.”
ICAM should work with the relevant stakeholders to ensure that the requirements of the proposed QA review system are in line with those of SMO 1. ICAM is encouraged to keep staff informed of ICAM’s responsibilities in this area.
- SMO 2: International Education Standards
ICAM is responsible for the implementation of the initial and continuing professional development (IPD and CPD, respectively) requirements for Certified Accountants, which are based on the Montenegrin National Accounting Educational Standard, developed in line with IES. ICAM reportedly promotes the incorporation of the 2015 revised IES requirements to relevant stakeholders such as the Ministry of Finance, Ministry of Education, and Ministry of Labor to help ensure that the revised IES apply to all professional accountants and auditors in the jurisdiction.
The Centre for Financial Reporting Reform of the World Bank provided support to ICAM (see World Bank 2017 Accountancy Education: Benchmarking Study), which launched in 2013 and completed in 2016. Upon completing the project, ICAM reports that, with the assistance of the World Bank, it has made further progress in bringing its accounting education, curriculum, and examinations closer in line with the requirements of IES to ensure quality educational programs for its members.
ICAM reports in its SMO Action Plan that it performs regular updates of its syllabus and education materials to ensure that they are in line with the latest international pronouncements and enhance its support to the profession by ensuring that its educational materials remain adequate and up to date. To this effect, the World Bank consultants worked with ICAM to prepare several training manuals and materials on international standards to improve the content of the IPD and CPD programs. Further World Bank interventions are envisioned as part of the additional funding to support implementation of the newly adopted laws.
Results from the World Bank 2017 Accountancy Education: Benchmarking Study indicate that although practical experience requirements are in place, they are based on input from the candidates in form of a letter of confirmation from the employer and the employment record. Further reform is needed to introduce a system that would recognize practical experience based on a competency framework rather than just relying on the length of time employed under eligible supervisors.
ICAM is working to establish closer connections between tertiary education and professional educational programs by collaborating with the University of Montenegro to provide its students with exemptions from examinations (see World Bank 2017 Accountancy Education: Benchmarking Study). All students with an undergraduate degree with an accounting concentration are exempt from a number of papers when entering the professional education system of ICAM. Such exemptions are expected to prevent excessive delays for aspiring candidates to reach the point of qualification. ICAM continues to work towards better integration between academic and professional accountancy programs to enable students to find an efficient route to qualification.
CPD for Certified Accountants is required according to the Law on Auditing No. 001 of 2017 as prescribed by the Competent Authority, which is ICAM. ICAM accordingly requires 40 hours of CPD training annually, of which 20 must be verifiable and completed via classroom training and seminars. Implementation of the CPD requirement is measured on an input basis and is self-reported by members. ICAM verifies the total hours and also checks the quality of the lecturers but does not perform sample checks or audits of the CPD activity reported.
Lastly, ICAM indicates it invites comments from its members on exposure drafts issued by the IAESB.
ICAM is encouraged to continue to review the areas identified in the Institutional Development Fund project Capacity Building for Effective Audit Oversight that may require improvements, and report on progress achieved in establishing plans to address these areas. In its next SMO Action Plan submission, ICAM is encouraged to provide an update on how it is progressing with establishing plans to check CPD activity via sample checks or audits.
- SMO 3: International Standards on Auditing
ICAM is legally entrusted for the translation and publication of ISA for application in the jurisdiction and plays an integral role in supporting the implementation of the IAASB pronouncements.
ICAM entered into a formal agreement with the Serbian Association of Accountants and Auditors and the Association of Accountants and Auditors of Republika Srpska to produce a common translation of IAASB literature. ICAM reports that the latest available version of ISA is that of 2016 and confirmed that it has an ongoing process to ensure that any new or revised standards are translated in a timely manner.
To support its members with the implementation of ISA, ICAM (i) develops and disseminates ISA implementation guidance; (ii) builds awareness of the adopted standards; (iii) builds awareness of recent updates and modifications to ISA via publications such as ICAM’s journal and seminars; and (iv) incorporates ISA into its education, examination programs, initial and continuing professional development programs while collaborating with other parties responsible for initial professional development requirements to ensure that up-to-date standard-related topics are being included in education and training programs. .
Specifically, ICAM offers technical courses and organizes knowledge sharing and networking events to educate Certified Auditors on a range of audit-related topics. For example, in 2015, ICAM reports to have conducted its first symposium, which included discussions on the application of the new European Union Audit Directive and organized its X Congress of Accountants and Auditors to improve management processes and promote knowledge exchange.
Lastly, ICAM solicits members’ feedback on IAASB Exposure Drafts as part of its participation in international standard-setting processes.
ICAM is encouraged to provide specific recent and planned examples of trainings and learning activities it undertakes to support its members with the implementation of the applicable auditing standards.
- SMO 4: Code of Ethics for Professional Accountants
While the Law on Accounting No. 052 of 2016 and the Law on Auditing No. 001 of 2017 adopted the IESBA Code of Ethics as issued by IESBA for application by Certified Accountants and Certified Auditors, respectively; ICAM is the competent authority responsible for translation and dissemination of the IESBA Code of Ethics in Montenegro and reports to have translated and published the 2016 version.
ICAM maintains several processes to support its members’ implementation by (i) developing and disseminating guidance on the Code; (ii) building awareness of the adopted standards through seminars (two seminars in 2016) and the distribution of publications; (iii) enhancing awareness of recent updates and modifications to the Code; (iv) adding the Code into its education and examination programs; (v) incorporating the Code, including recent updates and modifications into initial and continuing professional development activities.
ICAM members who are non-compliant with the IESBA Code of Ethics are subject to formal reprimand, then a freezing of membership status, and in extreme cases, revocation of certification and license. It appears that no such enforcement actions have needed to be taken.
ICAM reports to collaborate with other professional accountancy organizations (PAOs) in the region on ethics-related matters. For example, in January 2016, ICAM visited Association of Accountants and Auditors of Republika Srpska alongside other PAOs in the region to discuss disciplinary matters related to violations of the IESBA Code of Ethics.
Lastly, ICAM is active in international standard-setting processes and responds to IESBA Exposure Drafts.
ICAM is encouraged to further showcase the training and educational material and opportunities that it provides to enhance member knowledge, understanding, and compliance with the Code of Ethics. It may also consider promoting the incorporation of ethics-related topics in accountancy curricular to other relevant stakeholders.
- SMO 5: International Public Sector Accounting Standards
ICAM does not have responsibility in the standard-setting area for public sector accounting, which are prescribed by the Law on State Property of 2009 and the Law on Financing of Local Self-Government of 2010. Nevertheless, ICAM reports to support the adoption of accrual-basis IPSAS in Montenegro and is engaged in raising awareness of its importance. ICAM participates in dialogues with the Ministry of Finance—the entity responsible for the applicable public sector accounting standards—and the State Audit Institution on the importance of public financial management reform. It also lobbies political entities to prepare financial statements on an accrual basis. Moreover, the institute issued a request to the Ministry of Finance to expand its authority to include public sector accounting matters.
Additionally, ICAM, as part of the Consortium that includes the University of Podgorica Faculty of Economics of Montenegro and the Serbian Association of Accountants and Auditors, has translated the 2013 version of IPSAS and has shared it with the Ministry of Finance and the State Audit Institution.
Beginning in 2016, ICAM reports to be conducting ongoing training for public sector accountants in cooperation with the Government of Montenegro, the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Center of Excellence in Finance. This is part of a three-phased training system with phase one focusing on national laws related to taxation and budget, phase two on financial reporting in accordance with IPSAS, and phase three on management accounting in accordance with IPSAS. ICAM indicates its staff will be trainers during phases two and three, which were expected to commence in 2017.
Lastly, ICAM reports in its SMO Action Plan that since it has a signed agreement with CIPFA in place, it is considering the possibility of offering CIPFA certificates for its members.
ICAM is encouraged to continue promoting the adoption of accrual IPSAS in Montenegro and to participate in the international standard-setting process by providing comments on IPSASB Exposure Drafts.
- SMO 6: Investigation and Discipline
In the absence of an investigation and disciplinary (I&D) system for professional accountants at the jurisdiction level and prior to the adoption of the new Law on Auditing No. 001 of 2017, which now mandates the establishment of an I&D system, ICAM proactively established a three-tiered I&D system for its members. Its I&D system encompasses investigation, disciplinary, and appeals processes, and provides ICAM with the power to enforce sanctions unless there is a possibility of criminal responsibility (in that case public prosecutors take over). As of 2017, roughly 3% of ICAM members have reportedly been investigated by ICAM’s Investigation Committee, and only two cases progressed further since violations were found. It is unclear if any sanctions were imposed.
ICAM raises awareness amongst its members and the public about the I&D system through initial and continuing professional development training, ICAM publications, seminars, and other media to encourage adherence to the rules of professional conduct and to educate individuals on how to report violations of the rules.
ICAM has been working to bring its system in line with the requirements of SMO 6. In 2011, the institute reviewed the system existing at the time and adopted a new Rulebook on I&D procedures, which was subsequently updated in 2014 to better comply with the revised SMO 6 requirements. ICAM reports that there are some areas that require improvements, such as a lack of publicly available results of the I&D processes.
ICAM submits annual reports on I&D to the Ministry of Finance and ICAM Assembly; however, the reports are not publicly available as indicated above. It also collaborates with other professional accountancy organizations in the region to share experiences and knowledge on disciplinary procedures.
Given the adoption of the new law, ICAM’s role and responsibilities in the area of I&D are being reconsidered by the government. ICAM expects laws to pass that may give ICAM additional responsibilities in this area and will prompt further revisions of its I&D system.
ICAM should consider working with the relevant stakeholders to ensure that the requirements of the proposed I&D system in the jurisdiction are in line with those of SMO 6. ICAM is also encouraged to update its SMO Action Plan to include updated information on progress made regarding specifying ICAM’s role in the I&D system in the jurisdiction.
- SMO 7: International Financial Reporting Standards
ICAM is the competent authority responsible for translation and dissemination of IFRS, which are adopted by law, and continues to support the implementation of the standards in Montenegro along with the Serbian Association of Accountants and Auditors (SAAA) and the Association of Accountants and Auditors of Republika Srpska by translating and publishing IFRS.
The latest version of IFRS translated into the Serbian language is the full 2009 version and a number of standards from the 2013 Handbook have been translated. The time lag in translation of the most recent IFRS is reportedly due to the fact that SAAA was given rights for translation and has encountered some obstacles with the Serbian Ministry of Finance. Nevertheless, ICAM is reportedly considering ways to reduce the time lag between the issuance of new IFRS and their translation into Serbian. It has also proactively met with the Serbian Ministry of Finance to expedite the process and is expecting a more recent translation to be completed in the near future.
In the meantime, ICAM reports that it informs its members of any amendments to the standards as they arise. ICAM also translated the 2013 version of IFRS for SMEs, which was made available to its members.
ICAM has several processes in place to support its members’ implementation of the standards, which include (i) developing and disseminating IFRS implementation guidance in the form of a manual on the practical application of specific IFRS; (ii) enhancing awareness of the adopted standards; (iii) building awareness of recent updates and modifications to IFRS—for example, ICAM offers periodic seminars on all issued amendments to the standards; (iv) including IFRS into its education and examination programs; (v) incorporating IFRS into initial professional development activities; and (vi) adding recent updates and modifications to IFRS into continuing professional development activities.
Lastly, ICAM responds to exposure drafts of the IASB as part of its participation in the international standard-setting process.
ICAM is encouraged to showcase how it includes standard-related topics in its initial professional education program, and is also encouraged to continue executing its plans for a more up-to-date translation of IFRS.
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