Institute of Certified Auditors of the Republic of Macedonia
Member | Established: 2006 | Associate since 2010; Member since 2013
The ICARM was established under the Audit Law of 2005. ICARM’s mandatory membership is comprised solely of certified auditors, audit firms, and certified auditors–sole proprietors. The competences of the institute are stated in the Audit Law of 2010 as the following: (i) maintaining registries of auditors, certified auditors, audit firms, and certified auditors – sole proprietors as well as registries of those whose license have been revoked; (ii) organizing and conducting examinations for auditors; (iii) issuing auditor’s certificates; (iv) developing and delivering continuing professional development activities; (v) enforcing compliance with applicable auditing and ethical standards; (vi) translating the ISA, IESBA Code of Ethics, and ISQC 1; (vii) initiating I&D procedures for members; (viii) carrying out QA reviews; and (ix) undertaking any other activities which promote high professional standards and improve the quality of auditing services.
ICARM became an IFAC Member in 2013 after being an Associate since 2010.
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
In accordance with the 2010 Audit Law and subject to the oversight of the Council for Advancement and Oversight of Auditing of the Republic of Macedonia (CAOA), ICARM is responsible for the establishment and conduct of quality assurance (QA) reviews for all audits. The CAOA, as the oversight authority, may request specific QA reviews to be carried out by ICARM and is represented on ICARM’s Quality Control Committee.
In 2009, ICARM developed its QA system with the assistance of the French professional accountancy organizations and has been operating the system since 2010. ICARM conducted a self-assessment on its QA review system in 2017 and indicates that its QA program is aligned with SMO 1 requirements although ISQC 1 and ISA 220 are still based on the standards as issued in 2009. Following the amendment of the Audit Law in 2014, and with a view to incorporate experiences and findings of the QA reviews, ICARM commenced a review of its QA Rulebook to, among other objectives, to ensure compliance with the requirements of SMO 1. As of the time of the assessment, the timeline for the review has not been established although the institute indicates that it plans to utilize the new Rulebook for QA reviews conducted in 2017–2018.
From 2009 to 2011, ICARM performed 29 reviews that represent 95% of audit engagements in the country. In 2012–2014, during the second cycle of quality reviews, ICARM conducted 54 reviews. In 2015 and 2016, first two years of the third cycle, ICARM conducted 39 reviews.
ICARM analyzes the findings of the reviews with a view to continuously improve the system and publicly discloses information on the functioning of the QA program on its website. In addition, an independent external review by a controller appointed by the French profession took place between 2013 and 2014.
Additionally, the institute reports to conduct ongoing activities to support its members in the process of QA reviews by providing updates and instructions on creating and maintaining an effective quality control system and offers continuing professional development programs and seminars based on review findings. For example, in December 2016, the institute held a two-day course to assist auditors in small- and medium-sized practices to develop tools to document preliminary audit procedures and identify audit risks and the institute intends to offer further practical training during the remainder of 2017. For additional details and other examples, please refer to ICARM’s 2017 SMO Action Plan.
One of the institute’s most recent initiatives includes providing assistance to small- and medium-sized entities to support compliance with the quality control requirements. In 2015, ICARM, in partnership with the Profession Comptable Libérale Française (PCLF), shared an “Audit Pack for SMEs.” An English language Audit Pack for SMEs training program were designed and seminars were offered by the PCLF in Macedonia to assist with the implementation of the tool.
ICARM is encouraged to consider how it may be able to reduce the time lag in translating and disseminating the most up-to-date quality control standards, which is the only component of its QA review system that is not aligned with SMO 1 requirements. Within its SMO Action Plan, ICARM could consider explaining the challenges it faces in this regard and potential actions the institute could take to address it.
- SMO 2: International Education Standards
Initial and continuing professional development requirements (IPD and CPD) for auditors, which is ICARM’s area of regulatory responsibility, are stipulated in the 2010 Audit Law and are mostly aligned with the IES requirements. The focus of ICARM, under the oversight of the Council for Advancement and Oversight of Auditing (CAOA), is to implement these requirements.
One of the requisites for candidates aspiring to achieve the designation of Certified Auditor is to pass ICARM’s examination. Under the Road to Europe–Program for Accounting Reform and Institutional Strengthening (REPARIS), ICARM successfully established an examination program and syllabus that aligns with IES 2 and is based on the Association of Chartered Certified Accountants’ (ACCA) education and training program. The institute has an Examination Committee in place that includes a representative from the CAOA and has published a Rulebook related to exam procedures. Furthermore, to comply with the amended Audit Law, the institute has also established an Examination Oversight Committee that includes representatives from the Ministry of Finance, the CAOA, the ICARM President, and two ICARM members.
However, in the 2014 Report on the Observance of Standards and Codes—Accounting and Auditing: Republic of Macedonia, the World Bank notes that the examination requires updates to address more complex IFRS topics, information technology, and the revised (2015) IES requirements. Furthermore, amendments to the Audit Law in 2013 require ICARM to establish a database of questions to conduct the professional examinations in electronic format. Additional changes, including to the exam’s format, the availability of questions, and other technical details, have been in place for new candidates since January 2014 but limited resources and tight deadlines will impact the effective implementation of these changes. ICARM reports that it is arranging meetings with the Ministry of Finance to discuss these issues.
Additionally, the REPARIS supported ICARM in its establishment of CPD programming that aligns with IES 7 and its Committee for Education, Training and Publications makes recommendations for the annual CPD programming. In 2016, the institute notes that it produced a Handbook on CPD for members that reflects the 2015 IES. The World Bank 2017 Accountancy Education: Benchmarking Study notes that adopting an output-based approach aligned to the requirements of IES 8 is necessary as well as prescribing learning outcomes for professional skills, and professional values, ethics and attitudes.
Lastly, ICARM has also signed an agreement with the University American College Skopje to support academic cooperation and training related to the accountancy profession. This cooperation envisions an exchange of information and experts to help deliver lectures and CPD programs and aims to establish an ACCA examination center in the country.
ICARM notes in its SMO Action Plan that it will review the revised (2015) IES requirements. The institutes is encouraged to establish a timeframe for this review and include related actions in its SMO Action Plan.
- SMO 3: International Standards on Auditing
Under the 2010 Audit Law, ICARM is responsible for the translation of the international auditing pronouncements as well as monitoring their implementation and enforcement. As of the date the assessment, the 2009 version of ISA has been translated and published in the Official Gazette of the Republic of Macedonia for application in the jurisdiction. ICARM attributes the time lag in translation of the most recent IAASB pronouncements to the resource constraints; however, it notes that up-to-date translations of the ISA are considered a priority for the institute and the activity is slated for September 2017 as included in its 2017 Annual and Financial Plan.
Although the latest IAASB pronouncements have not yet been translated, ICARM reports that it maintains an ongoing process of regularly updating the educational materials with regards to new and amended IAASB standards.
The institute also develops teaching materials for both initial and continuing professional development (CPD) and organizes seminars and conferences. ICARM indicates that it offers regular training on ISA within its CPD programming. For example, its 2016 CPD program included 18 hours on ISA updates and practical application seminars while its 2017 calendar of trainings include the 2016 ISA. In 2012, to ensure access to the latest training materials, ICARM signed a three year contract with BPP Professional Education in the UK, one of the leading providers of professional accounting and auditing education materials in Europe.
Additionally, ICARM is an active participant of the World Bank’s Center for Financial Reporting Reform Training of Trainers (ToT) for auditing and other workshops. These are organized as part of the EU-Road to Europe–Program for Accounting Reform and Institutional Strengthening (REPARIS) and Strengthening Auditing and Reporting in the Countries of the Eastern Partnership (STAREP) programs that are intended to assist in delivering effective financial reporting training for audit practitioners.
Thus far ICARM has not provided comments on the IAASB exposure drafts and other documents but reports that it intends to do so going forward.
ICARM is encouraged to continue identify opportunities to reduce the time lag in translating the latest IAASB pronouncements for application in the Republic of Macedonia and outline actions within its SMO Action Plan that it may undertake to achieve this objective.
- SMO 4: Code of Ethics for Professional Accountants
ICARM is responsible for translation of the IESBA Code as adopted by the 2010 Audit Law as well as monitoring of its implementation amongst auditors and any enforcement actions related to violations of the Code. As of 2017, ICARM reports that auditors must adhere to the 2009 version of the IESBA Code that was translated into Macedonian and published in the Official Gazette.
ICARM reports that its activities in this area are executed by its Ethics Committee and are focused on supporting its members with the implementation of the Code through the development of teaching materials for both initial and continuing professional development (IPD and CPD) as well as the organization of seminars and conferences.
According to ICARM, there exists an important need and demand for education and training in the area of ethics. ICARM notes that it would be beneficial if a volume of educational material related to ethics was created, translated, and distributed to members and relevant stakeholders with an emphasis on the practical application of ethical requirements; however, as of the date of the assessment, ICARM indicates that due to financial constraints, its first priority is to translate and share the 2016 ISA. The institute does note that its Annual CPD Program includes seminars on updates to the Code and ICARM members receive latest updates from IFAC in English. Additionally, during its CPD events, ICARM strives to provide materials, resources, and examples on the practical application of the Code. Notably, during December 2016, the institute held a lecture on the new NOCLAR standard. The institute plans to continue offering courses on NOCLAR throughout 2017.
Finally, as of 2017, ICARM has not provided comments on IESBA exposure drafts and other documents but indicates that it plans to do so going forward.
ICARM is encouraged to continue identify opportunities to reduce the time lag in translating the latest IESBA pronouncements for application in the Republic of Macedonia and outline actions within its SMO Action Plan that it may undertake to achieve this objective.
- SMO 5: International Public Sector Accounting Standards
IPSAS, which have been adopted by the Macedonian government as cash-basis, are not within the scope of responsibilities of ICARM.
ICARM reports that it has considered the requirements of SMO 5 within the context of the new regulatory and operating environment in light of the establishment of the Institute of Accountants and Certified Accountants (IACA)—and determined that the IACA has a more relevant role in promoting the adoption of accrual-basis IPSAS and subsequent implementation.
As of the date of the assessment, the IACA and ICARM are working on signing an agreement with the IACA to cooperate on several regulatory aspects. ICARM notes it would consider building awareness of the adopted standards through its continuing profession development program and would provide support to the government as necessary and within the scope of its remit in order to promote the adoption and implementation of IPSAS.
To keep members aware of developments in the public sector, ICARM regularly informs its members of all new, proposed and revised IPSAS and other pronouncements issued by IPSASB through electronic distribution of IFAC bulletins and newsletters.
- SMO 6: Investigation and Discipline
As mandated by the 2010 Audit Law, ICARM, under the oversight of the Council for Advancement and Oversight of Auditing, is responsible for establishing an investigative and disciplinary (I&D) mechanism for auditors. ICARM has established a Disciplinary Committee and a Managerial Board responsible for the implementation of its I&D procedures. The Disciplinary Committee conducts investigations and will make recommendations to the Managerial Board regarding the basis of initiating disciplinary procedures and a proposed sanction. In turn, the Managerial Board conducts the disciplinary hearings and imposes disciplinary measures based on the recommendation of the Disciplinary Committee.
ICARM published a revised I&D Rulebook in 2012; however, due to amendments to the Audit Law in 2014, the institute is undertaking another review of its Rulebook. The objective of the current review is to ensure alignment with the Audit Law and new ICARM Bylaws. ICARM conducted a review of its I&D procedures and reports that it mostly aligns with the SMO 6 requirements except for the present composition of the Committee and Board. ICARM notes that other experts, lawyers and other specialists may be included if needed, as stated in the I&D Rulebook. ICARM indicates that it will also take the SMO 6 requirements into consideration during its review. Additionally, this review aims to describe more precisely the procedures to be followed with respect to discipline and sanctions matters.
Lastly, ICARM indicates that it includes knowledge of the I&D system as part of initial and continuing professional development courses to inform its members.
ICARM has been proactive in reviewing its I&D Rulebook to align it with national legislation and has taken a notable first step in identifying areas in its I&D procedures that require enhancements to align with the SMO 6 requirements such as the composition of its respective committees. The institute is now encouraged to outline steps it will take to consider, execute, and implement changes to enhance its I&D system within its SMO Action Plan. The actions should include concrete timelines for their execution—for example, a timeline for when the review will be completed—to enable the institute to track its progress against its plans and make strategic adjustments as needed.
- SMO 7: International Financial Reporting Standards
ICARM has no direct responsibility for the adoption of IFRS and IFRS for Small- and Medium-sized Entities (SMEs), which are adopted by the Ministry of Finance and published in the Official Gazette. The institute has contributed to the translation of the 2009 IFRS into Macedonian, which are the currently applicable accounting standards in the jurisdiction. Under the new Law on Accounting Services, the responsibility for translating IFRS and IFRS for SMEs will be under the remit of the new professional accountancy organization for accountants and Chartered Accountants—the Institute of Accountants and Certified Accountants (IACA).
ICARM indicates that it provides support to its members with the implementation of IFRS through educational programs and continuing professional development (CPD) trainings. Although the 2009 IFRS are applicable due to translation availability, the institute indicates that its CPD includes updates and changes to the standards. In 2016, the institute notes that 18 hours of its CPD programming were focused on IFRS, IFRS for SMEs, and updates. Additionally, ICARM also supports and participates in regional workshops related to financial reporting and IFRS.
If deemed feasible and relevant, ICARM could consider collaborating with IACA to help facilitate more recent translations of the IFRS as there have been new updates and changes to the standards since 2009.
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