Institute of Certified Auditors of the Republic of North Macedonia
Member | Established: 2006 | Associate since 2010; Member since 2013
The ICARNM was established under the Audit Law of 2005. ICARNM’s mandatory membership is comprised solely of auditors, certified auditors, audit firms, and certified auditors–sole proprietors. The responsibilities 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auditors, audit firms, and certified auditors – sole proprietors as well as registries of those whose license have been revoked; (ii) organizing and conducting examinations for auditors; (iii) issuing auditor’s certificates; (iv) developing and delivering CPD activities; (v) enforcing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.
ICARNM 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 North Macedonia (CAOA), ICARNM 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 ICARNM and is represented on ICARNM’s Quality Control Committee.
In 2009, ICARNM developed its QA system with the assistance of the French professional accountancy organizations and the Road to Europe: Program of Accounting Reform and Institutional Strengthening (REPARIS). It has been operating the system since 2010, with its reviewers trained every two years by French reviewers. ICARNM’s QA reviews also encompass other assurance engagements. ICARNM has evaluated its QA review system and indicates that it is aligned with SMO 1 requirements although ISQC 1 and ISA 220 are still based on the standards as officially gazetted/issued in 2009. The ICARNM has translated the 2018 ISA and ISQC1 into Macedonian language, which is published on the ICARNM website but remains pending publication in the Official Gazette due to legal constraints.
Since 2010, ICARNM has performed reviews using a cyclical approach that represents 95% of audit engagements in the country. ICARNM prepares annual QA work programs as well as annual reports that disclose the results and findings of reviews and potential changes for the next cycle. Both documents are available on its website. ICARNM has produced a QA Rulebook, which it will review and amend as necessary based on national regulation and learnings from the QA review process. As of 2022, ICARNM reports that the Ministry of Finance is considering amendments to the Audit Law of 2010. Proposed amendments include dividing responsibility for quality assurance reviews between the CAOA (PIE reviews) and the ICARNM (non-PIE reviews). ICARNM indicates it would update its QA Rulebook again depending on the final amendments to the law.
Additionally, the Institute maintains ongoing activities to support its members in the process of QA reviews by providing updates and guidance on creating and maintaining an effective quality control system and offering continuing professional development programs and seminars. For example, it has organized multi-day seminars on the practical implementation of ISA, audit planning, and risk assessments for practitioners. ICARNM is preparing members on the upcoming quality management standards through CPD events, and the distribution of IFAC and IAASB materials.
ICARNM also assists small- and medium-sized entities in supporting compliance with the quality control requirements. ICARNM, in partnership with the Profession Comptable Libérale Française (PCLF), presented an “Audit Pack for SMEs.” An English language Audit Pack for SMEs training program was designed, and seminars were offered by the PCLF in North Macedonia to assist with the implementation of the tool. ICARNM has also shared IFAC’s SMP Guide on Quality Control for Small- and Medium-size Practices.
IFAC encourages and supports ICARNM’s advocacy and translation efforts as the official adoption of the latest version of ISQC 1 and relevant ISA would advance North Macedonia’s QA status to fully Adopted. ICARNM’s activities related to supporting the implementation of ISQM1, ISQM 2, and ISA 220 (revised) among members when it becomes effective as of December 15, 2022 are also positive developments. Resources on the quality management standards are available on the IAASB website.
SMO 2: International Education Standards
Initial and continuing professional development requirements (IPD and CPD) for Certified Auditors, which is ICARNM’s area of regulatory responsibility under the oversight of the Council for Advancement and Oversight of Auditing (CAOA), are stipulated in the 2010 Audit Law. Auditor candidates must have a bachelor’s degree in economics, law, or other relevant area; complete a professional education program; pass the professional exam offered by ICARNM; have three years of practical experience in audit, two of which must be under the supervision of a practicing auditor; and have a clean professional record.
According to the World Bank 2017 Accountancy Education: Benchmarking Study Master’s programs benchmarked well against IES (2015). Improvements in financial accounting and reporting and IT learning outcomes would result in further alignment. Both undergraduate and master’s programs would benefit from additional courses on Public Sector Accounting. Practical experience (IES 5) is met only based on the length of time employed with an audit firm (rather than competencies or skills demonstrated).
As noted, candidates must pass ICARNM’s examination. Under the Road to Europe–Program for Accounting Reform and Institutional Strengthening (REPARIS), ICARNM established an examination program and syllabus that is based on the Association of Chartered Certified Accountants’ (ACCA) education and training program. The same World Bank study notes that learning outcomes for professional skills and professional values, ethics, and attitudes, are not prescribed per the IES revised in 2015 and a more structured and regular process for updates of the syllabi is necessary. In response, the ICARNM has reported that it is working to review and improve its syllabus to maintain exam accreditation and reciprocity with the ACCA, which would indicate a continued alignment with the IES. ICARNM has an Examination Committee in place that includes a representative from the CAOA and has published a Rulebook related to exam procedures.
Previously, ICARNM signed a contract with BPP Professional Education in the UK, one of the providers of professional accounting and auditing education materials, for initial education teaching materials. However, ICARNM notes that demand for initial education courses was low, and candidates receive university training on standards and attend CPD training which covers exam-related and practical topics as well.
Auditors are subject to 120 hours of CPD over a three-year period. ICARNM has a Committee for Education, Training and Publications that issues the annual CPD programming. In the same benchmarking study, the World Bank notes that adopting an output-based approach aligned to the requirements of IES 8 is needed. ICARNM reports that it is working to improve its CPD approach.
ICARNM has signed agreements with the University American College Skopje, state Faculty of Economics in Skopje and Shtip, professional organizations for valuators, internal auditors and the State Audit Office, as well as professional organizations of auditors in Bulgaria (ICPAB), Azerbaijan (CAAR), and Kosovo (SCAAK) to support academic cooperation and the IPD and CPD related to the accountancy profession.
ICARNM is encouraged to continue proactively liaising with all relevant stakeholders in the jurisdiction on accountancy education, which is fundamental to the strength and relevancy of the accountancy profession. A suggestion is to review the analysis from the World Bank 2017 Accountancy Education: Benchmarking Study report and consider actions to address the recommendations on university programming, exams, practical experience, and CPD in the report wherever feasible. ICARNM may use the Self-Assessment Against the IES and the Accountancy Education E-Tool developed by IFAC to conduct a self-assessment and to consider available implementation support materials. Once a self-assessment is completed, ICARNM can better identify and prioritize actions to eliminate any gaps or weak areas. These plans with reasonable timeframes should be outlined in its Action Plan.
SMO 3: International Standards on Auditing
Under the 2010 Audit Law, ICARNM is responsible for the translation of the international auditing pronouncements as well as monitoring their implementation and enforcement. As of 2022, the 2009 version of ISA has been translated and published in the Official Gazette of the Republic of North Macedonia for application in the jurisdiction. ICARNM has translated the 2018 IAASB Handbook which is available for members’ reference via its website, but it is not published in the gazette and therefore, not legally applicable. It is engaging with the Ministry of Finance to resolve legal matters related to the official publication after which it will proceed with subsequent translations such as ISA 315.
ICARNM reports that it maintains an ongoing process of regularly updating the educational materials with regards to new and amended IAASB standards. Thus far, ICARNM has not provided comments on the IAASB exposure drafts to resource constraints and lack of capacity. It focuses its efforts on providing adoption and implementation support.
ICARNM indicates that it offers regular training on the latest ISA within its CPD programming. Additionally, ICARNM 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.
IFAC encourages and supports ICARNM’s advocacy and translation efforts as the official adoption of the latest version of the ISA would advance North Macedonia’s ISA status to fully Adopted. The 2020 IAASB Handbook is available, which includes ISA 540 revised (effective December 2019), conforming amendments arising from the IESBA Code of Ethics, and ISA 315 revised (effective December 2021). ICARM may also consider disseminating ISQM 1, ISQM 2, ISA 220, and ISRS 4000 (revised) that will become effective throughout 2022 to prepare auditors to properly apply the standards upon effective date.
SMO 4: Code of Ethics for Professional Accountants
ICARNM is responsible for the translation of the IESBA Code as adopted by the 2010 Audit Law and monitoring its implementation amongst auditors and any enforcement actions related to violations of the Code. ICARNM reports that auditors must adhere to the 2009 version of the IESBA Code translated into Macedonian and published in the Official Gazette by the Ministry of Finance. The ICARNM is currently translating the 2020 International Code of Ethics, which will be available to members on its website. It is engaging with the Ministry of Finance to resolve legal matters related to the official publication after which it will proceed with subsequent translations in the 2021 Handbook.
ICARNM reports that its activities in this area are executed by its Auditing Standards and Disiciplinary Committees and are focused on supporting its members with the implementation of the Code. Its annual CPD program includes updates and practical implementation of the Code of Ethics and ICARNM members receive the latest updates from IFAC in English.
According to ICARNM, there exists an important need and demand for education and training around ethics. ICARNM 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, ICARNM indicates that due to resource constraints, its priority is to translate and share the standards.
The 2021 version of the International Code of Ethics is now available, which namely differs from the 2020 Handbook by including approved revisions that will become effective in December 2022, such as: revisions to non-assurance services, fees, and objectivity of an engagement quality reviewer. ICARNM may consider sharing the standards at least in English to raise awareness of key stakeholders and prepare members to properly apply the standards upon effective date.
SMO 5: International Public Sector Accounting Standards
According to the 2020 IFAC/CIPFA Public Sector Financial Accountability Index and the World Bank/CFRR’s 2020 Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: North Macedonia the current federal/central governmental institutions follow the Law on Accountancy of the Budget and Budget Beneficiaries which stipulates cash basis, national standards, while state owned entities follow national standards based on IFRSs. The World Bank indicates there are plans to transition to accrual-basis standards, but no timeline is indicated.
Public sector standards are not within the remit of ICARNM. ICARNM reports that it has considered the requirements of SMO 5 within the context of the regulatory and operating environment considering 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.
The IACA and ICARNM are working on signing an agreement with the IACA to cooperate on several regulatory aspects. ICARNM 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 to promote the adoption and implementation of IPSAS.
To keep members aware of developments in the public sector, ICARNM 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
In accordance with the 2010 Audit Law, the ICARNM, under the oversight of the Council for Advancement and Oversight of Auditing (CAOA), is responsible for establishing an investigative and disciplinary (I&D) mechanism for auditors.
ICARNM has established a Disciplinary Committee and a Managerial Board responsible for the implementation of its I&D procedures. The Disciplinary Committee conducts investigations, conducts hearings, and will make recommendations to the Managerial Board regarding the basis of initiating disciplinary procedures and a proposed sanction. In turn, the Managerial Board imposes disciplinary measures based on the recommendation of the Disciplinary Committee. ICARNM conducted a review of its I&D procedures and reports that it aligns with the SMO 6 requirements.
ICARNM has an I&D Rulebook (the 2012 version is available in English) – last updated in 2018, taking into consideration amendments to the Audit Law from 2014, new ICARNM bylaws, and SMO 6 components such as independence of the Disciplinary Committee; defendants’ rights; and more precise procedures to be followed when issuing sanctions. Between 2018—2021, ICARNM notes that it conducted I&D procedures based on QA review findings, CPD obligations, and membership fees. Those that resulted in disciplinary measures, such as a revoked membership or license, are published via a relevant register on its website.
ICARNM indicates that it includes information sessions on the I&D system as part courses to inform its members.
Enforcement mechanisms that meet the SMO 6 benchmark for all professional accountants are essential to public trust and confidence in the accountancy profession. ICARNM has been proactive in reviewing its I&D Rulebook to align it with national legislation and with the SMO 6 requirements. The institute is encouraged to continue its regular review of the implementation and effectiveness of procedures to identify and promptly apply any improvements as necessary.
SMO 7: International Financial Reporting Standards
ICARNM 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 Law on Accounting Services, the responsibility for translating IFRS and IFRS for SMEs is under the remit of the professional accountancy organization for Accountants and Chartered Accountants—the Institute of Accountants and Certified Accountants (IACA).
ICARNM 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. The institute states that at least 15 hours of its annual CPD programming are focused on IFRS, IFRS for SMEs, and updates. Additionally, ICARNM also supports and participates in regional workshops related to financial reporting and IFRS.
Efforts to adopt and translate the latest IFRS Standards are strongly encouraged as part of bringing transparency, accountability, and efficiency to national, regional, and global markets. If deemed feasible and relevant, ICARNM could consider collaborating with IACA to help facilitate more recent translations of the IFRS as there have been several new updates and changes to the standards since 2009.
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