Instituti i Kontabilistëve të Miratuar
Member | Established: 2000 | Associate 2012; Member 2019
IKM was originally established as the Liaison of Certified Accounting Professionals (LPKM) by the Decision of the First Instance Court of Tirana No. 1590 dated 18/05/2000. During its 2006 organizational reforms, LPKM re-established itself as IKM, a non-governmental, non-profit, non-religious, and non-political organization. It is officially recognized by Legal Decree No. 8788 dated 07/11/2000 on Non for Profit Organizations and operates in accordance with Law No. 10091. IKM’s membership is comprised solely of Certified Accountants, who in Albania may choose to join one of the existing recognized professional organizations for accountants. Members of IKM provide a variety of services including bookkeeping; compilation of financial statements; preparation of prospective financial statements; tax consulting; financial management consulting; internal control systems design and internal audit services; non-statutory auditing, and other services. A substantial percentage of IKM’s membership are accountants in business. Members of IKM do not provide statutory audit services. As of September 2019, IKM is the only PAO for accountants recognized by the POB.
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
Under the Law on Statutory Audit and Organization of the Accountancy Profession No. 10091, the responsibility for conducting quality assurance (QA) reviews of statutory audits is vested with the Public Oversight Board (POB), with an option to delegate QA reviews of audits of non-PIEs to the Institute of Authorized Chartered Auditors (IEKA). IKM as a professional body for accountants is not involved in the implementation of the system.
However, although not required by law, in September 2010, IKM established a QA review system for its members—certified accountants. The system is based on peer reviews and is administered by a Quality Control Committee, an independent body in the General Assembly. Accounting firms are required to implement a system of quality control in accordance with the regulations of IKM on quality control, which have progressively been brought in line with ISQC 1.
IKM employs both cycle-based and risk-based approaches. Reviews are conducted every five years and inspectors are selected from IKM membership. IKM shares information on the functioning of the QA review system with the POB, which regulates its activities.
In 2018, IKM conducted a self-assessment of its QA system against the requirements of SMO 1 and reported full compliance apart from the requirement for a regular review of the effectiveness of the system. Considering that the system is just being operationalized, these reviews have not been conducted in the past but are planned for 2019.
To support its members with the implementation of quality control standards, IKM produces related materials, including a quality control checklist for controllers and those to be controlled, and makes these materials available on its website on an on-going basis. The institute also conducts trainings for controllers and the Quality Control Committee, with the most recent training conducted in December 2018. In September 2019, IKM signed a cooperation agreement with the Society of Certified Accountants and Auditors of Kosovo (SCAAK) aimed at working together to develop more efficient and effective QA review system for accountants.
From 2014–2016, IKM reported that it participated in the discussions on proposed amendments to legislation to include a requirement for a mandatory QA system for accountants, in addition to the one for auditors. However, this provision was ultimately not included in the final law that passed in April 2016. Final revisions, according to IKM, mainly related to the role, functions, and the organization of the POB.
IKM reports that it monitors national and international developments and standard-setting activities in the area and is developing a system for communicating new developments and changes in national and international guidance related to QA reviews to IKM membership and the general public through publications, emails, and its website.
As IKM continues to fully operationalize its QA review system for accounting services and work with the regulators to introduce a requirement for one through the law, IKM is encouraged to collaborate with other PAOs for accountants to consider ways to make efficient use of resources and ensure that all accountants are subject to quality review of their work thus increasing the reliability of financial information in the jurisdiction. In addition, IKM is also encouraged to consider participating in the regional initiative led by ICAEW to establish effective and efficient QA review systems for accountants. Experience of other accounting bodies in the region could be beneficial in this regard.
- SMO 2: International Education Standards
Initial professional development (IPD) and continuous professional development (CPD) requirements for attaining the qualification of a Certified Accountant—the only category of professionals that constitutes IKM’s membership—are set in law and include the following: candidates are required to obtain a University Diploma; have three (3) years of related practical experience (accounting/finance); have attended the qualification training classes for IAS/IFRS and National Accounting Standards; and successfully passed the professional skills exams set by the Examination Commissions under the Public Oversight Board.
In addition, IKM establishes CPD requirements for its members. Since becoming an IFAC Associate in 2012, IKM has worked to bring its CPD requirements in line with IES. As of 2018, IKM members are subject to 40 hours of CPD (up from 30 hours in 2012), and this requirement is now subject to monitoring. Nevertheless, as of 2018, the CPD requirements continue to differ from IES as the output approach has not been introduced, among other differences. With the assistance of the World Bank, an initial gap assessment of IKM’s CPD programming has been conducted and strategy for enhancing CPD in line IES has been developed. The improved CPD programming is expected to improve IKM’s competitiveness.
Between 2014 and 2016, IKM worked on improving university curricula as part of the World Bank Corporate Financial Reporting Enhancement Project (CFREP) and benefited during 2016–2018 from the development of learning materials and train of training sessions (ten IKM trainers were trained). The institute also participated in a study tour to Netherlands to the universities and professional bodies.
In September 2019, IKM signed a cooperation agreement with the Society of Certified Accountants and Auditors of Kosovo (SCAAK) in, among other areas, provision of IPD and CPD programming and jointly promoting incorporation of the IES requirements in their jurisdictions.
While progress has been made in bringing accountancy education requirements in Albania closer to the requirements of the revised IES, a further comprehensive gap analysis of the overall national requirements and programs for accountants in Albania against the revised IES in cooperation with other stakeholders involved in the education of accountants in the jurisdiction is recommended. IKM, as one of the leading PAOs in the jurisdiction and considering its close ties with universities, should consider proactively taking the lead in the reform process, especially as it relates to IPD. If gaps exist, a unified strategy should be developed to make efficient use of resources and help enhance and calibrate the educational requirements and their effective implementation.
- SMO 3: International Standards on Auditing
The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016 requires application of ISA, as translated in Albanian, in all statutory audits. The Albanian Institute of Authorized Chartered Auditors (IEKA) is responsible for the translation of ISA and has translated the 2016 version of the standards.
IKM reports that, being a professional association of accountants, it does not have statutory auditors as its members and therefore is not actively involved in this area. IKM has considered the need to be involved in the auditing standard-setting process and implementation of the standards and reported that it in general supports the IEKA in its ongoing process to adopt ISA and participates in national roundtables on the financial reporting framework.
For example, IKM reports that its representatives participated in a roundtable on proposed amendments to the Law No. 10091 that focused on the regulation of auditors and in a number of trainings organized by the World Bank in September 2016 and April/ May 2018. Participation has also helped IKM tailor CPD training sessions on ISA, which have been included in the CPD plan for the next three years. The institute also reports to be working with the FEUT University to ensure the inclusion of ISA and other related pronouncements in its Master Degree Program for accountancy.
IKM could consider, possibly in cooperation with IEKA, offering its members educational opportunities to raise their awareness about auditing standards and audit requirements in general. If deemed practical and needed, IKM could also consider assisting IEKA in the translation process to reduce the time lag between the issuance of new IAASB pronouncements and their application in Albania.
- SMO 4: Code of Ethics for Professional Accountants
The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016 requires application of the IESBA Code of Ethics for statutory auditors and certified accountants. In line with this requirement, members of IKM, through its Charter, are required to apply the IESBA Code of Ethics. IKM reports that the 2015 version of the Code as translated by the Albanian Institute of Authorized Chartered Auditors (IEKA) and adopted as the IKM’s Code of Ethics is applied as of 2019.
IKM reports that it has established process to ensure timely adoption of the IESBA Code of Ethics once it has been translated by IEKA, which took the leading role in the translation of the Code for application in Albania. In addition, in September 2019, IKM signed a cooperation agreement with the Society of Certified Accountants and Auditors of Kosovo (SCAAK) aimed at, among other translating the IESBA Code in a timely manner.
To support implementation of the IESBA Code of Ethics, since 2015, IKM has been incorporating the requirements of the Code into its CPD program, including case studies. Although 2015 IESBA Code is being applied in the jurisdiction, IKM monitors the activities of the IESBA and reportedly includes the requirements of later Codes (the restructured Code as of the time of the writing of this report) into its programs. It has also developed a system for communicating new developments and changes in national and international standards and other guidance to IKM membership and the general public through magazines, emails, and its website.
Staff reiterates its previous recommendation to IKM to consider enhancing its activities to support its members with the implementation of the Code and raise their awareness about its requirements. Such activities may include holding seminars and focused training on the subject, establishing hotlines, and disseminating information on the developments in the area through different communications means, among other activities. Finally, if deemed practical and needed, IKM could also consider assisting IEKA in the translation process to reduce the time lag between the issuance of new IESBA pronouncements and their application in Albania, especially in light of the issuance of the revised and restructured IESBA Code that will become effective in June 2019.
- SMO 5: International Public Sector Accounting Standards
IKM supports the development of public sector accounting standards through its seat on the National Accounting Council (NAC). In turn, the NAC advises the Ministry of Finance (MoF), the standard setter for this area, on public sector accounting standards.
As of 2019, the public sector entities in Albania apply adjusted cash-based accounting rules as stipulated in the Law No. 9228 of 2004 although the MoF is considering the adoption of IPSAS in a phased approach. IKM has been invited as an expert to provide insight on this issue and has also advocated for the possible adoption of IPSAS through authoring articles on the subject of IPSAS and accrual accounting in the IKM magazine and participating in the national and international events to facilitate the adoption of IPSAS in the jurisdiction.
Furthermore, the president of IKM is a member of a steering committee established to coordinate the implementation of full IPSAS in the public sector of budget institutions, a project implemented by the World Bank.
IKM reports that it monitors international developments in the area and disseminates the IPSAS amongst its members and through its website, magazines, and publications. IKM reports that it has provided comments to the IPSASB exposure drafts since January 2011 and in 2010, IKM assisted the MoF in translating IPSAS.
IKM’s membership does include accountants that provide services in the public sector. Accordingly, the institute reports that its CPD programs, as well as other training and educational activities, include IPSAS-related materials. IKM also plans to participate in the development of IPSAS implementation guidance once the international standards have been adopted. Additionally, the institute states plans to work with the FEUT University to include IPSAS into its master degree Program.
Although IKM appears to be actively supporting adoption of IPSAS in the jurisdiction, the institute is encouraged to provide more details in its SMO Action Plan on how it supports its members with the implementation of the existing public sector accounting standards.
- SMO 6: Investigation and Discipline
There is only a legal requirement to implement a system of investigation and discipline (I&D) for auditors, not for accountants in the jurisdiction. Nevertheless, the IKM, a body uniting certified accountants, introduced an I&D process which was first administered by its Managing Council and since January 2015 by a separate I&D Committee within its Managing Council. The committee is directly responsible for investigating and analyzing complaints related to the discipline of members for any breach of the ethical requirements, professional standards, and professional conduct. In the recent years, three cases have been heard, initiated by prosecutors but no sanctions have been imposed.
In 2014, IKM reviewed the requirements of SMO 6 (revised 2012) and since then has been reportedly working to address the identified gaps. For example, in 2015, a system for communicating the results of I&D and changes in the I&D system to IKM membership was established and is being implemented on an ongoing basis. Since 2017, information on the requirements and implementation of the I&D system has been included in the continuing professional development programming.
However, IKM’s system still needs improvements in order to meet international best practices. Areas of less than full compliance, according to the 2019 self-assessment, include lack of separation between investigation and discipline functions; members of the I&D committee include only professional accountants; and the decisions for the sanctions are made available to the general assembly only, and not the public. IKM acknowledges the shortcomings and is working to establish plans to address those.
The institute reports to be actively engaged with other stakeholders in the jurisdiction on matters related to I&D of certified accountants. IKM works with other accountancy regulators in promoting the need for defining an I&D process for certified accountants in law or regulation. Although the relevant provisions were ultimately not included in the final Law on Statutory Auditing and Organization of the Accounting Profession adopted in 2016, a related regulation was developed by the POB that was incorporated into IKM’s I&D processes. IKM is also cooperating with the POB as well as the Tax, Prosecution, and Anti-Money Laundering Authorities in the fight against corruption, tax evasion, and money-laundering.
Although the system appears to be established, more information on its actual implementation would be beneficial. IKM is encouraged to review the results of the updated self-assessment and develop an action plan, that is considered feasible and with a specific timeframe, to address the gaps as was recommended following the initial self-assessment in 2014. IKM is also encouraged to continue working with the POB to bring the I&D system in the jurisdiction in line with the requirements of SMO 6 and to work with other PAOs for accountants to ensure that all accountants are subject to quality I&D processes thus increasing the reliability of financial information in the jurisdiction.
- SMO 7: International Financial Reporting Standards
Although IKM does not set accounting standards, it is represented on the National Accounting Council (NAC), which is responsible for drafting national standards and providing a recommendation for adoption to the Ministry of Finance (MoF). The MoF has required the application of IFRS translated into Albanian for public interest entities (PIEs) and some large non-listed companies and Albanian National Accounting Standards which are mostly aligned with the requirements of the IFRS for SMEs.
IKM is involved in the process of translating IFRS and IFRS for SMEs through its participation in the IFRS translation review committee. IKM also promotes the complete adoption of IFRS for SMEs through its representation on the NAC.
To support its membership with the implementation of the accounting standards, IKM provides training programs, initiates public forums, delivers education materials, and disseminates information on international developments. IKM reports that it participates both in the national and international standard-setting process by providing comments on the exposure drafts of both national and international pronouncements. Overall, IKM has processes in place to address the SMO 7 requirements on an ongoing basis. These processes are designed to maintain the SMO fulfilment level and address new developments as appropriate.
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