Instituto Salvadoreño de Contadores Públicos
Associate | Established: 1997 | Associate since 2011, applying for full membership
The ISCP was constituted in 1997 through the merger of three professional associations. The ISCP is a voluntary professional organization, comprised of public accountants and auditors. The ISCP represents and promotes the accountancy profession, develops training activities, and promotes improvements to professional practices. In addition, the ISCP supports the adoption and implementation of international standards and regulation of the profession through its participation in the Oversight Board of the Profession of Public Accounting and Auditing.
In addition to being an Associate member of IFAC, the ISCP is a member of the Inter-American Accounting Association.
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 the ISCP has no legal authority or responsibility to establish a mandatory quality assurance (QA) review system for all audits of financial statements, the ISCP indicates that it is actively involved in supporting the operational QA review systems in the jurisdiction and educating its members on the importance of and results from regular QA reviews.
In El Salvador, the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) and the Superintendent of the Financial System (SSF) are authorized to carry out QA reviews for audits of companies and audits of regulated companies, respectively. The ISCP supports the implementation of the two QA review systems—which the institute reports are both in line with SMO 1 requirements—by having two of its members sit on the CVPCPA’s Board and maintaining a permanent communication with the SSF. These mechanisms also enable the ISCP to monitor the QA review systems in the jurisdiction to ensure continued alignment with the SMO 1 requirements and promote any improvements or adjustments that may need to be made.
Furthermore, the ISCP reports that it has motivated and engaged its more experienced members to act as reviewers for the QA systems; analyzed the results of annual inspections; and provided training activities based on the findings of the inspection results. In 2016, the VII Annual Convention of Public Accountants, which was led by the ISCP, primarily focused on the results of the QA review systems and the new requirements for 2017 due to the changes in professional auditing regulations. In 2017, the ISCP led an Inter-American Regional Accounting Seminar, which covered the topic of quality control standards.
In addition, the ISCP disseminates information on the QA review systems and works with universities by promoting the incorporation of QA topics into the curricula. Lastly, the ISCP developed a virtual platform which provides professional accountants with tools to maintain high-quality services and raises awareness of the QA review systems in the jurisdiction.
- SMO 2: International Education Standards
In El Salvador, universities and the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) have a role in implementing initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants, which are established in the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017. Individuals wishing to obtain a public accountant or auditor license from the CVPCPA need a bachelor’s degree in accounting, one year of practical experience for a public accountant and two years for auditors, and then, to maintain the license, fulfill annual CPD requirements that are aligned with IES.
As an entity established by general consensus and with voluntary membership, the ISCP lacks authority to further adopt IES requirements for its members. Therefore, its activities primarily include promoting an update of the universities’ curricula and proposing legal changes to the government that would require the accountancy profession in El Salvador to adopt and implement IES requirements. For example, the ISCP states it has established a University Exchange Commission responsible for promoting the IES in the jurisdiction and collaborated with the CVPCPA to reform the IPD and CPD requirements. In addition, the ISCP has established an Education Standards Committee responsible for monitoring and executing SMO 2-related activities.
The ISCP also reports of additional activities it is undertaking to promote the adoption and implementation of IES in El Salvador. The institute is working with the Board of Professional Associations of El Salvador (CAPES) to update the legislation to require a competency exam in order to practice. As of 2019, a competency exam requirement is still against the law in El Salvador. Furthermore, the ISCP indicates it has been communicating with IFAC members in Brazil and Mexico to learn about their certification systems.
Moreover, the institute states that it collaborates with the universities to assess the current accounting curricula against the IES requirements to develop an enhanced curriculum for students in the jurisdiction. In 2016 and 2017, the IES were used as a reference for the content of the National Congress of Teachers in Public Accounting and Economic Sciences. In addition, the ISCP has signed an agreement with the CVPCPA to serve as an authorized CPD provider, and during 2018, the ISCP managed to train more than 5,210 professional accountants.
Lastly, the ISCP reports that it has established mechanisms, such as its virtual platform, to distribute information to members regarding recent developments and revisions issued by the IAESB.
The ISCP is encouraged to provide a status update on the proposed amendments to incorporate IES requirements for all professional accountants. In addition, if deemed feasible, it would be beneficial for the ISCP to participate in the international standard-setting process by providing comments on exposure drafts and other IAESB pronouncements to share their experiences and perspective.
- SMO 3: International Standards on Auditing
The ISCP is not legally responsible for the adoption of auditing standards in El Salvador, but it does play an important role in the standard-setting process by participating in the standard-setting proceedings of the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) and Superintendent of the Financial System (SSF)—the entities responsible for setting auditing standards for enterprises and regulated companies, respectively. The institute has two of its members sit on the CVPCPA’s Board, and it maintains a permanent communication channel with the SSF. The ISCP actively promoted and recommended the adoption of ISA to both entities and has processes in place to encourage the regulators to adopt updated versions of ISA in the jurisdiction. As a result, the regulators have adopted the new auditor reporting standards.
To support the implementation of the standards, the ISCP has established a Committee of Professional Standards responsible for monitoring and ensuring the fulfillment of SMO 3 requirements. As part of its activities, the ISCP has developed training to support its members with standards’ implementation and includes ISA in its continuing professional development activities and seminars, such as the annual National Convention of Public Accountants and National Congress of Teachers in Public Accounting and Economic Sciences. Additionally, the ISCP reports that it monitors changes and modifications to the standards to ensure proper dissemination of information and international developments in the area through printed materials and its website.
Furthermore, the ISCP is cooperating in the Ibero-American Cooperation Frameworkd (IberAM)—a regional project, which aims to produce a single, unified, high-quality Spanish translation of the standards.
The ISCP is encouraged to continue promoting the adoption of the latest version of the ISA, which would now be the 2018 IAASB Handbook that includes certain revised standards. If deemed feasible, it may be beneficial for the ISCP to participate in the international standard-setting process by providing comments on exposure drafts and other IAASB pronouncements.
- SMO 4: Code of Ethics for Professional Accountants
In El Salvador, professional accountants are subject to ethical requirements set by the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA), which, has adopted the 2014 IESBA Code of Ethics. Although the ISCP cannot legally adopt ethical requirements for its members, the ISCP does play an important role in the standard-setting process by having two of its members sit on the CVPCPA’s Board and monitors updates to the IESBA Code of Ethics to promote the adoption of the latest version of the IESBA Code of Ethics.
ISCP’s important role as an advocator is highlighted by the recent CVPCPA decision to return to the adoption of the 2014 IESBA Code. Last year, in 2018, the CVPCPA had reversed its previous decisions to adopt the 2014 IESBA Code of Ethics and adopted its own Code of Ethics that was not based on the IESBA Code of Ethics. During the deliberations on the adoption of ethical requirements, the ISCP reports that it expressed disagreement with the decision of the CVPCPA to adopt differing ethical requirements and offered to financially support the regulator with the use and distribution of the IESBA Code of Ethics for the jurisdiction. Subsequently, the ISCP states that in 2019, in collaboration with other PAOs in the jurisdiction, the CVPCPA was convinced to withdraw the decision to adopt its own Code.
The ISCP indicates that it monitors the cases of non-compliance with ethical requirements identified by the CVPCPA and has developed training activities on topics related to ethical standards.
The ISCP reports that it has signed agreements with the universities in El Salvador to disseminate the IESBA Code of Ethics and encourage universities to incorporate the IESBA Code of Ethics into the accounting curricula. In addition, the ISCP has taken steps to support its members with the implementation of the IESBA Code by disseminating information about updates through printed materials and its website; creating a question and answer section on its website to address ethical professional practices; and developing an annual survey of members’ compliance with the Code of Ethics.
The ISCP is encouraged to continue promoting the adoption of the latest version of the IESBA Code of Ethics. Considering the 2018 International Code of Ethics, which is a completely restructured and rewritten Code, the ISCP is encouraged to outline the steps it will take to promote the update to the CVPCPA. If deemed feasible and relevant, it would be beneficial for the ISCP, in collaboration with the CVPCPA, to participate in the international standard-setting process by providing comments on exposure drafts and other IESBA pronouncements to share its experiences and perspective.
- SMO 5: International Public Sector Accounting Standards
The ISCP is not responsible for setting public sector accounting standards, which are adopted by the Director General of Government Accounting (GOES) within the Ministry of Finance in El Salvador. Nevertheless, the ISCP reports that it promotes the adoption of IPSAS by meeting with the GOES to maintain a dialogue on how the institute can best collaborate with the GOES and support the adoption and implementation of IPSAS. As a result of these meetings, the ISCP shared the Spanish translation of the IPSAS with the National Commission for the Implementation of IPSAS for its analysis.
In addition, the GOES is receiving technical and financial support from the United States Agency for International Development to support the adoption of IPSAS. The ISCP reports that it is monitoring the project’s activities and in 2016, participated in a training course on IPSAS for public sector accountants.
The ISCP has established a Committee for the Public Sector that is responsible for monitoring changes to the standards and pronouncements issued by the IPSASB and disseminating the information amongst its members. Finally, the ISCP plans to conduct a research study on the status of IPSAS adoption within the Central America region; however, further details on this activity have been requested since ISCP first reported on it in June 2015
The ISCP is encouraged to outline the specific activities it is carrying out to promote a timeline for the GOES’s adoption and implementation of IPSAS in El Salvador. For example, the ISCP is encouraged to indicate if it provides training for its members that work in the public sector and if it has engaged with universities to incorporate the standards into accounting education curriculum. An update on its plans to carry out a research study on IPSAS adoption within Central America would also be beneficial.
- SMO 6: Investigation and Discipline
In El Salvador, the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) and the Superintendent of the Financial System (SSF) are responsible for investigating and disciplining (I&D) professional accountants, with the SSF carrying out I&D procedures for auditors of regulated companies and the CVPCPA conducting investigations and issuing sanctions for all other professionals. The ISCP conducted an assessment of the CVPCPA’s I&D policies and processes against the requirements of SMO 6 and has identified that gaps exist, such as a lack of linkage with the results of QA reviews, and members of the committee do not include non-accountants, among others.
The ISCP reports that it promotes the SMO 6 requirements to the CVPCPA by having two of its members sit on the CVPCPA’s Board which allows the institute to work closely with the oversight body to propose improvements and monitor the implementation of the CVPCPA’s I&D system. In addition, the ISCP indicates that it monitors the I&D cases led by the SSF.
To do this, ISCP has established its Investigation and Discipline Committee that is responsible for monitoring the CVPCPA’s disciplinary decisions. When ISCP members are issued disciplinary reports, the Committee will also request a corrective action plan to educate the member. Monitoring also allows the ISCP to gather statistical information on I&D cases for its tracking and reporting purposes.
Lastly, in 2018, the ISCP reported plans to review its statutes and CVPCPA’s regulation to promote the alignment of the I&D system with the SMO 6 requirement; no outcome has yet been reported
The ISCP is encouraged to provide an update on its SMO Action Plan on its initiatives to promote the incorporation of the SMO 6 requirements into the CVPCPA’s I&D system. In addition, the ISCP is strongly encouraged, in collaboration with the regulator, to assess the SSF’s I&D policies and processes against the best practices of SMO 6. If gaps in alignment exist, the ISCP is encouraged to prioritize collaborating with the SSF to develop plans to support the adoption and implementation of any missing components and update its SMO Action Plan accordingly.
- SMO 7: International Financial Reporting Standards
It is the responsibility of the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) and the Superintendent of the Financial System (SSF) to set accounting standards for financial statements of the respective companies under each agency’s supervision. The ISCP, however, indicates that it actively participates and contributes to the CVPCPA’s standard-setting process and pushed for the adoption of the full IFRS and IFRS for SMEs by the CVPCPA. It has two of its members sit on the CVPCPA’s Board and continues to work closely with the regulators to support ongoing adoption and implementation of the standards.
As part of these efforts, the ISCP has established a Professional Standards Committee that is responsible for monitoring changes to the standards and pronouncements issued by the IASB, promoting updates to the regulators and ensuring dissemination and training activities for its members. In 2016, the ISCP was able to encourage the CVPCPA to update the adopted version of the IFRS for SMEs to the 2015 Spanish translation.
To support its members with the implementation of the standards, the ISCP reports that it has undertaken several initiatives. It has provided specialized educational courses on IFRS and IFRS for SMEs to over 5,000 accounting professionals; offered preparatory courses for individuals pursuing the Inter-American Accounting Association’s (AIC) IFRS for SMEs certification; developed its own IFRS for SMEs diploma to improve accountants’ expertise and generate interest in obtaining the AIC’s certificate; and disseminates information to members and stakeholders on new and revised IASB pronouncements. The ISCP indicates that it is working with the Mexican Institute of Public Accountants to help make more resources and literature on the standards available.
The ISCP is encouraged to provide detailed information on its efforts and actions to promote the full adoption of IFRS for banks and other financial institutions in the jurisdiction to the SSF as this would ensure that all financial statements of public interest entities are prepared in accordance with IFRS. Additionally, if deemed feasible, it may be beneficial for the ISCP to participate in the international standard-setting process by providing comments on exposure drafts and other IASB pronouncements to share its experiences and perspective.
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