Member | Established: 1997 | Member since 2000
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
Until 2016 IEKA shared the responsibility for conducting quality assurance (QA) reviews with the Public Oversight Board (POB), which had reviewed the quality of work of auditors of public interest entities (PIEs), while IEKA conducted QA reviews for non-PIEs. However, with the changes introduced to the Law No. 10091 in 2016, the responsibility for conducting QA reviews was passed entirely to the POB, which may delegate QA reviews for non-PIEs to IEKA. As of 2020, the POB conducts reviews of PIEs only, and IEKA reports that it has been requesting that the POB utilize its delegation authority to allocate the responsibility for conducting reviews of non-PIEs to the institute.
In 2011, IEKA developed Quality Control Regulations and had an established QA review system based on most of the requirements of SMO 1. In 2013, IEKA undertook a review of its QA system to ensure it complies with SMO 1 (revised 2012). In 2013–2014 IEKA’s focus was on producing new requirements on quality control set in accordance with ISQC 1 and with the Law No. 10091. The quality control regulations were further updated in 2015. In 2016, IEKA reported full compliance with SMO 1 and demonstrated that it had established processes to review and improve existing procedures on an ongoing basis. In 2016, IEKA planned to further update its quality control and quality assurance regulations in line with the requirements of the amended Law No. 10091; however, this initiative was not implemented as the POB took over the responsibility for conducting the reviews.
The institute reports that it provides support to its members with the implementation of quality control standards and has over the years developed tools and conducted trainings for the reviewers and members to better understand QA review procedures and implement them in practice.
IEKA’s contribution to the development of a QA review system in the jurisdiction and its willingness to resume the reviews are commendable. Recognizing that the QA review system developed and operated by IEKA was in compliance with SMO 1, IEKA is encouraged to review the existing system in the jurisdiction against the requirements of SMO 1 and extend assistance to the POB in the areas where gaps exist, if any. If not already done so, it is recommended that IEKA takes the results of the reviews conducted by the POB in consideration when developing its CPD programming. In addition, considering the IAASB is revising ISQC 1, with the final standard to become effective tentatively in 2021–22, IEKA is encouraged to develop plans to prepare its members for the change and to raise awareness of the POB about the upcoming new standards.
SMO 2: International Education Standards
Under the oversight of the Public Oversight Board (POB), which overall is responsible for certification of auditors, IEKA is responsible for implementing initial and enforcing continuous professional development (CPD) requirements for auditors that are established in the law. In particular, IEKA is responsible for developing educational programming for auditors, verifying practical experience, and enforcing CPD requirements.
Over the last decade, IEKA has championed reforms in education of auditors. In 2019, IEKA launched a new model for education of auditors that is based on extending university education to professional settings. The new approach involves integration of educational programming delivered by higher education institutions (HEIs) and IEKA. To achieve this objective, IEKA worked over the last several years to align its curricula with international benchmarks and to assist HEIs to align their programs with the IEKA professional program at the basic and intermediate level. In 2019, an upgraded curriculum fully aligned with the 2019 IES was introduced that was developed as part of the World Bank Corporate Financial Reporting Enhancement Project. Within the new system, in addition to HEIs classes, candidates attend professional courses delivered by IEKA. As of 2020, to complete the full transition to the new model, IEKA is developing a system for recognition or accreditation of local HEIs and other international programs.
IEKA is also involved in verifying practical experience requirement for aspiring auditors established by the law, which requires a minimum three years of practical experience with a reputable statutory auditor or audit firm recognized by the IEKA. During the three years, the candidate must perform at least 600 hours of work in audit engagements. Reports from the employer on the candidate’s progress are submitted to the IEKA every six months.
IEKA members are required to complete at least 120 hours of CPD over a three-year period (40-60 hours per year). IEKA indicates that the content of CPD programming for its members is in line with the IES requirements. Compliance with the CPD requirement is monitored. The POB reviews fulfillment of CPD requirements and takes necessary measures in case of non-compliance.
IEKA’s contribution to the professional development of auditors in Albania over the years and the introduction of the new curriculum that is fully aligned with the 2019 IESs are commendable. Considering the newly revised IES that become effective in 2021, IEKA is encouraged, if not already doing so, to review the changes and incorporate them in their programming. The institute is also encouraged to raise awareness of other stakeholders involved in the education of professional accountants, especially those involved in the education of accountants, about the new requirements. IEKA could consider offering its expertise and share experiences with other PAOs and POB to bring the overall system of education in line with IES. During the next round of update, IEKA is encouraged to conduct a self-assessment against the entire suite of new IES, including those that are under purview of the POB and PAOs for accountants, and share the results in its SMO Action Plan. The IES Checklist and the Accountancy Education E-Tool developed by IFAC may be used to conduct an assessment and to consider available implementation support materials.
SMO 3: International Standards on Auditing
With ISAs adopted by law in Albania, IEKA is responsible for their translation into Albanian and has translated and made publicly available the 2018 version of ISAs.
To join the forces and to improve the translation process, a joint committee was set up between IEKA and Society of Certified Accountants and Auditors of Kosovo with the main objective to implement the translation process of new or revised ISA as they become available. Nevertheless, there have been delays in the translation process. In addition, the committee has also translated both parts of the ISA Guide for SMEs.
ISA are included in the institute’s educational programming, which is reportedly updated to reflect developments in the international standard-setting. In 2019, IEKA launched a new model for education of auditors, linking educational programming delivered by higher education institutions (HEIs) and IEKA’s program. The same year IEKA brought its curriculum fully in line with the IES, including requirements related to auditing. The version of ISA that is being taught as of the time of the assessment, needs to be established, however.
IEKA also reports that it continuously supports its members with the implementation of the standards by issuing implementation guidance, developing training activities, and disseminating information on the developments in the international standard-setting area. The institute so far has not participated in the IAASB public consultation process.
Although as of 2020, IEKA has translated and made publicly available the latest version of ISA, there appears to be a time lag between the issuance of new and revised ISA and their translation for application in Albania. IEKA, in cooperation with SCAAK, is encouraged to consider establishing a process that provides for a timely translation of the most recent IAASB pronouncements. The institute also needs to ensure that the latest IAASB pronouncements have been incorporated into its educational programming. It could also consider realizing its plans to participate in the international standard-setting process through providing comments to the IAASB exposure drafts and other public consultations.
SMO 4: Code of Ethics for Professional Accountants
With the IESBA Code adopted by law in Albania, IEKA is responsible for its translation into Albanian and has translated and made publicly available the 2018 version the IESBA Code.
IEKA reports that it has incorporated the 2018 IESBA Code into its initial and continuing professional development programs. In 2019, IEKA launched a new model for education of auditors, linking educational programming delivered by higher education institutions (HEIs) and IEKA’s program. A separate module on professional and business ethics covering the fundamental concepts and requirements of the IESBA Code has been introduced.
Although as of 2020, IEKA has translated and made publicly available the latest version of the IESBA Code, IEKA, in cooperation with SCAAK, is encouraged to consider establishing a process that provides for a timely translation of the most recent IESBA pronouncements. It should also consider enhancing its activities to support implementation of the Code. Such activities may include holding seminars and focused trainings, establishing a hotline for confidential questions, and disseminating information on the developments in the area through different communications means, among other activities. If deemed pertinent, IEKA may also consider participating in the international standard-setting by providing comments to the IESBA Exposure Drafts and other public consultations.
SMO 5: International Public Sector Accounting Standards
With no responsibility for the adoption of public sector accounting standards in the country, IEKA reports that it supports the adoption of IPSAS in the jurisdiction and disseminates information on IPSAS to relevant authorities, although no formal plan to promote adoption has so far been established.
The institute reports that it informs the Ministry of Finance (MoF) on the latest activities of the IPSASB, new IPSAS issued, and on trends in public sector accounting. It also provides training to public administration accounting staff in response to the MoF’s requests. In addition, IEKA publishes information on the developments occurring in the field of public sector accounting via its website and the magazine. The institute also contributed to the translation of IPSAS into Albanian in 2007–2008.
IEKA has demonstrated that, within the scope of its authority, it is committed to meet the SMO 5 obligations. The institute is encouraged to further consider opportunities in the area of public sector accounting and, if deemed relevant and practical, establish a formal plan to promote the adoption IPSAS to the relevant stakeholders.
SMO 6: Investigation and Discipline
With the establishment of the Public Oversight Board (POB), the disciplinary function for auditors, including IEKA’s members, has been assigned to the POB.
Prior to 2016, IEKA was responsible for the regulation of auditors, including investigation and discipline, and established in 2011 a system that, after several years of review and improvements, was reported to be fully in line with the requirements of SMO 6. Following the transfer of the legal responsibility, IEKA reports that it continues to operate its I&D system for its members. The Investigation and Discipline Committee of IEKA will investigate its members and forward the cases to the POB, which imposes sanctions involving removal or practicing rights for any regulatory breaches by IEKA’s members.
In its 2020 SMO Action Plan, IEKA indicated that it disseminates information on the outcomes of the disciplinary actions and publishes relevant information on I&D procedures applicable to IEKA members on its website and magazine. It also posts information on how to raise complaints.
Effective and efficient I&D procedures are foundational to maintaining public trust and confidence in the profession. Staff reiterate its recommendation put forward in 2016 that IEKA conduct an assessment of the new I&D system against the requirements of SMO 6 and work with the POB to ensure that the resulting system incorporates international best practices in the area, including those formulated in SMO 6. During the next round of updates, the IEKA is encouraged to present results of a self-assessment of the new I&D system against those of SMO 6. IEKA is also encouraged to consider promoting the establishment of an I&D system for the accountancy profession in general, including accountants, that is in line with the requirements of SMO 6 and offer its expertise to the professional organizations of accountants, if needed.
SMO 7: International Financial Reporting Standards
IEKA has demonstrated that, within the scope of its authority, it fulfills the SMO 7 obligations and is committed to ongoing improvement.
As IEKA has no direct responsibility for the adoption of accounting standards, it focuses on assisting the National Accounting Council (NAC)—the entity responsible for the setting accounting standards—in the process of adoption of national standards as well as translation and implementation of IFRS, which have been adopted for application in Albania for public interest companies, through its representation on the council.
In 2009, IEKA issued a convergence statement whereas it declared its intent to promote the adoption of IFRS without modification and to support the NAC in its standard-setting activities. In an ongoing manner, IEKA disseminates information on the international developments in the area, provides comments on the IASB Exposure Drafts, assists the NAC in drafting national accounting standards and circulating NAC’s Exposure Drafts, and contributes to the translation of IFRS, when needed.
IEKA also supports IFRSs implementation by its members by providing training, organizing seminars, and publishing articles in its magazine on the new and revised National Accounting Standards (NASs) and differences between the NASs and IFRS.
IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.
No 108, Nejatollahi St