Kuwait Association of Accountants and Auditors

Member | Established: 1973 | Member since 1987

KAAA, which is a mandatory membership organization for accountancy professionals, was founded in 1973 by the Decree Law No. 5 of 1981 on the Practice of the Auditing Profession. KAAA is directly responsible for (i) delivering initial and continuing professional development under the supervision of the MCI for members which includes Chartered Accountants and Auditors; (ii) managing and conducting professional examinations with the exam committee for the certification of accountants as well as auditors; and (iii) maintaining a registry of its members.

In addition to being a member of IFAC, KAAA is also a member of the Accounting and Auditing Organization for Islamic Financial Institutions (AAAOFI).

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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.

Methodology
Last updated: 09/2022
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SMO Action Plan

Status of Fulfillment by SMO

  • SMO 1: Quality Assurance

    Under the Capital Markets Law (No. 7 of 2010), the Capital Markets Authority (CMA) is responsible for conducting quality assurance (QA) reviews of audits of public interest entities (PIEs), which are defined as listed and financial institutions. As of the date of the assessment, CMA’s QA review system is the only operational QA system in the jurisdiction. The Kuwaiti Association of Accountants and Auditors (KAAA) reports that the system is partially in line with SMO 1 requirements. In 2013, KAAA initiated an ongoing process to review, identify, and propose modifications to the QA review system in cases of divergence.

    The Decree Law No. 5 of 1981 on the Practice of the Auditing Profession stipulates that a QA review system for audits of non-PIEs also be established and operated by the Ministry of Commerce and Industry (MCI). According to KAAA, MCI’s mandatory QA review system was expected to be completed by 2019 (pending parliament approval). However, due to the global COVID-19 pandemic, plans have been delayed and KAAA cannot confirm when the system will be established and operational. As of 2022, the extent of KAAA’s role remains unclear, and if the envisioned system will be in line with SMO 1 requirements. In the meantime, KAAA reportedly uses a QA review questionnaire for its members which covers auditors non-PIEs.

    KAAA reports to meet with representatives from the MCI to promote alignment with SMO 1 requirements regularly. It also states it has initiated discussions with the MCI to share responsibilities for QA reviews of non-PIE audits. KAAA plans to cooperate with audit firms to facilitate understanding of QA reviews and increasing awareness through meetings and guidance material.

    To support its members in preparing for the shift from quality control to quality management standards, KAAA has been conducting trainings.

    KAAA is encouraged to complete the full self-assessment checklist against SMO 1 requirements – Quality Assurance Review Systems (available in Arabic) for inclusion in the SMO Action Plan document. It should also develop specific actions to close any existing gaps during the next round of its SMO Action Plan update.

    KAAA should maintain regular communication and collaboration with the MCI to ensure that the proposed QA review system in the jurisdiction for non-PIE audits will incorporate international best practices, including those formulated in SMO 1, and so that it can be made aware of any deficiencies among its membership that require either additional education or disciplinary action as necessary. KAAA is also encouraged to resume its collaboration (from 2013) with the CMA to promote full alignment of the QA review system for PIE audits with SMO 1 best practices. Lastly, while the KAAA is already preparing its members for the shift from quality control to quality management standards, KAAA is encouraged to engage with both the MCI and CMA as well via education, advocacy, and outreach, since the standards will come into effect in December 2022.

    Current Status: Execute

  • SMO 2: International Education Standards

    Initial and continuing professional development requirements (IPD and CPD, respectively) for accountancy professionals are stipulated in national legislation—the Decree Law No. 5 of 1981 on the Practice of the Auditing & the Capital Markets Law (No. 7 of 2010)—and are implemented by the Kuwaiti Association of Accountants and Auditors (KAAA) under the supervision of the Ministry of Commerce and Industry (MCI) for accountants and auditors of non-public interest entities (non-PIEs); and the Capital Markets Authority (CMA) for PIEs, respectively.

    In 2022, KAAA completed a review of the existing requirements in the jurisdiction against those of the revised 2019 IES during a project with IFAC staff. Additional information from the multiple stakeholders involved in accountancy education is needed to further determine the extent of IES adoption particularly as it relates to university curricula/entry level education (IES 1-4); practical experience (IES 5); and exam/assessment of competencies (IES 6).

    KAAA reports several ongoing initiatives in its SMO Action Plan which include, but are not limited to: (i) identifying the technical and financial resources needed to improve professional accountancy education; (ii) increasing the range and rigor of courses offered; (iii) revising and enhancing examination requirements for Chartered Accountants and Auditors; (iv) increasing the number of learning events (for example, thematic lectures, seminars, round tables, and scientific-practical conferences) to improve skill level; and (v) including various standard-related topics and content in training courses and material.

    KAAA reports to monitor new and revised IES and proposes relevant changes to various education providers and regulators. It also reportedly updates its own education requirements and curricula in line with new and revised IES on an ongoing basis. CPD is required by law, and all KAAA members are required to adhere to the requirements as stipulated by IES 7. KAAA provides its members with copies of the CPD policies, and its Training and Professional Development Committee monitors fulfillment of these requirements on an annual basis.

    To further support its members, KAAA signed a memorandum of understanding (MoU) with the Institute of Chartered Accountants of India (ICAI) in 2019, to strengthen the accounting, financial and audit knowledge base in Kuwait. Under the MoU, ICAI collaborates with KAAA to offer technical training programs to the employees of Kuwaiti Government/Ministries, as well as to KAAA members.

    The IESs improve the quality of professional accountancy education worldwide by prescribing requirements for initial and continuing education & development that ensures accountants have the proper competencies to provide high-quality services. KAAA should continue collaborating with regulators and universities to adopt education requirements that meet the latest IES and align with global best practice for all professional accountants. KAAA can refer to examples in the region for best practices and learnings regarding the adoption of IES — there are examples on voluntary certifications/examinations and accrediting universities’ curricula. The Accountancy Education E-Tool and the IES Checklist developed by IFAC may be useful to identify implementation support materials and the KAAA’s Training and Professional Development Committee should review these available tools as part of its determining the next steps in its work plan.

    Current Status: Execute

  • SMO 3: International Standards on Auditing

    The Decree Law No. 5 of 1981 on the Practice of the Auditing Profession delegates audit standard-setting authority to the Ministry of Commerce and Industry (MCI). The MCI requires adoption of ISA as issued by the IAASB for audits of all types of companies. As of the 2022, the 2020 IAASB Handbook is in effect in the jurisdiction.

    The Kuwaiti Association of Accountants and Auditors (KAAA) has an advisory role with regards to adoption and therefore focuses its efforts on providing implementation support to its members via continuing professional development courses on ISA and any updates to the standards.

    For example, KAAA conducts two-day conferences (approximately every two years) on common challenges with the implementation of any revisions such as new auditor reporting standards (2017 conference). It also conducts annual training seminars for university professors to assist them in teaching the theoretical and practical application of new and revised ISA. KAAA reports that it prepares and publishes articles in the KAAA Magazine to raise awareness on new and revised standards and supplies its members with Arabic translations of the Handbook.

    Lastly, KAAA encourages members to provide contributions to the IAASB exposure drafts and other public consultations.

    Current Status: Sustain

  • SMO 4: Code of Ethics for Professional Accountants

    Accountancy professionals are subject to ethical requirements, as per the Decree Law No. 5 of 1981 on the Practice of the Auditing Profession, which are set by the Ministry of Industry and Commerce (MCI). As of 2022, the Kuwaiti Association of Accountants and Auditors (KAAA) reports that the MCI Code of Ethics is converged with the English version of the 2018 International Code of Ethics issued by the IESBA. KAAA reports that it will work with the MCI to converge with the latest version of the Handbook once it is available in Arabic.

    Auditors of public interest entities (PIEs) are also subject to ethical requirements stipulated in the Capital Markets Law (No. 7 of 2010). The law delegates ethics standard-setting to the Capital Markets Authority (CMA) which adopted the International Code of Ethics as issued by the IESBA for auditors of PIEs.

    Although KAAA has no responsibility for adoption of ethical standards in Kuwait, it reports to meet with the MCI on a regular basis to promote adoption of new and revised versions of the International Code of Ethics. In 2018, KAAA signed a memorandum of understanding with the International Arab Society for Certified Accountants (IASCA) to distribute the Arabic translation of the 2018 Code.

    KAAA employs several awareness and training initiatives to support its members in understanding and applying the ethical requirements. This includes continuing professional development courses and annual two-day conferences on topics related to the IESBA Code of Ethics. It reportedly prepares and publishes articles in the KAAA Magazine to raise awareness on new and revised standards and plans to promote the latest Handbook to the MOC to encourage convergence.

    Lastly, KAAA encourages members to provide contributions to the IESBA exposure drafts and other public consultations.

    It is essential to the public interest that professional accountants adhere to the latest ethical requirements. Now, the 2021 Handbook is currently effective, with changes in the terms and concepts used in the IAASB's International Standard on Assurance Engagements (ISAE) 3000 (Revised), and revisions to promote the role and mindset expected of all professional accountants that were effective in 2021. In addition, KAAA should also take note of changes that will be effective in December 2022, including the objectivity of an engagement quality reviewer and other appropriate reviewers, revisions to the non-assurance services, and revisions to the fee-related provisions.

    KAAA is also encouraged to include actions/plans in its SMO Action Plan related to promoting the importance of adopting the International Code of Ethics for all professional accountants in the jurisdiction to relevant authorities and stakeholders.

    Current Status: Execute

  • SMO 5: International Public Sector Accounting Standards

    The Ministry of Finance (MoF) is responsible for accounting standard-setting for public sector entities. The Kuwaiti Association of Accountants and Auditors (KAAA) reports that public sector standards in Kuwait are cash-based.

    Although KAAA has no direct responsibility for adoption of public sector accounting standards, it reports to have been working to promote adoption of IPSAS by engaging in discussions with the MoF. It has provided the MoF (as well as KAAA’s members) with the latest Arabic translation version of the Handbook from the Arab International Society for Certified Accountants which is the 2021 Handbook to foster awareness and better understanding of the standards.

    KAAA states that it prepares and publishes articles in the KAAA Magazine to raise awareness on new and revised standards amongst its members. It also provides its members with guidance material, seminars, continuing professional development course offerings, and IPSASB exposure drafts.

    KAAA is encouraged to provide an update on the MoF’s plans to adopt accrual-basis IPSAS plans. KAAA may also find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for training and educational activities it offers. Although KAAA appears to be supporting adoption of IPSAS in the jurisdiction, it 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.

    Current Status: Review & Improve

  • SMO 6: Investigation and Discipline

    Auditors of public interest entities (PIEs) are subject to the Capital Markets Authority (CMA) investigation & disciplinary (I&D) system as stipulated in the Capital Markets Law (No. 7 of 2010). Meanwhile, under the Decree Law No. 5 of 1981 on the Practice of the Auditing Profession, the Ministry of Commerce and Industry (MCI) is responsible for conducting investigations & disciplinary (I&D) proceedings for all other accountancy professionals. The MCI has established a Disciplinary Committee, comprising representatives from the MCI, the business community, and the Kuwaiti Association of Accountants and Auditors (KAAA). The most recent assessment of I&D procedures that KAAA carried out was in 2015. Since KAAA did not fully complete the checklist, the extent of fulfillment of the I&D procedures with the requirements of the SMO 6 requires further clarification.

    KAAA states that it assists the MCI with the implementation of the system (i) through its representative on the Disciplinary Committee and (ii) by having procedures in place within the association to report its members for misconduct and non-compliance with applicable standards and regulations. KAAA also raises its members’ and the public’s awareness of how the I&D system functions by disseminating information on the rules and procedures in seminars, training sessions and on its website.

    KAAA states that it encourages the MCI to incorporate the SMO 6 requirements in its system. It reports to have proposed expanding the powers of the MCI to adopt new sanctions in draft legislation, which is still pending Ministerial approval as of the date of this assessment due to delays from the global COVID-19 pandemic.

    I&D procedures that meet the SMO 6 benchmark are foundational to maintaining public trust and confidence in the profession. The CCPPE’s enforcement mechanism continues to have a number of areas for improvement that remain outstanding since its last Action Plan update. As a matter of priority, KAAA is encouraged to complete the full self-assessment checklist against SMO 6 requirements – Investigation & Discipline Systems (available in Arabic) for inclusion in the SMO Action Plan document. It should also develop specific actions to close any existing gaps during the next round of its SMO Action Plan update. KAAA is strongly recommended to prioritize organizational initiatives that will result in a strengthening of these procedures.

    KAAA may also consider its role regarding enforcement at the jurisdictional level and provide more details and information about its plans either to recommend and support the implementation of I&D processes in line with the SMO 6 requirements to the financial sector regulators, or to promote a unified national system that can investigate and discipline all professional accountants while being in line with SMO 6.

    Lastly, KAAA is also encouraged to provide an update on the draft legislation that is still pending and its impact on I&D alignment at the jurisdiction level.

    Current Status: Plan

  • SMO 7: International Financial Reporting Standards

    Ministerial Resolution No.18 of 1990 (as amended) stipulates the requirements for the preparation of financial statements, including applicable accounting standards. In accordance with the law, the Ministry of Commerce and Industry (MCI) is the accounting standard setter for all companies, and it consults with the Kuwait Association of Accountants and Auditors (KAAA). IFRS as issued by the IASB are mandatory for the preparation of financial statements by all companies.

    Although KAAA has no responsibility for the adoption of IFRS, it reportedly established an ongoing process for monitoring IASB standard-setting activities and disseminating information on new and revised standards. In addition, KAAA states it liaises with university professors on the incorporation of changes to IFRS into university courses.

    KAAA supports its members with implementation of the standards through seminars and training via the Training Committee. For example, in 2012, the KAAA Training Committee introduced an IFRS Update Program for its members which continues to operate as of 2022 to address IFRS implementation challenges and ways to overcome said challenges.

    Lastly, KAAA encourages members to provide contributions to the IASB exposure drafts and other public consultations.

    Current Status: Review & Improve

Disclaimer

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.

 

Contact

P.O. Box: 22472 - Safat
Postal Code: 13085, Kuwait, Telex: Al-Muraja’a
Kuwait
Tel: 00965-24849799
Fax: 00965-24836012
Info@kwaaa.org
http://www.kwaaa.org/

 

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