Latvian Association of Certified Auditors

The Latvian Association of Certified Auditors (LACA) has played a central role in the establishment and ongoing development of a quality assurance (QA) review system in Latvia. Under the current framework established by the Law on Audit Services, responsibility for QA reviews is shared between the Ministry of Finance (MoF) and LACA, with the MoF conducting reviews of audits of public interest entities and LACA conducting reviews of audits of non-public interest entities.

The QA review system is operational and applies a risk-based and cyclical approach, with defined review cycles for both public interest entities and non-public interest entities. The MoF cooperates with European counterparts and applies established methodologies for quality inspections, while LACA maintains oversight of its QA processes through its Quality Control Committee, including the publication of annual reports and ongoing review of methodologies.

LACA supports the implementation of quality management standards through the translation and dissemination of relevant standards, including the International Standards on Quality Management (ISQM 1 and ISQM 2) and International Standard on Auditing (ISA) 220 (Revised), and has incorporated these standards into its QA framework.

Through these activities, LACA maintains established processes to fulfill its SMO 1 obligations and demonstrates a sustained commitment to maintaining an effective and operational QA review system.

Current Status: Sustain

Initial and continuing professional development requirements for auditors in Latvia are established under the Law on Audit Services and implemented by the Latvian Association of Certified Auditors (LACA) under the oversight of the Ministry of Finance (MoF). The framework includes requirements for higher education, practical experience, and successful completion of professional examinations.

LACA supports the implementation of initial professional development by administering qualification examinations, collaborating with universities, and engaging with stakeholders to ensure that education programs align with the competencies required for the audit profession. The education framework incorporates a competency-based approach consistent with the International Education Standards (IES).

LACA has established continuing professional development (CPD) requirements of a minimum number of hours over a defined period and maintains systems to monitor and enforce compliance. The association provides a range of training and educational activities through its education programs and regularly updates its offerings to reflect developments in standards, regulations, and professional expectations.

LACA also promotes awareness and understanding of the IES through ongoing communication and engagement with members and stakeholders. Through these activities, LACA maintains established processes to fulfill its SMO 2 obligations and demonstrates a sustained commitment to maintaining high-quality professional education in line with the IES.

Current Status: Sustain

Under the Law on Audit Services, statutory audits in Latvia are required to be conducted in accordance with International Standards on Auditing (ISA) as issued by the International Auditing and Assurance Standards Board (IAASB). The Latvian Association of Certified Auditors (LACA) is responsible for the adoption and translation of ISA for application in the jurisdiction, under the oversight of the Ministry of Finance (MoF).

LACA supports the implementation of ISA through the timely translation and dissemination of standards, including recent updates contained in the latest IAASB Handbook. The association provides ongoing training and technical guidance to members through its education programs, covering new and revised standards as well as emerging issues affecting audit practice.

To promote consistent application of ISA, LACA develops practical tools and guidance, including illustrative auditor’s reports and implementation materials. LACA also contributes to the development and implementation of auditing standards through its participation in the Audit Advisory Council, supporting the MoF with technical input on auditing matters.

Through these activities, LACA maintains established processes to support the implementation of ISA and demonstrates a sustained commitment to maintaining high-quality auditing practices in line with international standards.

Current Status: Sustain

Ethical requirements for auditors in Latvia are established under the Law on Audit Services, which incorporates key provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code). The Latvian Association of Certified Auditors (LACA) is responsible for the translation and implementation of the Code, under the oversight of the Ministry of Finance (MoF).

LACA has translated and implemented the 2023 edition of the IESBA Code and supports its application through training and continuing professional development activities. The association promotes awareness of ethical requirements through its Education Committee, Ethics Committee, and Education Center, including regular training sessions and discussions on emerging ethical issues.

While LACA maintains established processes to support the implementation of the IESBA Code, the version applied is not the most current version in effect as of the time of the assessment. As such, further efforts are needed to ensure timely adoption and incorporation of updates to the Code.

LACA is encouraged to reduce the time lag between the issuance of revisions to the IESBA Code and their adoption in the jurisdiction, and to continue strengthening implementation support to ensure alignment with the latest ethical requirements.

Current Status: Review & Improve

Public sector accounting standards in Latvia are developed by the State Treasury under the Ministry of Finance (MoF). The applicable framework consists of national standards based on accrual principles that are broadly aligned with International Public Sector Accounting Standards (IPSAS).

The Latvian Association of Certified Auditors (LACA) does not have direct responsibility for the adoption of public sector accounting standards. Within the scope of its mandate, LACA engages with relevant stakeholders, including the State Treasury and the State Audit Office, and contributes to the development of the public sector financial reporting framework through consultation on draft legislation and standard-setting initiatives.

LACA supports the advancement of public sector financial reporting by promoting awareness of IPSAS and exploring opportunities to provide technical assistance and training to public sector professionals in specialized areas.

Given the nature of its mandate and the legal and regulatory environment, LACA is not directly involved in activities related to the adoption of IPSAS.

Current Status: Sustain

An investigative and disciplinary (I&D) system for certified auditors in Latvia is established under the Law on Audit Services and operates under a shared responsibility model between the Ministry of Finance (MoF) and the Latvian Association of Certified Auditors (LACA).

The MoF is responsible for investigation and disciplinary procedures related to audits of public interest entities and provides oversight of LACA’s activities. LACA administers the I&D system for auditors of non-public interest entities through established procedures and committees responsible for investigation and disciplinary decision-making.

LACA has implemented a structured I&D framework supported by internal rules governing investigation, disciplinary processes, and case management. The system incorporates both complaints-based and information-based approaches and has been strengthened to enhance independence and align with EU requirements. LACA continues to review and update its procedures and engage with the MoF on potential legislative enhancements.

While the I&D system for auditors is operational and largely aligned with SMO 6 requirements, further improvements are needed to ensure full alignment across all professional accountants in the jurisdiction and to continue strengthening independence, transparency, and consistency of processes.

LACA is encouraged to continue advancing reforms to fully align its I&D system with SMO 6 requirements, including enhancing coordination with relevant stakeholders and strengthening the overall effectiveness and transparency of the system.

Current Status: Review & Improve

Corporate financial reporting requirements in Latvia are established under the Law on Annual Financial Statements and Consolidated Financial Statements, which transposes the EU Accounting Directive and sets out the applicable accounting framework. Entities are required or permitted to apply International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), depending on their size, type, and public accountability.

The Latvian Association of Certified Auditors (LACA) does not have direct responsibility for the adoption of accounting standards. Within the scope of its mandate, LACA supports the implementation of IFRS by providing training, guidance, and access to relevant materials for its members. Through its education programs, LACA promotes awareness of new and revised standards and supports consistent application in practice.

LACA also collaborates with other professional bodies and stakeholders to support the development of the financial reporting framework and the implementation of EU legislation and IFRS. These efforts contribute to the overall quality of financial reporting in the jurisdiction.

Through these activities, LACA maintains established processes to support the application of IFRS and demonstrates a sustained commitment to fulfilling its SMO 7 obligations within the scope of its authority.

Current Status: Sustain