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Latvian Association of Certified Auditors

Member | Established: 1994 | Member since 2009

LACA was founded in 1994 according to the Law on Sworn Auditors of January 22, 2004. The aim of LACA is to facilitate the development of audit profession at the national level. LACA has a wide range of responsibilities according to the Law on Audit Services including: (i) organizing professional education and examination; (ii) issuing licenses for audit firms and certified auditors and conducting quality assurance of their work; (iii) organizing continuing professional education; (iv) reviewing disputes; and (v) maintaining registers of auditors, including audit firms and individuals. Apart from IFAC membership, LACA also is a member of Accountancy Europe.

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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.

Last updated: 05/2023
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SMO Action Plan

Status of Fulfillment by SMO

  • SMO 1: Quality Assurance

    LACA has played a leading role in the establishment and development of a quality assurance (QA) review system in Latvia since 2005. Under the previous 2004 Law on Sworn Auditors, LACA had primary responsibility for the review of audits of all listed entities through the association’s Quality Control Committee.

    As a result of the EU Audit Reform and its transposition into the 2017 Law on Audit Services, responsibility for QA reviews is now shared between the Ministry of Finance (MoF) and LACA, with the MoF performing reviews of audits of all public interest entities (PIEs) and LACA performing reviews of audits of non-PIEs. The MoF, in cooperation with LACA, ensures quality control reviews utilize a risk-based and cyclical approach (with a review cycle of every 3 years for PIEs and every 6 years for non-PIEs). The MoF uses templates developed in the EU for quality inspections and regularly interacts with other country representatives to ensure best policies and practices are shared.

    LACA’s Quality Control Committee publishes annual reports of its QA reviews and regularly reviews its QA methodology and review processes to ensure that it remains in line with SMO 1 requirements. LACA has translated for adoption and implementation relevant standards such as ISQM 1 & 2 and ISA 220 (revised) into Latvian and is introducing changes to its QA procedures to address ISQM 1.

    LACA is encouraged to continue to monitor and prepare its members and stakeholders for the implementation of ISQM1. Resources on the quality management standards are available on the IAASB website.

    Current Status: Sustain

  • SMO 2: International Education Standards

    The Law on Audit Services as amended in July 2019 establishes the initial and continuing professional development (IPD and CPD, respectively) requirements for auditors in Latvia. The law also authorizes the Latvian Association of Certified Auditors (LACA) to implement the IPD and CPD requirements under the oversight of the Ministry of Finance. The MoF establishes the framework for the IPD – such as a university degree, practical experience, and exams – and LACA supports the MoF with creation of examination questions, offering the qualification examinations, and offers feedback on the examination process.

    The association states it monitors the demand of auditing firms and engages with universities to address educational needs and competencies to meet market demand. LACA states that the IPD provides the necessary technical competence, professional skills, and practical experience for the entry level position at auditing firms, which aligns with the competency-based approach of the IES requirements revised in 2019.

    With regards to CPD, LACA is continuously evaluating and updating its training program for the auditors to reflect the changing requirements of IES as well as local regulations and expectations of society. LACA has an annual reporting and monitoring system in place for the education activities undertaken (in hours and subjects—minimum of 30 hours CPD per annum are required with 120 hours CPD hours required over a 3-year period) of its members. Furthermore, LACA also has an Education Center that provides training and CPD courses to its members and utilizes the education statistics gathered from the trainings to verify its members’ CPD compliance. In addition, the association also has implemented a quality control mechanism over members’ compliance with CPD requirements.

    Finally, the association reports that it has established an ongoing process to promote and disseminate information about IES.

    LACA is encouraged to review and complete the IES Checklist developed by IFAC which may be useful in progressing with the adoption of the revised requirements of the IES. LACA may also consider utilizing the IFAC Accountancy Education E-Tool to review the current version of IESs and share these requirements with its members and stakeholders.

    Current Status: Review & Improve

  • SMO 3: International Standards on Auditing

    The Law on Audit Services as amended in July 2019 requires the use of ISA in Latvia as approved and translated by the Latvian Association of Certified Auditors (LACA). LACA has translated the 2016 IAASB Handbook in addition to all recent revisions effective by December 2022 (e.g., ISA 250, 540, 315; ISQM 1 & 2, ISA 220). All LACA activities are subject to the oversight of the Ministry of Finance.

    In addition to standard-setting, LACA also plays an important role in the implementation process by ensuring that auditors are aware of and applying the standards as intended. Since 2011, when the association first completed the adoption of the 2009 ISA and offered training to members with the support of the World Bank, LACA’s Education Committee and Education Center has provided regular trainings for its members concerning ISA, International Standards on Review Engagements, and other assurance standards and the standards’ updates and revisions. Recent trainings include ISQM 1 and ISQM 2; revisions to ISA 315; and the impact of war in Ukraine on audits.

    In addition, to facilitate consistent reporting in accordance with ISA, LACA prepares sample independent auditor’s reports and accompanying guidelines to auditors.

    Finally, as a member of the AAC—a consultative body to the Ministry of Finance on auditing matters—LACA actively supports the Ministry of Finance in providing technical guidance on the issuance and implementation of ISA and other IAASB pronouncements.

    Current Status: Sustain

  • SMO 4: Code of Ethics for Professional Accountants

    Various aspects of the IESBA Code of Ethics have been incorporated into the Law on Audit Services as amended in July 2019. Under the Law, certified auditors must abide by the IESBA Code of Ethics, as translated by the Latvian Association of Certified Auditors (LACA) and are bound by stringent independence rules. LACA has translated the 2022 International Code of Ethics to Latvian.

    To ensure effective implementation of the Code, LACA works through its Education Committee, Ethics Committee, and Education Center to regularly update its education and continuing professional development programs on revisions to the IESBA Code of Ethics. The institute highlights the importance of training methods on ethical and moral values as well as the need to continuously improve and understand professional ethics. LACA’s Ethics Committee also facilitates ongoing discussions and trainings for its members on potential ethical issues during its regular meeting of members.

    LACA is encouraged to continue its translation & training efforts in this area to ensure that professionals can implement revisions once effective.

    Current Status: Sustain

  • SMO 5: International Public Sector Accounting Standards

    In Latvia, the State Treasury, under the Ministry of Finance is responsible for the development of legislation for public sector accounting standards, which are national standards with accrual-based principles and the financial statements for central and local government and government-related entities are broadly IPSAS compliant.

    While it has no responsibility for the adoption of public sector accounting standards in the jurisdiction, LACA reports that it cooperates closely with the State Treasury under the Ministry of Finance to support standard-setting activities. It actively promotes the adoption of IPSAS with the State Treasury and State Audit Office and provides comments on draft legislation to make improvements to the existing public sector accounting legislation—for example, on the recent 2019 Law on Procedure for Preparation of the Annual Report.

    In addition, LACA reports it is considering providing technical assistance and support to public sector accountants on specialized areas such as performance audits.

    LACA is encouraged to continue its advocacy with Treasury to converge national standards with IPSAS especially now that the State Revenue Service is to transition to accrual accounting this year. Adoption of accrual IPSAS as issued by the IPSASB would ensure application of global best practice. It may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for training and educational activities it is considering.

    Current Status: Sustain

  • SMO 6: Investigation and Discipline

    In Latvia, a mandatory investigative and disciplinary (I&D) system for certified auditors is based on the Law on Audit Services as amended in July 2019. Under the law, the I&D function for certified auditors is shared between the Ministry of Finance (MoF) and the Latvian Association of Certified Auditors (LACA). MoF’s mandate includes the oversight of LACA’s activities, including investigation and discipline. The Ministry of Finance is responsible for the I&D regarding auditors of public interest entities.

    LACA has implemented I&D mechanisms for its members related to misconduct and failure to meet rules and regulations. All the association’s I&D activities are performed jointly by its Quality and Ethics Committees. The Quality Committee is responsible for investigation activities while the Ethics Committee is responsible for decisions on disciplinary actions.

    LACA further explains that the I&D procedures are defined in three sets of internal rules which are updated on an ongoing basis: (i) Rules of the Quality Committee (last updated for 2022); (ii) Rule of the Ethics Committee (last updated in 2018); and the (iii) Rules on Disciplinary Case Initiation, Investigation and Prosecution (last revised in 2019). In addition, LACA reports that the existing I&D arrangements for auditors have been further reviewed with a focus on enhancing the role of the oversight board in line with the amended EU Audit Directive and strengthening its independence.

    According to LACA, the I&D system is compliant with SMO 6 requirements, noting that both complaints-based and information-based approaches are used in practice. In 2019, LACA finalized the rules on disciplinary case initiation, investigation, and prosecution to clarify the timings of different stages of I&D processes including case review and external communications. LACA reports that it continues ongoing discussions with the Ministry of Finance to implement legislative amendments for I&D systems.

    LACA has demonstrated that it is committed to meeting the SMO 6 obligations and has a process in place to review and improve its I&D procedures as needed.

    Current Status: Review & Improve

  • SMO 7: International Financial Reporting Standards

    The 2013 EU Accounting Directive was adopted in Latvia and transposed under the 2016 Law on Annual Financial Statements and Consolidated Financial Statements which sets the requirements for the preparation of corporate financial statements in Latvia. It outlines accounting standards to be applied—either EU-endorsed IFRS or Latvian Generally Accepted Accounting Principles (GAAP)—based on company size and type.

    With no responsibility for the adoption of accounting standards, LACA states that it uses its best endeavors to broaden the adoption and mandatory application of IFRS in the jurisdiction. Presently, EU-endorsed IFRS are required or permitted for listed and unlisted companies, development financial institutions, and large state-owned enterprises.

    Through its Education Committee and Education Center, LACA also provides ongoing training on IFRS with materials translated in Latvian. LACA reports that its course curriculum, which includes new updates and common implementation issues, has been recognized by the Ministry of Education; and that up-to-date texts of all IFRS, including interpretations and annual improvements as adopted by the EU is available on the Ministry of Finance site at: International accounting (financial reporting) standards in the EU. Most recent update topics included IFRS 16 in 2020 and 2019 and IFRS 9 and IFRS 15 in 2018.

    Additionally, LACA and the Association of Accountants in the Republic of Latvia established a cooperation agreement in 2012 with the objective of enhancing the Latvian financial reporting framework. The agreement covers collaboration on the following issues: (i) creating favourable conditions for the development of accountants, auditors and other related professions in Latvia; (ii) achieving a qualitative development of the Latvian financial reporting system, including the introduction of the requirements of the EU legislation, IFRS, as well as other standards; (iii) improving the quality of financial reporting as well as the implementation of best practice models in the field of accounting, financial reporting and auditing.

    LACA has demonstrated that, within the scope of its authority, it is committed to meet the SMO 7 obligations and has established ongoing processes to maintain compliance.

    Current Status: Sustain


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.


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