Lebanese Association of Certified Public Accountants
Member | Established: 1964 | Member since 1981
The LACPA was created by the Accountancy Profession Act No. 364/1994 and is the sole organization in Lebanon representing the accountancy profession in the country. The institute establishes national standards on ethics, auditing, accounting education and accounting practices and by providing guidance, training, and professional development it strives to ensure the highest quality performance by Lebanese professional accountants.
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
Under the Accountancy Profession Act No. 364 of 1994, LACPA has the authority to regulate all auditors which are required to be Certified Public Accountants (CPAs) registered and licensed by the association.
In 2013, LACPA amended its bylaws to establish the necessary mechanisms for a mandatory peer-review quality assurance (QA) review system for all CPAs. Implementation of the system is planned for Q4 2016 with a focus on a representative sample of listed and public companies. The association reports that its quality control manual has been reviewed to ensure its compliance with the revised requirements of SMO 1 (2012).
As part of the amendments to its bylaws, LACPA established two new committees: the Quality Control Supervisory Committee (QCSC) and the Quality Control Technical Committee (QCTC). The committees are meant to be independent, and LACPA reports that the bylaws for each have been developed to ensure independence in the composition of its members. LACPA has plans to develop the required tools and resources to ensure a confidential environment for the QCSC and QCTC to work at the association’s premises by maintaining separate offices, IT infrastructure, and database.
In order to support implementation of the QA review system, LACPA conducted a series of events and activities in the 2014–2015 periods which include: production of an audit manual and related working papers for Small and Medium Practices (SMPs); workshops to support SMPs; identification of international and local partners to provide financial support for the peer review program in the early years; selection and training of external quality assurance reviewers; and hosting technical workshops for its members, trainees, and the business community. Additionally, LACPA hosted a technical workshop in 2015 with trainers from the American Institute of Certified Public Accountants for approximately 70 peer reviewers from Egypt, Lebanon, and Jordan, which will constitute the core source of peer reviewers in the region.
The focus for the association has been continuing its implementation support efforts, ensuring the committees are operational, appointing a technical advisor from LACPA to the QCTC, and continuing to identify international and local partners to provide financial support for the QA program.
LACPA is encouraged to conduct a self-assessment of the QA review process against the SMO 1 requirements and develop specific actions to close existing gaps, if any. During the next round of its Action Plan update, LACPA is encouraged to provide an update on the implementation of the QA review system for its members. Importantly, the new suite of Quality Management standards that will become effective in 2021–2022 will require significant change management for regulators and firms. LACPA is encouraged to prepare members and raise awareness of the changes from quality control standards to quality management standards and update its training programming to ensure that its members are sufficiently prepared to apply the standards once they become effective.
SMO 2: International Education Standards
The Accountancy Profession Act No. 364 of 1994 defines initial professional development (IPD) requirements for aspiring Certified Public Accountants (CPAs). The act requires all CPAs to be registered and licensed members of the Lebanese Association of Certified Public Accountants (LACPA) and grants the association the authority to establish final competency examinations and continuing professional development (CPD) requirements for its members.
The IPD requirements for CPAs include a university degree in accounting from a university that is recognized by the Ministry of Education, three to five years’ experience supervised by a LACPA member, and successful completion of LACPA’s professional examination which includes a theoretical and practical component to assess competencies.
The curricula for public universities are established by the Ministry of Higher Education. As for the private universities, curricula are approved by the Ministry of Higher Education.
LACPA requires CPAs to attend a minimum of 40 hours of CPD annually. The association monitors the fulfillment of CPD requirements by requiring members to submit evidence.
LACPA indicates that it established and monitors additional requirements in line with IES 8 for engagement partners. CPAs may jointly establish professional non-trading partnership or companies in collaboration with financial, management and economic experts.
During the 2013–2015 periods, LACPA established its own training institute which offers specialized seminars and workshops on topics such as ISA, IFRS, Business Soft Skills, and Law and Taxation. Furthermore, the association—in collaboration with the World Bank—launched a program to offer professional diplomas in association with international organizations such as the American Institute of Certified Public Accountants (AICPA), the Institute of Management Accountants (IMA), and the Association of Certified Chartered Accountants (ACCA). LACPA has partnered with local regulatory bodies to benefit from the diploma programs being offered.
During the same timeframe, the association has amended the bylaws of the Examination Committee to ensure rotation of its members every three years and to schedule two exams on a semi-annual basis. Furthermore, LACPA adopted a new examination syllabus that it reports to be in line with new international requirements. To support adoption of the IES, the association makes the examination syllabus available to all universities operating in Lebanon and promotes and assists universities to adopt the standards of the exams.
In 2022, LACPA conducted a preliminary self-assessment of education requirements at the jurisdiction level and identified some gaps in alignment. LACPA indicates that once the situation in-country permits, it plans to conduct a follow-up gap analysis, particularly in reviewing university curricula, to clarify the extent of alignment with the revised IES of 2019—subject to delay due to ongoing crisis in Lebanon since 2019.
The latest IES standards reflect the need for competency-based approaches as well as the increasing demand for accountants skilled in information and communications technologies and place further emphasis on professional skepticism skills and behaviors. These apply to both aspiring and professional accountants. The Accountancy Education E-Tool and the IES Checklist developed by IFAC & available in Spanish may be useful and LACPA should review these available tools as part of its work plan to advocate for IES adoption.
SMO 3: International Standards on Auditing
According to the Accountancy Profession Act No. 364 of 1994, LACPA proposes auditing standards to the Ministry of Finance (MoF), which sets the audit requirement for companies as well as the standards through ministerial decrees and orders.
As the MoF has adopted ISA as issued by the IAASB without modifications based on proposals by LACPA, the association primarily focuses its activities on providing implementation support for its members.
LACPA reports that it continuously informs members of new and revised pronouncements issued by the IAASB through articles in its professional magazine, website, and email alerts. Furthermore, the association has incorporated new and revised standards into its continuous professional development program as well as the seminars and workshops it puts on for members and the regulators.
Since 2014, LACPA has set up a training schedule in collaboration with the regulators. During 2015, LACPA conducted a year-long training program for all of its members on the revised audit manual and held a special panel at its 20th Congress on the New and Revised Auditor Reporting Standards. The association also organized specialized training workshops on new and revised ISA issued by the IAASB in 2015, to which the regulatory bodies in Lebanon were invited to attend.
While LACPA closely follows developments and proposals of the IAASB, the association has been working since 2014 to acquire the services of a technical advisor to assist in commenting on the latest amendments, exposure drafts, and other consultations of the IAASB.
The 2020 IAASB Handbook is available, which includes ISA 540 revised (effective December 2019) and conforming amendments arising from the IESBA Code of Ethics. If not doing so already, ICAG should be providing proactive implementation support on ISA 315, ISQM 1, ISQM 2, ISA 220 (revised), and ISRS 4000 (revised) that will become effective throughout 2021 – 2022 to prepare auditors to properly apply the standards upon effective date.
SMO 4: Code of Ethics for Professional Accountants
The Accountancy Profession Act No. 364 of 1994 grants authority to LACPA to set ethical requirements for its members, under the oversight of the Ministry of Finance (MoF). Since 2014, LACPA has reported that it is drafting amendments to the Act No. 364 to allow revisions to its Code without approval of the MoF; however, at the time of the assessment, the status of the proposed amendments and the progress made are unclear.
LACPA last issued its Code in 2006, which it reports was then in line with the IESBA Code of Ethics. While the association reports that it has a process in place to monitor all new and revised pronouncements from the IESBA and communicate these to its members, it is not clear whether any subsequent versions of the Code were adopted.
LACPA’s plans to support the implementation of the Code by its members since 2014 have primarily focused on including the IESBA Code into its continuing professional development curriculum, as well as calling the Professional Ethics Advisory Committee of the association to promote the Code and assist members in understanding it for application. However, it is not clear if LACPA has progressed with the execution of these activities.
As a matter of priority, LACPA is also strongly encouraged to update its SMO Action Plan to indicate progress it has made and current status of the draft law changes. The 2021 version of the International Code of Ethics is now available, which namely differs from the 2020 Handbook by including approved revisions that will become effective in December 2022, such as: revisions to non-assurance services, fees, and objectivity of an engagement quality reviewer. Furthermore, the association should include in its SMO Action Plan specific plans regarding its activities to provide members with the Code, address differences with the IESBA Code, provide translations (if needed), as well as specific activities to educate its members. Lastly, the association should consider plans to participate in the international-standard setting process by providing comments and response to exposure drafts and other consultation issued by the IESBA.
SMO 5: International Public Sector Accounting Standards
LACPA reports that it has been actively engaged with the Ministry of Finance (MoF), the entity responsible for the adoption of public sector accounting standards, to promote and support the adoption of IPSAS. 2015 was a turning point after LACPA took the initiative to arrange a special three day technical congress on IPSAS with the MoF and in collaboration with the IPSASB as part of an educational and awareness campaign it started in 2014. Participants in the congress were all senior and upper-level management of governmental departments as well as the association’s members. Following the event, LACPA received a recommendation from the MoF to form a committee comprised of representatives from regulators to establish a work plan aimed at preparing an adoption and implementation plan of the IPSAS.
The association’s plans following the congress focus on the formation of the committee with regulators and inclusion of the IPSAS into its activities, events, and publications.
LACPA is encouraged to include updated information regarding any adoption decision by the MoF. LACPA should also consider plans to provide training opportunities for professionals in the public sector, as well as plans regarding the provision of translation of the IPSAS for the project, if required. LACPA may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for any advocacy and/or educational activities it offers.
SMO 6: Investigation and Discipline
The Accountancy Profession Act No. 364 of 1994 and the bylaws of LACPA establish the rules and procedures for investigative and disciplinary (I&D) system of the association, which are subject to the approval of the Ministry of Finance. All CPAs must be licensed and registered members of LACPA; therefore, its system applies to all professional accountants.
LACPA reports that since 2014 it has been in the process of reforming its I&D system to ensure it fulfills the requirements of SMO 6 (revised 2012). The process includes redrafting the Act No. 364 and its bylaws as well as establishing the necessary internal structure, mechanisms, and processes.
In setting up the procedures and processes, LACPA states it is including the following to ensure a fully operational system: a complaints box, a confidential case register, an investigative body, a disciplinary board, an appeals board, and a court appeals process. To support the implementation of the system, the association reports that it also launched an awareness campaign clarifying the responsibilities of CPAs towards the profession, clients, and users of financial statements and explaining the functioning of the I&D system to raise the public’s awareness on how to file complaints.
Although LACPA indicates it has established ongoing processes to ensure the system is operating properly and that the procedures are in line with international standards, the status of the reforms and current level of fulfillment of the system with SMO 6 requirements is unclear.
LACPA is strongly encouraged to carry out a self-assessment of its I&D policies and processes against the requirements of SMO 6. If gaps in compliance exist, LACPA should prioritize the development of plans to adopt any missing requirements and update its SMO Action Plan accordingly. LACPA is also encouraged to update its the SMO 6 section of its Action Plan with specific activities being carried out to distribute information to members regarding recent developments and revisions of the I&D system.
SMO 7: International Financial Reporting Standards
Financial reporting standards in Lebanon are set by the Ministry of Finance. Most companies are required to prepare annual financial statements using the IFRS, then referred to as International Accounting Standards (IAS), according to Ministerial Decree No. 6258 of 1996 and 673/1 of 2001.
With IFRS partially adopted, LACPA’s focus has been on supporting its members with the implementation of the standards. The association has had ongoing plans in place since 2014 to raises awareness on the importance of the implementation of IFRS by providing information on new and revised standards to its members in LACPA’s magazines and publications.
In 2014, LACPA signed a memorandum of understanding with the Association of Chartered Certified Accountants (ACCA) to use ACCA’s Diploma in International Financial Reporting (Dip IFR) materials to provide training to all its members. No further information is available
LACPA reports that it participates in international knowledge sharing and learning events aimed at furthering the adoption of IFRS globally. The associations plans to further support IFRS implementation include: (i) introduction of training courses on specific IFRS topics, which feature in various IASB pronouncements; (ii) upgrades to LACPA’s website to facilitate publication of up-to-date information on IFRS and IFRS for SMEs; (iii) organization of a two-day event on “IFRS for SMEs” in collaboration with the business community; and (iv) facilitating access to IFRS in Arabic for its members.
In 2016, LACPA also planned to on board a technical advisor to submit comments to the exposure drafts of new and revised IFRS.
LACPA is encouraged to provide further information on the process for the adoption and translation of IFRS and indicate the version and translation of IFRS currently used. The association should also consider updating its SMO Action Plan to indicate whether its plans actions where completed, to showcase the specific activities it is planning for the next few years, and to consider including plans to encourage full adoption if applicable.
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