Lesotho Institute of Accountants

The Lesotho Institute of Accountants (LIA) maintains an established quality assurance (QA) review system for audit firms and continues to strengthen its framework in line with Statement of Membership Obligation (SMO) 1 requirements. Although there is no explicit statutory mandate in the Accountants Act 1977 to establish a QA system, LIA has exercised its regulatory authority in the public interest by operating a mandatory practice review framework for firms performing statutory audits.

Following earlier review arrangements supported by the Association of Chartered Certified Accountants (ACCA) and the Public Accountants and Auditors Board (PAAB) of Zimbabwe, LIA has now transitioned to an in-house system. In May 2024, the institute approved its own quality review methodology and manual for audit firms, which now forms the basis of inspections and follow-up procedures. The methodology incorporates International Standards on Quality Management (ISQM) 1, ISQM 2, and International Standard on Auditing (ISA) 220 (Revised) as the applicable standards for reviews and establishes a cycle-based and risk-based inspection framework.

LIA’s current framework requires all professional audit firms to undergo inspections as a condition of license renewal. The review cycle provides for more frequent inspections of firms auditing public interest entities and follow-up reviews where deficiencies are identified. The system also includes documented independence requirements for reviewers, corrective action plans, and linkage to the investigation and discipline framework for serious non-compliance.

To support implementation, LIA continues to provide technical support and capacity-building activities for members and firms. These activities include annual seminars and workshops on quality management standards, audit quality, and inspection findings, as well as direct feedback to reviewed firms on deficiencies and remediation plans. Recent technical sessions have focused on implementation of ISQM 1 and ISQM 2 and strengthening firm-level quality management systems.

Through the establishment of an operational in-house QA framework, continued technical support to members, and ongoing review and enhancement of its methodology, LIA maintains well-established ongoing processes to fulfill its obligations under SMO 1 and continues to review and improve its activities as part of a continuous quality improvement approach.

Current Status: Sustain

Section 6 of the Accountants Act 1977 establishes that the Lesotho Institute of Accountants (LIA) is responsible for determining initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants in the jurisdiction. LIA maintains a structured three-tier qualification framework comprising Technician Accountant, General Accountant, and Chartered Accountant, each with specified academic and practical experience requirements aligned with the International Education Standards (IES).

LIA continues to operate its professional qualification pathway through a joint scheme with the Association of Chartered Certified Accountants (ACCA), which remains in place through 2028 and includes Lesotho-specific modules to address national legal, regulatory, and public sector requirements. This framework supports alignment with the latest IES requirements, including learning outcomes, practical experience, final assessment, and continuing professional development.

To strengthen national accountancy education capacity, LIA has undertaken a range of sustained initiatives in recent years. The Lesotho Professional Accountancy Programme (LePAP) was developed with support from development partners to meet local private and public sector needs and was designed using a learning-outcomes approach consistent with the IES framework. While the standalone program has been paused due to low intake, LIA has continued to integrate its educational objectives through partnerships with academic institutions and employers.

LIA works closely with the Council on Higher Education (CHE) and universities to align tertiary accounting programs with IES benchmarks. This includes collaboration with the National University of Lesotho, accreditation of relevant degree programs, and quality reviews of tuition providers and training institutions. The institute also maintains an Approved Training Employers (ATE) scheme under which participating employers provide structured practical experience training and competency tracking for aspiring professional accountants.

LIA continues to support members through an established CPD framework requiring annual credits and supported by regular workshops, seminars, technical updates, newsletters, and a CPD calendar published on its website. Compliance with CPD obligations is monitored by the institute and forms part of its ongoing professional regulation activities.

Through these established and ongoing processes, including academic partnerships, structured practical experience arrangements, and continuous CPD monitoring and support, LIA maintains well-developed mechanisms to fulfill its obligations under SMO 2.

Current Status: Sustain

The Companies Act 2011 grants authority to the Lesotho Institute of Accountants (LIA) to prescribe auditing standards and the rules and regulations governing the conduct of audits in the jurisdiction. In line with this mandate, LIA has adopted International Standards on Auditing (ISA) as issued by the International Auditing and Assurance Standards Board (IAASB) without modification and on an ongoing basis. The institute’s regulations page confirms that ISA are implemented in Lesotho and are applied as the national auditing standards. (lia.org.ls)

LIA maintains well-established processes to support the effective implementation of ISA by its members. The institute regularly organizes seminars, workshops, and continuing professional development activities on new and revised auditing and quality management standards, including recent technical sessions focused on International Standards on Quality Management (ISQM) 1, ISQM 2, and ISA 220 (Revised). These activities are complemented by technical updates and articles published through its member communications and professional newsletters.

LIA also supports implementation through its quality assurance review framework, under which audit firms are reviewed against compliance with applicable auditing and quality management standards. The 2024 quality review methodology and the Practice Bylaws reinforce implementation support by requiring firms to align their systems and engagements with the latest IAASB pronouncements.

In addition, LIA continues to engage in the international standard-setting process through participation in consultations and by providing comments on IAASB exposure drafts and other pronouncements, either directly or through regional collaboration with the Pan African Federation of Accountants (PAFA).

Through the continued adoption of ISA as issued, sustained professional education and implementation support, and participation in the international standard-setting process, LIA maintains well-established ongoing processes to fulfill its obligations under SMO 3.

Current Status: Sustain

A 1984 amendment to the Accountants Act 1977 grants the Lesotho Institute of Accountants (LIA) authority to establish ethical requirements for the profession. In line with this mandate, LIA has adopted the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA) and continues to adopt subsequent amendments on an ongoing basis. The current framework provides for automatic application of the latest edition of the Code, and the applicable handbook in use is the 2025 International Code of Ethics.

LIA maintains established processes to support members with the implementation of the Code. The institute provides regular ethics-focused training sessions, technical workshops, and continuing professional development activities whenever a new handbook or significant amendments are issued. Recent activities have included ethics awareness sessions, independence requirements for audit and assurance engagements, and dedicated ethics events as part of its annual professional development calendar.

The institute also supports implementation through member communications, including updates shared through membership meetings, email circulars, and technical notices highlighting revisions issued by IESBA. LIA further promotes the use of the IESBA eCode and develops discussion forums and targeted workshops to address emerging or challenging ethical issues identified in practice.

Compliance with ethical requirements is reinforced through LIA’s regulatory framework. The Practice Bylaws require practitioners to submit an annual ethics declaration as part of license renewal, and compliance with the Code is considered through the quality assurance review and investigation and discipline processes.

Through the continued adoption of the Code as issued, ongoing member training and awareness activities, and the integration of ethical compliance within its broader regulatory framework, LIA maintains well-established ongoing processes to fulfill its obligations under SMO 4.

Current Status: Sustain

The Public Financial Management and Accountability Act 2011 provides the legal framework for public sector financial management and reporting in Lesotho and establishes the basis for the preparation of government financial statements in accordance with the International Public Sector Accounting Standards (IPSAS) framework. Within this environment, the Lesotho Institute of Accountants (LIA) continues to play a direct and active role in supporting the adoption and implementation of IPSAS and broader public sector financial reporting reforms.

LIA maintains ongoing collaboration with the Accountant General, Auditor General, and the Ministry of Finance to support the transition from the current modified cash-basis reporting framework toward stronger alignment with accrual-based IPSAS. This includes continued work on implementation roadmaps, technical discussions with government finance officials, and awareness-raising activities to support the phased reform of public sector financial reporting.

The institute also contributes to strengthening public sector accountancy capacity in the jurisdiction through professional education, stakeholder engagement, and collaboration with regional and international partners. LIA continues to explore partnerships with the African Professionalisation Initiative (API) and the South African Institute of Government Auditors (SAIGA) to support competency development for public sector accountants and auditors.

In addition, LIA supports broader public sector financial management reforms through dialogue with government institutions and participation in committees advising the public sector oversight and audit framework. It also continues to engage with international standard-setting developments and intends to contribute to the International Public Sector Accounting Standards Board (IPSASB) consultation process through comments on exposure drafts and other pronouncements.

Through these established and ongoing processes to promote IPSAS adoption, strengthen public sector capacity, and support implementation planning and awareness, LIA maintains well-developed mechanisms to fulfill its obligations under SMO 5.

Current Status: Sustain

The Accountants Act 1977 requires the Lesotho Institute of Accountants (LIA) to establish and operate an investigation and discipline (I&D) system for members under its regulatory authority. In line with this mandate, LIA maintains an established framework comprising complaint intake procedures, investigation arrangements, disciplinary hearings, sanctions, and an appeal mechanism to the High Court.

LIA’s current framework includes committees responsible for compliance monitoring, investigation of reported cases of noncompliance, and disciplinary decision-making. Matters identified through complaints, regulatory monitoring, or quality assurance reviews may be investigated and, where appropriate, referred to the Disciplinary Committee, which is empowered to impose sanctions, including reprimands, fines, suspension from practice, removal from the register, and exclusion from membership.

The institute continues to strengthen the transparency and effectiveness of its disciplinary framework. Recent developments include work on compliance and whistleblowing policies and procedures intended to enhance the efficiency, consistency, and public transparency of the disciplinary process. These developments complement the existing linkage between the I&D framework and the quality assurance review system.

LIA also undertakes ongoing awareness-raising activities for both members and the public. The institute has published clear guidance on its website regarding how complaints may be submitted, and its annual reporting includes information on disciplinary actions taken during the reporting period. These disclosures support public confidence in the profession and reinforce awareness of the existence and operation of the I&D system.

Through the maintenance of an established disciplinary framework, ongoing process enhancements, public reporting, and continued awareness-raising activities, LIA maintains well-established ongoing processes to fulfill its obligations under SMO 6.

Current Status: Sustain

The Companies Act 2011 requires companies to prepare financial statements in accordance with the accounting standards prescribed by the Lesotho Institute of Accountants (LIA). In line with this mandate, LIA has adopted International Financial Reporting Standards (IFRS) and IFRS for Small and Medium-sized Entities (IFRS for SMEs) without modification and on an ongoing basis, with automatic incorporation of all new and revised standards issued by the International Accounting Standards Board (IASB).

According to the IFRS Foundation jurisdiction profile for Lesotho, full IFRS are required for financial institutions and other publicly accountable entities, while other eligible entities may apply either full IFRS or IFRS for SMEs. This framework continues to apply in the jurisdiction, and the applicable handbook in use is the 2025 IFRS Accounting Standards.

LIA maintains established processes to support the implementation of IFRS by its members and the wider profession. The institute provides technical updates, workshops, seminars, and continuing professional development activities covering new and revised IFRS requirements and emerging financial reporting issues. These activities are complemented by member communications and periodic technical guidance on changes issued by the IASB.

In addition, compliance with IFRS requirements is reinforced through LIA’s quality assurance review system and its regulatory oversight of practicing members and audit firms. Through these mechanisms, the institute supports both awareness and effective implementation of financial reporting standards in practice.

Through the continued adoption of IFRS as issued, ongoing member support and technical training, and integration of financial reporting compliance within its regulatory framework, LIA maintains well-established ongoing processes to fulfill its obligations under SMO 7

Current Status: Sustain