Lithuanian Association of Accountants and Auditors

Associate | Established: 1990 | Associate since 2017

The LAAA is a public, non-profit, non-governmental, voluntary organization uniting professional accountants in Lithuania. The LAAA’s mission is to provide high-quality professional services, raise the knowledge level of accounting specialists, and encourage continuous development in the profession. The LAAA undertakes the following activities: (i) establishing educational and professional conduct requirements for members; (ii) administering a “Professional Accountant” examination designed for individuals seeking advanced level qualifications; and (iii) establishing and operating QA and I&D systems for members. In addition to being an IFAC member, LAAA 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.

Methodology
Last updated: 03/2022
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SMO Action Plan

Status of Fulfillment by SMO

• SMO 1: Quality Assurance

  In Lithuania, the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM) and the Lithuania Chamber of Auditors (LCA) are responsible for the adoption and implementation of a quality assurance (QA) review system; accordingly, AAAPVIM has established a QA system for all public interest entities (PIEs), while LCA performs the QA reviews for non-PIEs. As reported by LCA, the QA review systems in the jurisdiction are aligned with the requirements of the SMO 1.

  The LAAA’s membership is largely comprised of other accountancy professionals and one of its principal activities is to assure the quality of the work performed by these members. LAAA states it has developed and implemented a system of quality control for accountants. To achieve this, LAAA has created a Quality Control Committee, which is responsible for: establishing and operating the QA review procedures for the LAAA members; reviewing the quality of work provided by the members of the LAAA at least every six years; and issuing recommendations and guidance to the members of LAAA. The LAAA’s Quality Control Committee meets with Latvian counterparts to share experiences on quality control for accounting services. Recently LAAA has also included policies on data protection and AML as part of quality assurance reviews. The LAAA details in its SMO Action Plan that it has considered the SMO 1 best practices and incorporated those that align with the type of reviews it undertakes.

  LAAA indicates it awareness of the benefits of QA reviews. In 2021, LAAA began recognizing members for high-quality services and professionalism. A part of the selection criteria relates to the results of quality reviews as part of encouraging and promoting quality improvements.

  To conclude, LAAA notes that in May 2022 a new Law on Accounting will come into effect. Additionally, in 2022, the LAAA will have representatives serve on a Quality Control Working Group of the AAAPVIM which is developing updated quality control recommendations because of the new Law on Accounting. LAAA will review the resulting legislation and recommendations to develop a quality control manual that is relevant for its members. It has also been sharing developments on the quality management standards with members.

  Considering the LAAA’s membership composition and within the scope of its mandate, it has demonstrated that it plans, executes, and improves activities related to SMO 1 as part of an ongoing commitment to continuous improvement. The additional implementation support it will provide members in a quality control manual will be valuable.

  Current Status: Sustain

• SMO 2: International Education Standards

  In Lithuania, the Audit Law No. XIII-96 of 2017 establishes the initial and continuing professional development (IPD and CPD) requirements for auditors but there is no legislation that specifies professional qualifications, education, or licensing requirements for other professional accountants. The LAAA, of its own volition, establishes IPD and CPD requirements for members that wish to use the Professional Accountant designation. LAAA’s IPD requirements include having a bachelor’s degree (if no higher education than ten years’ work experience and at least seven years’ experience in accounting is required); have experience of at least 3 years within the last ten years in areas of accounting, finance, economics, or control; pass LAAA’s examinations (3 exam topics); and possess an impeccable reputation.

  To support those seeking the Professional Accountant designation, the LAAA provides intermediate and advanced level trainings (which take approximately one month to complete) twice a year. LAAA indicates that the trainings now include ‘concept-checking questions’ aimed at ensuring candidates are understanding the application of the topics discussed. The association also notes that it has contacts with employers to share updates on the education standards. The LAAA reports that all association’s training examinations are based on the latest IES and any changes in EU or Lithuanian legislation.

  Since 2016, LAAA members must fulfill 120 hours of CPD over a 3-year period. LAAA organizes several CPD trainings for members throughout the year and encourages its members to upskill. LAAA’s Training and Professional Activities Committee monitors LAAA members‘ CPD compliance. As part of its educational initiatives, the LAAA reports that it organizes an annual two-day session for chief accountants to review the results of prior trainings questionnaires and to provide updates in accounting and tax areas.

  There seems to be a solid foundation of accountancy education in the Lithuania as LAAA’s initial programming appears to incorporate 2015 IES requirements (such as competency-based evaluations). LAAA is encouraged to support universities and employers (e.g., articulating learning outcomes in collaboration with employers) — to bring accountancy education fully in line with the international benchmarks (now the 2019 Handbook). All stakeholders should be made aware of the revised IES 2, 3, 4 effective January 2021 which enhance the Information and Communications Technologies (ICT) and Professional Skepticism learning outcomes and clarify accompanying explanatory material. The LAAA can leverage IFAC’s Accountancy Education e-Tool and the IES Self-Assessment developed by IFAC to take stock and develop plans as necessary. These plans with reasonable timeframes should then subsequently be outlined in its Action Plan.

  Current Status: Review & Improve

• SMO 3: International Standards on Auditing

  The auditing requirements are set in the Audit Law No. XIII-96 of 2017. The Audit Law adopts ISA as issued by the IAASB and requires statutory audits to be performed according to the standards. The Audit Law also states that the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), as the public oversight body, is to translate the ISA and publish them on its website. The AAAPVIM has translated and published ISA effective as of December 15, 2019 (i.e. up to the 2018 Handbook).

  LAAA has no authority for the adoption of audit standards and most of its members are not auditors. However, LAAA indicates it supports the implementation of the auditing standards by educating its members and stakeholders on ISA and disseminating information on updates and revisions to ISA. Furthermore, LAAA also states that it participates in public consultations on auditing and ISA-related matters on an ongoing basis.

  Considering the LAAA’s membership composition and within the scope of its mandate, it has demonstrated that it is using its best efforts to address the requirements of SMO 3.

  Current Status: Sustain

• SMO 4: Code of Ethics for Professional Accountants

  While requirements for professionals other than auditors are not specified in the law, the LAAA—which unites accountants on a voluntary basis—reports that it has established and implemented a Code of Ethics for its members since 2006. Known as the Decalogue of LAAA Ethics Standards, the association reports that their Code was established in accordance with the IESBA Code of Ethics and has been updated over the years to continue following the IESBA Code of Ethics. LAAA members are required to adhere to the 2021 International Code of Ethics in English as of the date of the assessment. When Lithuanian translations of the latest amendments are available, LAAA will disseminate the translations to members for application.

  The LAAA has established an Ethics Committee responsible for: (i) monitoring changes to the IESBA Code of Ethics in order to review, approve, and publish new sections of its Code of Ethics or amending existing parts when necessary; (ii) maintaining a help line to respond to all questions of its Code, and (iii) analyzing and processing any misconduct complaints.

  The LAAA supports the implementation of its Code amongst its members by providing regular trainings and seminars on ethics-related courses. Finally, the LAAA indicates it maintains dialogues with key stakeholders concerning professional ethics issues that might arise and the Code of Ethics.

  The LAAA has demonstrated that it plans, executes, and improves activities related to SMO 4 as part of an ongoing commitment to continuous improvement. If deemed feasible and relevant, it would be beneficial for the LAAA to participate in the international standard-setting process by providing comments on IESBA exposure drafts based on its experience in supporting members and keeping pace with the requirements of the IESBA Code of Ethics.

  Current Status: Sustain

• SMO 5: International Public Sector Accounting Standards

  The Ministry of Finance (MoF) is responsible for establishing public sector accounting and reporting standards in Lithuania. Since 2010, all public sector entities on both state and municipal levels have the obligation to implement the National Public Sector Accounting and Reporting Standards (NPSAS). According to the IFAC / CIPFA Public Sector Accountability Index, the NPSAS are accrual-basis IPSAS modified for the national context.

  The association has no authority for public sector standards. The LAAA reports it still is supportive in this area and participates in projects related to the NPSAS, contributes to technical discussions with the MoF and other government institutions on NPSAS-related topics and encourages the usage of IPSAS, and monitors IPSAS-related changes and updates. The LAAA also reports that it regularly communicates to members when there are relevant changes and updates regarding the standards.

  Given the nature of its mandate, membership composition, and the legal and regulatory environment, the LAAA is using its best efforts to fulfill the SMO 5 requirements. The LAAA is encouraged to continue its advocacy with the MoF to converge NPSAS with the latest version of the accrual-basis IPSAS. 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 advocacy and educational activities it is considering.

  Current Status: Review & Improve

• SMO 6: Investigation and Discipline

  The LAAA is responsible for implementing an investigation and discipline (I&D) mechanism for its membership. Accordingly, it has implemented an I&D system which the LAAA reports corresponds with the requirements of SMO 6.

  To operationalize a more reliable and transparent I&D system, in May 2016 the LAAA approved three committees: Quality Control Committee (to investigate complaints received), Ethics Committee (to issue sanctions after reviewing conclusions by the Quality Control Committee), and an Appeal Work Group (in the event of an appeal). LAAA reports that the last significant complaint was received in 2016.

  The LAAA also states it has every candidate sitting for LAAA examinations sign an attestation that they are aware of the I&D procedures for any case of misconduct or non-compliance and it is raising awareness amongst the business community on the I&D processes.

  The LAAA has outlined I&D procedures that correspond with the SMO 6 requirements but should clarify if it reviews & improves these for effectiveness considering the last case investigated was in 2016. This seems to indicate a lack of operation and/or awareness of the public that LAAA can address matters related to its membership. As part of the SMO 6 best practices (“Public Interest Considerations”), it may consider enhancing activities to support public awareness of the I&D system.

  Current Status: Review & Improve

• SMO 7: International Financial Reporting Standards

  The Accounting Law No. IX-574 of 2001 sets the requirements for the preparation of corporate financial statements in Lithuania. The law requires the application of EU-endorsed IFRS, or Lithuanian Business Accounting Standards (LBAS) based on companies’ size and type and empowers the Ministry of Finance (MoF) to develop accounting legislation and establish the LBAS.

  Given the LAAA’s membership, it indicates that it is active in supporting the implementation of IFRS. It regularly organizes seminars on IFRS updates; disseminates information on IFRS through various means; and develops guidelines on IFRS-related technical issues. LAAA and its members also participate in legislative processes and projects related to application of IFRS in Lithuania. The LAAA also reports that it will continue to promote the adoption and implementation of IFRS for Small and Medium-sized Entities (SMEs) to the MoF and tax authority.

  Current Status: Sustain

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.