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 association regulates its members by: (i) establishing initial and continuing professional development requirements and professional ethics requirements; (ii) administering a “Professional Accountant” designation for accountants seeking advanced level qualifications; and (iii) establishing and implementing quality assurance (QA) review and an investigative and disciplinary (I&D) systems.

In addition to being an IFAC member, LAAA is a member of Accountancy Europe, formerly known as the Federation of European Accountants.

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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: 10/2018
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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), including listed entities, credit institutions, insurance companies, and financial brokerage companies, while LCA performs the QA reviews for non-PIEs. As reported by LCA in 2017, the QA review’s systems in the jurisdiction are aligned with the requirements of the SMO 1.

  While LAAA has no direct responsibility for establishing a QA review system for certified auditors, LAAA reports that it has developed and implemented a system of quality control for the work activities of its members—some of whom are auditors—since 1990. 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; issuing recommendations and guidance to the members of LAAA; and designing a quality control standard for accounting services.

  LAAA states it has adopted ISQC 1 and reviewed the SMO 1 requirements. The association reports that it is reconciling, to the extent possible under the local legislation, SMO 1 requirements with LAAA’s QA review system. In particular, LAAA is working to strengthen the link between its QA review system and its I&D system.

  To support its members with QA review process, LAAA indicates it has developed a QA manual for its members and raised awareness of the benefits of a QA review system among its members.

  The LAAA is encouraged to provide an update on its efforts and actions to align its QA review system with SMO 1 requirements. In addition, the LAAA is encouraged to clarify if it collaborates or has established communications with the LCA regarding the QA reviews of auditors who are members of both professional accountancy organizations so that the LAAA may implement any necessary procedures.

  Current Status: Review & Improve

• 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. However, LAAA reports that it establishes IPD and CPD requirements for its members, and since 2001, the association has been administering the title of “Professional Accountant” and providing training and education for members seeking the designation. LAAA reports that its education and training programs are aligned with IES; however, in light of the revised 2015 IES—which emphasize learning outcomes-approaches—the certification’s alignment with the revised requirements is to be further clarified.

  The LAAA reports that it has mechanism in place to revise and update their training courses on a regular basis, with the IES, EU and jurisdictional changes. The LAAA has also established communications channels for distributing information to members about recent developments and revisions issued by the IAESB.

  To support members seeking the designation of “Professional Accountant”, the LAAA provides trainings for intermediate and advanced level accountants, which are organized twice a year. In addition, LAAA also organizes a course for maintaining the qualification with the goal to encourage its members to maintain and raise the level of their professional knowledge. The LAAA has also set CPD requirements for its members, at 120 credits within three years, but not less than 20 credits within one year.

  As part of its educational initiatives, the LAAA reports that it has organized an annual two-day session for chief accountants to review the results of trainings and to provide updates in accounting and tax areas.

  In light of the 2015 revised IES requirements, which emphasize learning outcomes and demonstrating competencies. LAAA is encouraged to indicate how it is strategizing to incorporate these new requirements into its IPD and CPD programming of professional accountants.

  If deemed feasible, it may be beneficial for LAAA to participate in the international standard-setting process by providing comments on exposure drafts and other IAESB pronouncements to share its experiences and perspective.

  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 directly adopts ISA as issued by the IAASB and requires statutory audits to be performed according to the standards. The Lithuania Chamber of Auditors reports that it is in the process of translating and publishing the 2016 version of ISA.

  LAAA has no direct responsibility for the adoption of ISA and the majority of its members are not auditors. Nonetheless, 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.

  Current Status: Sustain

• SMO 4: Code of Ethics for Professional Accountants

  The LAAA is responsible for establishing ethical requirements for its members. The LAAA developed and adopted the Decalogue of LAAA Ethics Standards based on the 2015 IESBA Code of Ethics and has processes in place to incorporate amendments and updates on an ongoing basis to continue following the IESBA Code of Ethics.

  To ensure alignment of its own code, 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) developing a guideline incorporating a set of standard quality issues-solutions, (iii) maintaining a help line to respond to all questions of its Code, and (iv) analyzing and processing ethical complaints from its members.

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

  The LAAA is encouraged to provide an update on its efforts and actions to adopt the 2016 IESBA Code of Ethics and the effective date of its application for its members, thereby eliminating differences with IESBA Code and its own Code. Also, if deemed feasible and relevant, it would be beneficial for the LAAA, to participate in the international standard-setting process by providing comments on exposure drafts and other IESBA pronouncements.

  Current Status: Review & Improve

• SMO 5: International Public Sector Accounting Standards

  LAAA is not responsible for the adoption of public sector accounting standards, which are adopted by the Ministry of Finance (MoF). 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), which were prepared based on 2010 IPSAS.

  The LAAA is nonetheless proactive in this area and reports that it participates in projects related to the NPSAS, contributes to technical discussions with the MoF and other government institutions on NPSAS-related topics, 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.

  The LAAA is encouraged to clarify the latest version used by the MoF as based of preparation of the NPSAS. The LAAA is also encouraged to provide an update and detailed information on its efforts and actions to promote the adoption of IPSAS as public sector accounting standards or promoting an ongoing adoption process of the IPSAS requirements in the preparation of NPSAS.

  Finally, the LAAA is encouraged to elaborate on how it is supporting members that work in the public sector with the application of currently adopted standards. For example through trainings activities, other guidance materials, etc.

  Current Status: Execute

• SMO 6: Investigation and Discipline

  The LAAA is responsible for implementing an investigation and discipline (I&D) mechanism for its members. Accordingly, it has implemented an I&D system which the LAAA reports is almost fully aligned with the requirements of SMO 6, to the extent possible under the local legislation. The LAAA reports that there are two legal impediments which prevent it from further aligning its system with the requirements of the SMO 6: (i) LAAA cannot initiate proceedings based on information received as only the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM) has the legal mandate to conduct investigations when information is received on the possibility of misconduct, and (ii) Lithuanian laws and EU legislation prohibit sharing the results of I&D proceedings to the public.

  Nonetheless, the LAAA states it has established ongoing processes to conduct assessments of its own I&D policies and processes against the requirements of SMO 6 to pursue alignment with best practice. To operationalize a more reliable and transparent I&D system in May 2016, the LAAA has established 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).

  The LAAA reports it is focusing its activities in strengthening the link between its QA review system and its I&D system, and raising awareness amongst its members and the Lithuanian business community on the I&D processes.

  The LAAA may consider reaching out to neighboring EU PAOs in order to learn from their experiences in overcoming legal impediments that limit the complete fulfillment of SMO 6; for example, it might benefit LAAA to understand how other PAOs may be able to publish some information related to disciplinary proceedings which would further align its own I&D mechanism to meet SMO 6 requirements.  Additionally, LAAA is encouraged to clarify if it collaborates or has established communications with the LCA regarding the I&D proceedings and outcomes of auditors that may be members of both PAOs so that the LAAA may implement any necessary procedures and/or training.

  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.

  To further promote the adoption of the international standards, the LAAA reports that it has promoted the adoption and implementation of IFRS for Small and Medium-sized Entities (SMEs) to the MoF and tax authority.

  Among its members, the LAAA supports IFRS implementation by providing training activities, including an annual seminar on IFRS updates; developing implementation guidelines and materials on IFRS-related technical issues; distributing information of the standards through various dissemination means, such as its website, social media and TV/Radio interviews; and participating in the international standard-setting process by providing comments to the IASB.

  The LAAA is encouraged to provide an update and detailed information on its efforts and actions to promote the adoption of IFRS for SMEs to the MoF.

  Current Status: Review & Improve

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.