Mongolian Institute of Certified Public Accountants (MonICPA)

Although the MonICPA has no legal responsibility for implementing a quality assurance (QA) review system, the institute reports that it supports the implementation of quality control standards and the QA review system established by the Ministry of Finance (MoF), which, according to MonICPA, is developed in line with SMO 1. This includes the adoption of ISQM 1 and 2.

As part of the efforts to support and promote the adoption and implementation of a QA system, MonICPA developed a voluntary QA system for all its members. The institute established an Audit Quality Review Team under its Audit Quality Sub-Committee to develop implementation guidelines and published documents to support audit firms and its members with the establishment of internal quality control systems. In addition, the MonICPA prepared an Audit Quality Review Questionnaire to provide guidance to the quality assurance review team.

To assist the work of the other stakeholders involved in QA reviews in the jurisdiction, the MonICPA reports that it translates quality control standards and has signed a memorandum of understanding with the National Audit Office and the Financial Regulatory Commission (FRC) to provide training activities for audit firms performing audits of companies under their supervision. Additionally, it states it is participating in a panel with the MoF, the FRC, and the Bank of Mongolia to review the audits of financial statements prepared by insurance companies and non-banking financial institutions. There are plans to conduct training on the quality management standards.

To support its members’ understanding of the requirements and implementation of quality control standards, the MonICPA states that it has developed training activities and workshops for its members who conduct audits and published an annual Audit Quality Review Report which highlights the QA reviews’ findings and common areas of concerns.

Current Status: Sustain

Under the Law on Accounting of 1993, as amended in 2015, the Mongolian Institute of Certified Public Accountants shares responsibility with the Ministry of Finance, the Ministry of Education, and universities for implementing initial and continuing professional development requirements for Certified Public Accountants.

MonICPA establishes and enforces continuing professional development requirements for CPAs and participates in the development and periodic review of the CPA qualification framework. The curriculum is reviewed on a recurring basis, and MonICPA reports that the CPA education and training requirements incorporate the learning outcomes and competencies reflected in the latest International Education Standards. The Institute has translated the IES and engages with universities and relevant authorities to promote alignment of academic programs with professional requirements.

However, Professional Accountants who do not pursue the CPA designation are not subject to a clearly defined regulatory framework aligned with the International Education Standards under the current legal structure.

Within the scope of its mandate, MonICPA maintains established processes to support alignment of the CPA qualification and continuing professional development requirements with the International Education Standards and continues to review and enhance these processes as part of its ongoing commitment to professional development.

Current Status: Sustain

Auditing standards in Mongolia are set in the Law of Mongolia on Auditing. Under the same law, the MonICPA is responsible for contributing to the adoption and implementation of the auditing standards by providing translations of the standards to the Ministry of Finance—the entity responsible for ultimately reviewing and approving translations of the standards and implementation guidance—and developing guidelines and material for CPAs and audit firms.

As reported by MonICPA, the 2020 version of ISA is currently being applied in the jurisdiction. The MonICPA reports that the 2020 ISA was translated and provided to the Accounting and Auditing Standards Committee (AASC) for review.

The adoption of standards process is lengthy as standards are reviewed, translated, approved at both internal and legislative levels before appropriate training is provided.

To assist its members with the implementation of the auditing standards, the MonICPA reports that it developed two manuals: i) Application of ISA; and ii) the Policies and Procedures and Financial Audit. Moreover, it also states it has organized training activities for its members and disseminated new and amended standards through its various communications channels.

The MonICPA reports that to establish oversight of audits that are mandated by the National Audit Office, the institute has signed a Memorandum of Understanding (MoU) with the Financial Regulatory Commission (FRC) and the Bank of Mongolia to review the quality of audit works on entities regulated by the respective institutions. As part of the MoU, the institute reports that it promotes new and revised standards to the FRC and conducts training on the standards. There are plans to conduct training on the quality management standards.

MonICPA has demonstrated its best endeavors to support the adoption and proper implementation of ISA with its translation process. As feasible, MonICPA is encouraged to progress with the timely translation of the latest IAASB standards as they are issued.

Current Status: Review & Improve

The MonICPA is responsible for setting ethical requirements for Certified Public Accountants (CPAs), and reports that, in 2021, its Board approved the adoption of a Code of Ethics that is aligned with the 2018 International Code issued by IESBA. There are ongoing discussions to review the latest Code for adoption. The plan is to complete this process by 2025.

The adoption of standards process is lengthy as standards are reviewed, translated, approved at both internal and legislative levels before appropriate training is provided. The MonICPA indicates that it promotes the Code of Ethics to relevant IPD stakeholders through a variety of awareness raising activities. These include: coordinating visits to universities to promote the IESBA Code of Ethics; promoting the inclusion of ethical courses in the professional curricula to the Ministry of Education and universities; developing a manual on its Code of Ethics for all accounting students and candidates for the CPA exam; and including ethical content in the pre-CPA examination.

While it is positive that MonICPA has advanced adoption of the 2018 International Code, it is encouraged to continue pursuing adoption of the latest version.

Current Status: Execute

The Law of Mongolia on Accounting of 1993, as amended in 2015, establishes IPSAS as public sector accounting standards in Mongolia for all budget entities, which are defined by the Law on State Registration of Legal Bodies as state or locally owned, not-for-profit legal bodies that provide work and services to execute the functions of the state in accordance with the approved budget and are registered by the State Central Administrative Body Responsible for Finance and Budget Matters. The Ministry of Finance (MoF) is authorized by the law to implement the standards.

The MonICPA reports that it supports the adoption of IPSAS by contributing to the translation of IPSAS for the MoF. MonICPA reports that the 2021 IPSAS have been translated for application.

The institute indicates that along with the MoF, all budget entities in the country who are required to apply IPSAS are provided a copy of the Handbook of International Public Sector Accounting Pronouncements as issued by the IPSASB, and that it has developed guidelines and training activities for public sector accountants in the jurisdiction. The institute states that material on IPSAS is included in its initial and continuing professional development programs.

Current Status: Sustain

The Law of Mongolia on Accounting of 1993, as amended in 2015, outlines the penalties that can be imposed on Certified Public Accountants that breach the applicable standards and requirements. The MonICPA’s investigative and disciplinary (I&D) system and procedure is outlined within the institute’s Code of Ethics and is performed under the oversight of the Ministry of Finance.

As reported by MonICPA, its Ethics Committee has developed procedures related to I&D titled “Rules for Receipt of Complaints and Information Related to Ethical Cases, Investigation, Discussion and Decision.” The MonICPA reports that it reviewed the requirements of SMO 6 in 2012, and had identified gaps in its appeals process. The MonICPA reported that in 2017 its Ethics Committee was to review SMO 6 again address the gaps that were previously identified. Since then, MonICPA has established a new Oversight Committee, consisting of nine members, with responsibility to conduct investigation and discipline activities as approved the MonICPA Board.

The MonICPA states that it raises the public’s awareness of its I&D system through its website and other institutional communications channels, such as its newspaper and quarterly journal.

Enforcement mechanisms that meet the SMO 6 benchmark for all professional accountants are essential to public trust and confidence in the accountancy profession. It seems that MonICPA’s enforcement mechanism has not yet been aligned with the SMO 6 benchmark. IFAC reiterates its recommendation that MonICPA conduct a full review of its I&D system by completing the self-assessment of SMO 6 requirements provided in the SMO Action Plan. Where gaps persist, the institute should prioritize making improvements to its enforcement system where needed following IFAC’s comments and recommendations. These plans with reasonable timeframes should be outlined in its Action Plan.

Current Status: Review & Improve

Corporate accounting standards in Mongolia are set by law and the IFRS are the applicable standards. Under the Law on Accounting, the MonICPA is responsible for providing translations of the standards to the Ministry of Finance (MoF) and developing implementation guidance and materials. MonICPA reports that the latest version of the IFRS are adopted.

The adoption of standards process is lengthy as standards are reviewed, translated, approved at both internal and legislative levels before appropriate training is provided.

As part of its translation activities, the MonICPA states it has developed processes to provide translations of the latest IFRS updates and has used translation software—SDL-TRADOS—since February 2013 and in 2014 created a translation database.

The MonICPA also participates in a working group established by the MoF which is responsible for developing a new template for preparing and presenting separate financial statements in accordance with IFRS.

MonICPA reports that for the first time, part B is being published and is to be approved by the review committee. In addition, the ISSB S1 and S2 standards have also been translated and published. The timeline to set an effective date of the standards is still yet to be determined. To support its members with the implementation of accounting standards, the MonICPA has incorporated standard-related topics into its various initial and continuous professional development programs, and provides additional training through workshops, international conferences, and online video training.

Lastly, the MonICPA notes that it raises awareness of new and revised standards by distributing information through its website and other institutional communications channels

Current Status: Sustain