Ordre des Experts-Comptables du Luxembourg
Associate | Established: 1999 | Associate since 2009
OEC was established by the Law of 10 June 1999 On the Profession of Accountant. It is a mandatory membership organization for all certified chartered accountants (“experts-comptables”), individuals and firms that wish to offer accountancy and tax services. OEC’s responsibilities include to: (i) ensure that its members comply with all applicable laws and regulations; (ii) establish ethical requirements for its members; (iii) protect the rights and interest of the profession; (iv) advocate for the profession in legal and technical matters; (v) set and enforce continuing professional development requirements for its members; and (vi) to implement and oversee disciplinary measures of its members. In addition to IFAC membership, OEC is a member of Accountancy Europe.
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
In Luxembourg, the Commission de Surveillance du Secteur Financier (CSSF) —the public oversight body of the audit profession and financial services regulator in the jurisdiction—is responsible for the adoption and implementation of a quality assurance (QA) review system; accordingly, CSSF has established a QA system for all public interest entities, including listed entities, credit institutions, and insurance undertakings. As reported by the Institut des Réviseurs d’Entreprises in 2018, the QA review systems in the jurisdiction is aligned with the requirements of the SMO 1.
While OEC’s members do not perform any audit engagements, OEC reports that it has developed and implemented a peer review system, “Règlement sur le Contrôle confraternel,” for the work activities of its members since 2011. The peer review system seeks to ensure that members respect their legal obligations and professional rules as well as their professional obligations arising from legislation relating to anti-money laundering and terrorism financing. To operate the peer review system, OEC has created a Confraternal Control committee complemented by an IT software that enables OEC to manage and monitor inspections. Additionally, the OEC has hired an AML/FT inspector to increase human resources in 2019.
In 2018, the OEC conducted an assessment of its peer review system policies and processes against the requirements of SMO 1 and concluded that for components of SMO 1 that are applicable to its members, the OEC reports its peer review system aligns with the SMO 1 requirements. It intends to strengthen its procedures by beginning to systematically have documentation of general peer reviews (non- AML/FT) sent to the OEC.
- SMO 2: International Education Standards
In Luxembourg, the Law of 10 June 1999 regulates the accounting profession and establishes the initial and continuing professional development (IPD and CPD) requirements for certified chartered accountants (“experts-comptables”). The University of Luxembourg organizes and delivers the IPD program, including professional examinations, based on the requirements outlined in the law. The OEC report that IES 1–3 are aligned with the IES. The OEC is responsible for the implementation of CPD obligations and notes that CPD requirements are not fully aligned with IES 7; however the association is working to enhance convergence and indicates that a portion of its members are also members of the Institut des Réviseurs d’Entreprises (IRE) and therefore, meet the IES 7 requirements. In light of the revised 2015 IES—which emphasize learning outcomes-approaches—the IPD alignment with the revised requirements is to be further clarified.
To support incorporation of the IES requirements, the OEC holds a position on the University of Luxembourg‘s committee that is responsible for the professional education program and the organization of the examinations (test d’aptitude). CPD requirements for OEC members are set a 60 credits within three years and in 2017, OEC began monitoring members’ compliance with the CPD requirements. The institute indicates that it offers an annual CPD program to support its members in meeting CPD obligations and will also highlight trainings offered by the IRE, the professional organization for auditors in the jurisdiction. In 2018, the OEC offered training on tax matters and anti-money laundering; the GDPR; and opinions from the National Accounting Standards Commission.
The institute reports that projects currently be developed include: a partnership with a training organization to organize conference cycles for members at preferential prices; and dedicated access through the OEC website to selected e-learning courses.
The OEC has also established communication channels for distributing information to members about recent developments and revisions issued by the IAESB and states it participates in the international standard-setting process by providing comments to the IAESB through its membership with Accountancy Europe.
In light of the 2015 revised IES requirements, which emphasize learning outcomes and demonstrating competencies, the OEC is encouraged to indicate how it is strategizing to advocate and raise awareness of the importance of incorporating these new requirements into the IPD programming of professional accountants. Additionally, the institute should indicate if it has considered any changes to its CPD obligations to meet the 120 credits per every three years outlined in the IES.
- SMO 3: International Standards on Auditing
According to the Audit Law, the application of ISA is required in all statutory audits and the Commission de Surveillance du Secteur Financier (CSSF) may issue standards in the field of statutory audit for matters that are not covered by the auditing standards. The CSSF has published add-ons / carved-out related to ISA, ISQC 1 and the Code of Ethics. Those add-ons / carved-out are available on the CSSF website. Currently in force is the 2016–2017 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements.
In addition, the Audit Law also empowers the Institut de Réviseurs d’Enterprise (IRE), the professional accountancy organization for statutory auditors and audit firms, to issue standards on various activities with the exception of those application to statutory audit. In this regard, IRE has adopted other IAASB pronouncements (ISAE, ISRE, and ISRS) for its members.
The OEC has no direct responsibility for the adoption of ISA and its members do not perform audits; nonetheless, in 2011, the OEC adopted a standard related to professional services performed by certified chartered accountants providing contractual services that are not reserved for IRE members. The standard refers to ISAE, ISRE, and ISRS and states that application of the OEC standard must remain in compliance with other IAASB pronouncements.
When IAASB pronouncements are issued, the OEC indicates that it will share this information to its members via email, newsletter, and the dedicated IFAC RSS feed on its website.
- SMO 4: Code of Ethics for Professional Accountants
The OEC is responsible for establishing ethical requirements for its members. The OEC developed and adopted the “Code de déontologie” based on the 2010 IESBA Code of Ethics with specificities included as they pertain to the profession in Luxembourg. Its Ethics Task Force remains aware of changes and updates to the IESBA Code in order to incorporate amendments and updates on an ongoing basis. For example, OEC reports that its Ethic Task Force is charged with ensuring that the OEC’s ethical requirements will align with the IESBA’s Revised & Restructured Code for 2018.
The OEC supports the implementation of its Code amongst its members by: (i) incorporating a course on ethics as part of the initial professional development program, (ii) providing trainings and seminars on ethics-related courses, and (iii) disseminating updates of the IESBA Code of Ethics and of its Code. Finally, the OEC participates in the international standard-setting process by providing comments to the IESBA through its membership with Accountancy Europe.
During the next update, the OEC is encouraged to report its progress in aligning its ethical requirements with the latest version of the IESBA Code of Ethics. In addition, the OEC is encourage to provide information on planned actions or initiatives related to raising awareness on and supporting the adoption of these new requirements: e.g. activities to disseminate information on the IESBA Code of Ethics, incorporating the IESBA Code of Ethics in training activities. These are examples of best practices that can be shared and highlighted through the Action Plan.
- SMO 5: International Public Sector Accounting Standards
The OEC is not responsible for the adoption of public sector accounting standards, which are adopted by the Ministry of Finance (MoF). The MoF is currently using a modified cash accounting system. According to the 2017 OECD Publication, Accrual Practices and Reform Experiences in OECD Countries, Luxembourg has an ongoing reform process to move to accrual accounting over the medium term, though progress has been limited.
The OEC reports that activities to promote IPSAS are more within the scope of the government and the MoF. The institute indicates that it stands ready to provide relevant information on IPSAS to its members and could participate in promoting IPSAS adoption through governmental committees or Accountancy Europe in the event that these initiatives were started by authorities.
As the MoF is undertaking preparatory work to prepare for a possible adoption of IPSAS, the OEC is encouraged to further consider how it may be able to proactively provide technical, advocacy, and other forms of support to the MoF to enhance public financial management in the jurisdiction.
- SMO 6: Investigation and Discipline
The OEC is responsible for implementing an investigation and discipline (I&D) mechanism for its members. OEC completed a self-assessment of its I&D system and while its procedures are largely aligned with SMO 6 requirements, there are some gaps in areas of public interest considerations and administrative procedures.
To operationalize its I&D system, the OEC has established a Disciplinary Council. The Disciplinary Council is empowered to impose sanctions on any of its members including monetary fines, prohibition to exercise specific activities, or permanent prohibition on the right to practice. Decisions of the Disciplinary Council may be challenged through appeal both by the individual and by the General State Prosecutor. The appeal should be brought before the Civil Chamber of the Court d’Appel (Court of Appeal) which will give its decision by way of a final judgment.
Additionally, the OEC reports that it uses its newsletter and website to ensure that its members are informed of current regulations application to the profession, the ethical requirements, and consequences of non-compliance with any of these standards.
Where legally feasible, the OEC is encouraged to establish strategic plans to address the areas for improvement it has identified in its SMO 6 self-assessment. The overall strategic plan, including a timeline and action steps, should be reported on in its next update.
- SMO 7: International Financial Reporting Standards
In accordance with the EU Accounting Directive, EU endorsed IFRS are mandatory for the preparation of financial statements of consolidated financial statements of listed entities and permitted for non-listed entities. Upon authorization from the Commission des Norms Comptables (CNC), the Luxembourg accounting standards board and standard-setter, other non-listed entities have the choice between using EU endorsed IFRS or LuxGAAP for the preparation of their statutory financial statements.
The OEC states that it actively participates in the activities of CNC via its representatives in the Commission’s subgroups. Through its involvement in these subgroups, the OEC provides technical advice to the CNC in regards to the application of both the EU and national accounting laws and regulations as well as the implementation of EU-endorsed IFRS.
Among its members the OEC supports IFRS implementation by ensuring coverage of IFRS within its newsletter and sharing CNC circulars that include FAQs related to new standard-related developments. The institute will also direct members to IFRS trainings hosted by other organizations, such as the Institut des Réviseurs d’Entreprises—the professional accountancy organization for auditors—or the CNC. Given the number of trainings offered by these and other organizations and the fact that IFRS are rarely used by unlisted companies (which comprises most of the work undertaken by OEC members), the institute has not included IFRS within its own CPD program.
Lastly, the OEC participates in the international standard-setting process by providing comments to the IASB through its membership with Accountancy Europe.
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.