Palestinian Association of Certified Public Accountants
Associate | Established: 1995 | Associate since 2013
The PACPA was established in 1995 under a license (No. 5026) from the Ministry of Interior and membership is mandatory for practicing Certified Public Accountants that are licensed auditors and for audit firms that conduct audits. Other segments of the profession may choose to voluntarily join PACPA and be subject to its rules and regulation.
In accordance with Article 25 of the Auditing Profession Law No. 9 of 2004, PACPA has the authority to: (i) maintain an audit license registry; (ii) investigate and discipline members for non-compliance with applicable rules, regulations, the code of ethics, practicing without a license, and breaches of professional conduct subject to the final approval by the BPA if the sanction is suspension or expulsion; and (ii) establish and operate a quality assurance review system.
In addition to being a Member of IFAC, PACPA is a Member of the Arab Federation of Accountants and Auditors and the Mediterranean Federation of Certified Accountants.
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
PACPA, which has the legal responsibility for establishing and implementing a quality assurance (QA) review system in Palestine, reports to have operationalized a mandatory QA system and has already developed the working procedures for this system through its QA Committee. PACPA reports it has also developed guidelines to help members understand the review process and comply with quality control standards since it has adopted ISQC 1 for its members’ application.
With the support of a World Bank grant and technical expertise from another international professional accountancy organization, PACPA prepared and translated a QA manual in 2014, provided training for members, and organized and delivered an awareness program. In 2015, the association aligned the QA review system with SMO 1 requirements and continues to review the system on an annual basis to ensure continued alignment. In November 2019, PACPA printed and distributed the QA manual to all members and offered trainings in January 2020 to members on the contents of the QA manual.
PACPA reports that it hired qualified reviewers and conducted training sessions in preparation for visits in December 2020.
In the next SMO Action Plan update, PACPA is encouraged to report on its periodic review of the new QA review system since it has newly become operational.
SMO 2: International Education Standards
Initial professional development (IPD) requirements are outlined in the Accounting Profession Law No. 9 of 2004. PACPA, on the other hand, is responsible for setting the continuing professional development (CPD) requirements for its members. PACPA members are required to attend a minimum of 90 cumulative training hours every three years, which is not aligned with IES 7 requirements. PACPA reports that its Continuing Education Committee monitors CPD fulfillment and does not renew licenses for those who are in non-compliance with the requirements. PACPA states that its Continuing Education Committee meets regularly to update its working procedures and strengthen its CPD program.
In order to update its working procedures and strengthen its CPD program, the Committee exchanges and shares relevant information with the Saudi Organization for Certified Public Accountants—the IFAC member organization in Saudi Arabia—and has developed a feedback mechanism to evaluate the effectiveness of its courses. Additionally, in 2013, it conducted a needs assessments to better tailor its CPD course offerings. The results of the needs assessments formed the basis of training offered to bridge gaps. PACPA also accredits training providers to enhance the quality of CPD training and workshops delivered to its members.
Moreover, PACPA also indicates that it raises awareness and promotes the need to incorporate IES requirements into the IPD programming offered through universities and the Board of Professional Auditing (BPA), the body responsible for licensing auditors in Palestine. As a result of these engagement efforts, PACPA reports that one of the leading universities has included IFRS and ISA in its curricula and the BPA is considering steps to adopt the requirements of IES 8 as part of license renewals. Between 2014-2019, PACPA entered into partnership agreements with universities to offer IFRS and ISA courses, and in December 2019 held a workshop for staff and students of Arab American University, Birzeit University, Al Najah National University and Abu Dies University on IFRS and ISA.
Finally, PACPA notes that it participates in the international standard-setting process by providing comments on Exposure Drafts in collaboration with Palestinian universities.
In 2019, newly revised IES address learning and development for information and communications technologies (ICT) and professional skepticism. As market expectation increases for ICT skills and professional skepticism, these standards were developed to address the competencies, skills, and behaviors for both aspiring and professional accountants in these critical areas. These revised standards become effective January 2021. PACPA is encouraged to review the standards to adapt the national education programming as necessary.
SMO 3: International Standards on Auditing
ISA as issued by IAASB are required for application in the jurisdiction. Since ISA are already adopted, PACPA focuses on supporting members with implementation. PACPA coordinates with the International Arab Society of Certified Accountants (IASCA) to make translated versions of ISA available to its members. It reportedly disseminates the Arabic version of the 2019 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements to its members via its website and provides ongoing training on standard-related topics in its continuing professional development programs to further support its members with implementation. In addition, specialized training is also provided for members on applying ISA in the audits of small- and medium-sized entities.
PACPA also details that it regularly hosts or participates in conferences aimed at raising the awareness and the skill level of auditors on the use of ISA. In addition, the association states that it engages with Palestinian universities to encourage the inclusion of ISA within university accounting curricula.
As IAASB is revising its standards on quality control, PACPA should also consider following the developments and incorporating the revisions and prepare for the implementation of the revised standards. PACPA is also encouraged to consider participating in the international standard-setting process by providing comments on IAASB Exposure Drafts and other pronouncements.
SMO 4: Code of Ethics for Professional Accountants
The Companies Law No. 12 of 1964 outlines ethical requirements for entities in Palestine. The Board of Professional Auditing’s (BPA) draft amendments were approved on January 27, 2019 which require adoption of the IESBA Code of Ethics as issued by IESBA.
The Palestinian Association of Certified Public Accountants (PACPA) amended its own bylaws to require members’ adherence with the IESBA Code of Ethics as issued by IESBA. The association’s membership is mandatory for all auditors in the jurisdiction and also includes other segments of the profession, such as bookkeepers, that voluntarily decide to join.
PACPA reports that it focuses on supporting compliance with the Code through educational activities. The association raises awareness of the requirements of the Code—including new and revised requirements, which are adopted at its annual meetings—through training courses and workshops. It has instituted mandatory annual ethics trainings in its continuing professional development programs and includes ethics-related topics in professional examinations.
In addition, it has prioritized strengthening the linkage between compliance with the Code and PACPA’s investigative and disciplinary system. In this regard, its Code of Professional Conduct Committee collaborates with the Board of Directors to resolve cases related to violations of the Code.
To further support members, the association reports to disseminate the Arabic translation of the 2018 Handbook of the International Code of Ethics for Professional Accountants to its members.
PACPA also participates in the international standard-setting process by providing comments in collaboration with the Board of Professional Auditing, the entity licenses auditors, on exposure drafts issued by the IESBA.
SMO 5: International Public Sector Accounting Standards
The Palestinian Ministry of Finance is responsible for issuing public sector accounting policies, which are implemented by the Palestinian National Authority (PNA). IPSAS have not been adopted, and there are currently no known plans for adoption.
With no legal responsibility for the adoption of public sector accounting standards in the jurisdiction, PACPA indicates that it works to raise awareness amongst the entities responsible for the adoption and implementation of the public sector accounting standards on the benefits of IPSAS adoption. In January 2020, PACPA sent a formal letter to the President of Palestine explaining the importance and the positive effects resulting from the adoption of IPSAS. It is also planning to send the President a copy of the translated IPSAS. PACPA reports to have received a positive response from the State Audit & Administrative Control Bureau regarding the formal letter that was sent.
To this end, the association has established an internal committee to promote the adoption of IPSAS, and states that it collaborates with regional and international institutions to gather information and cases on IPSAS adoption and implementation experiences to share with PNA.
Lastly, PACPA states that it organizes workshops, and publishes articles and bulletins on IPSAS-related topics.
In its SMO Action Plan, PACPA should consider providing specific and current activities related to promoting the adoption of IPSAS and a timeframe for their completion.
SMO 6: Investigation and Discipline
In Palestine, PACPA and the Board of Professional Auditing (BPA) share responsibility for the investigation and discipline (I&D) of auditors. Accordingly, PACPA has established and operates a complaints-based I&D system that incorporates all the requirements of SMO 6, apart from the composition of the Disciplinary Committee. It has the authority to levy sanctions on members for non-compliance with applicable rules, regulations, the code of ethics, and standards of professional conduct. However, PACPA is not allowed to expel or suspend members but may make recommendations to do so to the BPA, which licenses members of the profession, and ultimately determines the applicability of these sanctions.
The association reports that it has an ongoing process in place to periodically benchmark its I&D system against the requirements of SMO 6; and the most recent comparison as of the date of the assessment was completed in 2019. It reports in its 2020 SMO Action Plan that 60 complaints were resolved in 2019 and 29 complaints were resolved in 2020 (as of August).
The association reports to have established a link between the QA and investigation & disciplinary systems since the QA review system has become operational.
Finally, PACPA notes that it raises the awareness of the public and its members about the features of the I&D system through its website, where the public is readily able to find the section to submit a complaint, and other publications such as its magazine (Al Modaqeq Al Falastini).
SMO 7: International Financial Reporting Standards
Corporate accounting standards are adopted by law in Palestine and, therefore, PACPA has no responsibility for the adoption of these standards. Draft amendments to Companies Law No. 12 of 1964 were approved on January 27, 2019, requiring the adoption of IFRS and IFRS for SMEs.
Since IFRS and IFRS for SMEs are adopted in the jurisdiction, PACPA focuses on supporting its members with implementation. PACPA reports that it promotes the inclusion of standard-related topics in the initial professional development curriculum of universities and organizes workshops and other trainings on the standards in its annual continuing professional development program.
PACPA also reports to publish guidance specifically related to adoption challenges and participates in sessions to carried out by firms and other organizations. PACPA states that it notifies its members of all new and revised IFRS and other pronouncements issued by the IASB via its website and magazine. To further support its members, PACPA indicates it provided its members with an Arabic version of the 2019 IFRS Handbook and maintains ongoing processes to provide updated translations in a timely manner.
PACPA is encouraged to participate in the international standard-setting process by providing comments on the exposure drafts and other pronouncements issued by the IASB.
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