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. PACPA states that the next steps include updating the adopted manual as needed to include any revised requirements of SMO 1. The association reports to have established a link between the QA and investigation & disciplinary systems.
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. The institute is also encouraged to provide the number of reviews that have been conducted for firms performing audits of financial statements.
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. In 2014 and 2015, PACPA entered into partnership agreements with Abu Deis University, and the Palestine Technical University to offer IFRS and ISA courses.
Finally, PACPA notes that it participates in the international standard-setting process by providing comments on IAESB Exposure Drafts in collaboration with Palestinian universities.
PACPA is encouraged to develop plans to promote the adoption of the revised (2015) IES requirements to relevant stakeholders. The 2015 IES are available in Arabic and PACPA could consider sharing these standards with the BPA and universities. It is also encouraged to clarify the extent of alignment of the BPA’s examination with IES 6 requirements and to review IES 7 requirements to align its CPD requirements. In line with this, it would be beneficial for the association to consider establishing a mechanism to update initial professional development and CPD providers on IES changes on a regular basis.
SMO 3: International Standards on Auditing
In the absence of specified auditing standards in accountancy regulations or laws, PACPA has assumed the role of de facto auditing standard-setter. Since 2008, it has adopted ISA through its bylaws, for all statutory audits conducted by its members, which are the only individuals permitted to conduct audits in the jurisdiction. PACPA coordinates with the International Arab Society of Certified Accountants (IASCA) to make translated versions of ISA available to its members. The last version that was adopted and issued was 2015. IASCA is in the process of translating the 2016–2017 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements in Arabic and PACPA reports that it plans to adopt this translation for use by its members once completed.
The association notes that it circulates updates on the standards 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.
PACPA is encouraged to indicate in their SMO Action Plan when the institute expects the 2016 version of ISA will be adopted in the jurisdiction, and may 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
Having adopted the IESBA Code of Ethics for its members, 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 has disseminated the 2014 Code translated into Arabic.
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.
PACPA is encouraged to work to reduce the time lag in disseminating available Arabic translations of the IESBA Code as the International Arab Society of Certified Accountants has published the 2015 version in accordance with IFAC Translation Policy. The association could consider promoting the incorporation of ethics-related topics in initial professional development education programs. It is also encouraged to indicate any activities related to engaging with universities to include ethics-related topics. Lastly, PACPA should consider reviewing the NOCLAR standard, an international ethics standard for auditors and other professional accountants, which has become effective as of July 2017, and consider means to incorporate the standard into its ethical requirements and support its implementation.
SMO 5: International Public Sector Accounting Standards
PACPA, which has no responsibility for the adoption of public sector accounting standards in the jurisdiction, indicates that it works to raise awareness of the Palestinian Ministry of Finance and the Palestinian National Authority (PA)—the entities responsible for the adoption and implementation of the public sector accounting standards—on the benefits of IPSAS adoption. PACPA reports in its SMO Action Plan that it offered assistance to the PA for adoption and implementation of IPSAS.
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 the PA.
Furthermore, PACPA, along with the International Arab Society of Certified Accountants (IASCA), have planned to coordinate with the Ministry of Finance’s Training Center in September 2017 to include training on IPSAS for government staff. The Training Center reportedly included this endeavor in its annual training plan.
In 2016, 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.
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 a complaints-based I&D system, with most features that are aligned with the requirements of SMO 6, and has the authority to levy sanctions on members for non-compliance operate with applicable rules, regulations, the code of ethics, and standards of professional conduct. However, PACPA is not allowed to expel or suspend members for non-compliance but may make recommendations to do so to the BPA, which licenses members of the profession, and ultimately determines the applicability of these sanctions.
PACPA has operationalized its I&D system and in 2016, the Disciplinary Committee reviewed 25 complaints.
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 is expected to be completed by the end of 2017.
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.
PACPA is encouraged to develop specific plans with timelines to adopt any missing requirements once it has carried out its analysis and include these its SMO Action Plan. Furthermore, the institute should consider also including more information on the scope of the enforcement activities carried out by the regulators and if they have established any I&D procedures.
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. Banks, financial institutions, and listed companies must apply IFRS and PACPA reports that it strives to promote the adoption of IFRS and IFRS for small- and medium-sized enterprises (SMEs) for entities that are not yet subject to the requirements.
As part of these efforts, PACPA participates on the committee that was formed by the Palestinian National Authority to draft, prepare comments, and promote amendments to the new draft Companies Law that would make the application of IFRS a legal obligation for all companies. The status of the legislation is still pending and being debated as of the date of the assessment. In the interim, PACPA adopted a self-regulatory requirement for its members to apply IFRS and IFRS for SMEs. In addition, the association indicates it is exploring options to make Arabic translations of the standards available in the jurisdiction.
Finally, 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 is encouraged to provide an update on the status of the amendments to the Companies Law within its next SMO Action Plan. It is also encouraged to cooperate with parties responsible for IFRS adoption to participate in the international standard-setting process by providing comments on the exposure drafts and other pronouncements issued by the IASB.
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.