Instituti i Kontabilistëve të Miratuar

Under the Law on Statutory Audit and Organization of the Accountancy Profession No. 10091, the responsibility for conducting quality assurance (QA) reviews of statutory audits is vested with the Public Oversight Board (POB), with an option to delegate QA reviews of audits of non-PIEs to the Institute of Authorized Chartered Auditors (IEKA). IKM as a professional body for accountants is not involved in the implementation of the system.

However, although not required by law, in September 2010, IKM established a QA review system for its members—certified accountants. The system is based on peer reviews and is administered by a Quality Control Committee, an independent body in the General Assembly. Accounting firms are required to implement a system of quality control in accordance with the regulations of IKM on quality control, which have progressively been brought in line with ISQC 1. Since operationalizing its QA review system in 2018, IKM has done four review cycles and reviewed over 100 member firms.

IKM employs both cycle-based and risk-based approaches. Reviews are conducted every five years and inspectors are selected from IKM membership. IKM shares information on the functioning of the QA review system with the POB, which regulates its activities, and has further described its QA review system in its SMO Action Plan. IKM has conducted a self-assessment of its QA review system in 2018 and again in 2022, and reports that its procedures meet the best practices of SMO 1. It has undertaken its first review of the QA procedures and supporting manuals to address the quality management (QM) standards. IEKA has translated the QM standards and IKM is supporting member firms to adopt systems of quality management and integrate a QM approach to their operations and strategy.

To support its members, IKM produces materials, including a quality control checklist for controllers and firms/practitioners undergoing a review, and makes these materials available on its website on an ongoing basis. IKM also conducts trainings for controllers and the Quality Control Committee. In September 2019, IKM signed a cooperation agreement with the Society of Certified Accountants and Auditors of Kosovo (SCAAK) aimed at working together to develop more efficient and effective QA review system for accountants and is also participating in a regional initiative led by ICAEW on QA for accountants. In 2022, as mentioned, IKM is providing updated guidance related to QM standards and is organizing workshops to guide firms in the development of their own QM manuals.

From 2014–2016, IKM reported that it participated in the discussions on proposed amendments to legislation to include a requirement for a mandatory QA system for accountants, in addition to the one for auditors. This provision was ultimately not included in the final law that passed in April 2016. In 2022, discussions have resumed between the MoF, POB, and World Bank to amend legislation regarding auditors and certified accountants. IKM has requested to participate in the working groups and will again introduce proposals to stipulate a mandatory QA review system for accountants.

IKM reports that it monitors national and international developments and standard-setting activities in the area and communicates new developments and changes in national and international guidance related to QA reviews to IKM membership through publications, emails, and its website.

IKM has demonstrated commendable commitment to QA reviews for accounting services for its membership and engaging with regulators at the national level. As other organizations for accountants are recognized by the POB, IKM is encouraged to collaborate & share its expertise with these PAOs to make efficient use of resources and ensure that all accountants are subject to quality review of their work thus increasing the reliability of financial information in the jurisdiction. Exchanging experience with other accounting bodies in the region could continue to be beneficial in this regard.

Current Status: Sustain

Initial professional development (IPD) and continuous professional development (CPD) requirements for attaining the qualification of a Certified Accountant (CA)—the only category of professionals that constitutes IKM’s membership—are set in law and include the following: candidates are required to obtain a master’s degree in accounting or finance; have three (3) years of related practical experience (accounting/finance); have attended the qualification training classes for IAS/IFRS and National Accounting Standards; and successfully passed the professional skills exams set by the Examination Commissions under the Public Oversight Board. IKM has established an Education Committee that oversees all aspects of education and exam administration.

Between 2014 and 2016, IKM worked on improving university curricula and its IPD programming to address the IES as part of a World Bank Corporate Financial Reporting Enhancement Project (CFREP) and benefited during 2016–2018 from the development of learning materials and train of training sessions (ten IKM trainers were trained). IKM reports that its curricula have been strengthened to ensure candidates learn & demonstrate technical competencies, professional skills, and ethics. These are assessed through assessments prior to sitting for the POB examination. IKM also participated in a study tour to Netherlands to the universities and professional bodies.

In 2022, the World Bank / CFRR launched the Strengthening Quality of Auditing and Reporting Project for Republic of Albania (SQARP) building upon previous country projects. One of the strategic objectives under SQARP is to enhance accountancy education and includes the following: a) building on new syllabi for the CA certification prepared under previous capacity building projects that aligns with the IES and other global programs such as the ACCA; review and upgrade the learning program; prepare a bank of questions and answers for the examination; and provision and implementation of a system comprising secure examination question and answer inventories; b) delivery of training to examiners and moderators (as identified by the POB), including implementation and training on extensive use of technology and e-tools; c) design a tailored training program based on the research findings covering services, expertise models, technology and markets, and support IKM to deliver this program; d) prepare a manual covering the examination quality control processes including for security and integrity, and implementation of an e-examination system that can facilitate secure e-testing as part of future examination processes. IKM also reports that, as part of the SQARP, discussions with the MoF, POB, and World Bank are ongoing around legislative revisions & amendments that would address formal assessments & monitoring of practical experience for CA candidates.

In addition, IKM establishes CPD requirements for its members. Since becoming an IFAC Associate in 2012, IKM has worked to bring its CPD requirements in line with IES. Since 2018, IKM members are subject to 40 hours of CPD (up from 30 hours in 2012), and this requirement is now subject to monitoring and possible sanctions. IKM requires members to submit proof of CPD fulfillment (input approach) and in 2022, has shifted to an output approach whereby CAs must complete assessments during & after each training to demonstrate what they learned in the training. This was achieved with the assistance of the World Bank, which conducted a gap assessment of IKM’s CPD programming and strategy for enhancing CPD in line IES. The improved CPD programming is expected to improve IKM’s competitiveness. IKM designs an annual CPD calendar with mandatory trainings in accounting standards, AML, ethics, tax among other topics requested by IKM members through feedback surveys.

Further of note, IKM signed a cooperation agreement with the Society of Certified Accountants and Auditors of Kosovo (SCAAK) in, among other areas, provision of IPD and CPD programming and jointly promoting incorporation of the IES requirements in their jurisdictions.

It is positive that support for strengthening accountancy education requirements and progress in aligning training programs, exams, and CPD with the IES requirements continues in Albania and that IKM is an active participant in the reform process. As the World Bank projects progress, IKM should continue to refer to the IES Self-Assessment created by IFAC to ensure that all new changes meet the IES benchmarks.

Current Status: Review & Improve

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016 requires application of ISA, as translated in Albanian, in all statutory audits. The Albanian Institute of Authorized Chartered Auditors (IEKA) is responsible for the translation of ISA and has translated the 2018 version of ISA. As of 2022, translation is ongoing for ISA 540 (revised), ISA 315 (revised) (effective in the 2020 IAASB Handbook) as well as the quality management standards.

IKM reports that, being a professional association of Certified Accountants, it does not have statutory auditors as its members and therefore is not actively involved in this area. IKM has considered the need to be involved in the auditing standard-setting process and implementation of the standards and reported that it supports the IEKA in its process to adopt ISA and participates in national roundtables on the financial reporting framework. In 2021, IKM and IEKA renewed their MoU to collaborate on matters related to the accountancy profession, such as CPD recognition and translation of materials.

Previously, IKM representatives participated in a roundtable on proposed amendments to the Law No. 10091 that focused on the regulation of auditors and in several trainings organized by the World Bank in September 2016 and April/ May 2018 on ISA. Participation has helped IKM tailor CPD training sessions on ISA, which are included in its CPD plan. From 2019, IKM offered training on ISA 700-800 as related to financial statements and in 2022, provided training on the revised ISRS 4400 which its members may apply in their work. IKM also reports to be working with the FEUT University to ensure the inclusion of ISA and other related pronouncements in its master’s degree program for accountancy.

Overall, IKM has processes in place to address the SMO 3 requirements of supporting adoption & implementation of the latest ISA. These processes maintain IKM’s fulfillment of SMO 3 and address new developments as appropriate.

Current Status: Sustain

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016 requires application of the IESBA Code of Ethics for statutory auditors and certified accountants. In line with this requirement, members of IKM, through its Charter, are required to apply the IESBA Code of Ethics. The 2018 International Code of Ethics has been translated by IEKA and SCAAK and as of October 2022, translations of revised requirements in the 2021 International Code of Ethics are being finalized.

IKM adopts the Code as translated by IEKA and updates its supplementary Code of Ethics. Furthermore, as of 2022, IKM indicates it has translated relevant sections of the 2021 International Code of Ethics for accountants and aligned its Code of Ethics accordingly. These are available on the IKM website for its membership.

In addition, in September 2019, IKM signed a cooperation agreement with the Society of Certified Accountants and Auditors of Kosovo (SCAAK) aimed at, among other translating the IESBA Code in a timely manner.

To support implementation of the International Code of Ethics, IKM has been incorporating the requirements of the Code into its CPD program, including case studies and the latest revisions — e.g., IKM reports that relevant portions of the 2021 International Code were included its in CPD program for 2022. There is mandatory annual training on the Code of Ethics.

IKM also notes that it monitors the activities of the IESBA. It has developed a system for communicating new developments and changes in national and international standards and other guidance to IKM membership through magazines, emails, and its website.

IKM’s efforts to adopt the latest version of the International Code of Ethics are commendable. As previously recommended, because ethics is a keystone of the accountancy profession, IKM may consider furthering its activities to support its members with the implementation of the Code through technical & confidential hotlines or providing other opportunities for members to ask questions & seek guidance.

Current Status: Review & Improve

IKM supports the development of public sector accounting standards through its seat on the National Accounting Council (NAC). In turn, the NAC advises the Ministry of Finance (MoF), the standard setter for this area, on public sector accounting standards. According to the World Bank’s Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries—Albania (2020) and the World Bank’s Public Sector Accounting Reforms Implementation Status in PULSAR Countries (2022), national standards are cash basis with accrual accounting elements relating to assets and liabilities. There are PFM reforms underway to adopt and implement accrual-basis standards that are based on IPSAS. With funding from the Swiss State Secretariat for Economic Affairs (SECO), the World Bank is supporting the MoF in the implementation of the reform strategy. An estimated timeframe for the first-time implementation of IPSAS is 2027.

IKM is a member of a steering committee established to coordinate the PFM reform project supported by the World Bank. Members of IKM will serve as trainers for the component of the project that focuses of strengthening the skills & competencies in the public sector. In 2022, IKM members participated in the first Train the Trainer sessions. IKM will serve as a primary CPD provider for public sector accountants and has supported a translation process of the 2019 IPSASB Handbook. IKM is also holding discussions with the MoF, WB, and POB on the creation of a Public Sector Accountant Certification whereby IKM would manage the exam and certification process.

IKM has been actively advocating for the adoption of IPSAS since 2009. It has authored articles about IPSAS and accrual accounting in the IKM magazine and participated in the national and international events to facilitate the adoption of IPSAS in the jurisdiction. Its members are kept informed of developments as part of IKM’s newsletter and its CPD programs, as well as other training and educational activities already include IPSAS-related materials. Additionally, IKM states that it plans to work with the FEUT University to include IPSAS into its master’s degree program.

Overall, IKM has processes in place to address the SMO 5 requirements of supporting adoption & implementation of accrual-basis IPSAS. These processes maintain & advance IKM’s fulfillment of SMO 5 and address new developments as appropriate.

Current Status: Sustain

There is only a legal requirement to implement a system of investigation and discipline (I&D) for auditors, not for accountants in the jurisdiction. Nevertheless, the IKM, a body uniting certified accountants, introduced an I&D process for its membership in 2015.

Since 2015, IKM has regularly reviewed the requirements of SMO 6 and has taken several steps to close identified gaps in its procedures and better meet the SMO 6 benchmark; these steps are outlined in more detail in its SMO Action Plan. For example, the I&D process was originally managed by the IKM Managing Council before the creation of a separate committee that would do both investigations and issue any disciplinary actions. In 2019, IKM introduced changes to permit non-professional accountants (mainly legal professionals) to serve on the committee. In 2020, the Managing Council decided to publish all the I&D committee sanctions and decisions and make them available to the public—not just IKM membership—through its website. A link with the results of QA reviews has also been established with the formal operationalization of the inspection process. From 2020-2021, IKM received over a dozen requests from the POB to further investigate members because of information in QA reviews.

Finally, in 2022, IKM reports that it is has separated the investigation and discipline functions and no individual serves on the investigation and disciplinary committee at the same time. The Managing Council will receive a final report and recommendations for any proposed sanctions, which it ultimately can approve or refer the case to the POB for additional sanctions. Individuals can also appeal decisions to the Managing Council and/or the POB.

Since 2017, IKM has included a session on the I&D system and consequences of non-compliance in its CPD calendar. IKM also reports to be actively engaged with other stakeholders in the jurisdiction on matters related to I&D of certified accountants. IKM works with other accountancy regulators in promoting the need for defining an I&D process for certified accountants in law or regulation. IKM is also cooperating with the POB as well as the Tax, Prosecution, and Anti-Money Laundering Authorities in the fight against corruption, tax evasion, and money-laundering.

IKM’s efforts to strengthen its I&D procedures with the SMO 6 requirements & best practices are commendable. Having recently aligned its procedures, IKM is encouraged to ensure it is regularly reviewing the implementation & effectiveness of the system and continues to make improvements as necessary. IKM is also encouraged to continue working with the POB and with other PAOs for accountants to ensure that all accountants are subject to quality I&D processes thus increasing the reliability of financial information in the jurisdiction.

Current Status: Review & Improve

Although IKM does not set accounting standards, it is represented on the National Accounting Council (NAC), which is responsible for drafting national standards and providing a recommendation for adoption to the Ministry of Finance (MoF). The MoF has required the application of IFRS translated into Albanian for public interest entities (PIEs) and some large non-listed companies as well as Albanian National Accounting Standards which are mostly aligned with the requirements of the IFRS for SMEs.

IKM is involved in the process of translating IFRS and IFRS for SMEs through its participation in the IFRS translation review committee. IKM also promotes the complete adoption of IFRS for SMEs through its representation on the NAC.

To support its membership with the implementation of the accounting standards, IKM provides training programs (examples of which are indicated in its SMO Action Plan), initiates public forums with the NAC, delivers education materials, and disseminates information on international developments. The institute also notes it has cooperated with universities to include IFRS in accountancy curricula. IKM reports that it participates both in the national and international standard-setting process by providing comments on the exposure drafts of both national and international pronouncements.

Overall, IKM has processes in place to address the SMO 7 requirements on supporting adoption & implementation of IFRS. These processes maintain IKM’s SMO fulfilment level and address new developments as appropriate. The BOA has deferred implementation of IFRS by banks for regulatory purposes and requires prudential reporting from the banking sector which does not align with the IFRS and is hindering full Adoption of the standards. IKM is encouraged to continue its advocacy for adoption of IFRS for all PIEs.

Current Status: Sustain