Lesotho Institute of Accountants

Although there is no legal mandate to establish a quality assurance (QA) system, the Lesotho Institute of Accountants (LIA), in accordance with the Accountants Act 1977, may take steps as needed to regulate the profession in the public interest. Therefore, LIA introduced mandatory practice reviews in 2009 for audit firms that provide audit services to public interest entities.

Due to capacity restraints in the past, the Association of Chartered Certified Accountants (ACCA) was contracted to conduct practice reviews from 2012–2014. Throughout 2017, LIA arranged a partnership with the Public Accountants and Auditors Board (PAAB) of Zimbabwe to continue conducting QA reviews and transfer the skills for performing QA reviews to local reviewers. LIA reports that the PAAB’s first reviews were done in June 2018 with the second round being conducted in December 2018. The PAAB carries out QA reviews in accordance with SMO 1 requirements.

Within its own capacity, the LIA outlined a QAR policy that stipulates the details of the inspection process. It also has hired technical and legal staff to supervise compliance and disciplinary matters that arise from QA reviews. Additionally, LIA has established a Quality Assurance Committee that oversees the review process and members’ implementation of review findings. In addition to capacitation from the PAAB reviewers, the LIA participated in a PAFA-led workshop in March 2018 on QA review methodology. The institute is seeking to further relationships with PAOs in the southern African region to share common findings and deficiencies and find solutions.

To support its members with the review procedures, LIA holds annual seminars on ISA and ISQC 1, as well as workshops on SMO 1 and provides updates to reviewed firms on the QA review findings. LIA also disseminates information on the QA review process via its website and quarterly newsletter.

Finally, the LIA is pushing to re-draft the Accountants Act 1977 to provide legal backing to the institute’s role in running the QA system in the jurisdiction. The timeline for the passage of the Act is tenuous.

As QA reviews are resuming with the partnership of the PAAB, the LIA is encouraged to continue ensuring that the review process meets the SMO 1 requirements and that local reviewers are enhancing their capacity to do QA reviews as well. LIA is also encouraged to provide an update on the amendments of the Accountants Act 1977 that would include a mandate to implement a QA review system.

Current Status: Review & Improve

Section 6 of the Accountants Act 1977 establishes that Lesotho Institute of Accountants (LIA) is responsible for determining initial professional development (IPD) and continuing professional development (CPD) for professional accountants. LIA has established a three-tier qualification framework for entry into the profession: (i) Technician Accountant; (ii) General Accountant; and (iii) Chartered Accountant, each with specified educational background and practical experience. In recent years, the LIA has undertaken several initiatives to strengthen and tailor the accountancy education programming in Lesotho and taking into consideration the latest IES requirements.

Historically, professional qualifications for LIA members were earned through a joint qualification scheme with the Association of Chartered Certified Accountants (ACCA). The institute still has an agreement in place with ACCA until 2023. However, after several years of development and support from the World Bank and the European Development Fund, in July 2018, the first round of students were accepted for the Lesotho Professional Accountancy Programme (LePAP)—an accountancy qualification that was designed and developed to meet the local needs of both the private and public sectors of the Lesotho economy. The LIA notes that the LePAP subscribes to the requirements in IES and includes learning-outcome approaches. The LIA Capacity Development team, which developed the LePAP qualifications framework, thoroughly examined the knowledge, understanding, and skills requirements for professional development and looked extensively at how to incorporate issues of professional values and ethics in the scheme. Furthermore, it also addresses the multiple IES requirements that deal with admission requirements, practical experience, and assessments. 

To ensure the implementation of various IPD components, the LIA has partnered with universities and employers. For example, LIA reports that it engages with the National University of Lesotho to incorporate LePAP accounting modules within its Bachelor of Commerce and Accounting (Bcom) program to ensure that it meets IES benchmarks and enable students to sit for the LePAP examinations upon graduation. The LIA reports that the new Bcom modules will begin with the new academic year in August 2019. The institute has also signed an MoU with the Council of Higher Education with the objective of accrediting tuition providers that meet the LePAP programming and competencies. In collaboration with the CHE, LIA has accredited Botho University’s Bachelor Honors in Accounting and has done quality reviews at the Centre for Accounting Studies.

In regards to practical experience, LIA indicates that it has entered into contract with six organizations under an Approved Training Employers (ATE) scheme whereby those identified organizations will offer practical experience training to LIA students under agreed terms. Both employers and students will be provided with a competency framework to track competencies and LIA’s education team will receive progress reports.

Lastly, LIA has established CPD requirements for its members at 40 credits per year. The institute hosts workshops and seminars to assist members in keeping abreast of updates to educational requirements and to fulfill their CPD obligations. LIA monitors compliance with CPD requirements, informs members of CPD requirements via its newsletter, meetings, and workshops, and includes a CPD calendar of events on its website.

In 2019, newly revised IES were issued that 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. The institute is encouraged to continue and strengthen its engagement efforts with national universities and practical experience providers / employers to ensure that accountancy candidates are prepared to meet the market needs by receiving education in line with the latest IES requirements.

Current Status: Review & Improve

LIA is by law responsible for the adoption of ISA and states that it adopts and publishes ISA as issued by the IAASB without modifications on an ongoing basis for application in Lesotho.

The LIA supports the implementation of the ISA by providing education and training on the standards for its members. The institute organizes and delivers seminars and workshops on changes to the standards, and also publishes articles on ISA in its quarterly newsletter.

LIA states that it participates in the international standard-setting process by providing comments on IAASB Exposure Drafts.

Current Status: Sustain

LIA adopted the IESBA’s Code of Ethics in 2010 with minor modifications and implemented processes to adopt subsequent amendments to the Code on an ongoing basis. LIA reports its members are required to adhere the 2020 International Code of Ethics.

The institute also focuses on supporting compliance with the Code by offering pertinent training to members and utilizing the IESBA’s eCode—a new implementation tool. It held a training on the 2018 International Code of Ethics in January 2019 and in 2021 on the 2020 International Code of Ethics. LIA states that it identifies challenging ethical areas and develops discussion forums on those topics, subsequently conducting a workshop if necessary. The institute also delivers training on ethics and regulatory requirements, and raises member awareness by periodically publishing legal, ethical, and regulatory requirements.

The institute indicates that it keeps members informed by sharing amendments issued by the IESBA in membership meetings and via emails.

As part of best practice in adoption of ethical requirements, the LIA is encouraged to proactively review the 2020 Code and the resources available on the IESBA website. LIA is encouraged to continue demonstrating that the latest Code is adopted in a timely manner and that training (both IPD and CPD) and communications are ongoing to support effective implementation amongst members.

Current Status: Review & Improve

The Financial Management and Accountability Act 2011 establishes the Lesotho Institute of Accountants (LIA) as the public sector accounting standard setter. The Act requires government financial statements to be prepared in accordance with IPSAS. LIA states that presently statements are prepared on a modified cash-basis and eventually transitioning to accrual basis (IFAC, CIPFA 2018).

To this effect, the institute reports that it is working with the Accountant General and Ministry of Finance to develop a roadmap for IPSAS implementation. It also liaises with government finance officials; meets with the Accountant General, Auditor General and officials from the Ministry of Finance to raise awareness of, and promote, IPSAS implementation; and is the chairperson for a new committee that advises the Auditor General.

LIA is also proactive in fostering relationships with accountants in the public sector and with the introduction of the Lesotho Professional Accountancy Programme (LePAP)—an accountancy qualification that was designed and developed to have both private and public sector specializations—it is striving to strengthen the public sector accountancy capacity. As the LePAP is still in the nascent stages, the institute maintains an agreement with CIPFA until 2023 to professionalize public sector accountants.

In addition, LIA indicates that it plans on increasing its participation in the standard-setting process by submitting comments on IPSASB Exposure Drafts.

LIA should provide updated information on its current initiatives and plans to further promote the implementation of IPSAS—this might include hosting roundtable discussions, disseminating resources from the IPSASB website, highlighting the number of public sector officials pursuing the LePEP, and/or other advocacy activities.

Current Status: Review & Improve

The Accountants Act 1977 requires the LIA to establish an investigative and disciplinary (I&D) system for the accountancy profession. The institute therefore established a Risk and Compliance Committee to monitor member compliance with laws, regulations, the Code of Ethics, and professional standards and an ad-hoc investigations committee to investigate reported cases of noncompliance. Subsequently, the Disciplinary Committee is empowered to conduct disciplinary processes and issue sanctions for members that are found guilty of misconduct.

LIA reports that in 2016 it amended its Disciplinary Procedures to incorporate the revised SMO 6 requirements and the amendment was presented to its Council and general membership in 2017 for approval. LIA has also developed a Disciplinary Procedures Manual that serves as guide for the entire disciplinary process along with a Risk Register to maintain records of complaints, cases, and follow-up on investigations. The institute reported one complaint in 2020 which was resolved via mediation.

The institute raises both member and public awareness of the I&D requirements. LIA is developing a portal for the public to make a complaint via its website. In its annual report, LIA includes a section on the disciplinary actions that have been taken throughout the year.

LIA reports that its I&D system meets the SMO 6 requirements but has not instated a regular review process of the system’s implementation and effectiveness. The institute is encouraged to establish a regular review process for I&D procedures to ensure that its system functions properly and proactively address any issues that might be revealed.

Current Status: Review & Improve

LIA is by law responsible for the adoption of IFRS and states that it adopts and publishes IFRS and IFRS for SMEs as issued by the IASB without modifications on an ongoing basis for application in Lesotho. The institute states it continuously monitors and reviews IASB pronouncements and will provide comments on IASB exposure drafts.

In addition to sharing updates and revisions to the standards with its members via its website and internal notice board, LIA supports implementation of the standards by regularly conducting training on the standards, including IFRS in its CPD events, and monitoring application through inspections. LIA also indicates that it has a standing technical column in its quarterly newsletter on the standards.

Current Status: Sustain