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 carried out QA reviews in accordance with SMO 1 requirements.

Due to the COVID-19 pandemic and capacity constraints, LIA was not able to carry out QA reviews after 2019. In March 2023, LIA hired a consultant to draft its own QA methodology and manual. In May 2024, it approved the QA review manual that will be used in inspections. The next round of inspections is scheduled for May 2026 or earlier if the need arises. Relevant standards – ISQM 1, 2, and ISA 220 (revised) – are referred to in the QA review manual.

In addition to previous 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 relevant standards, as well as workshops and has provided updates to reviewed firms on the QA review findings.

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.

The accountancy profession in Lesotho has historically grown through the inclusion of professional accountants qualified abroad based on the fulfillment of academic programming, practical experience, and passing final examinations. Currently, professional qualifications for LIA members are earned through a joint qualification scheme with the Association of Chartered Certified Accountants (ACCA) with two Lesotho-specific modules. The institute has an agreement in place with ACCA until 2028.

In 2018, after several years of development and support from the World Bank and the European Development Fund, 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 subscribed to the requirements in IES and includes learning-outcome approaches. However, due to low intake, the program was not viable, and it has been paused. To support the Accountant and Auditor Generals, the LIA is exploring collaborations with the African Professionalisation Initiative (API) and the South African Institute of Government Auditors (SAIGA).

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 examinations. The LIA reports that new Bcom modules began with the 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. 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.

Current Status: Review & Improve

The Companies Act 2011 grants authority to the Lesotho Institute of Accountants (LIA) to set auditing standards and rules and regulations for the conduct of audits. The LIA 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. The LIA has also offered CPD in collaboration with PAFA, particularly on new and revised standards – ISQM 1, 2, and ISA 220 (revised).

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

Current Status: Sustain

A 1984 amendment to the Accountants Act 1977 grants the Lesotho Institute of Accountants (LIA) the authority to set ethical standards for the profession. LIA first 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 members are required to refer to the 2023 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. It organizes regular trainings when a new Handbook is issued. 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. It has plans to introduce an ethical declaration form that members must sign and submit annually to LIA.

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).

To this effect, the institute reports that it is working with the Accountant General, Auditor 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 striving to strengthen the public sector accountancy capacity. The LIA is exploring collaborations with the African Professionalisation Initiative (API) and the South African Institute of Government Auditors (SAIGA).

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

Current Status: Review & Improve

The Accountants Act 1977 requires the Lesotho Institute of Accountants (LIA) to establish an investigation and disciplinary (I&D) system. The institute 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 its enforcement procedures incorporate the SMO 6 requirements. The Committee is also developing compliance and whistleblowing policies and procedures that will make the disciplinary process more transparent and efficient.

The institute raises both member and public awareness of the I&D requirements. LIA has published clear instructions for making a complaint on its website. In its annual report, LIA includes a section on the disciplinary actions that have been taken throughout the year.

Current Status: Review & Improve

The Companies Act 2011 requires companies to prepare financial statements in accordance with the accounting standards prescribed by the Lesotho Institute of Accountants (LIA). In 2005, the LIA Council adopted IFRS and IFRS for SMEs as issued by the IASB. The decision requires automatic adoption of all new and revised IFRS. Except for financial institutions, which are considered the only publicly accountable entities and must apply full IFRS, companies may choose to apply IFRS or IFRS for SMEs. 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