Liberian Institute of Certified Public Accountants

Under the 2011 LICPA Act, the LICPA is responsible for adopting quality control standards and implementing quality assurance (QA) requirements to ensure the quality of work. Per the legislation, the monitoring mechanism is to be compliant with the SMO 1 requirements.

The Act states that mandatory periodic QA reviews be performed for all audits and the reviews must be performed by an experienced, nonresident, independent reviewer that is appointed by LICPA solely to conduct the reviews. LICPA framed the legislation as such in consideration of the relatively small number of practitioners in the jurisdiction and to ensure independence and objectivity. The Act requires the establishment of an Audit Quality Assurance Board (AQAB) to, among other functions, receive the QA reports from audit quality reviewers and to ensure that LICPA can take appropriate remedial measures. Considering the resources needed to establish and operate an AQAB, LICPA estimates it will be able to formally establish the AQAB in 2022.

Regarding QA reviews, LICPA has been striving to ensure reviews are properly conducted in line with SMO 1. In 2013, as part of LICPA and Institute of Chartered Accountants (Ghana) (ICAG)’s twinning arrangement, the ICAG conducted audit quality monitoring and QA reviews as part of a pilot phase exercise. Due to the Ebola virus outbreak, ICAG reviewers were only able to return in June and July 2016 to complete the exercise and submitted review reports to LICPA. In 2018, LIPCA reports that the World Bank conducted a set of QA reviews of firms and in 2019, LICPA formally requested the Institute of Chartered Accountants of Nigeria (ICAN) to carry out QA reviews. ICAN’s Council approved the conduct of QA reviews and in February 2020, ICAN dispatched a team which carried out a QARs of LICPA member firms. The report from on the outcomes of the reviews are still pending.

LICPA requires the application of ISA 220 and ISQC1 and has organized mandatory CPD training on quality control and audit quality for all members.

LICPA’s approach to QA reviews is commendable in ensuring audit quality in the jurisdiction. LICPA might consider outlining the steps it will need to undertake to establish the AQAB, which is a key group of individuals to ensure that education or disciplinary measures are taken as appropriate. Establishment of the AQAB requires strategic planning and communicating the resources needed to achieve this objective. Considering the reports received from ICAG in 2016 and the pending report from ICAN, LICPA is encouraged to follow-up with practitioners to support improvements and preparation for future QA reviews. Along these lines, LICPA is encouraged to prepare members for the changes from quality control standards to quality management standards that being proposed and reviewed by the IAASB.

Current Status: Execute

LICPA is responsible for setting, implementing, and monitoring compliance with initial professional development (IPD) and continuing professional development (CPD) requirements. LICPA’s IPD requirements for CPAs include earning a bachelor’s degree, completing the required practical experience of three or more years under a member of the institute who is authorized to provide such training and experience (thereby the institute’s monitoring mechanism), passing the final qualifying examinations, and passing an additional paper in Liberian taxation.

As part of a twinning arrangement funded by the World Bank, LICPA’s professional qualification program and examination is that of Institute of Chartered Accountants (Ghana) (ICAG), which meets the 2015 revised IES requirements. Through the partnership, LICPA was also able to produce manuals on Liberian tax and business law that support candidates to study for the accompanying final paper. However, one of LICPA’s key strategic priorities is to administer its own professional examinations by 2022 and strengthen its practical experience framework. The institute is working to partner with PAOs in the region such as ICAG and ICAN to receive technical knowledge and support and has prepared funding proposals to engage with relevant stakeholders and donors on this initiative. Beginning in January 2020, the institute indicates that it will receive some financial support from the World Bank to administer its own exams and it has commenced its search for consultants to lead this process.

LICPA also utilizes the Accounting Technician Scheme of West Africa (ATSWA) exam for its Accounting Technician designation and has signed a Memorandum of Understanding with a tertiary university to utilize the ATSWA as its curriculum in support of meeting the IES requirements. This initiative is part of its Syllabi Integration Program (SIP), which aspires to have universities providing accountancy education incorporate the ATSWA as its curricula thereby enabling graduates to be prepared to sit for the LICPA examination soon after. As part of the SIP, LICPA is also striving to strengthen the capacity and quality of the training providers (both institutions and individual lecturers).

Once a member of LICPA, individuals must fulfill CPD requirements of 32 credit hours per year. Beginning in 2020, the institute has made it a condition that members report CPD hours each year in order to be listed as a member in good standing. LICPA does provide some CPD opportunities but as part of its 2019—2022 strategic objectives, the institute is aiming to certify other external CPD providers and programs and evaluate their CPD program delivery.

LICPA has demonstrated that it is carrying out initiatives to incorporate IES requirements where it is able to. There is still opportunity to further review educational requirements and approaches to identify and make changes that would enable to it further fulfill the SMO 2 obligations.

LICPA has several key strategic objectives for 2022 that would enhance the quality of accountancy education in the jurisdiction but will require financial and technical resources. The institute is encouraged to outline these objectives in more detail in its Action Plan and indicate the steps/timeframe that would need to be undertaken as part of communicating its specific resource needs. In this regard, the Accountancy Education Benchmarking Tool developed by the Center for Financial Reporting Reform of the World Bank may be utilized to help assess the current status of national accountancy education against the revised IES requirements.

Current Status: Execute

Section 8 of the LICPA Act authorizes LICPA to adopt internationally comparable auditing standards. The Act further states LICPA should be in compliance with the requirements of IFAC’s SMO 3. In July 2015, LICPA issued Regulation 1: Professional Standards and Related Practice Statements, which adopted the ISA. All subsequent standards and revisions issued by the IAASB automatically become adopted for application.

With assistance from the World Bank and the Institute of Charted Accountants (Ghana), LICPA has conducted workshops and seminars on the ISA. LICPA is also committed to communicating changes to standards as they are issued; providing guidance to its members; and encouraging them to access the IFAC Knowledge Gateway. LICPA reports that members were made aware of the new and revised standards effective as of December 2016 and in 2017, in coordination with PwC, it conducted a CPD training on the new auditor’s report and key audit matters and their impact on accountancy practices in Liberia. The institute states that the revisions to standards in the 2018 Handbook will automatically be effective and LICPA plans to organize a CPD training to update members.

The 2018 Handbook is now effective, which includes revised standards ISA 250 and 540. LICPA is encouraged to outline its planned implementation support on the revised standards effective in December 2019 as part of providing more information on its overall activities in this area. LICPA is also encouraged to continue monitoring and preparing members for the changes from quality control standards to quality management standards that being proposed and reviewed by the IAASB.

Current Status: Review & Improve

Sections 8, 9, and 16 of the LICPA Act stipulate that the LICPA is responsible for the adoption of ethical requirements and that the Code of Professional Ethics is appropriately responsive to needs of stakeholders that rely on the work of accountants. Furthermore, Section 16 stipulates that LICPA should be in compliance with the requirements of IFAC’s SMO 4 relating to the adoption of the IESBA Code of Ethics.

The institute first issued Regulation 1 in July 2015 adopting the 2015 IESBA Code of Ethics for its members. LICPA has formally adopt the 2018 International Code of Ethics for its members in January 2020, illustrating its commitment to continued fulfillment of SMO 4.

In collaboration with the Institute of Charted Accountants (Ghana), LICPA has conducted seminars on the IESBA Code. Once the LICPA Council adopts the latest proposed Code of Ethics, the institute intends to organize a CPD event on ethical requirements to ensure members are up-to-date on their ethical obligations. In 2018 and 2019, the institute held CPD trainings on audit quality and the role of professional accountants where ethics-related issues and public trust were emphasized.

Adoption of the latest 2018 International Code of Ethics is an important accomplishment. Considering the changes within the Code, LICPA is encouraged provide further information on planned actions or initiatives related to raising awareness specifically on the 2018 IESBA Code of Ethics and supporting its proper implementation amongst members.

Current Status: Review & Improve

LICPA is responsible for advising the Ministry of Finance and Development Planning (MFDP), the entity responsible for adopting public sector accounting standards, on public sector financial management matters.

In 2009, the government enacted the Public Financial Management Act, which adopted and established cash-basis IPSAS as the official standards for public sector accounting in Liberia, with the aim of transitioning to accrual-basis IPSAS in 2014. However, at the time of the intended transition, the Ebola virus outbreak delayed the transition. As of 2019, LICPA reports it is engaging with the MFDP to set a new timeline for moving to accrual IPSAS. LICPA indicates that its Council recently formed a committee to engage the MFDP and other government stakeholders on this topic.

In 2016, in collaboration with the Institute of Charted Accountants (Ghana), LICPA organized a three-day seminar on IPSAS with over 60 government representatives in attendance. Since then, LICPA indicates that there are ongoing discussions with the MFDP to professionalize public sector accounting staff and enhance public financial management training through LICPA’s qualification program. The institute has incorporated IPSAS into its training programs for the ATSWA and CPA exams. LICPA has demonstrated that it is taking initiative within the scope of its authority for SMO 5 and is committed to exploring further improvements in this area.

It is a positive step that LICPA has established a committee to re-engage the government on the transition to accrual IPSAS. LICPA is encouraged to indicate specific activities it might be undertaking to advocate and raise awareness of accrual IPSAS; for example, organizing meetings/roundtables, sharing IPSASB pronouncements, meetings with the Ministry, etc. The institute is also encouraged to indicate any recent training support it has provided to members and/or government staff as part of its professionalization objective.

Current Status: Execute

Sections 3 and 16 of the 2011 LICPA Act authorize the LICPA to establish mechanisms for investigation and discipline (I&D). Furthermore, Section 16 stipulates that LICPA should be in compliance with the requirements of IFAC’s SMO 6. LICPA has established an Ethics, Investigation, and Discipline Committee (EIDC) that is responsible for investigating allegations of professional misconduct.

The institute reports that the EIDC is functional and that it forwards cases to the EIDC for investigation. Based on its investigations, the EIDC recommends appropriate sanctions to LICPA’s Council. The Council must approve any sanctions before the EIDC can impose them. As at December 2019, the EIDC has received three cases but has not issued any report on conclusions.

In 2019, LICPA conducted a self-assessment of its I&D system against the revised SMO 6 best practices and indicates that certain components, such as a separate entity to make disciplinary decisions (this impacts the composition of the disciplinary body as the Council is all professional accountants), an appeals body, certain administrative processes, and making results publicly available, require further implementation efforts.

As part of its 2019–2022 strategic objectives, the institute has stated an objective of developing a sound system for handling professional complaints related to the practice of accountancy in Liberia. There are no specific actions on how it intends to execute this within its Action Plan, however. LICPA is encouraged to specify its plans for strengthening its I&D system in line with SMO 6 best practices. It will require strategic planning and communicating the resources (financial, technical, and human capital) needed to achieve this objective.

Current Status: Plan

LICPA is responsible for the adoption of private sector accounting standards as per the LICPA Act 2011 and its bylaws require that all standards it issues be in line with international standards. Effective December 2018, public interest entities must apply full IFRS and all other companies may choose between IFRS or IFRS for SMEs. Any changes to the standards are to be automatically applied.

To support implementation, LICPA states it has conducted trainings on full IFRS and due to its involvement with universities, IFRS courses are integrated into the accountancy curricula.

The institute has outlined plans to ensure that revisions to the standards are adopted and communicated to members promptly via email and training. For example, in 2018, CPD training was held on new IFRS, such as IFRS 9, 15, and 17. Alongside sharing new information, LICPA intends to update the training programs and organize workshops to hear feedback and understand challenges that members are having in applying the standards. LICPA has demonstrated that it is implementing initiatives relevant to SMO 7 and is committed to continued improvements in this area.

Now that the application of IFRS is effective by law, LICPA is encouraged to continue its implementation efforts and should highlight examples of training and workshops it has and/or will provide for its members in its Action Plan. The institute may consider offering increased training of IFRS for SMEs as it is also an applicable framework in the jurisdiction.

Current Status: Review & Improve