Association of Professional Accountants & Auditors of the Republic of Moldova

In the Republic of Moldova, the requirements for quality assurance (QA) reviews of audits are set in Law No. 271 of 2017 — the Law on the Audit of Financial Statements. Per the legislation, the Public Audit Supervisory Council (the Council) is responsible for conducting QA reviews of all audits – with all entities subject to a review at least every 6 years and PIEs at least every 3 years. The Association of Professional Accountants and Auditors (ACAP) states that the Council’s QA review procedures are in line with SMO 1 requirements. Additionally, effective January 2021, per Decision No. 21 of 2020, the ACAP was delegated authority to perform QA reviews for its members that conduct audits. The ACAP’s QA review system is supervised by the Council. The ACAP reports that its procedures meet the SMO 1 requirements.

The ACAP has been actively involved in quality assurance prior to the passage of legislation in 2017 and the latest regulatory decisions in 2020. Beginning in 2014, the ACAP conducted QA reviews of member firms as required by its Statue, internal regulations, and in line with SMO 1 requirements. ACAP, therefore, has an established Quality Control and Monitoring Department (DCCM), which now develops the QA methodology in coordination with the Council. ACAP indicates that the methodology has been updates regularly since 2014.

To support members, the DCCM has developed a Manual on Quality Control for Audit Firms and organizes training sessions with the Council on how to implement the manual. Training and seminars are also organized considering the results of the reviews done by ACAP and the Council. Quality control standards and the IESBA Code of Ethics are available to members via the ACAP and Ministry of Finance websites. Recently, ACAP has been making members aware of the upcoming quality management standards and offering training on anti-money laundering as it relates to audit inspections.

Furthermore, to support its members who provide services to small and medium-sized enterprises, ACAP has shared IFAC’s SMP Guide on Quality Control for Small- and Medium-size Practices as well as the manuals developed by the professional accountancy organizations from Romania.

Finally, ACAP together with the regulators are actively participating in the World Bank Centre for Financial Reporting Reform’s project on Strengthening Auditing and Reporting in the countries of the Eastern Partnership (STAREP). ACAP also participates in the Quality Assurance Network under ICAEW Accountancy Profession Strategic Forum (ASPF), which provides an opportunity to exchange experiences on quality control with other PAOs.

It is positive progress that ACAP has now been delegated legal authority to perform QA reviews of its members and that it has experience conducting reviews in line with the SMO 1 requirements. It is encouraged to address IFAC’s recommendations/comments on ensuring collaboration with the Council to avoid potential duplication of reviews of its member firms (i.e., if ACAP and the Council are each doing reviews of PIEs and non-PIEs) and that QA reviews—after a time—can lead to disciplinary measures if necessary.

ACAP is also encouraged to continue its activities related to monitoring and supporting the implementation of ISQM1 among members. Resources on the quality management standards are available on the IAASB website.

Current Status: Review & Improve

In the Republic of Moldova, initial professional development and continuing professional development (CPD) requirements are stipulated for auditors in Law No. 271 of 2017 — the Law on the Audit of Financial Statements. The Public Audit Supervisory Council (the Council) is responsible for overseeing the initial professional development (IPD) and continuing professional development (CPD) for auditors that are set in law. Meanwhile, as a professional association, ACAP has established IPD requirements for members (e.g., an exam, certification, and practical experience) that are not auditors and is also responsible for monitoring the CPD of its members.

The ACAP offers the CAP/CIPA certification programs issued under the ECCAA (Eurasian Council of Certified Accountants and Auditors). The certification programs cover financial accounting and reporting, audit standards, professional ethics, among other topics that professional accountants must demonstrate knowledge of. The Council recognizes the certification programs which may allow for exemptions in pursuing the auditor’s examination. The ACAP has a training center through it offers preparatory courses for candidates for the CAP/CIPA certification. The ACAP indicates that the CAP and CIPA are generally based on the IES; however, it is not clear how its training center programs (preparing candidates for the CAP and CIPA) align with the latest IES 1-4; and how the examinations and evaluation of practical experience align with latest IES 5 and 6.

ACAP members must fulfill CPD requirements – 40 hours per year for auditors and 120 hours over three years for other members – which aligns with IES 7. ACAP is an approved training provider by the Council and its annual CPD program is approved by the Council and the Ministry of Education, Culture, and Research. The ACAP has signed several Memorandum of Understanding (MoUs) with other professional accountancy organizations to support its education initiatives, such as the Chamber of Financial Auditors for the conduct of CPD for auditors, the Corpul Expertilor Contabili si Contabililor Autorizati din Romania and the Institute of Professional Accountants of Russia to collaborate on the dissemination of IES translations, and with the ACCA to offer its DipIFRS training and other joint events.

ACAP indicates it is working with universities and the Ministry of Finance regarding strengthening national accountancy education and aligning with the IES through the World Bank’s Strengthening Auditing and Reporting in the Countries of the Eastern Partnership (STAREP) project. In 2019, the World Bank issued the report National Education Initiatives – Moldova (2019) which identified several challenges and recommendations. Overall, university curricula need to be updated to align with the latest IES which adopt an outcome-based approach and there can be greater collaboration between the universities, professional associations, employers, the Council, and the Ministries in developing, updating, and carrying out educational programming and creating a framework of professional competencies for various levels of the profession. The ACAP has provided access to the 2019 IES Handbook in Romanian for key stakeholders. The ACAP also participates in the World Bank’s Education Community of Practice (Edu CoP).

It is positive that ACAP has provided access to the 2019 IES Handbook in Romanian so that stakeholders can review the standards. Utilizing the analysis from the World Bank’s 2019 report as a basis, ACAP should now prioritize actions to address the recommendations in the report wherever feasible – either as it relates to its own programming or in support of universities and other training and exam providers — to bring accountancy education in line with the international benchmarks. These plans with reasonable timeframes should be outlined in its Action Plan. ACAP can utilize the IFAC Accountancy Education E-Tool and may considering completing the IES Checklist developed by IFAC as part of its progress.

Current Status: Execute

Auditing is regulated by Law No. 271 of 2017 — the Law on the Audit of Financial Statements. Medium-sized, large entities, and PIEs must undergo audits as well as companies preparing consolidated financial statements. ISA as issued by the IAASB and endorsed by the MoF are to be applied in all audits. As of January 2022, the 2020 IAASB handbook of international quality control, auditing, review, other assurance, and related services pronouncements are to be applied. As of December 2022, ISQM 1 and ISQM 2 are also adopted.

ACAP is not responsible for the adoption of auditing standard-setting and explains that its role in this area involves supporting the Ministry of Finance in the adoption process as well as its members with the standards’ implementation.

ACAP assists the Ministry by making the Russian and Romanian translations of ISA available through collaboration with professional accountancy organizations form Russia and Romania and obtaining the relevant permissions from IFAC.

ACAP’s Committee on Professional Training and Certification oversees a range of implementation support for its members, such as delivering pre-qualification and CPD courses on ISA; providing briefings for members on updates and revisions; and providing information via its website, newsletters, and journals. ACAP also indicates that it provides universities with available ISA translations.

ACAP is also involved in the working committees of the program on Strengthening Auditing and Reporting in the countries of the Eastern Partnership (STAREP) of the World Bank’s Center for Financial Reporting Reform.

The ACAP may also consider disseminating available translations of ISA 315, ISQM 1, ISQM 2, ISA 220, and ISRS 4000 (revised) to support auditors to properly apply the standards. While ACAP indicates it provides universities with available ISA translations, as recommended by the World Bank (2019), ACAP is encouraged to strengthen its collaboration with universities to ensure that methodological support, such as teaching materials, practical applications and manuals related to auditing are harmonized with the latest standards and that auditors have access to practical application trainings of the standards as well.

Current Status: Review & Improve

Law No. 271 of 2017 — the Law on the Audit of Financial Statements — stipulates that all auditors are to adhere to the IESBA Code of Ethics issued by the IESBA and accepted for application by the Ministry of Finance. As of 2023, the 2018 International Code of Ethics translated into Romanian, and the 2020 International Code of Ethics in English are accepted by the MoF and are to be applied. ACAP reports that it played a major role in promoting the need for introducing the requirement for application of the IESBA Code in law and assists with access to translations by collaborating with professional accountancy organizations from Russia and Romania and obtaining relevant permissions from IFAC.

Other accountancy professionals are not subject to any legal ethical requirements but may voluntarily join Moldovan professional associations and be subject to their self-regulation, such as the Association of Professional Accountants and Auditors (ACAP). To become a member of ACAP, individuals must agree in writing to comply with the Code of Professional Conduct; however, it is not clear if it has set ethical requirements for members who are not auditors— ACAP indicates it is only responsible for educating and enforcing compliance with the Code.

To this end, ACAP has a Committee for Members and Professional Ethics. It monitors changes made to the IESBA Code. ACAP indicates that aside from providing online access to the Code, it also delivers technical seminars on ethics and publishes related articles in its newsletter, journal, and website. The Code of Ethics is also included in pre-qualification classes, the CAP/CIPA exam, and CPD courses offered by ACAP — for example, in 2021, it organized multiple courses on practical considerations regarding the International Code of Ethics.

The 2022 version of the International Code of Ethics is now available, which namely differs from the 2020 Handbook by including approved revisions, such as: revisions to non-assurance services, fees, and objectivity of an engagement quality reviewer. Some of these revisions have Romanian translations and ACAP may consider disseminating available translations to raise awareness of key stakeholders and prepare auditors to properly apply the standards upon effective date.

Secondly, if within its authority, ACAP is also strongly encouraged to set ethical requirements for all its members – as it does educational requirements. This would ensure a wider scope of professionals adhere to internationally recognized ethical requirements. It could further work with other stakeholders in the jurisdiction—such as the Ministry of Finance, the Council, and other professional associations—to extend the requirements to all categories of professional accountants. Lastly, as recommended by the World Bank (2019), ACAP is encouraged to strengthen its collaboration with universities to ensure that ethics is included within curricula.

Current Status: Execute

The Accounting Law of 2007 requires the application of National Public Sector Accounting Standards (NPSAS), which are developed and approved by the Ministry of Finance of the Republic of Moldova. According to the 2020 IFAC/CIPFA Public Sector Financial Accountability Index and the World Bank/CFRR’s 2020 Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: Moldova the current standards are accrual-basis. Per the World Bank/CFRR report, the government has started to draft national accounting standards for public sector which are in compliance with IPSAS. Through Order No. 202 of December 17, 2015, the Ministry of Finance established a Council for Public Sector Accounting Standards as an advisory body for the development of NPSAS as well as for the drafting/amending of the relevant acts. NPSAS will be designed in compliance with IPSAS considering the specific characteristics of the Moldovan Government operations. The Ministry also plans to develop an integrated information accounting system for public entities by 2027.

ACAP reports that its role in this area is to support the Ministry in the process of adoption of IPSAS and educating its members and providing them access to IPSAS and other IPSASB pronouncements. Since 2009, ACAP has been delivering continuing professional development (CPD) courses on IPSAS to public sector staff and its members and conducting on-demand training courses on IPSAS delivered by experts from the United Kingdom and the Corpul Expertilor Contabili si Contabililor Autorizati din Romania (CECCAR) of Romania. ACAP also indicates that it is offering CIPFA exams convener services and that 3 public sector specialists were certified by CIPFA through the World Bank/CFRR’s Public Sector Accounting and Reporting Program (PULSAR).

The association also reportedly monitors issuance of new and amended IPSASB pronouncements and updates its CPD program accordingly. ACAP also reports that it has initiated dialogues with IFAC and CECCAR to update the approved translation of IPSAS in Romanian and Russian in accordance with IFAC’s translation and reproduction policy. The 2013 version of IPSAS as translated in Romanian has been shared with Ministry.

ACAP is encouraged to continue its advocacy and support toward accrual-basis IPSAS implementation. Several revisions to IPSAS have been issued since 2013 and translation of the 2016 IPSASB Handbook is available in Romanian that ACAP may consider sharing with the MoF. ACAP may also find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for any training and educational activities it offers.

Current Status: Review & Improve

Law No. 271 of 2017 — the Law on the Audit of Financial Statements — stipulates that the Public Audit Supervisory Council (the Council) is responsible for the investigation and discipline (I&D) for auditors in Moldova. All disciplinary decisions regarding auditors are published on its website. As a professional association uniting auditors and other professionals on a voluntary basis, ACAP operates an I&D system for its members as outlined in its statue (Article 5). ACAP has a Committee for Members and Professional Ethics that will investigate complaints and subsequently, the ACAP’s Disciplinary Committee will determine if any sanctions should be issued.

ACAP conducted a detailed self-assessment of its procedures against the SMO 6 requirements—available in its SMO Action Plan—and identified gaps in the following areas: only a complaints-based approach is adopted; all individuals on the committees are professional accountants; and it does not publish results of its cases. ACAP does inform members that a breach of professional standards or conduct can result in disciplinary proceedings.

ACAP has made commendable progress regarding an enforcement mechanism for its members since the last assessment (2017). Enforcement mechanisms that meet the SMO 6 benchmark for all professional accountants are essential to public trust and confidence in the accountancy profession. ACAP has identified areas in its system that need improvements to meet the SMO 6 best practices. As it continues to advance the implementation its I&D procedures, it should prioritize making improvements to its system as noted in the comments from IFAC. These plans with reasonable timeframes should be outlined in its Action Plan. Additionally, given the potential overlap between ACAP and the Council, the two entities are encouraged to coordinate and communicate regarding any disciplinary actions for auditors.

Current Status: Execute

Accounting and financial reporting in the Republic of Moldova is primarily regulated by Law No. 287 of 2017 — the Law on Accounting and Financial Reporting — which establishes accounting requirements for all reporting entities depending on their size. Article 5 of the Accounting Law requires public interest entities (PIEs) to apply IFRS and non-PIEs have an option to apply IFRS or Moldovan National Accounting Standards issued by the MoF in 2013, with amendments in 2015 and 2019, that are based on IFRS and EU Directives.

IFRS are endorsed for application in the Republic of Moldova through the Ministry of Finance (MoF). Endorsement of IFRS by the MoF involves approving an order specifically identifying the standards that are adopted in Moldova. The applicable standards are then published in the Official Gazette and are posted on the MoF website. Translations are prepared under the direction of the IFRS Foundation and are available in the Russian and Romanian language. ACAP is therefore not responsible for setting accounting standards and focuses on supporting the Ministry of Finance in the process of adoption of the standards as well as its members with the standards’ implementation.

ACAP reports that it disseminates the latest translated IFRS in a timely manner to its members, universities, and other stakeholders in Moldova. It also incorporates IFRS into its pre-qualification courses, CAP/CIPA exam, and CPD programs. ACAP also provides training from holders of the ACCA DipIFRS certificate. ACAP indicates it regularly updates its syllabus to include new and amended standards related to financial reporting and accounting and updates members through its newsletter and journal.

ACAP is also an active participant of the working committees of the program on Strengthening Auditing and Reporting in the countries of the Eastern Partnership (STAREP) of the Center for Financial Reporting Reform of the World Bank and participates in the IFRS Foundation webinars on IFRS issues.

Efforts to adopt and translate the latest IFRS Standards are strongly encouraged as part of bringing transparency, accountability, and efficiency to national, regional, and global markets. There are recent amendments to IFRS Standards and ACAP is encouraged, in collaboration with other stakeholders, to continue its support for timely, ongoing adoption.

Current Status: Review & Improve