Colegio de Contadores Públicos de Pichincha y del Ecuador

In Ecuador, the financial sector regulators—Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB)—are empowered to regulate auditors and audit firms providing services to regulated companies, which include the establishment of a quality assurance (QA) review system.

Although the CCPPE has no legal authority or responsibility to establish a mandatory QA review system for all audits of financial statements, in 2018 and 2023, the CCPPE conducted a comparison of the SCVS and SB QA review systems against the requirements of SMO 1 and identified gaps, such as audit reviews are only carried out when a suspicion or risk is identified, and the scope of reviews does not cover all audits of financial statements, among others. The CCPPE indicates that it regularly promotes the need to adopt a mandatory QA system at the jurisdiction level by meeting with the financial sector regulators to promote the best practices, providing technical support and training activities on quality management, and disseminating information on quality management standards.

The CCPPE also supports the financial regulators by meeting regularly with working groups to increase the discussion and understanding of the QA review system and provides training on quality management standards to regulatory officials and its members. This activity is performed with the support of the Ecuadorian Forum of Firms.

The CCPPE reports it has created a Quality Control subcommittee within its Audit and Quality Control Committee to promote quality management among regulators and audit firms. The CCPPE has provided audit manuals for small and medium practitioners. In addition, the CCPPE is reviewing the ISA for LCEs and planning to consider the implications for their activities in promoting QA reviews.

As the financial sector regulators are the authorities responsible for developing and operating a QA review system, and the financial sector regulators only carry out reviews when a suspicion or risk is identified rather than on an ongoing, cyclical basis, the CCPPE should continue using its best efforts to collaborate with financial sector regulators and relevant stakeholders to achieve alignment with the SMO 1 benchmark.

Current Status: Review & Improve

In Ecuador, universities and the Ministry of Education have a role in establishing initial professional development requirements for professional accountants, which are outlined in the Accountants Law of 1966. A university accounting degree for accountants (including auditors) and a secondary education degree for accounting technicians are the only requirements to practice in Ecuador. Auditors that are providing services to the financial sector are subject to additional registration requirements, such as practical experience, issued by the Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB).

As an entity established with voluntary membership, the CCPPE lacks the authority to adopt IES requirements for its members and establishing requirements aligned with the IES, such as a certification or mandatory CPD requirements may negatively impact the membership, as the jurisdiction do not have those requirements. Therefore, the CCPPE activities primarily include promoting an update of the universities' curricula, disseminating the IES requirements, and proposing legal changes to the government that would require the accountancy profession regulators in Ecuador to adopt and implement IES requirements. The CCPPE has a Continuing Education and Professional Development Committee, comprised of academics, which promotes the IES to regulators and disseminates the standards to universities for implementation support. The Colegio has a memorandum of understanding with several universities and technician institutions in this regard.

The CCPPE reports that it is advocating for an update of the Accountants Law to incorporate practical experience requirements and a qualification exam before practicing. Furthermore, the CCPPE developed an initiative to strengthen the registry of professional accountants maintained by the SCVS and the SB and raise awareness of the importance of mandatory CPD among national regulators. The CCPPE also indicates it has developed a qualification exam for the financial sector regulators' consideration as part of their requirements to register auditors.

The CCPPE is encouraged to continue collaborating with the financial regulators and universities to promote and support adopting and implementing the IES requirements. The CCPPE can refer to examples in the region for best practices and learnings, including a voluntary certification aligned with the IES, adopting mandatory CPD requirements for its members, and a university accreditation scheme.

The Accountancy Education E-Tool and the IES Checklist developed by IFAC may help identify implementation support materials.

Current Status: Review & Improve

The financial sector regulators—Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB)—are responsible for setting auditing standards in Ecuador. The SCVS and SB require ISA by reference and without modification.

As part of efforts to support ongoing ISA adoption, the CCPPE indicates that it: (i) monitors new and amended standards issued by the IAASB; (ii) advocates that regulators maintain ongoing, consistent adoption of ISA (iii) disseminates information on updates to the standards and international developments in the area through printed materials and its website; and (iv) develops guidelines and materials to support the implementation of the standards.

To support implementation, the CCPPE has ongoing processes to include the most recent amendments to the standards in its training programs and developed ISA courses, which are 40 hours of specialized training on the ISA. In addition, the CCPPE organizes training with providers of auditing tools and software to advance the application of ISA in audit practices, developed training courses for Small- and Medium-sized Enterprises on the implementation of ISA, and is working to participate in the international standard-setting process by providing comments on exposure drafts and other IAASB.

The CCPPE has demonstrated an ongoing process to maintain its fulfillment of the SMO 3 obligations and is committed to continuous improvement.

Current Status: Sustain

The CCPPE is responsible for setting ethical requirements for its members and has adopted the 2021 International Code of Ethics issued by the IESBA. As reported by the CCPPE, financial sector regulators—Superintendence of Companies, Securities and Insurance, and the Superintendence of Banks—are also empowered to set ethical requirements for auditors of entities under their supervision; however, the regulators have not issued a specific regulation in this regard.

The CCPPE has established a Legislation, Investigation, Ethics and Professional Practice Committee responsible for monitoring new and amended standards issued by the IESBA and disseminating new information and developments on the standards. This is currently done through printed materials and the CCPPE's website. The CCPPE reports that it has mechanisms in place to continue the ongoing adoption of the IESBA Code of Ethics, pending the publication of the Spanish version.

To support the effective implementation of the Code, the CCPPE reports that it raises awareness amongst its members and key stakeholders and includes ethical requirements in its training programs. The CCPPE has also developed publications covering ethical matters.

The CCPPE is encouraged to continuing advocating for the adoption and implementation of the International Code of Ethics for Professional Accountants for all professional accountants in the jurisdiction to relevant authorities and stakeholders.

Current Status: Review & Improve

The Ministry of Economy and Finance (MoF) is responsible for adopting public sector accounting standards in Ecuador. The MoF adopted national standards with reference to accrual-basis IPSAS since 2020.

The CCPPE actively advocated for and supported the adoption of IPSAS through its engagements with the MoF and the General Comptroller's Office. For example, the CCPPE co-organized the 2015 Accounting and Accountability for Regional Economic Growth (CReCER) conference with the MoF and the General Comptroller’s Office, during which IPSAS-related topics were discussed. The CCPPE also participated in public discussions on the benefits of adopting and implementing IPSAS for Ecuador and joined the MoF’s Harmonization Committee, which discusses government policies and work plans.

Now that IPSAS are effective in the jurisdiction, the CCPPE is supporting the ongoing adoption and implementation of the standards by: maintaining its regular contact with the MoF and General Comptroller's Office, disseminating new information and developments on the standard's translations, and including IPSAS in its training programs, in cooperation with the MoF. In addition, the CCPPE created a public sector commission to participate in the international standard-setting process to provide comments to the IPSASB.

The CCPPE has demonstrated an ongoing process to maintain its fulfillment of the SMO 5 obligations and is committed to continuous improvement.

Current Status: Sustain

The CCPPE is responsible for establishing and operating an investigative and disciplinary (I&D) system for its members. In addition, financial sector regulators—Superintendence of Companies, Securities and Insurance, and the Superintendence of Banks—are responsible for the I&D of auditors and audit firms providing services to companies under their supervision; however, it is unclear if the regulators operate any I&D mechanisms.

As part of its bylaws, the CCPPE has a Court of Honor to operate its I&D system. The Court of Honor conducts investigations related to misconduct/ethical issues and recommends sanctions to the CCPPE Board of Directors, which is ultimately responsible for the resolutions. Individuals can appeal the decisions of the Court of Honor to the CCPPE Board of Directors.

The CCPPE developed a strategic plan to address the previously identified gaps in its I&D policies. The CCPPE established a Legislation, Investigation, Ethics and Professional Practice Committee responsible for updating the bylaws and internal reforms in 2023 to propose enhancements to the I&D system. As of 2024, the I&D incorporates all SMO 6 requirements, except for a link to the quality assurance system. The CCPPE plans to sign cooperative agreements with other accountancy regulators to jointly address any disciplinary issues and disseminate this information to its members and the general public through its website.

The CCPPE reports that as part of its memorandum of understandings with the local chambers of commerce in Quito, Ibarra, Santo Domingo, and Ambato, the CCPPE plans to start leveraging the chamber of commerce's arbitration processes to deal with significant I&D cases to have the legal power to impose sanctions.

The CCPPE reports that it is also advocating for an update of the Accountants Law to incorporate a mandatory national system that can investigate and discipline all professional accountants in alignment with SMO 6 requirements. In addition, as part of its ongoing engagement with financial sector regulators, the CCPPE regularly advocates that SCVS and SB align their enforcement systems with the best practices of SMO 6.

The CCPPE is encouraged to continue collaborating with the financial regulators to recommend and support the implementation of I&D processes in line with the SMO 6 requirements. As a longer-term objective, CCPPE should also continue promoting legislative reforms that can create a unified national system to investigate and discipline all professional accountants while being in line with SMO 6.

Current Status: Review & Improve

The financial sector regulators—Superintendence of Companies, Securities and Insurance (SCVS) and the Superintendence of Banks (SB)—are responsible for setting corporate accounting standards in Ecuador. The SCVS has adopted IFRS and IFRS for Small- and Medium-sized Enterprises (SMEs) by reference for all companies (including listed and insurance companies), while the SB developed its own accounting norms for application by banks and financial institutions, with IFRS used as a supplement.

To support the adoption of the standards, the CCPPE reports that it has a technical group that monitors new and amended standards issued by the IASB and discusses the standards with the regulators to establish their applicability in the country. In addition, the CCPPE disseminates updates to the standards and international developments in the area through printed materials and its website. The CCPPE is also a member of the Latin American Accounting Standard Setters Group and participates in the international standard-setting process by providing comments to exposure drafts on a regional level.

The CCPPE reports it has begun to approach SMEs and banking institutions to raise awareness of the benefits of improving the quality of financial information by applying the IFRS or IFRS for SMEs, respectively.

The CCPPE plays a prominent role in supporting IFRS implementation and is recognized by regulators for raising professionals’ competencies. The CCPPE includes the most recent amendments to the standards in its training programs and has developed IFRS courses, which are specialized courses comprising 114 hours of training on IFRS. Over the past 10 years, the CCPPE has trained over 5,000 professionals on IFRS nationwide.

Efforts to adopt IFRS Standards for public interest entities like banks and other financial institutions are strongly encouraged as part of bringing transparency, accountability, and efficiency to national, regional, and global markets. The CCPPE should continue its best efforts to engage with the SB's adoption of IFRS as the primary standards adopted for these entities.

Current Status: Sustain