Colegio Hondureño de Profesionales Universitarios en Contaduría Pública

In Honduras, there is no legal requirement for a mandatory quality assurance (QA) review system; however, the COHPUCP, as the professional accountancy organization for public accountants, has collaborated with key stakeholders in the profession such as the Accounting and Auditing Standards Technical Board (JUNTEC), the Colegio de Peritos Mercantiles y Contadores Públicos de Honduras (CPMCPH), and the Association of Audit Firms of Honduras (AFAH)—an organization composed solely of audit firms—to advance the adoption of a QA review system. In collaboration with CPMCPH, the organization has advocated that the JUNTEC adopt a concrete plan to create a mandatory QA review system and adopt ISQC 1. The association has an ongoing collaboration with JUNTEC as COHPUCP is represented on the JUNTEC board and regularly provides technical input.

In 2010, COHPUCP took the initiative to develop regulation and materials to establish a voluntary QA system for its members with support from the Inter-American Development Bank (IDB). It executed numerous steps to promote the QA review system and communicate with stakeholders and members. Under the FOMIN project, the Institute of Chartered Accountants of Puerto Rico provided training activities on quality control standards. Subsequently, COHPUCP launched a pilot review with firms participating voluntarily. At the time, COHPUCP notes that a lack of legal requirements and resistance by its members and firms to participate in the QA review system were significant challenges that the institute faced to progress further with the implementation of its QA review system.

Nonetheless, from 2013–2014, COHPUCP tried to relaunch the voluntary QA system in association with AFAH. The abovementioned initiatives stalled and were recently reactivated in 2021. All relevant stakeholders in Honduras, including the National Banking and Insurance Commission (CNBS), which will occasionally carry out inspections if a risk is identified, are planning to operationalize a QA review system in 2022–2023, under the auspices of the COHPUCP and CPMCPH, and it is expected that the system will meet the SMO 1 requirements.

The organizations are providing training activities to raise awareness and support implementation.

COHPUCP has undertaken several commendable actions to drive the adoption and implementation of a QA system for all auditors that aligns with the SMO 1 requirements in the jurisdiction, which is expected to be in place in 2022. Importantly, the new suite of IAASB Quality Management standards that will become effective in December 2022 will require significant change management for regulators and firms. As it is preparing to develop a QA review process, the COHPUCP is encouraged to refer to the new changes from quality control standards to quality management standards and prepare members and other relevant stakeholders for the change. For example, the JUNTEC should be encouraged to adopt ISQM 1 and COHPUCP should update its training programming to ensure that its members are sufficiently prepared.

Current Status: Execute

In Honduras, public accountants and accounting technicians (the two segments of the accountancy profession) are regulated at the state level by Decree No. 73 of 1962, which sets initial professional development (IPD) requirements and requires mandatory membership in a professional organization. Universities and the Ministry of Education have a role in IPD for professional accountants. Public accountants are required to have a university accounting degree, while accounting technicians are required to hold a secondary education degree. Presently, there are no examination or practical experience requirements specified in legislation in order to offer services as outlined by the IES.

Therefore, COHPUCP’s activities are focused primarily on promoting the adoption and implementation of the IES requirements (particulary 1-4) to the Ministry of Education and universities. For example, COHPUCP's Education Committee, in coordination with the Department of Public Accounting and Finance of the Faculty of Economic Sciences of the National University of Honduras (UNAH), and the National Pedagogical University Francisco Morazan (UPNFM) have been working to harmonize the accountancy curricula in accordance with the revised IES. COHPUCP indicates that in 2021 the UNAH approved a new curriculum incorporating recommendations provided by the institute; however, alignment with the IES needs further clarification.

COHPUCP reports that in December 2020, the institute established 40 hours of mandatory continuing professional development (CPD) per year for its members effective 2021 as well as an entry exam for individuals seeking membership. This significantly advances the national programming with the IES benchmarks as IES 6 outlines the components for a final assessment and IES 7 and 8 stipulate CPD requirements.

Lastly, COHPUCP has also taken steps to explore the possibility of establishing an internship program to offer practical experience to students and to partner with UNAH to provide internship credit as part of advancing IES 5.

COHPUCP’s efforts to adopt and promote the IES where feasible are commendable. As the COHPUCP reported the adoption of mandatory CPD requirements and entry exam for individuals seeking COHPUCP membership, the institute is encouraged to clarify if the adopted requirements meet IES 7 and IES 6, which emphasize demonstrating competencies with a learning outcomes approach. COHPUCP is also encouraged to advance its efforts to establish practical experience requirements for its members in line with IES 5.

With respect to other areas, COHPUCP is encouraged to utilize the IFAC Accountancy Education E-Tool and the IES Checklist developed by IFAC to assess where gaps continue to exist and from there, continue collaborating with key stakeholders, such as other professional organizations, universities, and regulators, to create a plan to bring national educational requirements for all professional accountants in line with the latest IES. Stakeholder support and engagement will be valuable in ensuring proper alignment of requirements on the jurisdictional level.

Current Status: Execute

The JUNTEC and the National Banking and Insurance Commission (CNBS) are authorized to set auditing standards in Honduras. CNBS, through Circular No. 075 of 2011, requires auditors performing a mandatory audit of entities under its supervision to apply ISA as adopted by JUNTEC. The JUNTEC has adopted by reference the ISA as issued by the IAASB, as translated into Spanish, and subsequently published the standards in the official gazette for all mandatory audits. In line with JUNTEC Resolution No. 3 of 2017, the latest version of ISA that is in effect in the jurisdiction is the 2016-2017 ISA. JUNTEC has not adopted ISQC 1 standards.

While it has no authority for auditing standards' adoption, COHPUCP is an active participant in the national standard-setting process through its representation on the board of the audit standard-setter, the Accounting and Auditing Standards Technical Board (JUNTEC). COHPUCP has developed an ongoing process of reviewing new standards and pronouncements.

COHPUCP has been raising awareness of new and revised ISA amongst its members through its website, forums, conferences, technical sessions, and training programs. COHPUCP reports that it is working with the Government of Honduras, JUNTEC, and international organizations to identify opportunities for financing activities to promote effective implementation of the ISA in the jurisdiction.

COHPUCP is encouraged to provide an update on its efforts to promote the ongoing adoption of the latest ISA in the jurisdiction, making sure the standards are up-to-date with the latest version of the standards. The 2020 IAASB Handbook is available, which includes ISA 540 revised (effective December 2019) and conforming amendments arising from the IESBA Code of Ethics. The COHPUCP may also consider disseminating available translations of ISA 315, ISQM 1, ISQM 2, ISA 220, and ISRS 4000 (revised) that will become effective throughout 2021 – 2022 to prepare auditors to properly apply the standards upon effective date.

Current Status: Review & Improve

COHPUCP is legally empowered to set ethical requirements for its members. COHPUCP reports it has developed its own Code of Ethics while utilizing the latest version of the International Code of Ethics for Professional Accountants as a supplement.

To support implementation, COHPUCP has a Court of Honor which is responsible for monitoring and incorporating changes to the IESBA Code of Ethics— most recently the 2020 and 2021 versions and subsequently issue new sections of its Code of Ethics or amend existing parts when necessary. COHPUCP disseminates information to relevant stakeholders about the changes to its Code and new, proposed, and revised provisions of the IESBA Code of Ethics, and provides training and education for its members to support the implementation of the ethical requirements. It has noted in its SMO Action Plan that it is identifying opportunities for additional support and funding to support the Code's implementation.

As feasible, COHPUCP is encouraged to further work with other stakeholders in the jurisdiction to extend ethical requirements of the International Code of Ethics for all professional accountants in Honduras.

If deemed feasible, the COHPUCP is encouraged to consider plans to participate in the international standard-setting process by providing comments on exposure drafts and other IESBA pronouncements to share its experiences and perspective.

Current Status: Review & Improve

The General Accounting Office (CGRH), within the Financial Secretary of Honduras (SEFIN), sets public sector accounting standards in accordance with the Budget Organic Decree No. 83 of 2004. In 2012, SEFIN collaborated with JUNTEC—as part of the legal provision in the Accounting and Auditing Law No. 189 of 2004—to adopt IPSAS. In 2014, JUNTEC formally adopted IPSAS, as published in the Official Gazette through the Resolution No. 60 of 2014. In 2015, SEFIN reaffirmed the adoption of the IPSAS by JUNTEC under Resolution No. 223 of 2015. According to the CGRH, the 2018 IPSAS will be adopted as of January 1, 2018, with an effective date of January 1, 2019. However, due to the impacts of the COVID pandemic, the JUNTEC extended the effective date to January 1, 2024.

COHPUCP supports the adoption process by participating in the consultation activities with the CGRH and the JUNTEC. Overall, the association indicates it is actively engaged in supporting the government's efforts in assessing, adopting, and implementing the IPSAS in Honduras. The organization reports it serves as a technical resource to the CGRH on IPSAS-related matters.

In addition, COHPUCP indicates it hosts and develops training activities with the CGRH and SEFIN and reports that it monitors new and amended standards issued by the IPSASB and disseminates information on updates to the standards through its website.

COHPUCP is encouraged to continue its advocacy and support toward the latest IPSAS adoption and implementation, noting that the the 2021 IPSASB Handbook was effective as of January 2021. COHPUCP may also find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for any training and educational activities it offers.

Current Status: Sustain

COHPUCP, empowered by the Decree No 19 of 1993, has established an investigation and disciplinary (I&D) system for its members. According to its bylaws, COHPUCP's Honor Court is the body responsible for investigating the professional conduct of its members in accordance with its Code of Ethics, professional standards, and laws. COHPUCP investigates complaints, serves as a mediator in disputes between members and third parties, and recommends sanctions to its Board of Directors for violations of ethical laws and standards.

COHPUCP outlined a strategic plan to address the identified gaps of its I&D policies and ensure an effective system by the end of 2019; however, no action steps toward executing the plan have since been reported.

I&D procedures that meet the SMO 6 benchmark are foundational to maintaining public trust and confidence in the profession. COHPUCP's system continues to have the same gaps it identified in its self-assessment since 2019. It is strongly recommended that COHPUCP prioritize making improvements to its system as noted in the comments from IFAC. These plans with reasonable timeframes should be communicated and outlined in its Action Plan along with any challenges/limitations (e.g. legislation) the COHPUCP might face in making progress. Identifying challenges will better enable the COHPUCP to connect with other PAOs in the region that have overcome similar obstacles to learn from them.

COPHPUCP is also encouraged to consider collaborating with the CPMCPH to ensure that both I&D systems are aligned with best practices.

Current Status: Consider

Although it does not have authority in the adoption of corporate accounting standards, COHPUCP actively engages with the Accounting and Auditing Standards Technical Board (JUNTEC) through representation on the board. The JUNTEC is responsible for setting accounting standards in accordance with the Accounting and Auditing Law No. 189 of 2004 and has adopted IFRS and IFRS for Small-and Medium-sized Entities (SMEs) through the Resolution No. 001 of 2010 and subsequently published the standards in the official gazette, for application by all entities other than banks and financial institutions. COHPUCP also supports JUNTEC’s participation in the Latin American Accounting Standard Setters Group to participate in the international standard-setting process by providing comments to exposure drafts at a regional level.

Banks, financial institutions, insurance companies, and companies on the stock exchange must follow standards issued by the National Banking and Insurance Commission (CNBS). CNBS has adopted IFRS but that are modified according to national standards. COHPUCP reports it collaborates with CNBS regarding opportunities to further the adoption and implementation of the IFRS within the country.

COHPUCP has developed an ongoing process to review new and revised standards and pronouncements issued by the IASB. COHPUCP states that it enhances the knowledge of IFRS amongst its members through continuing education seminars, training events, and disseminating information via its website.

Efforts to adopt the latest IFRS Standards are strongly encouraged as part of bringing transparency, accountability, and efficiency to national, regional, and global markets. COHPUCP is therefore encouraged to continue efforts to advocate and advance the adoption of IFRS without modifications as the standards adopted by the CNBS for public interest entities. In addition, COHPUCP is encouraged to note whether it has also developed any implementation tools to facilitate the application of the standards among members.

Current Status: Review & Improve