Junta de Decanos de Colegios de Contadores Públicos del Perú

In Peru, each departmental association of public accountants, JDCCPP, and the financial sector regulators—Superintendence of Security Markets (SMV) and the Superintendence of Banking, Insurance, and Pensions (SBS)—have the legal authority to establish a quality assurance (QA) review system for all mandatory audits. While JDCCPP—as the recognized audit standard setter—has adopted ISA 220 and ISQC1; as of 2022, no specific rules have been issued regarding a QA review system. JDCCPP has also reported that the QA review procedures of the SMV and SBS, while operational, are not fully aligned with SMO 1 best practices.

In 2016, JDCCPP created a Technical Commission of Quality Control, conducted a survey to gather information about the quality control systems in Peru's audit firms, and planned to develop regulations to govern a QA system and launch it in 2017. However, the initiative did not gain traction due to changes in the governance structure of the JDCCPP. In 2019, JDCCPP reinstated plans to pursue the initiative with the support of two technical committees: an audit forum of firms, with the mandate to achieve compliance with SMOs 1 and 3, and the regulatory coordination committee, responsible for promoting regulatory consistency in the jurisdiction. No significant progress has been achieved since 2019, and the JDCCPP has extended its anticipated timeline to execute actions in this area. It is endeavoring to conduct a voluntary pilot QA review program at the beginning of 2023 and then on a mandatory basis in 2024.

JDCCPP reports it will support the implementation of relevant standards by developing quality control and quality management guidelines.

The JDCCPP has undertaken commendable actions to drive the adoption and implementation of a QA system that aligns with the SMO 1 requirements. As the JDCCPP is considering its plans to establish a QA review system, it is encouraged to work in collaboration with the SMV and SBS, which already have QA review systems for audits of financial statements of regulated companies, to possibly leverage existing resources and expertise and promote a single, unified QA review system that meets the SMO 1 best practices.

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. The JDCCPP is encouraged to refer to the new changes from quality control standards to quality management standards as it progresses with implementing the QA reviews and preparing members and other relevant stakeholders for the change.

Current Status: Plan

In Peru, the Ministry of Education, universities, and each departmental association of public accountants have a role in implementing initial professional development requirements for professional accountants, which are established in Law No. 28951 of 2007.

According to the law, a university accounting degree is the only requirement to be licensed as a public accountant by the departmental associations. To become a certified independent auditor, departmental associations require an additional practical experience requirement of five years, or three years plus a specialization acquired in an approved auditing course. Mandatory continuing professional development (CPD) is not required.

The departmental associations collaborate through the JDCCPP to set standards and regulations that are adopted in each department. Resolution No. 004 of 2021 adopted the 2019 IES.

JDCCPP has developed programs to promote and support the adoption and implementation of IES. For example, JDCCPP has implemented a voluntary national certification to enable the mobility of professionals nationwide. Applicants must complete a final uniform exam to demonstrate their competencies and are subject to CPD requirements (120 hours of CPD over a four-year rolling period) to maintain the certification.

To further consider how the IES requirements might be incorporated into national accountancy education, JDCCPP reports plans to: disseminate the IES to universities; issue guidance and advice on the university curriculum for public accountants; and develop a professional accountancy education manual for Peru.

In 2019, JDCCPP reported plans to develop a competencies-based certification process for all professional accountants and offer specific certifications for professionals providing specialty services, such as financial planning, audit, tax, and public sector accounting—all of which JDCCPP states would be in line with the revised IES. No progress has been achieved since 2019 in this regard.

As the national board of the departmental associations, JDCCP is encouraged to develop plans to coordinate the adoption and implementation of IES requirements, such as practical experience, a final exam, and mandatory CPD for all professional accountants in Peru, in addition to a university accreditation scheme. JDCCP can refer to examples in the region for best practices and learnings.

JDCCPP 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 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.

As part of this roadmap, the JDCCP should report on its progress related to its certification initiatives and how they might extend out to each departmental association.

Current Status: Plan

The departmental associations of public accountants are responsible for setting auditing standards in Peru under Law No. 28951 of 2007. However, in practice, the departmental associations defer to the auditing standards issued by JDCCPP. JDCCPP has created national technical commissions to set and adopt standards that become mandatory in each department. JDCCPP has been adopting ISA since 2006, and the most recent Resolution No. 004 of 2021 requires the 2018 version of ISA to be applied by all auditors. In 2022, JDCCPP reported that it will adopt the 2020 ISA once available in Spanish.

The JDCCPP has developed processes to monitor new and amended standards issued by the IAASB and is focused on keeping adopted standards up to date.

To facilitate members' implementation of the standards, JDCCPP offers continuing professional development programming and training sessions on the standards; disseminates information on updates and revisions to ISA; and develops implementation guidelines.

Lastly, JDCCPP states that it participates in the international standard-setting process by submitting comments on IAASB exposure drafts through its membership in the regional organization — Inter-American Association of Accountants.

The 2020 IAASB Handbook is available, which includes ISA 540 revised (effective December 2019) and conforming amendments arising from the IESBA Code of Ethics. JDCCPP may also consider disseminating available translations of ISA 315, ISQM 1, ISQM 2, ISA 220, and ISRS 4000 (revised) that will become effective in 2022 to prepare auditors to apply the standards upon the effective date properly.

Current Status: Review & Improve

In Peru, Law No. 28951 of 2007 grants authority to the departmental associations of public accountants to set ethical requirements for their members. In practice, the departmental associations defer to the ethical standards issued by JDCCPP's technical commissions. As of 2022, it has adopted the 2018 International Code of Ethics issued by the IESBA via Resolution No. 004 of 2021 and reports plan to adopt the 2022 International Code of Ethics once the handbook is available in Spanish.

The JDCCP has developed processes to monitor new and amended standards issued by the IESBA and is concentrated on keeping adopted standards up to date.

JDCCPP supports its members with implementing the Code by incorporating ethics topics in its training activities and disseminating information on the standards. JDCCPP indicates that it has multiple initiatives planned to support the proper adoption and subsequent implementation of the International Code of Ethics.

Furthermore, JDCCPP states that it participates in the international standard-setting process by submitting comments on IESBA exposure drafts through its membership in the regional organization — the Inter-American Association of Accountants.

It is in the public interest that professional accountants adhere to the latest ethical requirements issued by the IESBA. JDCCPP is encouraged to continue pursuing its timely adoption of the International Code of Ethics. The 2021 Handbook is available in Spanish.

The 2022 Handbook is currently effective, with revisions to the non-assurance services (NAS) and fee-related provisions, revisions to address the objectivity of an engagement quality reviewer (EQR) and other appropriate reviewers and the IAASB quality management-related conforming amendments to the Code. In addition, the 2022 Handbook contains the IESBA-approved provisions related to the revised definition of a public interest entity (PIE) that will become effective in December 2024.

Current Status: Review & Improve

JDCCPP is not responsible for setting public sector accounting standards, which are adopted by the National Direction of Public Accounting (DGCP) under the Ministry of Economy and Finance. The DGCP has adopted accrual IPSAS since 2011.

JDCCPP offers training, including an annual Symposium on the Public Sector Financial Management System and a biennial National Convention on Public Accounting and Public. It also notes that it has established communication mechanisms for sharing recent developments and revisions issued by the IPSASB.

Finally, the JDCCPP also reports it participates in the international standard-setting process by submitting comments on IPSASB-issued exposure drafts through its membership in the regional organization — Inter-American Association of Accountants.

JDCCPP may find IFAC’s Pathways to Accrual and IFAC's Train the Trainers: Introduction to IPSAS resource helpful for any training and educational activities it offers.

Current Status: Review & Improve

The departmental associations of public accountants are responsible for establishing investigative and disciplinary (I&D) systems for their members per Law No. 28951 of 2007. JDCCPP, as the national board of the departmental associations, has created national technical commissions to adopt investigation and disciplinary procedures, which are, in turn, adopted by each departmental association. JDCCPP issued Resolution No. 004 of 2021 to adopt the SMO 6 requirements and plans to update its enforcement procedures by 2023.

In 2019, the JDCCPP conducted an assessment of its I&D policies and processes against the requirements of SMO 6 and had identified a number of gaps in administrative processes (e.g., a process for the independent review of complaints on which there was no follow-up has not been established and results of the investigative and disciplinary proceedings are not made available to the public), liaison with external bodies, and there is no regular review of implementation and effectiveness of the system.

Each departmental association has an Ethics Committee responsible for receiving and resolving allegations or complaints of malpractice and an Honor Tribunal that resolves appeals. JDCCPP indicates it has established communication mechanisms to inform members and other stakeholders about the importance of the I&D mechanism.

The JDCCPP is developing an update to national Law No. 28951 of 2007 that regulates the profession and would, therefore, impact its enforcement procedures. The JDCCP has been implementing an Ethics and Disciplinary Guide in response to a recent National Law that provides sanctions against public accountants and incorporates good international practices; its effective application will be from 2023. The JDCCPP has reached out to other IFAC members to learn about their best practices and exchange materials and information about implementing an effective I&D mechanism.

I&D procedures that meet the SMO 6 benchmark are foundational to maintaining public trust and confidence in the profession. While the JDCCPP has committed to the SMO 6 requirements, it is not evident that it has strengthened its current procedures to align with SMO 6 best practices. JDCCPP is encouraged to include a clear plan to address the existing gaps.

JDCCPP should also clearly state how it monitors each departmental association's implementation of the SMO 6 requirements.

Current Status: Plan

It is the responsibility of the Accounting Standards Board (CNC)—which operates under the auspices of the National Direction of Public Accounting (DGCP) as part of the Ministry of Economy and Finance—and the financial sector regulators—Superintendence of Security Markets (SMV) and the Superintendence of Banking, Insurance, and Pensions (SBS)—to set corporate accounting standards for financial statements of the respective companies under each agency's supervision. The standard-setters have adopted IFRS and IFRS for Small- and Medium-sized Enterprises (SMEs) by reference.

JDCCPP supports the national standard-setting process through representation in the CNC. It also participates in the Latin American Accounting Standard Setters Group and comments on IASB exposure drafts through the Group.

JDCCPP created its National Technical Committee of Financial Information Standards to provide views on amended and new standards issued by the IASB and to promote the application of IFRS nationwide. JDCCPP currently offers continuing professional development programming and training sessions; disseminates information on updates and revisions to IFRS and IFRS for SMEs, and prepares implementation guidelines to support members' application of the standards.

Current Status: Sustain