IFAC SMO COMPLIANCE REPORT AND ACTION PLAN DEVELOPED BY COLEGIO DE CONTADORES PÚBLICOS DE COSTA RICA

Transcription

1 IFAC SMO COMPLIANCE REPORT AND ACTION PLAN DEVELOPED BY COLEGIO DE CONTADORES PÚBLICOS DE COSTA RICA

2 BACKGROUND NOTE ON ACTION PLANS Action Plans are developed by IFAC members and associates to address policy matters identified through their responses to the IFAC Compliance Self-Assessment Questionnaires. They form part of a continuous process within the IFAC Member Body Compliance Program to support the ongoing development and improvement of the accountancy profession around the world. Action Plans are prepared by members and associates for their own use based on the national frameworks, priorities, processes, and challenges specific to each jurisdiction. As such, they will vary in their objectives, content and level of detail, consistent with their differing national environments and stages of development, and will be subject to periodic review and update. Refer to responses to the Part 1 Assessment of the Regulatory and Standard-Setting Framework Questionnaire and Part 2 SMO Self-Assessment Questionnaire provide background information on each member and associate their environment and existing processes. These responses may be viewed at: Use of Information Please refer to the Disclaimer published on the Compliance Program website. ACTION PLAN IFAC Member: Approved by Governing Body: Original Publish : October 2010 Last Updated: September 2015 Next Update: September 2017 The last revision approved and submitted to IFAC covered the period from January 1, 2013 to December 31, This update, prepared in March 2015, corresponds to the Action Plan and Progress Report for the period from January 1, 2014 to December 31, 2014, and January Status as of of Publication Page 1 of 49

3 GLOSSARY Abbreviations relating to CCPACR and its structure CCPACR Organization of Public Accountants of Costa Rica - Colegio de Contadores Públicos de Costa Rica CG ERMC Corporate Governance and ERM Committee CONIA National IAS part of Standards Committee CONIIF National IFRS part of Standards Committee OC Oversight PROMECIF/PRONIIF National IFRS Program National Quality Assurance Program - covered by CCPACR under existing structure PSC Public Scope QCC Quality Control TH Tribunal of Honor Abbreviations relating to Costa Rican institutions CGR CONASSIF MEIC MEP MoF General Comptroller s Office - Contraloría General de la República National Financial System Supervision Council - Consejo Nacional de Supervisión del Sistema Financiero Ministry of Economy, Trade and Industry Ministerio de Economía, Industria y Comercio Ministry of Education - Ministerio de Educación Pública Ministry of Finance Ministerio de Hacienda IFAC and related Abbreviations IAASB IAESB IASB IESBAs IPSASB IESs IFRSs IPSASs ISA I&D QAP QCS ROSCs SMEs International Auditing and Assurance Standards Board International Accounting Education Standards Board International Accounting Standards Board International Ethics Standards Board for Accountants International Public Sector Accounting Standards Board International Education Standards International Financial Reporting Standards International Public Sector Accounting Standards International Standards on Auditing Investigation and Disciplinary System Quality Assurance Program Quality Control System Report on the Observance of Standards and Codes Small and Medium Enterprises Status as of of Publication Page 2 of 49

4 Action Plan Subject: Action Plan Objective: General Description of Organization, Environment and Goals of the Action Plan Describe Regulatory and Standard-Setting Framework, Governance, Challenges and Key Success Factors General Background: The Organization of Public Accountants of Costa Rica (CCPACR) was created in the year Its main purpose is to promote the advancement of accountancy and related sciences. As of December 31, 2014, the Organization had 6,321 active members, all of them Certified Public Accountants. The CCPACR has fully adopted financial and audit standards. CCPACR developed its Strategic Plan considering the visions of other Latin American related organizations, the IFAC, the Group of Latin American Accounting Standards Setters (GLASS) and the attributes of the CCPACR as determined by law. These strategies were adapted by the CCPACR to respond to the demands of the environment and to the needs of its members. More information on this and other subjects of interest can be found at the organization s website The entities that must be audited in our country are: Enterprises regulated by the National Financial System Supervision Council (CONASSIF). Enterprises considered major taxpayers of national and territorial income tax. Enterprises that must comply with bank requirements. Those that decide to submit voluntarily to auditing. Enterprises listed in the stock exchange. Enterprises registered under the Free Zone regime. Regulatory and Standard Setting Framework The main regulatory framework for the profession in Costa Rica is Law 1038 Law for the Creation of the Organization of Public Accountants, as the entity in charge of promoting the profession, as stated in Article 14 of the statutory law. In 2001, the CCPACR adopted the International Financial Reporting Standards (IFRS) and the International Standards on Auditing (ISA), in 2006 it recommended the government to adopt the International Public Sector Accounting Standards (IPSAS) and in 2009 adopted the International Financial Reporting Standards for Small and Medium Enterprises (IFRS-SME). The main support for the applicability of this law within the private sector can be found in Article 57 of the Income Tax Law Regulations, which establishes that taxpayer accounting systems must conform to International Accounting Standards approved and adopted by the CCPACR and any others adopted and approved by the Organization in the future. This position was reinforced with the inclusion of a reform in the Tax Standards and Procedures Code, as of September 2012, which outlines in its Article 128 the obligation of taxpayers to perform their accounting according to IFRS. In 2013, the Ministry of Finance reinforced this position with the enforcement of the Tax Procedures Regulations. Another main agent is the National Financial System Supervision Council (CONASSIF), which partially has accepted and is coming closer to the adoption of IFRS, as well as financial entities themselves. However, the Board of Directors of the CCPACR has considered this progress as a positive step but not sufficient as it requires a more sustained position. Status as of of Publication Page 3 of 49

5 In relation to the application of IPSAS, the Presidency and Ministry of Finance, through Decree No H have extended the period for implementation of those standards in all institutions until January Governance Framework The CCPACR has developed a work structure which includes permanent commissions, some defined under the Statutory Law: the Standing Advisory Committee, the Tribunal of Honor and others authorized by the Board of Directors based on the Law, as needed, to ensure the smooth development of operations (Example: Admissions, Oversight, Accounting and Auditing Standards, Quality Control, Tax Issues, Subsidiaries, Sports, and others). Among other commissions, the Board of Directors has created a Corporate Governance and Enterprise Risk Management, whose purpose is to study possible structural changes of the CCPACR, as well as issues concerning the profession as they relate to matters of national interest, both in the public and private sectors. As to the adoption of IPSAS, this is a direct responsibility of the Government. However, the Organization of Public Accountants remains vigilant to support and participate when deemed convenient in order to achieve the full adoption of the standards. The Public Accountants Organization cannot interfere directly with university education centers, para-university or technical schools that offer public accounting programs. The CCPACR, however, maintains linkages to be able to participate in the introduction of curricular changes, and is continually lobbying with the higher education supervision commissions, CONESUP and CONARE, regarding the need for graduates to be technically qualified in relation to professional practice demands. Challenges and Key Success Factors The Organization of Public Accountants makes on-going efforts to create awareness about the advantages of preparing highquality financial information as it elevates the interest in financial statements and generates numerous benefits to users and institutions in the country. Between 2009 and 2010, the Organization was taken to a court of law on account of its IFRS, ISA, and IPSAS certification program and was imposed a series of precautionary measures. The Court considered this program generated inequality in relation to Law 1038, by presuming that the diplomas granted by the Organization created an expectation in participants of obtaining an academic degree. In mid-2013, the different precautionary measures, which had caused a partial paralysis of the Organization with respect to professional advancement, were lifted, under the condition that the Organization would only offer training courses of a voluntary nature, that in no way implied an academic degree. In this sense diplomas would have to bear a legend to the effect, to prevent any harm and dismiss any expectations in participants and users. The CCPACR Board of Directors requested a legal opinion on the matter from the General Comptroller s Office, which determined that the Organization cannot generate distinctions between its members that are not provided for in its statutes nor does it have the power to award academic degrees. It could, however, offer professional advancement training to members and participants in general, who voluntarily decide to do so because of the CCPACR s steering role in the country and as one the major agents of knowledge in the field, which receives first- hand information on professional developments. The Board of Directors has considered that the operating structure in place allows the Organization to fulfill its commitments with IFAC, with regards to dissemination, training and linkages. If necessary, any pertinent adjustments could be made to this existing structure. Therefore, the creation of a parallel structure denominated National FRS Implementation Program (PRONIIF) was not considered necessary as the Organization is currently being able to advance in its commitments satisfactorily. Status as of of Publication Page 4 of 49

6 The Quality Control Program was redesigned at the end of 2013 and during 2014 to focus on a Pilot Plan of voluntary review of public accounting firms and independent practice professionals. Also in 2013, there was a court ruling clarifying the role of the Organization of Public Accountants with respect to the supervision of public accounting firms, which clearly determined based on Law 1038 that the CCPACR has the power to exercise such a supervision. The Organization has also made efforts to consolidate the CCPACR Code of Ethics by introducing improvements with the help of the Tribunal of Honor to facilitate its application when dealing with complex situations and by defining procedures on how to proceed when the Code itself does not foresee a particular situation based on, primarily, the IESBA Ethics Code. The training program offered during 2014 was implemented under the modality of Voluntary Advancement Courses on International Financial Reporting Standards and International Standards of Auditing. This modality was necessary due to a decision of the General Comptroller s Office which stated that the programs had to be of a voluntary nature and that the Organization could not offer, under any circumstances, academic degrees or certification levels to its members that are not foreseen under Law Consequently, the Organization is legally restricted from implementing certification programs that could be interpreted as making a distinction among its members under conditions not established in Law 1038, or leading to an academic degree. These Advancement Courses were therefore imparted throughout the year and have included additional subjects. Some improvements were made to the Induction Seminars that are required for new member incorporation, including the amendment to Article 30 of the Regulations to Law 1038 on admissions requirements which will be consolidated during The CCPACR has initiated a process of reinforcing its working committees, mainly the Standing Advisory Committee and the Standards Committee, to improve the system of dealing with consultations submitted to the Organization. It is expected that during the last quarter of 2014 a new professional will be appointed to reinforce, support and coordinate these committees. As mentioned, the work of these committees includes undertaking strategic actions, promoting the application of standards, improving the quality of professional performance, and processing of technical questions and information requests. This will allow the Organization to have a broader perspective in facing the challenges of globalization and international mobility, in particular the commitment to the ethical and technical obligations of the profession which require strengthening of the oversight functions of the Organization. The CCPACR as a professional organization relies on the support of the International Accounting Standards Board (IASB), the International Auditing Standards Board represented by the International Federation of Accountants. Additionally, the CCPACR has recently applied for affiliation to the Group of Latin-American Standards Setters (GLASS). This support is important for three reasons: in the first place, to broaden the Organization s scope through affiliations with different organizations to promote advancement, in the case of Costa Rica, with its limited budget, the CCPACR has been able to make significant progress, secondly a more active participation of international organization representatives that could lobby with government officials and thirdly, a stronger presence physical or through technical means, to share academic and technical experiences. Priorities for and 2015 Priorities for the period 2013 and 2014 were mainly focused on reinforcing the role of Working s and the participation with sister organizations so that, over the next years, the Organization may consolidate and implement more efficiently its annual operations plan in compliance with its SMOs and develop a professional advisory unit to act as liaison between the Accounting and Auditing Standards s and the Technical Advisory Committee. Other priorities during 2014 were the revision of guidelines issued by the CCPACR on the adoption of IFRS and ISA, the revision of the Status as of of Publication Page 5 of 49

7 CCPACR Ethics Code, review of admission process requirements, as well as of the content of professional development courses being offered by as modular courses on IFRS and IAS. Another important priority addressed during 2014 was the conclusion of the pilot plan for voluntary review of Public Accounting firms in the area of Quality Control. This pilot plan would provide the groundwork for a diagnosis regarding the implementation of quality control systems, to be able to design an overall basic guide to support the process in the firms that still have not established a system, as indicated in the International Quality Control Standard No. 1 and ISA 220. Other priorities were the organization of a Second International Congress on International Financial Reporting Standards and International Standards of Auditing with the participation of businesses and small-medium enterprises and also a Business Tax Survey. Projects Standards and Code Compliance Report (SCCR): As part of the initiatives to make progress on the observations of the Standards and Codes Compliance Report (SCCR), a joint participation agreement was signed in 2013 with the Association of Private Accountants and the Organization of Economic Sciences. However, the latter has not taken active part. The objective of this agreement is to work together to advance the profession in topics relating to IFRS topics and current tax issues. In 2014, the work with professional organizations will continue under the same terms. Interventions regarding initiatives of the Ministry of Finance: The CCPACR intervenes as needed with tax authorities on related issues in order to safeguard the interests of its members and the public accounting practice in Costa Rica. Along this line, a change was approved in the digital signature procedures for CPA-audited financial statements which certain taxpayers are required to submit to the authorities. Based on Article 57 of the Income Tax Law and the last change, in September 2012 in the Tax Standards and Procedures Code, and Tax Regulations issued in 2013, the Ministry of Finance now requires taxpayers to present their financial statements following IFRS. The Tax Administration, however, still maintains some exceptions. Regarding this issue, a liaison commission was appointed with members of the Ministry of Finance, the Association of Public Accountants and the Association of Private Accountants, which would meet regularly to update the guidelines and coordinate other issues of national interest. Meetings will continue throughout 2014 in order to develop a training program. Regarding IPSAS: In 2013, The CCPACR obtained the collaboration of a colleague, who has ample experience in the implementation of a standardized charter of accounts for the banking system and the applications of standards, to support the National Accounting Office in the IPSAS implementation project. The CCPACR was also able to enlist the support of a group of six students from the University of Costa Rica who were willing to fulfill their mandatory community service at the National Accounting Office. This colleague conformed a team with the students plus a group of interns already working at the Accounting Office to perform a series of activities to be able to meet the deadlines for IPSAS implementation. In the field of training, several activities were organized throughout the year with participation of public institutions, municipalities, ministries, among others. During 2014 there was no active collaboration with the National Accounting Office, despite insistence of the CCPACR. Encounter of Organizations organized by MEP, COLYPRO and CONESUP: This encounter took place during 2013, focusing on the analysis of oversight strategies and strengthening of the legal, ethical and efficient practice of Organizations and their members. Other initiatives included an analysis of the quality of the curricula proposed by Status as of of Publication Page 6 of 49

8 private universities for the public accounting program. Academic Aspects: Action Plan Developed by In May 2013, one of the proposals being pursued by the CCPACR became materialized with the signing of an agreement between the Ministry of Public Education (MEP) and the Higher Education National Accreditation System (SINAES). This agreement addresses one of the main concerns of Organizations with respect improvements in curricula and educational programs. With the signing of this agreement, CONESUP will require universities to seek accreditation of all programs while both private and public universities have accepted the commitment to strive for ongoing academic excellence on a voluntary basis. To obtain accreditation, the universities must submit to an evaluation by SINAES which is undertaken after completing an exhaustive process in three phases: self-evaluation, external evaluation, and follow-up to the improvement plan for accreditation. Universities will have to establish a student council, which together with the program director and rector s office will review all program curricula and undertake the self-evaluation. The SINAES will subsequently organize an external evaluation and develop an on-going improvement plan to achieve accreditation. The process also applies for changes in course names, contents, evaluation plans, entry requirements and evaluations, number of credits awarded, as well as change to the name or profile of a program. In May 2013, a new encounter of professional organizations was held at the Organization of Physicians and Surgeons, with numerous participation. The CCPACR attended and participated in the revision of the proposed amendment to the National Higher Education Council CONESUP Law. In substance, this amendment would allow CONESUP to make significant changes and have additional resources. However, regarding its form, the legal aspects of the proposal need to be reviewed more closely before being submitted to the Legislative Assembly for approval. After hours of discussions and brainstorming, again the CCPACR is insisting that the proposal needs to be reviewed by a legal specialist, with experience in drafting legislation and with teaching and academic experience, in order to increase its chances of flowing through the approval process and avoid any objections. In May 2014, the proposal of the CCPACR for minimum university curriculum requirements was presented to members of CONESUP. Quality Control: A pilot plan was launched in 2013 to undertake quality control reviews of auditing services and certifications made by public accounting firms and independent professionals. Ten firms participated and the results have helped in the preparation of a basic guide for the implementation of quality control systems. GLENIF- GLASS Group of Latin American Accounting Standard Setters: Also, as part of the work undertaken during 2013, the CCPACR submitted a request for incorporation to GLASS - Group of Latin American Accounting Standard Setters. In October, the CCPACR was accepted as observer. This affiliation will help promote the CCPACR and consolidate its commitment to the IFAC Operational Plan as well as provide opportunities for exposure and participation with GLASS members. On July 31, 2014 the CCPACR was accepted as active member. This affiliation confirms CCPACR s commitment as an active organization in the process of seeking harmonization of standards. Among the projects initiated during the year 2013, to be developed over the next two years, by the end of 2014 the following actions have been completed: a. Complete a diagnosis of accounting firms and independent professionals on quality control, and prepare a basic guide for implementation of the system with support from the CCPACR over the next two years. Status as of of Publication Page 7 of 49

9 b. Appoint a member as Technical Consultant to serve as liaison with the commissions Action Plan Developed by c. Update incorporation requirements and introduce changes to induction training to make it an Accounting Deontology Seminar. d. Update modular courses on International Financial Accounting Reporting Standards and International Standards of Auditing e. Incorporate a Suggested Guidelines and Safeguards section in the Ethics Code, for use during public accounting practice. Update the Ethics Code. f. Revise and update circulars issued by the CCPACR to its members g. Strengthen the role of the Organization of Public Accountants of Costa Rica within the media. h. Promote dissemination of all documents published by IFAC and the IASB and participate, through the Latin-American Group of Accounting Standards Setters (GLASS), in making observations and comments to documents issued by IFAC. i. Organize a meeting with the Ministry of Finance, the Vice-Presidency of the Republic, the CCPACR and Board of GLASS. j. Undertake diffusion, dissemination, training, and linkage activities. Update IFAC Action Plan: 1. Evaluate progress against Action Plan activities. Semi-Annually 2. Update Action Plan. Annually Status as of of Publication Page 8 of 49

10 Action Plan Subject: Action Plan Objective: SMO 1 Quality Assurance Establish an Effective System of Quality Assurance Background: The CCPACR is responsible for the quality assurance system. The initial step was to define the benchmarks for the system, which became the basis for the design of a computer application. In addition seminars were organized to train evaluators, who are now duly certified. The CCPACR has identified an important area in which the services of CPAs are required, and it concerns the institutions, businesses or users who require audited financial statements such as: financial institutions that have to report to CONASSIF, enterprises classified by the Tax Administration as major national and territorial taxpayers, companies in free zones, enterprises listed in the stock exchange, and companies seeking bank financing. Therefore, prior to the application of this quality control software, a previous stage was established to define basic guidelines and corresponding training workshops to support the implementation of the application in companies that do not yet have a system, or to improve existing systems Update In May 2013, a Quality Control Officer was appointed to initiate the development of a Quality Control Review System for Independent s and Firms based on the system developed by the firm KPMG during the period of 2008, through a program promoted by the IDB. Additionally, the evaluation questionnaires to be used were updated based on the 2013 version of the ISQC 1 and the International Standards for Auditing 220: Quality Control. A proposal was drawn up, based on ISQC 1, for the Quality Control Review System considering six elements: 1. Leadership responsibility in company quality control; 2. Relevant ethical requirements; 3. Acceptance and retention of professional relations with clients and specific tasks; 4. Human ; 5. Job Performance; and 6. Monitoring. Each element has a series of procedures to be followed in the Quality Control review, in order to verify adequate compliance by Independent s and Firms with existing standards. In order to test the computer application for the Quality Control Review, the CCPACR invited a number of Public Accounting firms to accept to be reviewed, on a voluntary basis. This pilot program started in December On the other hand, the Quality Control Unit was able to implement the following stages of quality control review program: a. Diagnosis, design of standards and revision program; b. Dissemination and training; c. Program implementation; d. Job performance; and Status as of of Publication Page 9 of 49

11 e. Follow-up. Action Plan Developed by During 2013 a series of forums and conferences as well as induction sessions for new members were organized to emphasize the need and importance of having a quality control system Update During the months of January, April, May, August and November 2014 several sessions were held to review the progress in the implementation of a quality control system. Participants, from January to May, were several Public Accounting firms and independent professionals. The Quality Control Unit together with the Oversight made several visits to accounting firms and independent professional and were able to determine several indicators of the more frequent weaknesses, among them: non-existence of reports on quality control, absence of performance evaluation reports on the auditing teams, no record about training or professional development, and others. On September 8, 2014 the CCPACR presented a project progress report to the IFAC Technical Manager. The report contained: Documents being used to perform the quality control review of accounting firms and independent professionals. Procedures used to undertake the quality control review. Training and support program for ISQC-1. Results of reviews performed by the Quality Control Unit during the 2014 period. Proposals for 2015 after the completion of the Pilot Plan. Once the results of the pilot plan were gathered and analyzed, the Quality Control and Oversight submitted to the Board of Directors a series of guides. After extensive revision, the Board of Directors approved the guides listed below, which were published in the official newspaper La Gaceta and are available on the CCPACR website: a. On November 10, 2014 Circular N was approved, entitled: Guide for Quality Control Implementation by Public Accounting firms or offices and Independent s. This circular contains the necessary guidelines for Public Accounting firms and professionals to follow in order to initiate the implementation. It establishes through transitory provisions that workshops will be held during March - July 2015 about its scope and implications. Likewise, it establishes that accounting firms must present a review of their quality control system by September 15, The Oversight and Quality Control Units will provide follow-up to action plans submitted by firms from October 2015 to March As of July 2016, all accounting firms and independent professionals in private practice must have established a quality control system. b. Through La Gaceta of December 16, 2014 the Circular N was published: Quality Control Review Handbook based on provisions indicated in the International Standards of Quality Control 1 (ISQC1). This handbook on quality control reviews establishes a list of minimum essential procedures to be followed by the Quality Control Unit. c. Circular N entitled Handbook on Procedures for the of Quality Control Reviews, provides guidelines to be taken into account by the CCPACR Oversight and Quality Control Units when undertaking reviews of public accounting firms and professionals d. Since November 24, 1998, the CCPACR Directive Board adopted the International Standard Audit; furthermore, in December 11, 2014, it was confirmed again by the digital publishing, official newspaper "La Gaceta No. 76". Since November 24, 1998, the CCPACR Directive Board adopted the International Standard Audit; furthermore, in December 11, 2014, it was confirmed again by the digital publishing, official Status as of of Publication Page 10 of 49

12 newspaper "La Gaceta No. 76". Accordingly since 1998 is mandatory to meet with QA requirement. The current task purposes are performed as guidance to small audit firms, and independent audit professionals, which do not have the same capacities and economic resources as medium or big audit firms. See attached Annex and link to reference Circular Circular See pages 23 to 28: Quality Control Work Plan Results and Achievements Initial Steps in Creating an Effective System of Quality Assurance. 1. Establish communication with Government on Quality Control (QC): coordinate activities with CONASIIF and with the General Comptroller s Office (CGR). QCC Quality Control (QCC) CONASSIF CGR 2. June 2013 Appointment of Quality Control Officer (QCC). August 2013 Completed Board of Directors Quality Control (QCC) Status as of of Publication Page 11 of 49

13 Apply tests on a sample of Income Certifications prepared by CPAs, provided by financial entities. Analyze results and prepare test report. 3. April 2013 During the period , the Oversight significantly increased the number of certification verifications in comparison with the verifications performed in This can be seen in the s Annual Report where the increase in the amount of verifications of certifications and audits can be appreciated both numerically and graphically. Work along this line will continue during the 2015 period. QCC Quality Control (QCC) Oversight Draw up a draft Work Plan for the implementation of the Quality Assurance Program (QAP). 4. December 2013 During the 2013 period, the draft Work Plan was prepared and subsequently reviewed by the Board of Directors and a group of member accountants with experience in quality control reviews. By December 31, 2013 the final version of the document was completed taking into account proposed changes and recommendations. At the same time the pilot plan was initiated to test the program. November 2013, Completed and being updated QCC Quality Control (QCC) 5. November 2013 Perform pilot test with auditing firms invited to participate on a voluntary basis. At the end of December 2013 the Organization of Public Accountants made contact with several firms (small and medium) in order to enlist their voluntary participation in the Pilot Plan for the Quality Control Review Program. The Pilot Plan to test and adjust the program initiated in December Started February and progress reviewed in August 2014 (Closed) Oversight and Quality Control (Completed) Oversight Quality Control (QCC) Status as of of Publication Page 12 of 49

14 6. April 2013 Make contacts with the General Superintendence of Financial Entities SUGEF and the General Comptroller s Office (CGR), in order to learn about their concerns and discuss the fact that there will be a significant increase in the quality of information as a result of the Quality Assurance Program (QAP). During 2013 and in order to obtain feedback to improve the quality of work of the CCPACR, the CCPACR President and Overseer met with the General Superintendent of Financial Entities (SUGEF). The meeting also served to seek consensus on the implementation of the IFRS in general, stress the importance of CPA work and the respect for their public certifications. October 2013 New encounter October 2015 Board of Directors, Oversight and QCC Quality Control (QCC) CGR 7. April 2012 Incorporate observations and obtain a Final Version of the Work Plan for the QAP implementation, once revisions are completed by the Chief of the Oversight Unit, the Quality Control and the Board of Directors. After consideration of the observations, the Quality Control Officer introduced the necessary corrections and the final document was finalized and presented for final review to the Chief of the Oversight Unit. The final version was submitted to the Board of Directors in 2014 for approval. September 2014 (Completed December 2014) QCC Oversight Quality Control (QCC) 8. May 2012 Work Plan Approval. Includes workshops to be organized with different CPA firms and professionals, as well as a selfassessment. January 2015 to December 2016 QCC and Oversight Status as of of Publication Page 13 of 49

15 9. November 2014 Develop and publish an Implementation Guide for the use of CCPACR members, through a webpage accessible only to active members and registered firms. December 2014 (Completed) QCC Oversight Quality Control (QCC) Disseminate information at Universities, Forums and internal events. Deliver talks at educational centers and introduce the subject to new professionals. 10. May 2012 During 2013 talks were organized with the purpose of sharing information about standards, and also to inform about the Organization s role in quality control reviews. A talk was organized in May, a forum in the month of June and quality control talks were included in the seminars for incoming professionals. See Annexes 4 & 5 Quality Control. (to be continued in 2015) Quality Control Oversight Quality Control (QCC) During 2014, different quality control training activities were organized, making emphasis on the need to have, from the start, a quality control system for the professional practice, as well as chats, publications called Update Drops and an international annual seminar for students and organization members. Status as of of Publication Page 14 of 49

16 11. April 2013 Include training sessions and proficiency courses on the Standard ISQC1, within the Training Program of the for members. During 2013 as indicated, talks were organized to share information about the work to be performed by the Organization with respect to quality Control reviews and the subject was also included in induction seminars. During 2014, the process continued. In January 2015 a cycle of workshops was initiated on these guides. (to be continued during 2014) QCC Oversight Quality Control (QCC) Maintaining Ongoing Processes 12. Ensure, through annual revisions, compliance of the Quality Assurance Program (QAP) with SMO - 1, by updating the revision questionnaires used based on the latest amendments to SQC-1. Launch November 2016, /Ongoing (Each ISQC-1 update) Quality Control Quality Control (QCC) Review of CCPACR s Compliance Information, Parts I and II 13. Review the responses to the Compliance Program, Parts I and II, and make changes and updates as necessary. Inform IFAC authorities and send updated information for re-publishing. - Appoint a person to be responsible for revising the information in Parts I and II and introduce changes as necessary - Inform IFAC about changes. (December each year) QCC Quality Control (QCC) Status as of of Publication Page 15 of 49

17 Action Plan Subject: Action Plan Objective: SMO 2 International Education Standards for Accountants and Other Pronouncements Issued by the IAESB Implementation of IESs Background: The CCPACR is the organization that groups certified public accountants in the country. Members are required to have a licentiate degree in Public Accounting, and a proven professional experience of at least two years counted as of the date the applicant receives the bachelor s degree. Under the provisions of the Law, the Organization may not impose an admission test, unless it is included in its provisions. At the end of 2012, the Constitutional Chamber ruled in favor of the right of Organizations to verify that applicants comply with admission requirements Update The Board of Directors reinforced the Induction Seminar in coordination with the Admissions Unit and the CCPACR general administration. The following are some of the changes in the program implemented during 2013: 1. The duration of the Induction Seminar, which was 5 hours in 2012, was extended to a minimum of 20 hours. 2. Participants receive a Participation Certificate, for completing and approving the Induction Seminar. 3. The main topics covered during the Seminar are: International Standards of Financial Reporting. International Standards of Auditing. International Standards for Small-Medium enterprises (SMEs). Ethics (*). Tax issues in Costa Rica. Legal and Regulatory Framework of the CCPACR. Statement of Members Obligations (SMO). Role and functions of the CCPACR Oversight. Quality Control. (*) The topic of Ethics was formerly covered in 45 minutes and now is reviewed for 6 to 7 hours, including a proficiency test at the beginning and one at the end. As a result of the legal case filed against the certification process in 2013, courses relating to IFRS, ISA, IPSAS and IAS-SME were practically frozen during the first half of An arbitration procedure was initiated, ending in a conciliation whereby the voluntary advancement courses will be maintained, but stating clearly that they are not equivalent to academic degrees and only advancement courses. Likewise, to further confirm the issue, the CCPACR submitted a legal consultation to the General Comptroller s Office regarding the scope of the Organization of Public Accountants of Costa Rica in relation to requiring its members or applicants to take mandatory advancement courses, giving them some Status as of of Publication Page 16 of 49

18 distinction over members who do not take the courses. The Comptroller s Office determined that the Organization has competence for professional development training but that it cannot make any distinction between members that could be interpreted as being discriminatory, as an academic degree, or establish differentiations among members. The decision states that the CCPACR Organic Law does not allow it to award academic degrees or establish differences among members not provided for in the Law and that furthermore by law it is not an education center. Finally the Board of Directors was able to agree on a conciliation and continue implementing the Voluntary Advancement Program. All the courses of the modular program were re-initiated at the end of the third quarter of The at the same time initiated an update of the professional development modular program on International Standards of Financial Reporting. Within this same field of professional development, as of August 2013, a webpage was developed called Update Drops. This initiative is intended to keep members abreast of current professional issues that can be helpful in their everyday work. A total of 21 opinion articles on current issues have been posted on the CCPACR Facebook page, and have been sent directly to directors and teachers in different universities offering accounting and public accounting programs Update As part of the strategy defined in 2013 to strengthen the admission process for new members, the Board of Directors made a full revision of Article 30 of the Regulations to Law The CCPACR submitted a request for accreditation to the Ministry of Education, as the entity in charge by law of this responsibility. However the Ministry of Education replied that it was not its responsibility and therefore the CCPACR requested the criteria of the General Comptroller s Office (CGR), all of which caused delay in the revision of Article 30. The Comptroller s Office determined that it was the responsibility of the Ministry of Education. On January 25, 2015, the Ministry of Education forwarded its approval to the Executive Power requesting the signature of the decree. It is now in the process of analysis and pending approval. This change includes the requirement that new applicants must attend and approve a Deontology in Public Accounting Course of not less than 20 hours. It is expected that by the end of June 2015, the revision to the Regulations will be approved and published. As part of its commitments with respect to dissemination, linkages and training, the CCPACR promoted for the second consecutive year the celebration, in the month of May, of the American Public Accountant Day. Throughout the month, a series of professional development activities were organized free of charge to the members, covering topics of International Standards of Financial Reporting, International Standards of Auditing, Tax issues, International Public Sector Accounting Standards, Ethics, COSOIII, FATCA, and circulars issued by the CCPACR. Another initiative implemented during 2014 was the organization of professional chats, forums and debates, so that certified public accountants could discuss technical issues. In addition, some activities were open to the participation of the public or specific sectors on matters of general interest. During 2014, the total number of participants was 2,804 while in 2013 it was 1,220 participants; in hours it was 116 hours in 2014 and 80 hours in Another means used to maintain close linkages was the weekly posting Update Drops. In 2014 a total of 43 articles were posted (23 articles in 2013) which were also circulated among universities. According to the court decision rendered in 2013, stating that the CCPACR has the power to regulate member incorporation requirements and determine an annual professional license fee, the Board of Directors through Circular N published the Handbook on Incorporation Procedures and Information Update for Public Accounting Firms. The Circular establishes that firms must update their information every year, inform if they have international representations, and report on quality control implementation. With respect to professional development courses, the Board of Directors reviewed the update proposal of the different modular courses on IFRS, ISA, and IPSAS. These courses award participation diplomas, and include assignments and a general test. The International Congress on International Financial Reporting Standards and International Standards of Auditing was carried out during the Status as of of Publication Page 17 of 49

19 month of September. Guest speakers included representatives of GLASS Group of Latin American Standard Setters, a member of IASB (Amaro Gomes), the Technical Manager of IFAC, a speaker on Ethics, as well as three Costa Rican professionals. The Congress analyzed current developments and the impact of recent standards, as well as the importance of the ethical framework. Another objective pursued in the annual plan was diffusion and dissemination through different communication media such as the press, radio, television and Internet. The CCPACR had presence in 293 notes in different media, which is very satisfactory for this SMO and is also related to SMOs 3, 4, 6 and 7. See attachment and link PUBLIC ACCOUNTANTS MONTH UPDATE DROPS AND BULLETINS Standards update Annual Report (see pages 9, from 26 to 31) Raise Awareness of the Requirements of IESs and Begin Application to University Education 1. February 2011 Read, analyze and reflect on the components of SMO-2, as a guide to create a structure and framework to implement education activities and improve modular and on-going programs. February 2011 Completed. Annual Revision Board of Directors Volunteers 2. May 2011 Make a proposal to revise the structure of the. To be revised also: purpose, structure, functions, responsibilities, and regulations in order to adjust these to the guidelines and requirements of SMO-2. Work started on the update of the modular professional advancement courses on International Standards of Financial Reporting, International Standards of Auditing, and International Public Sector Accounting Standards. Activity Board of Directors Status as of of Publication Page 18 of 49

20 3. March 2012 Diagnosis: undertake an analysis of SMO-2 and current situation to make operational recommendations and thus increase the level of compliance with the education standards for public accounting and auditing professionals. August 2013 First revision Completed. November 2015 Board of Directors, Volunteers 4. April 2012 Communicate results of diagnosis and recommendations through the website, forums, talks, etc. August 2013 Board of Directors, Volunteers 5. April 2013 Develop a proposal of syllabus or curriculum for universities, based on the provisions of the International Education Standards, the results of the diagnosis and recommendations from consulting entities. Discussion of proposal with CONESUP /CONARE. A meeting was held with CONARE officers to stress once again the need for universities to respect the curricular matrix. Meetings were also held with the deans of several universities to discuss possible changes, indicating that the CCPACR will be developing a model curricular matrix that is expected to be completed by September September 2015 Board of Directors, Volunteers 6. June 2013 Design a dissemination program for end users of financial information, according to the particular needs of the targeted sector and make use of communications media. Annual Guest Speakers and Advisory Unit Status as of of Publication Page 19 of 49

21 7. April 2013 Organize a Workshop-Congress: Update of IFRS and ISA: Practical Cases, primarily oriented to refresh and update the knowledge of IFRS Trainers of the Organization of Public Accountants of Costa Rica. The activity was organized in 2014 with the participation of GLASS representatives and three local professionals. September 2014 and 2015 (Annual) On-Going Volunteers 8. December 2013 Develop a rigorous assessment tool to evaluate trainers and well as the courses offered by the Organization of Public Accountants of Costa Rica. Initiate the development of a trainer profile for the courses on International Standards of Financial Reporting. For 2014, all courses were evaluated by their participants. The results provided feedback to make the necessary adjustments. Implemented in Mid-year revisions reviewed by Board of Directors and users Technology Unit 9. April 2013 Update and improve the CCPACR Library, with the idea of converting it into a Documentation Center, with reference material for members and other interested persons. During 2014, the IFAC English versions of the ISs were incorporated, as well as some materials on Ethics. In January 2015, the Guide for the use of IS for SME was included. Volunteers Status as of of Publication Page 20 of 49

22 10. Under dissemination of information, maintain members informed of changes and important information regarding standards published by international organizations responsible for regulating the profession, through mass s, publications in social networks and communications media, complemented with participation in external communications media, through the Communications Unit and Oversight. Begin Discussions about the Importance of a Examination / Maintain the Current Process of Voluntary Participation in Advancement Courses Management Information Technology Analyze the feedback received from the voluntary participation modular courses implemented by CCPACR. Detect potential improvements and propose a strategy to strengthen the courses. The content revision process was undertaken during Completed. Change after arbitration conciliation. Annual ongoing process Approve and disseminate proposals to improve the Voluntary Advancement program, through available resources such as the website, bulletins, social networks, s. During 2014, a full revision of the different modules of IFRS, ISA and IPSAS courses was completed Periodic 13. April 2013 Design and approve upgrades to the IFRS and ISA training modules and to proficiency courses, as well as undertake an international training activity focusing on IFRS Reforms for SME: IASB proposals. The upgrades to each course on IFRS, ISA, and IPSAS were concluded in August August 2015 Status as of of Publication Page 21 of 49