Members of LIA and, the public served by the accountancy profession, may recall that LIA is a member of the International Federation of Accountants (IFAC), and Eastern, Central, and Southern African Federation of Accountants (ECSAFA). For continued membership with these bodies, LIA has to comply with all the standards and pronouncements of both bodies.
LIA is bound by its membership with IFAC to comply with its pronouncements such as the Statements of Membership Obligations (SMOs). It should be noted that among the seven SMOs that IFAC has issued, SMO1 clearly enforces member bodies to implement the Quality Review System for members of the profession in the practice of audit. LIA by this move to Quality monitoring is in compliance with this pronouncement. Amongst other requirements of IFAC, member bodies are encouraged to set up Technical Departments and, have technical staff employed. One of the major roles of the Technical staff is the implementation and monitoring of the Quality Review Systems. LIA is confident to inform the public and its members that Technical Manager has been employed since June 2007 to carry out all the technical requirements, such as the Quality Monitoring System implementation in Lesotho for the professional accountants in practice.
Some of the notable benefits of this system are as follows:
- It will maintain and enhance the reputation of the profession with the public and the business community locally, regionally and internationally.
- It will put the profession in a stronger position to influence the future direction of regulatory involvement in the activities of practitioners, particularly as regards the attest function, since this will be the professional body which subjects its members to mandatory reviews.
- It will demonstrate to the critics that the profession is committed to self regulation and to ensuring the highest standards of professional work.
- Public perception of the profession will be improved as the public realizes that the profession does not only demand high standards from its practitioners, but it also monitors and enforces those standards.
- It will raise the standard of the accounting profession and the attest function in the country as a whole as practitioners realize that, whatever work they do, this may be subjected to quality review.
- Practitioners own internal review programmes, where these exist, may need to be reassessed as a result of the independent external reviews.
At the moment LIA is about to conclude preparations for implementation of this system. The LIA has issued the questions and answers document to members for comment before the actual takeoff of the system.
Quality Review/Assurance Programme:
Your Questions and answers
Q.1 What is the objective of quality reviews?
A.1 The main objective of quality reviews is to confirm that all registered accountants and auditors in public practice are maintaining an appropriate level of professional standards in the performance of the attest function.
Q.2 Why do we need audit practice quality reviews?
A.2 The attest function is reserved to the accountancy profession by the Accountants Act no. 9 of 1977 (as amended). The intention was not to give advantage to the members of the profession, but to protect the public. For this reason, this function should only be carried out by persons with the requisite education, training, professional standards and discipline.
There are a number of instances where complaints have been received from the business community, the chamber of commerce, the banks and the Lesotho Revenue Authority regarding poor and sub-standard attest work performed by practitioners. In other countries, business failures have occurred and the blame has been directed at the practitioners.
The professions image and that of the practitioners is tarnished by these complaints from the public and the business failures. Whilst a profession has certain rights and privileges, it also has obligations to the society which gives it those rights and hence the need to protect the society.
Q.3 What advantages to the profession will this programme have?
A.3 This programme will have many advantages, amongst which are the following:
It will maintain and enhance the reputation of the profession with the public and the business community locally, regionally and internationally.
It will put the profession in a stronger position to influence the future direction of regulatory involvement in the activities of practitioners, particularly as regards the attest function, since this will be the professional body which subjects its members to mandatory reviews.
It will demonstrate to the critics that the profession is committed to self regulation and to ensuring the highest standards of professional work.
Public perception of the profession will be improved as the public realizes that the profession does not only demand high standards from its practitioners, but it also monitors and enforces those standards.
It will raise the standard of the accounting profession and the attest function in the country as a whole as practitioners realize that, whatever work they do, this may be subjected to quality review.
Practitioners own internal review programmes, where these exist, may need to be reassessed as a result of the independent external reviews.
The Lesotho Institute of Accountants practitioners will be seen to be subject to reviews comparable to other international institutes with similar programmes, and this will enhance the acceptance of the work of the local practitioners internationally.
Q.4 What will the quality review programme achieve?
A.4 We hope that the programme will achieve the following:
It will provide with the necessary information required for educational and supportive service and this will help practitioners to maintain and improve their professional standards
The programme will help LIA identify delinquent practitioners who need to be struck off the list.
The programme will also assist LIA in identifying practitioners requiring further training in certain areas of the profession.
It will demonstrate to all people that our profession is able to self regulate and can ensure that established accounting and auditing standards are being adhered to by our practitioners.
The programme should help practitioners to have an interest in, and general awareness of, the services and products which LIA has available to assist them in the execution of their professional duties.
Our practitioners will be subject to reviews comparable with most other major international institutes which have similar programmes to LIA.
It will help to stop the loss of confidence in the profession by the public, both locally and internationally.
Q.5 What is the international opinion of practice review programmes?
A.5 Lesotho is one of the few countries which still do not have some form of a review programme in place for its body of professional accountants performing the attest function
In the United States, every certified public accountant in public practice is required to submit to a peer review every three years. This has been in place for many years and became compulsory in 1988.
In Canada, practice reviews started in Quebec in 1976 and is now operated by all the provinces. In Ireland, practice reviews have been carried out since 1987 and their review programme has met with enormous success. Scotland, New Zealand, England and Wales and Australia commenced their programmes in 1991 on cycles ranging from three to five years.
In March 2004 the IFAC Board approved the Statements of Membership Obligations (SMOs) which were subsequently rectified in November of the same year. SMO 1, Quality Assurance, establishes obligations on IFAC member bodies to establish quality assurance review programmes for their members performing certain audit engagements of financial statements.
The International Standards on Quality Control (ISQC) 1 (as amended), effective from 15 June 2006, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Service Engagements, give guidance to IFAC member bodies on quality control reviews for firms performing certain audit engagements of financial statements.
Close to home, in South Africa, the Independent Review Board of Auditors (IRBA) was established by statute in 2005, with the mandate to establish a quality control review programme for the SAICA members carrying out attest assignments.
Botswana, Swaziland, Namibia, Malawi, Tanzania and Kenya, to mention but a few countries in Africa, are all in the process of establishing review programmes for members of their accountancy bodies carrying out the attest function.