The Institute of Chartered Accountants of Belize

IMPLEMENTATION

Background

In 1998, the Institute of Chartered Accountants of the Caribbean (ICAC), the umbrella body of the Institutes of Chartered Accountants of the respective Caribbean territories commissioned its technical arm, the Auditing & Accounting Committee of ICAB to conduct a survey amongst the territorial institutes to ascertain their views on the desirability and form of a proposed Peer Review System. ICAC’s primary reason for making this request was to continue its thrust to harmonise accounting and auditing standards across the Caribbean.

IMPLEMENTATION

Background

In 1998, the Institute of Chartered Accountants of the Caribbean (ICAC), the umbrella body of the Institutes of Chartered Accountants of the respective Caribbean territories commissioned its technical arm, the Auditing & Accounting Committee of ICAB to conduct a survey amongst the territorial institutes to ascertain their views on the desirability and form of a proposed Peer Review System. ICAC’s primary reason for making this request was to continue its thrust to harmonise accounting and auditing standards across the Caribbean.

This harmonization effort represented ICAC’s response to the charges made by major financial institutions, e.g., IDB, that the application of accounting and auditing standards in the Caribbean was poor and that there was no uniformity in their application. It was felt that this disparity in the accounting standards applied and the quality of audits performed could lead to “shocks” in the financial markets if financial statement users were to make erroneous financial decisions based on inaccurate information contained in the financial statements.

What is Peer Review?

Prior to submission of the questionnaires to the territorial institutes, and in an effort to gain further insight into the issues surrounding the implementation of a peer review programme, members of the Technical Committee met with Mr.. Sha Ali Khan, Compliance Manager of ACCA, the body responsible for monitoring the peer review programme in the UK. The following paragraphs represent a synopsis of the salient features of the Peer Review System as practiced in the UK.

Mr Khan noted that one of the key features of a peer review system was regulation and he defined regulation as comprising registration, rule setting, review (or monitoring) and regulatory action.

Registration

A key feature of registration is establishing a public register of firms which are authorised to conduct audit work in the territories. The register will need to be updated regularly to add newly registered firms, delete firms ceasing to be registered and to reflect any changes of details of firms already registered. This registration process must be accompanied by a framework for the issue and removal of licences (or practicing certificates) only to persons who are fit and proper and properly qualified.

Currently, the registration issue in the Caribbean is addressed by the requirement that members be registered with the institutes to obtain their practicing certificates. In most territories, there is distinction between a practicing member and an ordinary member. This distinction is however not made in St. Lucia.
Issues

Some territorial institutes like St. Lucia have reported that their institutes do not maintain a list of members and do not have the power to enforce standards. The survey did not solicit responses from Antigua, Montserrat and St. Vincent. However, we know that legislation is in the process of being finalized for the formation of the OECS Institute which will be the umbrella body for territories comprising St. Lucia, St. Kitts, Antigua, Montserrat and St. Vincent. When the OECS Institute is constituted, the Peer Review system will have to be extended to cover practicing members in Antigua, Montserrat and St. Lucia and the Caribbean register will have to be updated accordingly.

Rule Setting

There must be a clear set of rules for registered auditors to promote public confidence and regulate the quality of work. Such rules encompass:

1. The requirement for professional indemnity insurance,

2. The acceptance of international auditing standards by members,

3. The establishment of a Code of Ethics,

4. The requirement for continuing professional education and,

5. Minimum professional qualification standards.

In the UK, the ACCA’s Monitoring Unit reports ultimately to the UK Department of Trade & Industry. The Monitoring Unit is the body charged with the responsibility of regulating the peer review practice. In that capacity it determines the criteria for the issuance of practicing licenses and who, when and the frequency of the peer review audit requirements. Some 4,500 auditors are registered with the Monitoring Unit, audits are conducted on a 5 year cycle with early follow up visits where unsatisfactory results are noted and high risk firms are visited more frequently.