The Institute of Chartered Accountants of Belize

BENEFITS

The ACCA Monitoring Unit has reported that the smaller firms in the UK have benefited from the Peer Review Process in that it has allowed them to identify those areas of their practice which were deficient as well as provide them with the corrective action to be taken.

Regulatory Action

This particular component of audit regulation has been identified as the one which will potentially require major changes/improvements by the Territorial Institutes before implementing the Peer Review System. Inherent in the regulatory process is the understanding that for any system of regulation to be effective, action needs to be taken where deficiencies are found to be significant or pervasive.

Unlike the ACCA which has developed its own finely tuned approach to regulation whereby there is a committee system which is Human Rights compliant and applies an approach to repeated failures known as “3 strikes” which is firm but fair, the Bye-laws of the Territorial institutes do not currently embody such regulatory provisions.

The Bye-laws of these institutes need to be amended to provide specific guidelines as to the regulatory powers that the institutes should posses and the detailed processes to be observed in the actual regulation of members. In particular, all efforts must be made to ensure that the regulatory rules in the respective territories are harmonized so that a “level playing field” is established.

Quality Control Issues

Mr. Khan alluded to the following quality control issues as being key components of the peer review process:

· Staff qualification and training

· Clearly developed methodology including programmes, checklists and procedures

· Review of all work by another compliance officer

· All reports recommending regulatory action undergo second review by manager

· All compliance officers occasionally accompanied on visits by a manager.

Peer Review vs Dedicated Team

The peer review process can be conducted via 2 media, peer review or dedicated team. Under the peer review approach members perform reviews of the work of each other. With a dedicated team system, a team of individuals perform all of the review. The issues in selecting an approach are as follows:

· Availability and quality of resources

· Training of reviewers

· Consistency and quality control

· Confidentiality and conflicts of interest

Evidently, with the dedicated team approach to the peer review process, the above noted issues are better addressed.

FEEDBACK FROM TERRITORIAL INSTITUTES

In executing the mandate set it by ICAC, the Technical Committee sent out circulars to the 8 territorial institutes (Barbados, Trinidad, Guyana, Belize, Jamaica, St. Kitts, St. Lucia and Bahamas) soliciting their views on the constitution of an effective peer review system.

These territories provided information as to the number of practicing members and firms, the CPE requirements, the auditing and accounting standards adopted in the region and the requirements for CPE. There was consensus among the territories that the dedicated team approach to peer review was the preferred option and that such reviews should be conducted on a 3 year cycle.

PROPOSAL RECEIVED FROM ACCA MONITORING UNIT

The 2nd step in the development of a peer review model occurred in January 2000, when ICAC invited the ACCA’s Monitoring Unit, (the body charged with the responsibility of regulating the peer review practice in the UK), to submit a formal proposal identifying ways in which the Unit could assist ICAC in developing a quality assurance review programme.

The 1st draft of such a proposal was received in February 2001 and copies distributed to the ICAC Board Members . The draft proposal is based on information provided by the Committee to the Monitoring Unit regarding the number of firms in the 8 territorial institutes, the existing framework in each territory and the application of international accounting and auditing standards in the region.

The proposal assumes that the system of regulation will involve establishing a dedicated monitoring unit comprising compliance officers employed by ICAC to carry out the monitoring activity which is a central component of the regulatory system.. The proposal is in draft form in that it does not contain any information as to costs, as further information had to be provided to Mr. Khan on the number of practicing members in Bahamas. That information has been subsequently been provided to Mr. Khan.

The proposal indicates that ACCA would assist ICAC in developing the methodology, setting up a register, establishing a set of rules, training the ICAC Monitoring Unit and developing the regulatory framework. As noted earlier, an estimate of the cost of the proposal was not provided by ACCA as more information is required.

WHAT NEEDS TO BE DONE NOW

To take the Peer Review Process to its conclusion ICAC needs to do the following:

1. Receive from the territorial institutes their master file of membership data to compile the Caribbean register.

2. Review the Bye-Laws of the respective institutes and where necessary ensure that the required amendments are made to give the institutes regulatory powers over their members.

3. Harmonise the CPE requirements in the respective territories.

4. Act as the coordinating agency in trying to secure indemnity insurance coverage for the smaller members.

5. Meet formally with Mr. Khan to discuss and resolve those outstanding issues which are required to inform the cost estimate.

We are almost there. All that is now required is a concerted effort by ICAC’s Executive to address the above issues in a succinct form and above all have detailed discussions with Mr. Khan towards finalising the proposal.

Michael Edghill
Chairman, Technical Committee of ICAC