Embed Size (px)
Citation preview
Mutual Recognition Agreement: The Challenges and Opportunities for CPAs
2015 Accountancy Week CelebrationPhilippine Institute of Certified Public Accountants
Estelita C. Aguirre Resource Speaker
July 15, 2015
Objectives of ASEAN and AFA History of ASEAN Integration MRA Framework Basic Features of Implementing MRA Accounting/Auditing Practices in ASEAN
Countries Facts and Figures Challenges
Presentation Outline
Association of Southeast Asian Nations (ASEAN)
To transform ASEAN into a stable, prosperous and highly competitive region with
Equitable economic development Reduced poverty and socio-economic
disparities
Objectives of ASEAN
ASEAN Federation of Accountants (AFA)
To provide an umbrella organisation for ASEAN
accountants for the further advancement of the
status of the profession in the region.
To establish a medium for closer relations,
regional cooperation, and assistance among
ASEAN accountants
AFA Objectives
History of ASEAN Integration
9th ASEAN Summit in Bali Indonesia (2003):The declaration of Bali Concord II taking the ASEAN integration to a higher plane by 2020
12th ASEAN Summit in Cebu (2006) :Accelerated the establishment of integration
from 2020 to 2015
Roadmap for the ASEAN Community
14th ASEAN Summit Chan-Am ( 2009 March 1)Declaration on the Roadmap for the ASEAN Community (2009-2015) was signed, including
ASEAN Political-Security Community Blueprint ASEAN Economic Community BlueprintASEAN Socio-Cultural Community Blueprint
ASEAN AGREEMENT
Roadmap for an ASEAN Community (2009-2015)
One vision. One identity. One Community.
1. With a single market and production base2. A highly competitive economic region3. A region of equitable development4. A region fully integrated into the global
economy
Key Characteristic of AEC
Free flow of goodsFree flow of servicesFree flow of skilled laborFree flow of investmentFreer flow of capitalHarmonized rules and regulations
Core Vision of AEC
.
Free Flow of Professional Services
via MRA.
ASEAN MRA is a multilateral arrangement among ASEAN countries or bilateral arrangement betweentwo ASEAN countries to enable professionals registered in its signatory countries to be equally recognized in another signatory country
ASEAN MRA
ASEAN MRAs for Professionals
Engineering Services Dec 2005Nursing Services Dec 2006Architecture Nov 2007Medicine Feb 2009Dentistry Feb 2009 Tourism Services Nov 2012Accountancy Services Nov 2014
MRA Framework on Accountancy
Signed in Chan-Am Thailand Education Licenses Demonstration of Competency Experience Compliance with IFAC Standards and Guidelines
Feb 26, 2009
Education
The AMS agree that a PPA of an AMS who seeks recognition in another AMS should have met the educational requirements in effect in the Country of Origin. Such individual's educational credentials may be accepted as having satisfied the
educational requirements of the Host Country's NAB and/or PRA.
Licenses
Where licenses are required from governmental or regulatory bodies other than the NAB and/or PRA of each AMS, the AMS shall, subject to their
Domestic Regulations, use their best endeavours to facilitate the PPA of the other AMS to obtain the necessary approval.
Competencies
The AMS recognizes the need to require the PPA seeking recognition to demonstrate competencies to assure that the PPA has satisfactory knowledge of the Domestic Regulations of the Host Country.
Experience
A PPA seeking recognition shall meet the experience requirements specified by the Host Country.
IFAC Standards and Guidelines
The professional competencies and qualifications threshold for the practice of accountancy in
ASEAN Member States shall be established, maintained and upheld according to the IFAC standards taking into consideration the Domestic Regulations of each ASEAN Member State.
Building Blocks of SMOs
(Statements of Membership Obligations)
SMO 2 Education Standards
SM
O 7
IF
RS
SM
O 3
IS
A
SM
O 5
IP
SA
S
SMO 1 QA SMO 4 Ethics SMO 6 I&D
Implementing MRA on Accountancy Services
Signed in Bali Indonesia by Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Singapore, Thailand, Vietnam and Philippines
November 2015.
Basic Features of the Implementing MRA
(1) Limited flow of accountancy services. MRA excludes external audit and other services
that require domestic licensing(2) Creation of Monitoring Councils(3) Creation of ACPACC(4) Recognition of ASEAN Chartered Professional Accountants (ACPA)(5) Setting up of an ACPAR(6) Acceptance of a Recognized Foreign Professional Accountant (RFPA) by the host country
1st Basic Feature of MRA
Limited flow of accountancy services:
MRA Article 3 excludes external audit and other
services that require domestic licensing.
Article 3 Scope
3.1 This Arrangement shall cover the provision of accountancy services covered under Central Product Classification (hereinafter referred to as “CPC”) 862 of the Provisional CPC of the United Nations, except for signing off of the independent auditor’s report and other accountancy services that requires domestic licensing in ASEAN MemberStates.
Article 3 Scope
3.2 Notwithstanding paragraph 1, cross-border movement of Professional Accountants providing external auditing services and other accountancy-related services thatrequires domestic licensing in ASEAN Member States may continue to be facilitated through bilateral and/ or multilateral MRAs between or among the Member States.
2nd Basic Feature of MRA
Creation of a Monitoring Council (MC) in each
Member State
Monitoring Committee (MC)
Participating AMS must establish a national MC MC members are national stakeholders
relevant to the MRA Functions include developing and maintaining
ACPA application assessment process, and authorised to certify the qualification and experience of individual professional accountants
3rd Basic Features of MRA
Creation of ASEAN Chartered Professional Accountants Coordinating Committee (ACPACC)
ACPACC
At least one appointed representative from each MC will compose the ACPACC Functions include authority to confer ACPA title and promoting the acceptance of ACPA. Report progress of work to ASEAN Coordinating Committee on Services (CCS)
4th Basic Feature MRA
Recognition of ASEAN Chartered Professional Accountants (ACPAs)
ACPA
ASEAN Chartered Professional Accountant (ACPA) refers to a natural person who is a national of an ASEAN Member State and is assessed by the NAB and/or PRA of any participating ASEAN Member States as being technically, morally, and legally qualified to undertake professional accountancy practice.
Qualifications of an ACPA
Accredited accountancy
degree/professional accountancy
examination programNAB/PRA certification no record of serious
violation on technical, professional or ethical
standards for accountancy practice
Comply with Continuing
Professional Development
(CPD) policy of the CO
Valid professional registration
certificate in the Country of Origin (CO) by NAB/PRA
3 years or more of relevant post
qualifying practical
experience within a 5 year period
5th Basic Features of MRA
Setting up of an ASEAN Chartered Professional Accountants Register (ACPAR)
ACPAR
The ASEAN Chartered Professional Accountant Register is where all ACPA are emplaced upon acceptance of the application by the ACPACC and payment of the necessary fees.
6th Basic Features of MRA
(6) Acceptance of a Recognized Foreign Professional Accountant (RFPA) by the host country through
NAB/PRB
National Accountancy Body (NAB) and/or Professional Regulatory Authority (PRA) refers to the designated professional accountancy or designated government body or its authorised agency in charge of regulating the practice of accountancy services
NAB and/or PRA
refers to the ASEAN Member State where the Professional Accountant is registered as a member of the National Accountancy Body and/or is licensed to practice accountancy by the National Accountancy Body and/or the Professional Regulatory Authority
Country of Origin
refers to the ASEAN Member State where the ASEAN Chartered Professional Accountant (ACPA) applies to practise accountancy services.
Host Country
Process to Become an ACPA & RFPA
MC assesses the professional accountant in
accordance with NAB/PRB rules and submit to ACPACC
Successful candidates to pay ACPA subscription fees to be listed on the ACPAR
ACPACC receives and evaluates application if applicant has complied fully with the requirements
ACPA submits application to NAB/ PRA (host country) to become an RFPA
... ..
NAB/PRA approves application after assessment of ACPA to be permitted to work as RFPA
Accounting and Auditing Practices AFA and World Bank Findings
Source: World Bank and AFA Report on Current Status of the Accounting and Auditing Profession in ASEAN Countries Sept 2014
Practices in the ASEAN
1. Recognition of Foreign Certifications
2. Accounting Education
3. Professional Examination
4. Relevant Practical experience
5. CPD Units
6. Independence and Ethics
7. Accounting Standard Setting
8. Financial Reporting Standards
9. Auditing Standard Setting
10. Quality Assurance and Oversight
Current Status of Profession
Brunei- CPA Australia, ACCA, CCANZ, ICAEW, ICAI
Cambodia- CPA Australia, ACCA, MIA, PICPA, ISCA
Indonesia-MIA
Laos – recognize foreign certification subject to test
MalaysiaACCA/ICAEW/CIMA/ICAScotland/ICAIreland, CAANZ,ICAIndia, CanadaICA,CPA Australia
Myanmar - None
Philippines - None
Singapore- CPA Australia, ACCA, ICAEW w/pathway
Thailand -None
Vietnam – ACCA forVAA ; CPA Australia for VACPA
1.Recognizes Foreign Certifications
Brunei – NA as long as members of ACCA,ICAEW, etc
Cambodia –Not clear
Indonesia – required
Laos – Syllabus to be reviewed to enable certification
Malaysia – required
Myanmar – required
Philippines - required
Singapore – required
Thailand – required
Vietnam – required
2. University Accounting Education
Brunei – NA
Cambodia –Not clear
Indonesia – Yes, IAI and IAPI
Laos – Yes, by LICPA and MoF
Malaysia – MIA:No Exams for recognised degree; For unrecognised degree – Yes ; for MICPA -Yes
Myanmar – Yes
Philippines –Yes, by the BOA
Singapore – Yes, by ISCA, if no accredited degree
Thailand – Yes, by FAP
Vietnam – Yes, by the MoF
3. Professional Examination
Brunei – 3 years
Cambodia –3 years
Indonesia – 3 years
Laos – 3 years
Malaysia - 3 years
Myanmar - 2 years
Philippines – 3 years for public practice only
Singapore – 3 years post/5-yrs pre-post qualification
Thailand – 3 years
Vietnam – 5 years
4. Relevant Practical Experience
Brunei –Per British Commonwealth PAO’s requirements
Cambodia - 40 hours per one year
Indonesia – 120 hours per 3 years
Laos – 120 hours per 3 years
Malaysia – 120 hours per 3 years
Myanmar – 120 hours per 3 years
Philippines –60 hours per 3 years
Singapore – 120 hours per 3 years
Thailand – 18 hours per 1 year
Vietnam – 40 hours per 1 year
5. CPD Units
Brunei – IFAC Code of ethics (CoE)
Cambodia – KICPAA CoE
Indonesia – Various rotation rules/various cooling periods
Laos – LICPA CoE based IFAC CoE
Malaysia – MIA based on IFAC’s CoE
Myanmar - MAC law in line with IFAC’s CoE
Philippines – Code of Ethics based on 2010 IFAC’s CoE
Singapore – ISCA’s is based on IFAC’s CoE
Thailand – Code of Ethics based on 2012 IFAC’s CoE
Vietnam – Code of Ethicsbased on IFAC’s CoE
6.a Independence & Ethics
Brunei – adopted IFAC Code of Ethics for Banks
Cambodia – no mention in CoE; SECC/NBC sets 3 years
Indonesia – All audits: Partner - 3 yrs; Audit firm- 6 yrs
Laos – Not stated in any legislation
Malaysia –Audit partners – 5 years; no firm rotation
Myanmar – no information
Philippines – Audit partners –5 yrs for listed Cos
Singapore – listed Cos/Banks -5yrs/KAPs forPIEs -7 yrs
Thailand – Audit partners – 5 yrs for PIEs
Vietnam – No information
6.b Rotation
Brunei – No information
Cambodia – NBC – silent; SECC – 3 years
Indonesia – All audits – 1 yr; listed Cos- 3 yrs
Laos – Not stated in any legislation
Malaysia -Audit partners -2 yrs, bank’s audit partner-5yrs
Myanmar – No information
Philippines – Audit Partners – 2 yrs
Singapore – listed Cos/KAPs for PIEs/other audits – 2 yrs
Thailand – Audit Partners for PIEs – 2 yrs
Vietnam – No information
6.c Cooling Period
Brunei – Brunei D. Accounting Standard Council
Cambodia – National Accounting Council
Indonesia – IAI Financial Accounting Standards Board
Laos – Accounting Dept of the MoF
Malaysia – Malaysian Accounting Standards Board
Myanmar – MAC
Philippines–Phil Financial Reporting Standards Council
Singapore –Accounting Standards Council
Thailand – Thai Acctg Standards Setting Committee
Vietnam – Ministry of Finance
7. Accounting Standard Setting
Brunei – IFRS for PIEs since 2014
Cambodia – CIFRS for listed, insurance since 2012
Indonesia –IFAS based on 2009 IFRS, excl IAS 1,41,15
Laos - IFRS for listed Cos starts 2017
Malaysia –MFRS for listed Cos, banks,insurance
Myanmar –MFRS for public Cos, financial institutions
Philippines – PFRS large/publicly accountable entities
Singapore – SFRS for Cos
Thailand – TFRS based on 2013 IFRS for PAEs
Vietnam – VAS developed based on IFRS
8.a. IFRS
Brunei – Brunei GAAP for Non-PIEs
Cambodia – CFRS for SMEs beginning 2010
Indonesia –SAK-ETAP for Non-PIEs
Laos – LFRS for SMEs beginning 2017
Malaysia – M’sian Private Entity Reporting Standards
Myanmar – MFRS for SMEs adopted
Philippines – PFRs for SMEs beginning 2010
Singapore –SFRS for qualifying SMEs
Thailand - TFRS for SMEs to start in 2017
Vietnam – IFRS for SMEs not adopted yet
8.b. IFRS for SMEs
Brunei – No legally required auditing standards;
Cambodia – CISA which is the same as ISA
Indonesia –SPAP which is fully consistent with ISA
Laos – would promulgate in line with ISA
Malaysia- ISA adopted as MASA
Myanmar –ISA adopted as MSA
Philippines – ISA adopted as PAS
Singapore – ISA adopted as SSA
Thailand –ISA translated into Thai with no modification
Vietnam –VSA closely aligned with ISA
9. Auditing Standard Setting
Brunei – PAOC/planned for 2014
Cambodia –QCC of KICPAA/adopted ISQC in 2010
Indonesia- PPJAP of Supreme Audit Board
Lao PDR – MoF in-charge of QAR
Malaysia –MIA Practice Review Program for Non-PIEs auditors; Audit Oversight Board for PIEs auditors
Myanmar - Compliance Review Committee
Philippines – BOA; with court injunction deferring QAR
Singapore- ACRA for PIEs/ISCA for non-PIEs
Thailand – SEC for listed/FAP for non-listed
Vietnam – A Dept of MOF implements QAR
10. Oversight /Quality Assurance
Are we ready for it?
What are the realities?
ASEAN today is 10 very different countries at very different stages of development:
High Income economies – Singapore & Brunei Upper Middle Income economies – Malaysia,
Thailand and Indonesia Lower Middle Income economies – Philippines,
Vietnam,Laos and Cambodia Low Income economy - Myanmar
Starting Business in ASEAN
2014
3 Singapore16 Malaysia
85 Lao PDR91 Thailand
109 Vietnam137 Brunei Darussalem
170 Philippines175 Indonesia
184 Cambodia 189 Myanmar
Starting Business in ASEAN
2015
6 Singapore13 Malaysia
85 Lao PDR 75 Thailand
125 Vietnam137 Brunei Darussalem
161 Philippines155 Indonesia
184 Cambodia 189 Myanmar
Doing Business in ASEAN
2014
1 Singapore6 Malaysia
18 Thailand59 Brunei Darussalam
99 Vietnam108 Philippines
120 Indonesia137 Cambodia
159 Lao PDR182 Myanmar
Doing Business in ASEAN
2015
1 Singapore18 Malaysia
26 Thailand59 Brunei Darussalam
78 Vietnam95 Philippines
114 Indonesia137 Cambodia
159 Lao PDR182 Myanmar
Realities in Starting a Business 2014
It takes an average of:. 3 procedures & 2 & 1/2 days - Singapore 3 procedures & 6 days - Malaysia 4 procedures & 17 & 1/2days Thailand 10 procedures & 34 days – Vietnam 15 procedures & 35 days - Philippines 10 procedures & 48 days - Indonesia 6 procedures & 92 days - Laos
From the Speech of Dato Timothy Ong June 6, 2014 in AIM Manila
Global Competitiveness Market2014-2015 (144 Economies)
Singapore 2
Malaysia 20
Thailand 31
Indonesia 34
Philippines 52
Vietnam 68
Lao PDR 93
Cambodia 95
Myanmar 134
Brunei Data Not Available
Source: World Economic Forum
Wobbly start. Wobbly still?“In September 2004, Statistically Speaking featured the article, “The ASEAN – Where Do We Stand? Or Wobble?”. It reported that the Philippines was somewhere in the middle among the 10 ASEAN countries for most indicators – “about kulelat among the original ASEAN members (Indonesia, PhilippinesThailand, Malaysia, and Singapore but still generally ahead of the Plus Five (Myanmar, Brunei, Lao PDR Cambodia and Vietnam).” The said article promised that, “six years from now, we will find out if we could walk straight or if our feet continued to wobble and our minds had started to boggle.”
Borrowed from Dr. Ben Diokno’s ppt presentation
Wobblier after 8 years
• In 2012, after 8 years, Dr. Romulo A. Virola, the former Secretary-General of the National Statistical Coordination Board wrote: “Statistics show that there are more bad news than good news! Eight years ago, we wrote how wobbly we were compared to our ASEAN neighbors. Sadly, based on the statistics presented, the Philippines appears to be even more wobbly.”
Note: 2014 FDI figure for Phil is very encouragingBorrowed from Dr. Ben Diokno’s ppt presentation
Foreign Direct Investments Trend
Foreign Direct Investment
Source: ASEAN Foreign Direct Investment Database as of 26 May, 2015
Singapore Indonesia Thailand Malaysia Vietnam Philippine
2012 60,980 19,138 10,699 9,400 8,368 2,797
2013 56,138 18,443 12,999 12,297 8,900 3,859
2014 72,098 22,276 11,538 10,714 9,200 6,200
Share 53% 16.4% 8.5% 7.9% 6.8% 4.6%
Foreign Direct Investment
Source: ASEAN Foreign Direct Investment Database as of 26 May, 2015
Philippines Cambodia Myanmar Laos PDR Brunei
2012 2,797 1557 1,354 294 865
2013 3,859 1,274 2,621 427 726
2014 6,200 1,726 946 913 568
Share 4.6% 1.3% 0.7% 0.7% 0.4%
Per Capita GDPPurchasing Power Parity
Source: All figures are from IMF 2014 published in April 2015
Country Rank in the World Rank in ASEAN GDP (Per Capita)
Indonesia 102 4 $ 10,641
Thailand 82 3 $14,354
Malaysia 51 2 $24,654
Singapore 3 1 $82,762
Philippines 119 5 $ 6,962
Vietnam 126 6 $ 5,635
The Challenges . . .
Challenges for ASEAN
Implementation of MRAs
Harmonization of qualifications of professionals through AQRF
Commitment to achieve the free flow of trade in services by 2015 as outlined in the AEC Blueprint.
Need to enhance its effort on services facilitation and cooperation activities, to complement the liberalization efforts.
Challenges for AFA
Providing assistance to ASEAN member bodies on capacity building of accountants through exchange of knowledge and best practices
Coordinate with each member bodies to update the information contained in
(1) The AFA’s Easy Guide to Setting up Accountancy Practices in ASEAN Countries; and
(2) The 2014 AFA – World Bank Report on Accountancy and Auditing Practices in ASEAN
Accelerating compliance with IFAC SMOs Providing quality CPD seminars and
workshops for accountants Bringing back the public confidence in the
audited financial statements through effective implementation of QAR
Advocacy to push reforms in respective government to improve the ranking in doing business
Challenges for AFA Members
Challenges for AFA Member-Bodies
Compliance with IFAC SMOs (as of Oct 6, 2014)
Brunei Darussalam (BICPA) Oct 2013
Cambodia (KICPAA) Aug 2014
Indonesia (IAI) May 2013
Laos PDR (LICPA) In progress
Malaysia (MIA ) Nov 2013
Myanmar (MICPA) In progress
Philippines (PICPA) Jan 2014
Singapore (ISCA) Jul 2012
Thailand (FAP) Feb 2014
Vietnam (VAA) Nov 2012
Member Bodies Regular Provisional Junior Student Corporate/ Total
Nodies Members Members Members Members Firms
BICPA 49 9 58
IAI 17920 3703 109 21732
KICPAA 155 20 34 49 258
LICPA 176 176
MIA 30,994 30,994
MICPA 595 595
PICPA 22,072 22072
ISCA 28069 28069
FAP 64635 64635
VAA 8,000 8,000
TOAL 173465 29 3703 34 158 177389
Membership of Member Bodies As of October 1,2014
Membership of AFA Member Bodies As of October 1, 2014
BICPA - 58
IAI- 21,732
KICPAA - 258
LICPA - 176
MIA - 30,994
MICPA - 595
PICPA 22,072
ISCA - 28,869
FAP- 64,635
VAA - 6,000
Harmonizing and streamlining of processes and procedures
Improving of standing in the World Bank Survey in starting and doing business in the country
Improving standing in FDI Confidence Index
For BOA - operationalizing the Monitoring Counciland providing guidance in raising the bar for Filipino CPAs to become globally competitive
Challenges for Government
Proper implementation of the international accounting standards
Effective implementation of the International Auditing Standards in the conduct of audit
Compliance with CPD, using the PICPA CPD Competency Framework based on IEAS
Production of credible and reliable FSs Levelling up to become globally competititve
Challenges for Accountants
