Public Accounting and Continuing Professional Development
Members applying for a new Public Accounting Licence (PAL) or renewing their existing PAL must complete the required Continuing Professional Development (CPD) hours in activities directly related to public accounting and in compliance with International Education Standard (IES) 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised). Failure to meet the requirements of IES 8 will impact PAL eligibility.
The responsibility for complying with these CPD requirements lies with each PAL holder. However, firms should be aware that appropriate CPD is a critical component of the quality management system and pervasive CPD deficiencies call that system into question.
CPA Ontario’s review of PAL holder CPD has identified some areas of concern with IES 8 compliance. The following guidance is designed to educate PAL holders about – and ensure they are compliant with – IES 8.
CPD under IES 8 should be progressive
IES 8 premises that the professional competence needed to assume the role of Engagement Partner Responsible for Audits of Financial Statements has already been established. For example, taking an introductory accounting course would not normally be considered progressive because that competence is expected to have already been established. Additionally, it would be rare for repeat attendance in the same course to be considered progressive.
But PAL holders also operate in an environment of change and must be prepared for new developments in regulation, financial and non-financial reporting as well as emerging issues and technologies. There could be instances where introductory-level learning in these areas would be appropriate.
To assess whether their CPD is progressive, PAL holders should ask themselves: “Did I learn something new or build on my previous knowledge as a PAL holder?”
CPD under IES 8 should cover the breadth of the area of practice
A common concern with PAL holder CPD is that hours are often concentrated in one learning outcome, which does not achieve breadth. “Breadth” does not mean covering every learning outcome under IES 8, but PAL holders are expected to determine which learning outcomes apply to their area of practice and provide mapping as to how CPD taken achieves those learning outcomes.
Additionally, while IES 8 contemplates the role of Engagement Partner Responsible for Audits of Financial Statements, in Ontario it encompasses anyone applying for or renewing an existing PAL, which relies on the concept of “equivalent roles” under IES 8. This means, for example, that courses on Review Engagement topics would be considered acceptable and expected for a PAL holder providing Review Engagements, as Engagement Partner Responsible for Reviews of Financial Statements would constitute an “equivalent role” and would allow the PAL holder to cover the breadth of their area of practice.
To assess whether CPD covers the breadth of their area of practice, PAL holders should ask themselves: “Did my learning align with and cover my public accounting practice?”
CPD under IES 8 should be proportionate to the role
Where CPD course selections can be mapped to IES 8, the proportion of CPD taken in specific areas must be appropriate.
During its review, CPA Ontario found that PAL holders’ had concentrated their CPD hours in areas that do not relate to the technical competencies needed for the practice of public accounting. In particular, we noted high concentrations in tax and personal development with less focus on technical accounting and assurance, which is concerning given the nature of public accounting. Most of the competency areas identified in IES 8 for a PAL holder are technical in nature and, as such, we expect the majority of PAL holders’ CPD to be technical.
To assess whether CPD is proportionate to their role, PAL holders should ask themselves: “Did my learning contain sufficient technical content to sustain and advance my competence in public accounting?”
Please note that hours in taxation, such as annual personal and corporate tax updates, do not count towards CPD for licensure unless they meet the learning outcomes identified in IES 8. “Tax” under IES 8 is limited to evaluating procedures performed to address the risks of material misstatement in the financial statements in respect of taxation, and the effect of the results of these procedures on the overall audit strategy.
For more information on IES 8, please visit Final Pronouncement – IES 8 (Revised).