Action Plan developed by Institute of Certified Public Accountants in Israel BACKGROUND NOTE ON ACTION PLANS

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1 BACKGROUND NOTE ON ACTION PLANS Action Plans are developed by IFAC members and associates to address policy matters identified through their responses to the IFAC Compliance Self- Assessment Questionnaire. They form part of a continuous process within the IFAC Member Body Compliance Program to support the ongoing development and improvement of the accountancy profession around the world. Action Plans are prepared by members and associates for their own use based on the national frameworks, priorities, processes and challenges specific to each jurisdiction. As such, they will vary in their objectives, content and level of detail, consistent with their differing national environments and stages of development, and will be subject to periodic review and update. Refer to responses to the Part 1 Assessment of the Regulatory and Standard-Setting Framework Questionnaire and Part 2 SMO Self-Assessment Questionnaire provide background information on each member and associate their environment and existing processes. These responses may be viewed at: Use of Information Please refer to the Disclaimer published on the Compliance Program website. ACTION PLAN IFAC Member/Associate: Approved by Governing Body: David Goldberg, Chair, BOD Original Publish : August 2011 Last Update: April 2014 Next Update: April 2016 Status as of of Publication Page 1 of 30

2 GLOSSARY CEO CHEI CPA CPD ED GAAP I&D IAASB IAESB IASB ICPAI IESs IESBA IFAC IGASB IIASB IPSASs IPSASB ISAs ISQC NSSs QA SMEs SMOs SMPs US PCAOB Chief Executive Officer Israeli Council for Higher Education Certified Public Accountant Continuing Development Exposure Draft Generally Accepted Accounting Principles Investigation and Discipline International Auditing and Assurance Standards Board International Accounting Education Standards Board International Accounting Standards Board International Education Standards International Ethics Standards Board for Accountants International Federation of Accountants Israel Government Accounting Standards Board Israeli Accounting Standards Board Israeli Oversight Board International Public Sector Accounting Standards International Public Sector Accounting Standards Board International Standards on Auditing International Standard of Quality Control National Standard Setters Quality Assurance Small and Medium Entities Statements of Membership Obligations Small and Medium Practices United States Public Company Accounting Oversight Board Status as of of Publication Page 2 of 30

3 Action Plan Subject: Action Plan Objective: SMO 1 Quality Assurance Use Best Endeavors to Ensure an Effective Quality Review Program is in Place for all Members Offering audit and Assurance Services Considering Large Entities as well as SMPs # Start Actions Completion Background: The inspection under the supervision of the Israeli Oversight Board () is mandatory on all firms of certified public accountants that audit the financial statements of public and reporting companies (for this purpose, companies are defined as companies that are subject to the Israel Securities Law, including Israeli companies whose securities are traded on foreign stock exchanges, other than those which are subject to oversight of the United States Public Company Accounting Oversight Board (U.S. PCAOB)). Members of the (ICPAI) who do not audit public companies and wish their firm to be inspected may voluntarily join the oversight process. The Institute encourages firms to voluntarily participate in the process. The has set, at its own discretion, the date and frequency of the inspection. Nevertheless inspections of firms will be undertaken not less than once every three years. However, inspection of large firms will be undertaken annually. In administering its inspections the coordinates with regulators, including the: Auditors' Council (Ministry of Justice) - The Board will advise the Auditors' Council of circumstances where it has revealed significant violations of the Auditors' Law and Regulations. Securities Authority - The Board will advise the Securities Authority of every report to the Auditors' Council, as noted above. In addition, the Board will also advise the Securities Authority of any pervasive default in performing audits of public companies and of specific cases where accounting firms failed significantly to adhere to Authority's rules. The Supervisor Of Banks: Bank Of Israel- The Board will advise the Supervisor of Banks on a basis similar to the reporting to Securities Authority regarding the audit of banking institutions. ICPAI has adopted the Israeli Auditing Statement # 67 "Guidelines in Respect of Quality Review in Certified Public Accounting Firms". The committee for Auditing Statements of ICPAI is currently considering the adoption of ISQC 1. ICPAI further intends to review the revised requirements of SMO 1, and take actions, where applicable and to the extent needed, to support the in administering the QA review system in line with the revised requirements. Status as of of Publication Page 3 of 30

4 # Start Actions Completion Aligning Quality Assurance Review System with the Requirements of SMO 1 1. Annually Hold a quarterly meeting with the Board of Directors to receive a detailed and thorough report on the quality assurance reviews. The Board of Directors outlines the 's policy, oversees its adoptions, holds deliberations regarding its work plan and the findings of its reviews. Annually Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director 2. January 2013 Draft a report on the broad findings that were uncovered during the reviews. The annual report on the broad findings uncovered in its inspections is published in 's website : Completed July 2013 Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director, (Review Team) 3. annually If necessary, the Board formulates new professional rules following the findings. Annually Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director, (Steering ) Status as of of Publication Page 4 of 30

5 # Start Actions Completion 4. July 2013 Approve the report which includes the conclusions from the audit and present the report to the Securities Authority. Completed July 2013 The annual report on the broad findings uncovered in its inspections is published in 's website Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director, Steering 5. Annually The conclusions of the quality assurance review are issued to the reviewed firm upon completion. Reviewed firms provide a written response, which is attached to the review report. In all cases the review team receives the previous written report and the firm's response which enables the team to follow up on weaknesses that were corrected or to perform follow up control. Annually Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director, Review Team Reporting to the Public 6. Publish a summary of the report on the Institute s website. Completed July 2013 Annually Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director Status as of of Publication Page 5 of 30

6 # Start Actions Completion Maintaining Process 7. Continue to ensure that the Oversight Board is operating effectively and continues to be in line with the SMO 1 requirement. ICPAI intends to review the revised requirements of SMO 1, and take actions, where applicable and to the extent needed. Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director 8. Follow up on the review team's work and address deficiencies encountered in the oversight. Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director 9. Continue to prepare clarifications as to the importance of the review, the creation of several teams, and raise the awareness of the firms being reviewed. Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director Review of ICPAI s Compliance Information 10. Annually Review the SMO 1 requirements annually as there may have been changes to the legislative and or administrative landscape. Carry out periodic review of ICPAI's responses to the IFAC self assessment questionnaires and update sections relevant to SMO 1 as necessary. Once updated, inform IFAC Compliance staff about the updates in order for them to republish updated information. Annually Mr. Joseph Benaltabet CPA Prof. Director Mr. Joseph Benaltabet CPA Director Status as of of Publication Page 6 of 30

7 Action Plan Subject: Action Plan Objective: SMO 2 International Education Standards for Accountants and Other Pronouncements issued by the IAESB Provide a Framework for Continuing Development (CPD) in Accordance with the Changes # Start Actions Completion Background: The Israeli legislator is responsible for passing the relevant law and regulations. ICPAI uses its best endeavors to persuade the regulator to pass laws and regulations in accordance with the International Education Standards (IESs). Accountancy education takes place in the universities. Israeli Universities are under the academic supervision of the Israeli Council for Higher Education (CHEI) and the professional supervision of the Auditors' Council (Ministry of Justice). The Council is the body responsible for the professional accountancy education program. The Institute's members on the Council are actively involved working to support the incorporation of IESs in university accountancy education. Completion of a final assessment is necessary in order to become an auditor in Israel. The Auditors' Council (Ministry of Justice) is the body responsible for conducting the final assessment. This examination is uniform for all candidates and is given in comprehensive written format. In order to sit for the examination, candidates must typically have completed a B.A. in Accountancy. Practical experience in the field of audit is required to practice in Israel as an auditor. The Auditors' Council approves the place of practical experience attainment (apprenticeship). The requirement for two years of practical experience is achieved under the supervision of a "coach" who has been approved to act as a "coach" by the Council. There are exceptions: The Auditors' Council may approve apprenticeship in other bodies such as the Securities Authority, the Tax Authority and large public corporations. The conditions are: 1. The apprenticeship must take place where audit and assurance work is performed. 2. The apprenticeship takes place under the supervision of a CPA who has been approved by the Council as a "coach". 3. On occasion, the period of apprenticeship is 1 year, and the additional year is to be carried out in a CPA firm. In regards to CPD, the ICPAI has established the Institute for Continuing Education and Certificate Programs which prepares a wide cadre of relevant professional and managerial subjects. The Institute laid the groundwork for proposed legislation which will require continuing professional education for CPAs. As part of the Institute's efforts towards mandatory CPD for all professional accountants, we record, monitor and verify members participation. The proposed legislation is expected to be passed in Status as of of Publication Page 7 of 30

8 # Start Actions Completion Preparations for the Adoption of CPD Requirements Establishment of the Institute for Continuing Education and Certificate Programs. The school's programs include study courses that are between hours long, half day study sessions, seminars, workshops, conferences and congresses. Completed Mr. David Goldberg, CPA Institute for Continuing Education and Certificate Programs Maintaining Processes 12. Triannually Prepare the schedule of CPD events (Every 3 months). The events cover a plethora of professional subjects that are relevant to the work of the CPA \ auditor, incl. various complimentary disciplines such as: Company Directors Course; Investigative Auditing; Understanding Governmental Accounting. Mr. David Goldberg, CPA and professional lecturers Technical staff together with individual lecturers The syllabus ensures that changes in tax laws, revisions of existing and \ or the introduction of new standards are incorporated. 13. Monthly Send all information about CPD to all members by mail (hard copy of the brochure) and in the form of a Newsletter, and publish on the ICPAI website under CPD Courses. Monthly Mr. David Goldberg, CPA Institute for Continuing Education and Certificate Programs 14. Carry out the activities of the school throughout the country, on a similar basis, in order to maintain uniformity. Mr. David Goldberg, CPA Institute for Continuing Education and Certificate Programs Status as of of Publication Page 8 of 30

9 # Start Actions Completion Obtaining Recognition of the Regulator 15. The Institute has negotiated, with the assistance of representatives from the Treasury, for the recognition of its professional study system, in order that civil servants can formally approach the Institute's bodies, which deal with continuing professional development, and obtain recognition and also points, which are also recognized in accordance with the rules governing civil servants. Mr. David Goldberg, CPA Institute for Continuing Education and Certificate Programs 16. The Institute believes that the combination of assessments on a voluntary basis, together with the formal arrangements in the public sector will also lead, at the end of the day, to a complementary process in the legislation and in accordance with the pronouncements by IFAC. Mr. David Goldberg, CPA Institute for Continuing Education and Certificate Programs Maintaining Processes 17. Continue to use best endeavors to ensure that the Institute's education requirements reflect the changes in the profession and the professional landscape, update the members to ensure they maintain professional competence. Mr. David Goldberg, CPA and professional lecturers Institute for Continuing Education and Certificate Programs Review of ICPAI s Compliance Information 18. Carry out periodic review of ICPAI's response to the IFAC self assessment questionnaire and update sections relevant to SMO 2 as necessary. Once updated, inform IFAC compliance staff about the updates in order for them to republish updated information. Annually Mr. David Goldberg, CPA Institute for Continuing Education and Certificate Programs Status as of of Publication Page 9 of 30

10 Action Plan Subject: Action Plan Objective: SMO 3 International Standards and other Pronouncements Issued by the IAASB Continue to Use Best Endeavors to Maintain Processes of Translation and Adaptation of IAASB Pronouncements # Start Actions Completion Background: The is the entity responsible for establishing auditing standards which are obligatory. The regulators have assigned this duty to the Institute. is an integral part of the ICPAI, according to the Auditors Regulations (ways of the Auditor's Practice) is responsible for: review of IAASB Pronouncements Recommending the IAASB Pronouncements to be adopted by the ICPAI monitoring of IAASB work program to identify new drafts and final standards Review the EDs and Pronouncements of International Standards on Auditing (ISAs) and prepare recommendations for their adoption in Israel with the plan to develop a translated version Review of the translation into Hebrew Examine the appropriateness of the translations and compliance with the Israeli standardization and regulation. As of 2014, the has issued 2 standards that are based on the Clarified ISAs (ISA 560 and ISA 230), with two other Clarified ISAs being in the process of being adopted ISA 200 and ISA other standards are based on previous versions of ISAs. All other Clarified ISAs are planned to be adopted by The main reason for delaying the adoption of clarified ISAs was the adoption of the American SOX standard in Israel. Israel has two sets of SOX methods the American one and an Israeli one, which is more limited in scope. Because the audit profession needed specific auditing standards to address these matters, the adoption of other Clarified ISAs was delayed. In addition, the has been working on a new standard with regard to consent letters, which has no equivalent in the International standards. Thus, when the SOX and consent projects will be completed, the is expected to continue with its work on the adoption of Clarified ISAs. The Institute for Continuing Education and Certificate Programs (see SMO 2) has conducted several seminars with regard to implementing auditing standards. ICPAI plans to provide ongoing seminars with regard to future new standards. Status as of of Publication Page 10 of 30

11 # Start Actions Completion Furthering the Development of the Hebrew Language Translation Process 19. January 2008 Selection of a specialized translation company to ensure the ongoing translation of the standards and draft standards as issued by IAASB. 20. Completion of the translation in accordance with the agreed plan by the specialized company selected to perform the ongoing translation of the standards. The follows the IFAC Translation Policy and the IAASB Policy Position on Modifications. 21. The committee reviews the translated standards. 22. Approval of the translation as performed by the selected company and reviewed by the committee in accordance with the approved plan and approval of the translation. Status as of of Publication Page 11 of 30

12 # Start Actions Completion Adoption of IAASB Pronouncements 23. The committee approves the standard. Following the approval, the standard is approved by the Institute's Council which receives the standards for remarks. 24. The ICPAI staff publishes the standards on the ICPAI website. The standards are published in the ICPAI magazines which are received by the members of the ICPAI, members of the academia, Israeli stakeholders and high profile members of the Israeli economy for their input within a limited time. All regulatory bodies receive the ED for comment. 25. Comments received are discussed by the for final approval. 26. The Council receives the modified standards for comments. 27. The Institute's Executive Board receives the standards for final approval. Council Council Executive Board Executive Board Status as of of Publication Page 12 of 30

13 # Start Actions Completion 28. Publish approved standard. Maintaining Process Overview for the Years The will review the Glossary The will review the Objective and General Principles Governing an Audit of Financial Statements. ISA 200 March 2014 Completed The will review the Quality Control for Audits of Financial Statements. ISA 220 September 2015 Status as of of Publication Page 13 of 30

14 # Start Actions Completion The will review the ISQC 1. September The will review the Communication of Audit Matters with Those Charged with Governance ISA 260. June The will review the Written Representations ISA 580. September The will review the Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement ISA 315. December 2014 Status as of of Publication Page 14 of 30

15 # Start Actions Completion The will review the Planning an Audit of Financial Statements ISA 300. March The committee will review 4 translated standards: ISA 700, 705, 706, 710. December The will review The Auditor's Procedures in Response to Assessed Risks ISA 330. June The will review the Using the Work of Another Auditor ISA 600. March 2016 Status as of of Publication Page 15 of 30

16 # Start Actions Completion The will review the Other Information in Documents Containing Audited Financial Statements ISA 720. June The will review the Materiality in Planning and Performing an Audit ISA 320. September The will review the Evaluation of Misstatements Identified during the Audit related Conforming Amendments ISA 450. December The will review the Initial Audit Engagements - Opening Balances ISA 510. March 2017 Status as of of Publication Page 16 of 30

17 # Start Actions Completion The will review the Audit Sampling ISA 530. June The will review the Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, and related Conforming Amendments ISA 540. September The will review the Related Parties, and related Conforming Amendments. ISA 550 December The will review the Going Concern ISA 570. March 2018 Status as of of Publication Page 17 of 30

18 # Start Actions Completion The will review the Using the Work of Internal Auditors, and related Conforming Amendments ISA 610. June The will review the Agreeing the Terms of Audit Engagements ISA 210. September The will review the Audit Considerations Relating to an Entity Using a Third-Party Service Organization ISA 402. December The will review the Audit Evidence ISA 500. March 2019 Status as of of Publication Page 18 of 30

19 # Start Actions Completion The will review the Audit Evidence - Specific Considerations for Selected Items ISA 501. June The will review the External Confirmations ISA 505. September The will review the Analytical Procedures ISA 620. December The will review the Using the Work of an Auditor's Expert ISA 620. December 2019 Status as of of Publication Page 19 of 30

20 # Start Actions Completion The will review the Comparative Information Corresponding Figures and Comparative Financial Statements ISA 710. February The will review the Special Considerations - Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks ISA 800. June The will review the Special Considerations - Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement ISA 805. September The will review the Engagements to Report on Summary Financial Statements ISA 810. December 2020 Status as of of Publication Page 20 of 30

21 # Start Actions Completion The will review the Communicating Deficiencies in Internal Control ISA 265. March The will review the Assurance Reports on Controls at a Third-Party Service June The will review the Objective and General Principles Governing an Audit of Financial Statements ISA 240. September The will review the Consideration of Laws and Regulations in an Audit of Financial Statements ISA 250. December 2021 Status as of of Publication Page 21 of 30

22 # Start Actions Completion Maintaining Process 64. Continue to raise members' awareness of these standards and assist them in the application of the standards. Israel Auditing Standards Staff 65. Continue to ensure members are kept fully aware of the standards by a communications plan which includes: Israel Auditing Standards Staff Updating the Institute's Webpage Conducting CPD events that include: study courses, seminars, congresses. Publish in our Newsletter Publish in our journal (sent by mail to all members). Review of ICPAI's Compliance Information 66. Continue to perform periodic reviews of the response to the IFAC self assessment questionnaire and update sections relevant to SMO 3 as necessary. Once updated, inform the compliance staff about the updates in order for them to republish Annually Israel Auditing Standards Staff Status as of of Publication Page 22 of 30

23 Action Plan Subject: Action Plan Objective: SMO 4 IESBA Code of Ethics for Accountants Continue to Use Best Endeavors to Maintain Process to Implement the IESBA Code of Ethics (COE) # Start Actions Completion Background: In Israel, Ethical standards are set by two autonomous legislations: 1. The Auditors Law which includes Auditors Regulations (Inappropriate Conduct of Behavior ) as set by the State (the "Regulations"). 2. Rules of Ethical behavior as set by the ICPAI according to its Article of Association (the - "ICPAI Rules"). The ethical behavior requirements included in the Regulations are similar to the ICPAI Rules. The ICPAI can impose only its own rules. The ICPAI maintains, through its Ethics committee, procedures for providing explanations, guidance and opinions concerning ethical matters introduced either by ICPAI members or others including anonymous approaches. The Ethics supervises the implementation of the ICPAI Rules and makes its recommendations to the Board of Directors of actions to impose said rules. Matters of significance are brought to the members' knowledge by ICPAI publications. Identifying Potential Departures from IESBA Code of Ethics and Promote Convergence Promote the convergence of the Ethics standards and the Independence standards of the IESBA Code of Ethics within the Ministry of Justice and the other regulatory authorities as appropriate President and members of the Board President and members of the Board The ICPAI has been promoting amendments to the Regulations: the Institute has established a subcommittee designated to propose the amendments. The sub-committee has submitted its proposals to the Ministry of Justice and is awaiting the Ministry s response. Status as of of Publication Page 23 of 30

24 # Start Actions Completion 68. October 2012 Review the IESBA Code of Ethics and compare the standards with current ethical and independence requirements currently included in the Rules of the ICPAI. June 2013 Ethics Members and Secretary 69. June 2013 Identify gaps in Ethics Codes and provide advice for closing these gaps. December 2014 Chairman of Ethics Ethics Raising Awareness of s to Support Implementation of IESBA Code of Ethics 70. Act for awareness for implementation of IESBA's guidance among ICPAI members. Educational s Lectures and publications Maintaining Processes 71. Monitoring of standard-setting activities of the IESBA and updating the Action Plan for further activities where necessary. Ethics members 72. Continue to promote awareness of changes in ethical requirements to ICPAI members through the courses, conferences, and professional publications. Educational s Lectures and publications Review of ICPAI's Compliance Information 73. Carry out periodic review of ICPAI's responses to the IFAC self assessment questionnaires and update sections relevant to SMO 4 as necessary. Once updated, inform IFAC compliance staff about the updates in order for them to republish updated information. Annually Chairman of Ethics and President Chairman of Ethics and President Status as of of Publication Page 24 of 30

25 Action Plan Subject: Action Plan Objective: SMO 5 International Public Sector Accounting Standards and Other Pronouncements Issued by the IPSASB Continue to Use Best Endeavors to Assist in the Adoption and Implementation of IPSAS # Start Actions Completion Background: In 2005 the Israel Government Accounting Standards Board (IGASB) was established in order to adopt the International Public Sector Accounting Standards (IPSASs) published by the International Public Sector Accounting Standards Board (IPSASB), an independent standard setting board operating under the auspices of IFAC. In May 2011, the IGASB published the translated IPSAS Guide (in Hebrew) which includes 21 IPSASs. In 2012, the IGASB published two additional IPSASs. The role of ICPAI has been to support the education and training of professionals in the area of IPSASs and public financial management through technical conferences and CPD offerings. ICPAI intends to continue these efforts to further IPSAS implementation. Continuing Education of Members 74. Develop and deliver technical conferences for ICPAI members to inform participants about the IPSASs and foster discussion of significant aspects. Consider new and important trends in IPSAS implementation and changes/ amendments to IPSAS in the development of conferences. May 2005 Completed January 2011 Institute for Continuing Education and Certificate Programs Technical Staff together with individual lecturers 75. Organize CPD lectures at national conferences for CPAs to broaden understanding of IPSASs and raise awareness of the issues of IPSAS adoption and implementation among a broader audience. ICPAI developed 2 CPD courses, 32 academic hours each course on IPSASs Completed Institute for Continuing Education and Certificate Programs Technical Staff together with individual lecturers Status as of of Publication Page 25 of 30

26 # Start Actions Completion Technical Support for our Members 76. Continue " Consultation" over the phone: We offer members a telephone service whereby they may make oral inquiries on technical matters, including public sector accounting and auditing. In addition, members may request written replies from our technical department on technical issues. ICPAI Technical Secretary Technical Staff Review of ICPAI's Compliance Information 77. The IFAC self-assessment questionnaires and this Action Plan will be reviewed periodically and updated as necessary by the staff responsible for the relevant area of activities. Annually ICPAI Technical Secretary Technical Staff Status as of of Publication Page 26 of 30

27 Action Plan Subject: Action Plan Objective: SMO 6 Investigation and Discipline ICPAI will Continue to Promote the Subjects that are Connected to SMO 6 in the Legislation # Start Actions Completion Background: The function of Investigation and Discipline (I&D) in Israel is in effect dealt with both by the regulator which is the Auditors' Council (the statutory body subordinated to the Ministry of Justice) and the ICPAI. The Auditors Council addresses all complaints concerning breaches of professional misconduct or breaches of ethical requirements as stated in the Auditors Law and Regulations. Complaints filed by various bodies including individuals are thoroughly investigated. Where applicable, the Council appoints an Investigation to examine the complaint. The investigative process within the Council is not in lieu of the process required if the auditor broke a State law, but the Auditors' law and regulations. The Council can impose penalties including reprimand, loss or restriction of practice rights, fine\payment and/of charge costs, loss of professional title. The Auditors Council has the judicial authority equivalent to a District Court. The Supreme Court of Israel sits as an appellate court. The ICPAI has a Disciplinary Tribunal which has the authority to administer sanctions against members violating its Rules. The Ethics recommends and issues an appeal, subject to the Board of Director's approval, to the ICPAI Disciplinary Tribunal against member violating ICPAI Rules. The Disciplinary Tribunal is an institution formed according to ICPAI Article of Association abiding all its members. The ICPAI internal court, finding a member guilty of violating ICPAI rules, may impose the following sanctions on the member: (A) A warning (B) A reprimand (C) Denying membership in the ICPAI for certain period. (D) Expelling from membership in the ICPAI (E) Imposing payment not exceeding NIS 6,000 (app. $ 1,700) to ICPAI. (F) Publication of verdict or part of it. (G) Imposing payment of hearing costs. Suggestions for amendments to the Auditors' Law and regulations are introduced to the ICPAI for response prior to being brought before the legislators. In addition, the ICPAI addresses the Minister of Justice and the Israeli Parliament's Constitution, Law and Justice to promote issues considered important for the State and or the profession. Status as of of Publication Page 27 of 30

28 # Start Actions Completion Enhancing the Investigation and Disciplinary Mechanisms in Line with SMO 6 Requirements Hold meetings between the Institute's representatives and those of the Ministry of Justice representatives throughout the year. Note: Subjects connected to SMO 6 are fully covered by the collaboration between the ICPAI and the Auditors Council. December 2012 Completed President, CEO, Members of the Board President, CEO, Members of the Board Maintaining Processes 79. Raising awareness of I&D by embedding the requirements within the framework of ICPAI conferences and professional development courses, initiated, organized or sponsored by the ICPAI. Educational s Educational s 80. Continue the requirement for each new member of the ICPAI to sign a written declaration stipulating adherence to the code and commitment according to the Ethical code and other professional standards, rules and requirements. CEO ICPAI Staff 81. Continue the communication between ICPAI Board and the Auditors Council regarding inappropriate behavior. President, CEO, Members of the Board President, CEO, Members of the Board Review of ICPAI's Compliance information 82. Carry out periodic review of ICPAI's response to the IFAC self assessment questionnaires and update sections relevant to SMO 6 as necessary. Once updated, inform IFAC compliance staff about the updates. President, Ethics Ethics Status as of of Publication Page 28 of 30

29 Action Plan Subject: Action Plan Objective: SMO 7 International Financial Reporting Standards and Other Pronouncements issued by the IASB Support Implementation of International Financial Reporting Standards (IFRSs) # Start Actions Completion Background: IFRSs were adopted by all public (listed) companies in Israel. The Israeli Accounting Standards Board (IIASB) promulgated Accounting Standard Number 29 in this respect, which has been adopted as mandatory requirement by the Israeli Securities Authority. The implementation was unconditional and with no exceptions from IFRSs. The ICPAI was in charge of the coaching of both reporters and auditors. Currently, private companies are allowed (but not required) by the IIASB to adopt IFRSs instead of Israeli GAAP. The IIASB promulgated Accounting Standard Number 31, allowing private (non-listed) companies to choose adoption of IFRS for SMEs, commencing in Furthermore, it mentioned its intension to require in the future (2015) mandatory implementation of either full IFRSs or IFRS for SMEs by all private companies, thus canceling the Israeli GAAP for the business sector, but there has been no progress in this issue until the IASB promulgates the revised standard of "IFRS for SMEs". Development of a Strategy for IFRS for SMEs Adoption and Implementation 83. July 2010 Together with the IIASB, continue monitoring the financial reporting needs of private companies. December 2015 IIASB, ICPAI ICPAI Subcommittee for Accounting Standards and Financial Reporting 84. August 2011 Together with the IIASB, conduct a study of the implementation of IFRS for SMEs worldwide. In 2012, the Institute has prepared a response to the IASB's IFRS for SMEs. Therefore the study initiated in 2011 has been postponed till 2013 when it is anticipated to resume. June 2014 IIASB, ICPAI ICPAI Subcommittee for Accounting Standards and Financial Reporting 85. January 2013 Monitoring the progress of the revised standard of "IFRS for SMEs" (now in the form of Exposure Draft" from October 2013; recommend to the IIASB the preferred strategy towards the adoption of IFRS for SMEs.) December 2015 IIASB, ICPAI ICPAI Subcommittee for Accounting Standards and Financial Reporting Status as of of Publication Page 29 of 30

30 # Start Actions Completion Maintaining Processes 86. Continue to promote awareness of changes in IFRSs and financial reporting requirements to ICPAI membership through the inclusion of these modifications in ICPAI professional development courses, conferences, and professional publications. 6 Courses on IFRSs took place in 2008 and courses of SMEs took place in ICPAI plans new set of courses for SMEs in 2014 and Monitoring of standard-setting activities of the IASB and updating the Action Plan for further activities where necessary. ICPAI ICPAI Subcommittee for Accounting Standards and Financial Reporting ICPAI ICPAI Subcommittee for Accounting Standards and Financial Reporting Review of ICPAI Compliance Information 88. Carry out periodic review of ICPAI's response to the IFAC self-assessment questionnaires and update sections relevant to SMO 7 as necessary. Once updated, inform IFAC compliance staff about the updates in order for them to republish updated information. Annually ICPAI ICPAI Subcommittee for Accounting Standards and Financial Reporting Status as of of Publication Page 30 of 30