A Action Plan Developed by. Instituto Nacional de Contadores Públicos de Colombia (INCP) BACKGROUND NOTE ON ACTION PLANS

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1 A Action Plan Developed by 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 Questionnaires. 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 reexamination 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 for 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: Instituto Nacional de Contadores Públicos de Colombia (INCP) Approved by Governing Body: Junta Directiva (Executive Board) Original Publish : August 2011 Last Updated: February Next Updated: February 2016 Status as of of Publication Page 1 of 18

2 GLOSSARY CTCP CGN CT CRP DIAN ED I&D IAASB IAESB IASB IES IESBA IFAC IFRS INCP IPSAS IPSASB ISA ISQC JCC MCIT MHCP QA SME SMO SMP XBRL Consejo Técnico de la Contaduría Pública (Technical Council of the Public Accountancy) Contador General de la Nación (Accountant General) Comité Técnico del Instituto Nacional de Contadores Públicos de Colombia (INCP s Technical and Accounting Research Committee) Comité de Relaciones Públicas del Instituto Nacional de Contadores Públicos de Colombia (INCP s Public Relations Committee) Dirección de Impuestos y Aduanas Nacionales (National Tax and Customs Office of Colombia) Executive Director - CEO Investigation and Discipline International Auditing and Assurance Standards Board International Accounting Education Standards Board International Accounting Standards Board IFRS Foundation International Education Standards International Ethics Standards Board for Accountants International Federation of Accountants International Financial Reporting Standards Instituto Nacional de Contadores Públicos de Colombia International Public Sector Accounting Standards International Public Sector Accounting Standards Board International Standards on Auditing International Standard on Quality Control Junta Central de Contadores (Central Board of Accountants) Ministerio de Comercio, Industria y Turismo (Ministry of Commerce, Industry and Tourism) Ministerio de Hacienda y Crédito Público (Ministry of Finance and Public Credit) Quality Assurance Small and Medium Enterprises Statement of Membership Obligation Small and Medium Practices extensible Business Reporting Language Status as of of Publication Page 2 of 18

3 Action Plan Subject: Action Plan Objective: Strategic Planning Establish an Ongoing Strategic Planning Mechanism and Cycle to Define and Prioritize Objectives # Start Actions Completion General Background The INCP is the most representative and experienced association of professional public accountants in Colombia. The INCP was founded on April 17, 1952 as a not-for-profit association, the objective of which is to study, investigate, reveal, enhance and properly apply accounting, financial and similar regulations that should be acknowledged by professional public accountants, thus promoting economic, social and human wellbeing in organizations. Governance The Institute s management and representative bodies are the General Assembly, the Board of Directors, the President and the Executive Director. Additionally, there are supporting committees such as the Administrative and Financial Committee, the Membership Growth and Public Relations Committee and the Professional Development and Technical and Accounting Research Committee 1. Membership and Institution INCP members are public accountants endowed with a professional registration, accounting firms, college students from their 4 th accountancy year onwards and graduates who are accepted as such for a maximum period of one year (while they obtain their public accountant professional registration). Becoming a member of our institution is voluntary for those who are interested in its activities. Our organization is permanently in contact with the Colombian Government entities such as the MHCP, the MCIT, CGN, the Superintendency of Companies, the Financial Superintendency, the CTCP, the Colombian Stock Exchange (Bolsa de Valores de Colombia) and the DIAN (see Glossary above). Additionally, we maintain close relations and ties with the main universities that offer accountancy programs. Accounting and Auditing Standards In Colombia, the entire professional regulation applicable to Public Accountants is based on rulings issued by the Colombian Government, through the MCIT and MHCP, acting jointly. The INCP is entitled to suggest changes and to provide support to the Colombian Government so as to achieve a greater technical understanding of accountancy-related issues. Law 1314, approved in July 2009, introduced relevant changes to the accounting and financial information reporting standards, as well as to audit and assurance standards, among other things. Some important aspects of this law are: Through the MCIT and the MHCP, the Colombian Government is the only standard setter on accounting, financial information reporting and audit and assurance standards. The CTCP is an entity under the authority of the MCIT; it is comprised by four members who are appointed by the President of the Republic and the two above-mentioned Ministries. 1 Originally in Spanish: Comité Administrativo y Financiero, Comité de Crecimiento de la Membrecía y Relaciones Públicas, Comité de Desarrollo Profesional e Investigación Técnico-Contable Status as of of Publication Page 3 of 18

4 # Start Actions Completion The CTCP is a normalizing body that prepares proposals to the regulators relating to new standards on accounting, financial information, audit and assurance, based on widely accepted international standards, in order to allow a convergence of the Colombian standards with international standards. The selected international standards to converge with are those issued by the independent standard setting boards operating under the auspices of the IFAC and the IASB - currently IFRS Foundation). Listed and public interest entities should apply IFRS; SMEs should apply IFRS for SMEs. Other companies should apply locally issued accounting standards. Challenges and Success Factors INCP s source of income is basically generated by the membership dues and academic and institutional activities. The main institutional challenges and priorities are: To strengthen the INCP by increasing its membership To support the CTCP in order to achieve a proper convergence of standards with IFRS and Audit and Assurance Standards. To support legislative initiatives as well as those from different government bodies that contribute to the profession s best interests. Also, to protect the profession from restrictive initiatives. To strengthen initiatives on professional education (including continuing education), particularly on the following topics (among others): IFRS, IFRS for SMEs, ISA, XBRL and statutory audit. Maintaining Ongoing Processes 1. Annually Consider Progress against Action Plan Annually CT 2. Annually Update Action Plan with IFAC Staff Annually CT Status as of of Publication Page 4 of 18

5 Action Plan Subject: Action Plan Objective: SMO 1 Quality Assurance Quality Assurance Review Program and Adoption of International Standards of Quality Control (ISQC) 1 Standard # Start Actions Completion Background: Law 1314 of 2009 includes Quality Control as mandatory in Colombia.The INCP is not entitled to establish a mandatory quality assurance system (QA). The INCP will make its best efforts to promote and support the adoption of a quality assurance system -according to corresponding requirements and good practices- by working with the MCIT, the legal body that shall issue the regulation to make it mandatory, and then to disseminate it. Thus, the INCP will present a regulatory draft, setting out new functions of the JCC -a body appointed to the MCITas an institution responsible of overseeing compliance in terms of Quality Control Standards.Initially, the INCP will ask its members to adopt it voluntarily (those members who should abide by these standards). Begin Dialogue and Public Awareness Campaign on the Subject of QA 1. May 2010 Keep a permanent contact with the National Government on an ongoing basis (through the MCIT), in order to disseminate quality assurance regulations. Ongoing President and INCP COL$ (per annum) 2. Broadcasting ISQC 1 through publication of articles related to quality assurance standards through institutional means (info, reports and magazines). INCP, CT COL$ Nov INCP s presence in 46 universities in 18 cities, where information is being disseminated on IFRS, Quality Control, Audit and Assurance Standards and the Code of Ethics. ED, CT and experts from firms COL$ Training sessions on ISQC 1 have been included in INCP's education programs. INCP, CT COL$ Professional events on the main aspects of ISQC 1 were held in Bogotá ( 2012) and Medellín (June ) during the last year, with the participation of local professionals. This type of events are carried out again on a permanent basis. Status as of of Publication Page 5 of 18

6 # Start Actions Completion 5. Maintaining Ongoing Processes Develop a training plan (specialization course) for professionals and SMPs. ED, CT and INCP, external instructors COL$ Ongoing Invite and encourage public accountants and accounting firms to implement the early application of ISQC1. This is achieved through media and training processes and through education cooperation agreements with the MCIT. Ongoing CT COL$ (per annum) New Developments 7. Continue promoting the implementation of quality assurance standards in Colombia. Ongoing CT, INCP COL$ (per annum) Reexamination of INCP Compliance Information 8. Annually Reexamine the INCP answers to IFAC s SMO1 action plan on a regular basis and update them based on proper compliance of plans established. 9. Annually The INCP's Technical and Professional Development Committee constantly follows-up the IFAC's action plan, turning it into a roadmap for all INCP activities. Annually President COL$ Annually President COL$ Status as of of Publication Page 6 of 18

7 Action Plan Subject: Action Plan Objective: SMO 2 International Education Standards for Professional Accountants and Other Pronouncements Issued by the IAESB Implementation of Experience Requirements for Professional Evaluation and Introduction of International Education Standards (IES) # Start Actions Completion Background: In Colombia, the only requirements to obtain the Public Accountant professional registration are to complete undergraduate studies in a college where the curriculum for Public Accountancy is approved and to prove at least one year of professional experience (we are working on a requirement of a three-year experience before granting the public accounting professional registration, instead of the one year currently required). The following detailed plan is intended to establish the basis for the adoption of IAESB standards related to technical training, professional experience and continuing education. In Colombia, only a Law could modify professional registration requirements and continuing education. Promote Alignment with IESs and Enhancement of Practical Experience Requirements 10. The INCP has supported the Forum of Firms for the past five consecutive years, where dialogue is promoted between audit firms and the Academy for a better education of accountants. Particularly, the INCP brought international speakers, including Marcelo Canetti, to the Forum of Firms. COL$ Established contact with ASFACOP (Asociación de Facultades de Contaduría Pública) so as to promote including international and audit and assurance standards in their curriculum. COL$ Promoting the benefits of adopting IES to enhance the quality of education and thus obtain skilled professionals. This is achieved through the Forum of Firms and seminars carried out by the INCP. COL$ Status as of of Publication Page 7 of 18

8 # Start Actions Completion Maintaining Ongoing Processes 13. Ongoing The INCP keeps a permanent dialogue with the universities it visits, so as to suggest including in their curriculum more teaching hours on IES. Ongoing INCP COL$ (per annum) 14. The INCP will continue promoting this through the Sixth Forum of Firms to be held in October. Ongoing COL$ (per annum) Reexamination of INCP Compliance Information 15. Annually Go over the INCP answers to IFAC s SMO2 action plan on a regular basis and update them based on proper compliance of plans established. 16. Annually The INCP's Technical and Professional Development Committee constantly follows-up the IFAC's action plan, turning it into a roadmap for all INCP activities. Annually President COL$ Annually President COL$ Status as of of Publication Page 8 of 18

9 Action Plan Subject: Action Plan Objective: SMO 3 International Standards and Other Pronouncements Issued by the IAASB Support the Translation and Implementation of IAASB Standards and Pronouncements # Start Actions Completion Background: The INCP is not an standard setter in Colombia, although it facilitates the adoption of auditing and assurance standards, through an agreement with IFAC.The Audit and Assurance standards are approved and set by the regulators (MCIT and MHCP, acting jointly). As of December 31,, the INCP signed the agreement with IFAC allowing the use, publication and dissemination of International Assurance Standards, Quality Control and Code of Ethics; in turn, the INCP signed the agreement with MCIT so that such standards become a Law in Colombia starting in or Indeed, it is expected that the CTCP will publish an exposure draft on the due process that the regulators will need to follow regarding the incorporation of the standards. Promote Awareness and Implementation of IAASB Standards 17. The INCP is promoting and disseminating audit and assurance standards, through publications, conferences and intensive seminars. ED, CT COL$ We will provide education specialization courses on audit and assurance standards., external instructors COL$ October We are also supporting the Government in identifying all necessary amendments to the Code of Commerce and other laws to make them compatible with the provisions of international standards. CT COL$ The INCP is facilitating the use of international standards in Colombia that are copyright of IFAC so it may allow the Colombian Government to include it in the Official Gazette. In addition, the INCP will monitor the update in databases of the Colombian Government. ED, President COL$ Participation in the IFAC s IberAm Project in order to help harmonize the Spanish version of the material. COL$ Status as of of Publication Page 9 of 18

10 # Start Actions Completion 22. The INCP has been translating the IAASB articles and pronouncements into Spanish language to be used by IFAC members in Spanish-speaking countries. COL$ The INCP led the Assurance Committee responsible for the evaluation of the impacts in the profession and in the Colombian legislation of the application of the IAASB standards by the Colombian professional accountants, as requested by the CTCP. This study was finished in June. President, CT COL$ The INCP launched the SPATIA project, to develop a debate between the Academy and the profesion, on professional accounting and auditing issues. CT, INCP, external advisor COL$ Maintaining Ongoing Processes 25. Ongoing Keep a permanent evaluation program to ensure that audit and assurance standards are being properly disseminated and evaluate if the JCC is carrying it out. 26. Ongoing Monitor that all the activities mentioned above are indeed executed. Ongoing CT, INCP COL$ (per annum) Ongoing CT, INCP COL$ (per annum) Reexamination of INCP Compliance Information 27. Annually Reexamine the INCP answers to IFAC s SMO3 action plan on a regular basis and update them based on proper compliance of plans established. 28. Annually The INCP's Technical and Professional Development Committee constantly follows-up the IFAC's action plan, turning it into a roadmap for all INCP activities. Annually President COL$ Annually President COL$ Status as of of Publication Page 10 of 18

11 Action Plan Subject: Action Plan Objective: SMO 4 IESBA Code of Ethics for Professional Accountants Implementation of the Updated IESBA Code of Ethics # Start Actions Completion Background: Law 1314 of 2009 requires a converge with the IESBA Code of Ethics. INCP is helping the MCIT to obtain the copyright from IFAC to include the Code in the Colombian legislation. Support Implementation of Updated Code of Ethics 29. The INCP is disseminating these regulations through its publications, conferences and seminars on the Code of Ethics. COL$ The INCP will provide education specialization courses to professional accountants on the Code of Ethics., external instructors COL$ The INCP has signed a cooperation agreement with the MCIT to disseminate standards on the Code of Ethics in Universities. ED, INCP, external instructors COL$ The INCP led the Assurance Committee responsible for the evaluation of the impacts in the profession and in the Colombian legislation of the application of the Code of Ethics standards by the Colombian professional accountants, as requested by the CTCP. This study was finished in June. President, CT COL$ To provide training seminars for professionals and SMP to understand the Code of Ethics., external instructors COL$ Status as of of Publication Page 11 of 18

12 # Start Actions Completion Maintaining Ongoing Processes 34. The Technical and Professional Development Committee is constantly monitoring that any amendment to the Code of Ethics is indeed being broadcasted on a timely basis through institutional means. CRP COL$ Reexamination of INCP Compliance Information 35. Ongoing Reexamine the INCP answers to IFAC s SMO4 action plan on a regular basis and update them based on proper compliance of plans established. 36. Ongoing The INCP's Technical and Professional Development Committee constantly follows-up the IFAC's action plan, turning it into a roadmap for all INCP activities. Ongoing President COL$ Ongoing President COL$ Status as of of Publication Page 12 of 18

13 Action Plan Subject: Action Plan Objective: SMO 5 International Public Sector Accounting Standards and Other Pronouncements Issued by the IPSASB Assist in the Implementation of IPSAS in the Public Sector # Start Actions Completion Background: The Accountant General, who is empowered to decide wether or not to adopt IPSAS in Colombia, has decided to adopt IPSAS using the accrual method. The INCP helps in the dissemination of the IPSAS and organizes courses, conferences and seminars to promote pronouncements issued by the IPSASB. Support the Implementation of IPSAS in the Public Sector 37. INCP will disseminate the IPSAS through INCP magazine articles, forums and seminars. COL$ October The INCP is considering carrying out an Inter-American Seminar under the auspices of the AIC (Inter-American Accounting Association - IAA); the main topic would be IPSAS and their recent development in countries from this region. March, external instructors COL $ October The INCP has held meetings with the CGN in order to sign a cooperation agreement to carry out common projects for the dissemination of IPSAS implementation among different government, national and state entities. ED, INCP, external instructors COL $ Changes to the IPSAS have been published through institutional means, allowing practitioners to know updated information and inviting the accounting community to comment the exposure drafts issued by the Board. ED, INCP COL$ Maintaining Ongoing Processes 41. Ongoing The Technical and Professional Development Committee is constantly monitoring that any amendment to the IPSAS is indeed being broadcasted on a timely basis through institutional means. Ongoing CT COL$ Status as of of Publication Page 13 of 18

14 # Start Actions Completion 42. July The INCP participated in the organization of the CRECER event in Cartagena. Both the Closed and Open event included conferences and high quality debates on IPSAS Implementation Strategies: Integrating IPSAS with PFM Systems and IPSAS Implementation: Addressing Specific Technical Issues (Pensions, Fixed Assets). Reexamination of INCP Compliance Information July August, external instructors, CReCER Global Partners COL$ Ongoing Reexamine the INCP answers to IFAC s SMO5 action plan on a regular basis and update them based on proper compliance of plans established. 44. Ongoing The INCP's Technical and Professional Development Committee constantly follows-up the IFAC's action plan, turning it into a roadmap for all INCP activities. Ongoing President COL$ Ongoing President COL$ Status as of of Publication Page 14 of 18

15 Action Plan Subject: Action Plan Objective: SMO 6 Investigation and Discipline Further Development of the I&D Process # Start Actions Completion Background: The Disciplinary Court of the JCC is the entity entitled to apply sanctions, whether personal or institutional, to those who have breached regulations applicable to public accountancy in Colombia. This court is composed of 7 members, out of which one is elected by the direct vote of professional accountants registered before the Central Board of Accountancy. The last election took place in 2010 and the next one will be in. This court is endowed with a procedure that receives disciplinary complaints that may be public or anonymous; they are validated and considered by the court s members to determine if there are any motives to carry out a disciplinary investigation that would require the analysis of corresponding proof. The discharge takes place and then the case is considered by the court. Although legally the INCP cannot judge or impose any disciplinary sanction on its associates professional conduct, it is important to highlight that the INCP s bylaws establish: Chapter II Members Obligations, article 18, section 17 Observing professional ethics regulations, which implies a loyal behavior towards the INCP, colleagues and the profession itself. Chapter IV Sanctions and Suspension of Rights, article 21 The following are causes that may lead to suspension of membership for a period no longer than one year: 1. Having been admonished twice by the Board of Directors due to successive breaches of professional ethics regulations 2. Having been charged with negligence or sentenced for a crime against legally-protected rights and interests while practicing the profession Suspension of the professional accountant license. Expulsion of members, article 22. The Board of Directors is entitled to expel a member if it is fully claimed and proven that he/she was involved in any of the following: 1. Having been legally charged with an offence of negligent or fraudulent bankruptcy. 2. Having been sentenced in court on crimes against the public administration, the administration of justice, the public security, public oath, the family, the individual freedom, sexual freedom and morality, moral integrity, life and personal integrity and economic patrimony. 3. Having been accused and found guilty of professional ethical breaches. Although the INCP cannot act as a disciplinary body of the accountancy profession, it can promote the election of its members as candidates to the Disciplinary Court of the JCC, as in 2010 election and in the most recent one in. It can thus play an important role in SMO implementation, taking into account the development related to the application of the Code of Ethics. Support the JCC and the I&D Process 45. Ongoing Should an INCP member be sanctioned, the cancellation of his/her membership will be considered, depending on the nature of the fault committed. If it is confirmed that the professional accountant was guilty of a serious fault, he/she will be expelled from the INCP, even if the JCC does not Ongoing Board of Directors Status as of of Publication Page 15 of 18

16 # Start Actions Completion sanction him/her. No sanction has ever been imposed on an INCP member. Nevertheless, internal policies establish that it is mandatory for the INCP to expel a member if the JCC has imposed a sanction to such member. 46. Ongoing During the past theee years the INCP has been proposing changes to the disciplinary procedure followed by the JCC. Those proposals are still under consideration by the corresponding authorities. Ongoing Board of Directors Maintaining Ongoing Processes and Reexamination of INCP Compliance Information 47. Ongoing Reexamine the INCP answers to IFAC s SMO6 action plan on a regular basis and update them based on proper compliance of plans established. 48. Ongoing The INCP's Technical and Professional Development Committee constantly follows-up the IFAC's action plan, turning it into a roadmap for all INCP activities. Ongoing President COL$ Ongoing President COL$ Status as of of Publication Page 16 of 18

17 Action Plan Subject: Action Plan Objective: SMO 7 International Financial Reporting Standards and Other Pronouncements issued by the IASB Promoting Ongoing Convergence with IFRS # Start Actions Completion Background: INCP should use its best endeavors to promote ongoing convergence with IFRS in Colombia. INCP facilitates the use of IFRS in Colombia that are copyright of the IFRS Foundation, which were published in the Official Gazette. In December 2012, the national government issued Decree 2784 of 2012 which ruled Law 1314 of 2009 on international financial reporting standards. This decree divided implementation in three groups: Group 1, listed companies, subsidiaries or public-interest companies that need to implement Full IFRS from January 2015 onwards. Group 2, SMPs that should implement IFRS for SMEs in January Group 3: microcompanies that are to apply a simplified accounting in January Support IFRS Convergence 49. The INCP is disseminating these regulations through its publications, conferences and seminars on IFRS., external instructors COL$ The INCP has provided education specialization courses to professional accountants on IFRS., external instructors COL$ October The INCP has signed a cooperation agreement with the MCIT to disseminate standards on IFRS in Universities. ED, President, INCP COL$ October The INCP participated in the nomination of one of the CTCP members, resulting in the appointment of Daniel Sarmiento as the fourth representative of the entity mentioned above. As per Law 1314 of 2009, a new fourth member of the CTCP will be nominated in. Completed ED, CRP COL$ INCP is developing a new agreement with the Superintendency of Companies; its purpose it to share with companies management the first impacts of the convergence process on financial statements. ED, INCP COL$ Status as of of Publication Page 17 of 18

18 # Start Actions Completion 54. Maintaining Ongoing Processes The INCP has already carried out the First INCP Summit in 2012 and is currently in the preparation of the Second INCP Summit. This summit is and international event that strengthens and raises awareness of local practices and local professionals on the best practices in terms of IFRS implementation experiences., external instructors COL$ Ongoing INCP will continue to offer seminars and specialization courses on IFRS. Ongoing, external instructors COL$ October Up to date, sixteen Specialization Courses have been carried out, educating 850 professionals. Ongoing, external instructors COL$ INCP is working with the AICPA on the possibility of carrying out an IFRS certification process in Colombia. ED, President, INCP COL$ Reexamination of INCP Compliance Information 58. Ongoing We will follow up on a regular basis the CTCP proposals in order to be able to inform any deviation from the international standard. 59. Ongoing Permanent revision of the work plan and CTCP projects to avoid deviations from the international standard. Ongoing President COL$ Ongoing President COL$ Status as of of Publication Page 18 of 18