The Mongolian professionMilestones:Accounting Law approved in 1993 (adoption of IAS)]Subsequent amendments in 2002, 2003, and 2006 Establishment of MonICPA in 1996 Professional Accounting Council under the Finance MinisterAuditing Law came into force in 1997Subsequent amendments in 2001, 2003, 2005, and 2006 The Accounting law requires all for-profit and non-profit entities (incl. SMEs) to prepare FSs in full compliance with IFRSs. Translation of IAS/ IFRS into native language in 1998, 2003, and 2011 (both full IFRS and IFRS for SMEs).The law on Auditing requires all private auditors apply ISA, and is regulated by MOF and MonICPA. It:Defines auditing principles, organization, administration for registering audit firms, licensing CPAs and organizations in auditing, and supervising their activities. Stipulates that only licensed audit firms are eligible to conduct audit servicesTranslation of ISA into native language in1997, 2005, 2007 and 2010.State Audit Law (passed in 2002) requires all state auditors apply ISA: National Audit Office (Supreme audit organization)Responsible for annual FSs audit (for government entities (state-owned) and performance audit for budget entities)Governing body is the Assembly of Delegates which is held once in 4 years: Approve the Institute’s By-Law and/or expected amendments;Adopt the Code of Ethics for CPAs;Elect Council members and Auditors etc.The Council consists of 19 members for four year term The Council nominates the Chairman, the President, and the Chief Executive.Activities are conducted by 4 Committees comprising of 28 full-time staff with support of part-time volunteers (members) MonICPA’s audit quality assurance system since 2007. MOF and MonICPA’ conduct joint reviews of audit firms.Ethics Committee has issued procedures “Rules for Receipt of Complaints and Information Related to Ethical Cases, Investigation, Discussion and Decision” in accordance with SMO 6. These procedures incorporate all of the requirements ranging from receipt of complaints from client or entity against members to final decision on the detected cases.MonICPA was admitted to IFAC Associate Membership in 2003. MonICPA submitted its Application for IFAC full membership in December 2011.
Projects funded by international financial community: 2 projects funded by Asian Development Bank “Improving Accounting and Auditing Systems” during 1993-1996; and “Capacity Building for Accounting and Auditing Professionals” in 2003-20041 project funded by World Bank “Improving the Audit Quality Assurance” in 2007-20081 project funded by the Japanese International Cooperation Agency (JICA) with support by JICPAProjects successfully implemented with support from more developed PAOs: Improving Capacity of Mongolian Auditors project was implemented 2005 through 2007 funded by JICA and implemented with support of JICPA. Under the project, 30 Mongolian auditors were trained at JICPA. MonICPA staff were trained by CPA Australia International Partnership Program with financial support by AusAID. It was done through CPA Australia’s initiative. The participants in the program were taught four segments of the CPA Program over a semester, and finally they were examined through written examinations.3 month English Proficiency and IFRS training organized jointly by MonICPA and ICAI in Delhi. 12 trainees (accountants) attended the training, and its was fruitful in getting more advanced knowledge on application of certain IFRS and improving English skill. Representatives from ICAI visitedMonICPA twice to assess SMO gaps and provide MonICPA with presentation of the application process for IFAC full member.MoUs in place with CPA Australia and ICAI.
Challenges: Language barriercauses time gap between translation and adoption of newly issued and revised international standards (either accounting or auditing)hinders continued development of accounting and auditing practices in the country. Translators are challenged with finding a common understanding of definitions and interpretation of entirely new concepts. Other challenges:Lack of awareness of international standards, and importance of fair presentation of FSs both at high level of the government and the community Financial constraints of the countrySuccesses:MonICPA is working towards full IFAC membershipAs promulgated by the Audit law, MonICPA is the only professional body accepted in the area of accounting.MonICPA is the key stakeholder in the process of development of the training program at bachelor degree (minimum requirements for integrated accounting professional qualification are defined by MonICPA).
Creation of sound and proper legal environment is vital for healthy system to be established from the very beginning. In order to do that, professional body (s) must review the existing laws and regulations, and revise or amend whenever it is deemed necessary to be in line with development and progress made in the related areas worldwide; if no laws, develop draft of required laws. MonICPA faced many difficulties in getting the people who had power for approving legislation be awareness of importance of application of international standards, understandable the roles and functions of professional bodies, consequently importance of transparency of financial information. MonICPA has signed Agreement with many state and government organizations, agencies such as, General Professional Inspection Agency, General Taxation Office, Financial regulatory Committee, Metropolitan Audit Office. Further, we will seek for more agencies and organizations to cooperate with us. Implemented various projects where strengthening capacity of MonICPA and competence of its staff were a component. Also, MonICPA has structured its governance in line with international good practice. It is very important to study structure, organizational chart, governance and key activities of accounting bodies in more developed countries as a model, and consider importing those arrangements if they really fit to yourcountry context. Many companies lack understanding of the concept and purpose or importance of audit services. There was very common understanding among the owners of companies that they saw auditors just as their “external bookkeepers” at early stages of adoption. This situation required much effort and time from both “champion” audit firms, MonICPA and the MOF to take measures to enlighten the community in terms of importance and purpose of audit service. We would recommend that there should be a detailed action plan which clearly sets out key actions and allocates responsibilities for implementing the necessary activities. Luckily, MonICPA has developed Action Plan with technical assistance from CPA Australia and IFAC relevant staff. We are taking the necessary actions to fully comply with IFAC SMOs.
The Mentee Perspective: The Mongolian Institute of Certified Public Accountants (MonICPA)
The Mentee Perspective: TheMongolian Institute of Certified PublicAccountants (MonICPA)Chimidsuren ChoigunsenCEO, MonICPAMentoring Insights – The MentorPerspectiveDubai, UAEFebruary 17th 2012 Page 1 | Confidential and Proprietary Information
The Mentee Perspective: MonICPABackground • The Mongolian profession – Milestones – International standards • MonICPA – Established in 1996 and celebrated its 15th anniversary in 2011 – Governance structure – Quality Assurance – Ethics – IFAC Associate Member since 2003 and applying for full IFAC Membership in 2013 Page 2 | Confidential and Proprietary Information
The Mentee Perspective: MonICPAMentoring Experience • Improving Capacity of Mongolian Auditors 2005-2007 – Funded by Japanese International Cooperation Agency – Training for 30 Mongolian auditors provided by Japanese Institute of Certified Public Accountants (JICPA) • CPA Australia International Partnership Program – Funded by AusAID – Participants in the program taught four units of the CPA program and then examined • Ongoing relationship with Institute of Chartered Accountants of India (ICAI) – Joint English proficiency and IFRS training initiative – Assistance with SMO compliance analysis Page 3 | Confidential and Proprietary Information
The Mentee Perspective: MonICPAChallenges and Successes Challenges • Language barriers • Lack of awareness of the importance of high quality financial reporting • Country financial constraints Successes • Working towards full IFAC membership • Only recognized accounting body • Only body setting professional accountancy qualification Page 4 | Confidential and Proprietary Information
The Mentee Perspective: MonICPASuccess Factors • Sound and proper legal environment • Cooperation with state and governmental entities • Strong staff competence and best practice governance structure • Appreciation of historical and cultural factors when raising awareness of the need for a formal accountancy profession • A focus on IFAC guidance and the SMOs Page 5 | Confidential and Proprietary Information