Slide 1

Accounting Education Requirements and Implementation of the

EU Directive on Statutory Audit

Wim MoleveldEducation Subgroup of the Liberalization/Qualification Working Party

European Federation of Accountants

ROAD TO EUROPE – PROGRAM OF ACCOUNTING REPORTING AND

INSTITUTIONAL STRENGTHENING

Slide 2

AGENDA

1. Requirements:- educational qualifications (art. 6)- examination of professional competence (art. 7)- test of theoretical knowledge (art. 8)- practical training (art. 10)- continuous education (art. 13)

2. Implementation:- education policy- programme of theoretical instruction- practical training

3. Observations and Conclusions

Slide 3

Communication on Reinforcing the Statutory Audit in the EU, 15 May 2003:

“To ensure the continued relevance of the

educational requirements, the contents of the curriculum should be assessed against relevant developments in business practice and financial

reporting (e.g. the IAS Regulation), taking account of international research and developments. Such an

assessment should draw upon international education guidelines such as IFAC’s International

Education Standards for Professional Accountants”

:

Slide 4

Requirements Statutory Audit Directive includes qualification

requirements for natural persons to be approved to carry out statutory audits: article 6 – 12 IFAC: Exposure Draft Competence Requirements for

Audit Professionals Statutory Audit Directive includes a new requirement on

continued education: article 13 IFAC: Continuing Professional Development:

A Program of Lifelong Learning and Continuing Development of Professional Competence

Slide 5

Requirements

educational qualifications (art 6)

“(…) a natural person may be approved to carry out a statutory audit only after having attained university

entrance or equivalent level, then completed a course of theoretical instruction, undergone practical training and passed an examination of professional competence of

university final or equivalent examination level, organized or recognized by the Member State

concerned.”

Slide 6

What means: “university final or equivalent examination level”?

FEE suggested coordination with the developments resulting from the Bologna Declaration of European Education Ministers, as follows: “The learning and assessment must be at a level at least equivalent to a three-year university first degree; significant parts of the learning and assessment will be at second-degree level i.e. equivalent to more than a three-year university first degree.”

Equivalent level: Dublin descriptors offer a basis for demonstrating the level of education and assessment, regarding the aspects of: knowledge and understanding; applying knowledge and understanding; making judgements; communication; learning skills.

Slide 7

Relevant differences between first-degree level and second-degree level

Example:

Making judgements: First-degree level( bachelor):

ability to gather and interpret relevant data … Second-degree level (master) :

ability to integrate knowledge and handle complexity, and formulate judgements with incomplete or limited information …

Slide 8Requirements

examination of professional competence (art 7)

“The examination of professional competence referred to in Article 6 shall guarantee the necessary level of theoretical knowledge of subjects relevant to statutory audit and the ability to apply such knowledge in practice. Part at least of that examination must be written.”

IFAC: Assessment of professional capabilities and competence (IES 6)

Slide 9

Requirements

test of theoretical knowledge (art 8)

“Test of theoretical knowledge…shall cover the following subjects in particular: …followed by a list of

subjects……it shall also cover at least the following subjects in so

far as they are relevant to auditing: …followed by a list of subjects…

The Commission may … adapt the list of subjects…The Commission will take into account the

developments in auditing and the audit profession…”

Slide 10

New subjects in test of theoretical knowledge

The Statutory Audit Directive added to the list of subjects in the 8th Directive:

International accounting standards International auditing standards Professional skills Professional ethics and independence Corporate governance

FEE suggested also: Assurance engagement concepts Business valuations International business and globalisation

Slide 11Requirements

practical training (art 10)

“In order to ensure the ability to apply theoretical knowledge in practice, a test of which is included in the examination, a trainee shall complete a minimum of three years practical training (...)”

IFAC: Practical experience requirements (IES 5):“the period of practical experience should be a minimum of three years”

Slide 12Requirements

continuous education (art 13)

“statutory auditors are subject to appropriate programmes of continuous education …”

IFAC: Continuing Professional Development (IES 7):

input-based approach: - complete at least 120 hours or equivalent learning units in each rolling three-year period- complete at least 20 hours or equivalent learning units in each year

Slide 13

Implementation

The regulatory body and/or professional body define the Education Policy

The education institutes (professional body and/or

universities) define the Education Programme

Slide 14Implementation

Education policy

Regulatory framework Scope and objectives Responsibilities and organisation Required competences and skills Subjects of the theoretical instruction and indication of the

quantitative aspects (ects, hours) Conditions practical training (training environment,

qualification trainer, duration, assessment)

Slide 15Implementation

Programme of theoretical instruction

Learning outcomes Knowledge base Education methodology

Assessment methods

Slide 16

Implementation

practical training

Programme of actions Recording of activities Observations by trainer Supervision and assessment

Slide 17Observations and Conclusions

The new EU Directive on Statutory Audit contains basically similar qualification requirements as under the Eighth Directive.

European Commission may further adapt the subjects in article 8 as the developments may require.

Proper implementation of the education requirements starts by defining national policy on accounting education and allocation of responsibilities by national regulators.

Universities’ independence and autonomy must ensure that education continuously adapt to changing needs.

FEE wants to contribute to the advancement of accounting education in Europe by enhancing compliance with the relevant EU directives and by promoting the international standards.