Standards & Guidelines



IFAC

Education

Committee |June 2002

Exposure Draft

Response Due Date December 31, 2002 | |

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| |Experience Requirements |

| |Proposed International Education Standard for Professional Accountants |

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|Issued for Comment by the | |

|International Federation of |[pic] |

|Accountants | |

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This Exposure Draft was approved for publication in June 2002 by the Education Committee of IFAC.

The mission of IFAC is the worldwide development and enhancement of an accountancy profession with harmonized standards, able to provide services of consistently high quality in the public interest. The Education Committee’s mission is to serve the public interest by the worldwide advancement of education and development for professional accountants leading to harmonized standards.

The Education Committee requests comments on this Exposure Draft. Respondents are encouraged to comment on the specific questions attached at the end of this document and any other issues related to this Exposure Draft. Comments sent by

e-mail are preferred but they may also be submitted by computer disk or in hard copy.

Comments should be received by 31 December 2002.

Comments received by the due date will be reviewed by the Education Committee and may influence the final Standard. Comments received before 15 October 2002 will be reviewed by the Education Committee at its meeting in November 2002. Comments recevied after that date will be reviewed by the Committee in March 2003. Comments received after the due date, and on an ongoing basis, are also welcome. Respondents should note that comments are considered a matter of public record.

Comments on this publication should be sent to:

Technical Director

International Federation of Accountants

535 Fifth Avenue, 26th Floor

New York, NY 10017, USA

Fax + 1 212-856 9420

E-mail responses should be sent to: EDComments@

Information about the International Federation of Accountants can be found at its web site, . Copies of this publication may be downloaded free of charge from the site.

Copyright © June 2002 by the International Federation of Accountants. All rights reserved.

contents

page

Preface 2

International Education Standards for Professional Accountants 2

Purpose of this Standard 2

Scope of the Standard 3

Background 3

Definitions 4

Effective Date 11

Foreword 11

Acknowledgements 12

Membership of the IFAC Education Committee 12

Experience Requirements 13

Monitoring and control 14

Discussion Questions 17

Preface

International Education Standards for Professional Accountants

1. International Education Standards for Professional Accountants (IES) prescribe standards of generally accepted “good practice”' in the education and development of professional accountants. IES express the benchmarks that member bodies are expected to meet in the preparation and continual development for professional accountants. They establish the essential elements of the education process at a level that is aimed at gaining international recognition, acceptance and application of the education process. Hence, member bodies must consider these prescriptions.

2. International Education Standards for Professional Accountants cannot legally override local laws and regulations but will provide an authoritative reference for informing and influencing local regulators regarding generally accepted “good practice.”

3. International Education Standards are the paragraphs in bold typeface in this Standard. Commentary paragraphs, which may elaborate on and assist in the interpretation of the standard paragraphs, appear in plain typeface.

4. The individual Standards need to be read in conjunction with the Guiding Principles for International Education Statements and the related commentary and implementation material contained in the Introduction to International Education Standards for Professional Accountants.

Purpose of this Standard

5. This Standard prescribes the practical experience and training member bodies should require their members to obtain to qualify as professional accountants.

6. The aim of this Standard is to ensure that candidates for membership of an IFAC member body have acquired the practical experience considered appropriate at the time of qualification to function as competent professional accountants.

7. Further training may be required after qualification to bring a candidate up to the level of a statutory auditor or some other form of specialization. In any event, life-long learning will be required to renew professional competence and keep it up to date (see also proposed International Education Standard Continuing Professional Education and Development).

8. Practical experience, gained by working as accountants, in addition to academic study, is considered necessary before candidates can present themselves to the public as professional accountants. Given the variety of circumstances surrounding professional accountancy bodies throughout the world, the requirement for relevant experience may vary from one body to another.

Scope of the Standard

9. This Standard prescribes the practical experience candidates normally require before being admitted to membership of an IFAC member body. It also prescribes monitoring and control systems to ensure the experience gained is acceptable.

Background

10. This Standard draws on IEG 9, “Prequalification Education, Assessment of Professional Competence and Experience Requirements” (first issued 1991, revised 1996) and Competence-based Approaches to the Preparation and Work of Professional Accountants, Discussion Paper (first issued 1998, revised 2001). Further suggestions are contained in Practical Experience, Discussion Paper (issued 1998) and Specialization in the Accounting Profession, Discussion Paper (issued 1992).

Definitions

11. Definitions and explanations of the key terms used in the Standards are set out in the Guiding Principles for International Education Statements. The terms used in this Standard are defined as follows. Words marked with an asterisk (*) indicate terms that are defined elsewhere in this glossary.

|Candidate |Refers to any individual who is presenting themselves|

| |for assessment as part of an education program in |

| |preparation to become a professional accountant.* |

|Competence |Is being able to perform a work role to a defined |

| |standard, with reference to real working |

| |environments. |

| | |

| |Explanation |

| |Competence may be assessed by a variety of means, |

| |including work-place performance, work-place |

| |simulations, written tests of various types and |

| |self-assessment. |

| |[Competence-based Approaches to the Preparation and |

| |Work of Professional Accountants, 2001] |

|Development |Is the acquisition of capabilities which contribute |

| |to competence.* |

| | |

| |Explanation |

| |Development refers to the growth of attributes that |

| |contribute to competence, however achieved. |

| |Individuals may develop their abilities through a |

| |wide range of processes such as learning, including |

| |education and training; experience; reflection; |

| |observation or receipt of information; other |

| |structured and unstructured learning activities; or |

| |through natural growth over time. |

|Education |Refers to a systematic act or process aimed at |

| |developing knowledge, skills, character or other |

| |abilities and attributes within individuals. It |

| |includes developmental activities commonly referred |

| |to as training.* |

| | |

| |Explanation |

| |Education is a formal, structured learning process |

| |whereby individuals develop attributes considered |

| |desirable by society. Education is usually |

| |characterized by the growth of an individual’s mental|

| |and practical abilities, as well as maturing in |

| |attitude, resulting in an enhanced ability of the |

| |individual to function and contribute to society, in |

| |either specific or non-specific contexts. While |

| |often conducted in academic environments, education |

| |also includes formal learning processes in other |

| |environments, such as on-the-job and off-the-job |

| |training. Education is, by nature, formal and |

| |therefore excludes informal, unstructured learning |

| |and developmental processes. Valuable learning, |

| |training, and development can also take place in less|

| |formal environments through processes that are not |

| |formal or structured enough to be considered |

| |“education.” |

|Ethics |Refers to the professional values* and principles of |

| |conduct applying to professional accountants,* as |

| |well as to students and trainees,* associated with |

| |IFAC member bodies. |

|General Education |Consists of subjects drawn from the arts, sciences, |

| |social sciences and humanities that are outside the |

| |discipline areas of accounting and business. |

| | |

| |Explanation |

| |General education covers a broad range of subjects of|

| |which the content is not primarily concerned with |

| |business matters. The knowledge gained from general |

| |education underpins a professional education, |

| |although it is not directly related to, or required |

| |for, conducting business activity. It contributes to|

| |professional competence by imparting knowledge of the|

| |world, broadening the candidate’s mind, and providing|

| |a more rounded education than that gained by business|

| |study alone. |

|Good practice |Refers to those elements considered essential to the |

| |education* and development* of professional |

| |accountants* and performed at a standard necessary to|

| |the achievement of competence.* |

| | |

| |Explanation |

| |“Good practice” relates not only to the range of |

| |content and processes of education and development |

| |programs, but also to the level or standard at which |

| |they are performed (i.e., the depth and quality of |

| |the programs). The IFAC Education Committee is |

| |conscious of the wide diversity of culture language |

| |and educational, legal and social systems in the |

| |countries of the member bodies and of the variety of |

| |functions performed by accountants. Different |

| |factors within these environments may vary the |

| |ability of member bodies to adopt some aspects of |

| |“good practice.” Nevertheless, member bodies should|

| |continuously aspire to “good practice” and achieve it|

| |wherever possible. |

| | |

| | |

|Practical experience |Is work experience, undertaken by a trainee* that is |

|(or professional experience) |relevant to the work of professional accountants.* |

| |The program of experience is aimed at developing |

| |professional competence* (including values) within |

| |trainees and provides a means whereby trainees can |

| |demonstrate the achievement of professional |

| |competence. |

| | |

| |Explanation |

| |Practical experience refers to the on-the-job |

| |execution of tasks that are relevant to the field of |

| |accountancy. The practical experience component of |

| |the qualifying process is intended to develop |

| |candidates through the direct application of |

| |knowledge, skills and professional values. |

| |Ultimately, it is through practical experience that |

| |trainees will demonstrate their competence to perform|

| |the roles of professional accountants. Practical |

| |experience is sometimes referred to as “professional |

| |experience” and is synonymous with that term. |

| |[By reference to the Discussion Paper Practical |

| |Experience, 1998] |

|Pre-qualification |Refers to the period before qualification* as an |

| |individual member of an IFAC member body. |

| | |

| |Explanation |

| |The term “pre-qualification” is usually associated |

| |with activities and requirements relating to the |

| |development of those who have not yet obtained a |

| |professional qualification. It refers to the |

| |developmental period, or any part of the |

| |developmental period, between the time at which an |

| |individual begins their professional development and |

| |the time at which they achieve initial professional |

| |competence, as recognized by qualification. |

|Professional accountant |Refers to those individuals, whether they be in |

| |public practice (including a sole practitioner, |

| |partnership or corporate body), industry, commerce, |

| |the public sector or education, who are members of an|

| |IFAC member body. |

| |[IFAC Code of Ethics for Professional Accountants, |

| |2001] |

|Professional knowledge |Refers to those topics that make up the subject of |

| |accountancy as well as other business disciplines |

| |that, together, constitute the essential body of |

| |knowledge for professional accountants.* |

|Professional values |Are the attitudes that identify professional |

| |accountants* as members of a profession. They |

| |comprise principles of conduct generally associated |

| |with, and deemed essential in defining the |

| |distinctive characteristics of, professional |

| |behavior. |

| | |

| |Explanation |

| |Professional values include technical competence, |

| |ethical behavior (e.g., independence, objectivity, |

| |confidentiality and integrity), professional demeanor|

| |(e.g., due care, timeliness, courteousness, respect, |

| |responsibility and reliability), pursuit of |

| |excellence (e.g., commitment to continual improvement|

| |and life-long learning) and social responsibility |

| |(e.g., awareness and consideration of the public |

| |interest). |

|Qualification |Qualification as a professional accountant* is |

| |recognition that, at a given point in time, an |

| |individual is deemed to have met the requirements for|

| |recognition as a professional accountant. |

| | |

| |Explanation |

| |Qualification is the formal recognition of an |

| |individual as having attained a professional |

| |designation, or having been admitted to a class of |

| |professional membership, that signifies the |

| |individual is a professional accountant. |

| |Qualification implies that the individual has been |

| |deemed competent in terms of meeting the requirements|

| |prescribed for obtaining professional accountant |

| |status. While the term “qualification” can be |

| |applied to various stages of professional development|

| |and classes of membership, its usage in IFAC |

| |Education Committee documents (unless otherwise |

| |indicated) relates to the benchmark for recognition |

| |as a professional accountant. |

| |[Based on IEG-9, “Pre-qualification Education, |

| |Assessment of Professional Competence and Experience |

| |Requirements of Professional Accountants,” 1998] |

|Skills |Refer to the various types of abilities required to |

| |apply knowledge and values appropriately and |

| |effectively in a professional context. |

| | |

| |Explanation |

| |Professional accountants are required to possess a |

| |range of skills, including technical and functional |

| |skills, organizational and business management |

| |skills, personal skills, interpersonal and |

| |communication skills, a variety of intellectual |

| |skills, and skills in forming professional judgments.|

| | |

|Specialization |Is the formal recognition by a member body of a group|

| |of its members possessing distinctive competence* in |

| |a field, or fields, of activity related to the work |

| |of the professional accountant.* |

| |[Discussion Paper Specialization in the Accounting |

| |Profession, 1992] |

|Trainee |Is an individual undertaking pre-qualification* |

| |professional development* within the work place. |

| | |

| |Explanation |

| |A trainee is an individual who is undertaking a |

| |practical experience or work-place training program |

| |for qualification as a professional accountant. |

|Training |Refers to pre- and post-qualification developmental |

| |activities, within the context of the work place, |

| |aimed at bringing a student or professional |

| |accountant* to an agreed level of professional |

| |competence.* |

| | |

| |Explanation |

| |Training includes work-place-based education and |

| |experience activities for developing an individual’s |

| |competence to perform tasks relevant to the role of |

| |the professional accountant. Training may be |

| |undertaken while performing actual tasks (on-the-job |

| |training) or indirectly through instruction or |

| |work-place simulation (off-the-job training). |

| |Training is conducted within the context of the work |

| |place, with reference to the specific roles or tasks |

| |performed by professional accountants. It can |

| |include any activity purposefully designed to improve|

| |the ability of an individual to fulfill the practical|

| |experience requirements for qualification as a |

| |professional accountant. |

Effective Date

12. Member bodies should aim to comply with this standard by 1 January 2005. Earlier application is encouraged.

Foreword

13. The balance between experience and academic study may vary from one qualification to another. Practical experience is more likely to be gained in a work environment, while knowledge of theory is more likely to be gained in an academic environment. Professional values and ethics may be gained through a combination of both types of environments. It is a matter for IFAC member bodies to adapt their practical experience requirements to meet their own needs and requirements and to meet the requirements of the relevant regulatory authorities as well as public expectations that professional accountants can apply their knowledge in practice.

Acknowledgements

The Education Committee thanks the Task Force members who have contributed to the development of this Exposure Draft:

|Country |Name |

|Czech Republic |Bohumil Král and Jaroslav Louka |

|Hungary |József Roóz and Ferenc Eperjesi |

|Israel |Yoram Eden |

|Malaysia |Dato Abdul Halim Mohyiddin, Tan Shook Kheng |

| |and Albert Wong Mun Sum |

|Turkey |Ercan Bayazitli, Recep Pekdemir and Masum |

| |Türker |

|United Kingdom |David Hunt, Mark Allison, and Michael Walsh.|

|Transnational Auditors Committee |Hans Verkruijsse (observer to the Education |

| |Committee) |

Membership of the IFAC Education Committee

The following were members of the Education Committee when this Exposure Draft was approved:

|Country |Name |

|New Zealand |Warren Allen (Chair) |

|Argentina |Hector Carlos Ostengo |

|Canada |Shirley Reilly |

|China |Shuang Li |

|Czech Republic |Bohumil Král |

|France |Alain Burlaud |

|Hungary |József Rooz |

|Israel |Yoram Eden |

|Malaysia |Abdul Halim Mohyiddin |

|Pakistan |S.M. Zafarullah |

|South Africa |Steve McGregor |

|Thailand |Usana Patramontree |

|Turkey |Masum Türker |

|United Kingdom |David Hunt |

|United States |Gary Holstrum. |

Experience Requirements

14. An appropriate period of practical experience in performing the work of professional accountants should be a component of the pre-qualification program. This period should be long enough to permit candidates to demonstrate they have gained the knowledge, skills and professional values required for performing their work with professional competence and for continuing to grow throughout their careers. The period of practical experience should be three years. A period of professional education with a strong element of practical application can contribute to part of this overall requirement.

15. The overall goal is to produce competent professional accountants by giving them an appropriate mix of general education, professional education and practical experience. The exact combination may vary as long as the ultimate goal is achieved. Demonstrable achievement of competence is more important than simply spending the amount of time necessary to meet the practical experience requirement.

16. Accounting degree programs may take four years or more and, in the later years, can place a strong emphasis on relevant professional education and applications. Other education programs may consist of non-accounting degrees followed by three intensive years of combined relevant professional education and experience.

17. Practical experience provides a professional environment in which accountants:

▪ enhance their understanding of organizations and how business functions;

▪ are able to relate accounting work to other business functions and activities;

▪ become aware of the environment in which services are provided;

▪ develop the appropriate professional values and ethics in practical, real-life situations (see also proposed International Education Standard, “Professional Values and Ethics”);

▪ have an opportunity to work at progressive levels of responsibility; and

▪ obtain the specialized accountancy training needed to ensure professional competence.

18. Trainees need to gain their practical experience in accounting positions deemed appropriate by the professional body to which they are applying. Experience may be obtained before a program of study, after a program of study, at the same time as a program of study or by some combination of these methods, subject to the controls below.

Monitoring and control

19. The member body or regulatory authority needs to ensure that the experience candidates have gained is acceptable. Experience leading to qualification should mainly be conducted under the direction and supervision of an experienced member of one of IFAC’s member bodies. For a program of practical experience to be effective, close collaboration is necessary among the professional body or regulatory authority, the trainee and the employer providing the experience. The program of practical experience should be mutually beneficial to both the candidate and the employer. The employer should keep, and periodically review, a record of the actual experience a trainee has obtained, while the professional body should periodically review samples of such records.

20. The program of practical experience should be designed and implemented to meet the experience requirements set by the professional body. At the same time, it should be cost-effective for the employer, whether that employer is in industry, commerce, government or public practice. IFAC member bodies whose members are eligible for an audit license at the point of qualification should ensure that appropriate audit experience is acquired during the pre-qualification period. If the license is granted by an external agency, or after qualification, that agency will formulate the necessary requirements for qualification. Those requirements might also be fulfilled during the post-qualification period.

21. Either the employer or the trainee should keep a record of the actual work experience, which will then be reviewed by the professional body at the point of application for membership. The record should also be regularly compared with the overall program established for the trainee to ensure that the requirements established by the professional body or regulatory authority are being met. If progress within the program does not match the anticipated development rate, the trainee should be counseled to discover the reasons why and what can be done to improve the situation. This will also provide an opportunity for the trainee to comment on the work experience and contribute to the trainee's future development.

22. Among the steps that professional bodies should take are the following:

▪ establish a monitoring system, normally on a sampling basis, that provides for monitoring and reporting of the experience actually obtained by trainees;

▪ provide detailed written guidance for employers and trainees;

▪ establish a mechanism for approving employers as suitable for providing the appropriate experience for the trainees;

▪ assess and approve the work experience environment before commencement of experience. (To this end, the nature and scope of relevant experience and the organizational structure of employers should be considered to ensure that trainees receive proper direction, supervision, counseling and evaluation.);

▪ assess the experience gained on the basis of a written or oral submission made by trainees at the point of application for membership, appropriately supported by supervisors;

▪ review employers previously approved. The review may advise employers on areas that need improvement or may recommend that approval be withdrawn if conditions have changed to the extent that relevant experience criteria are not being met;

▪ establish a system of periodic reporting to cover changes, if any, in the nature, scope and content of the trainees’ practical experience where it may be impractical to visit all approved employers;

▪ undertake a periodic competence study to help to ensure that the experience gained is relevant and appropriate.

Discussion Questions

Please reference comments to the relevant paragraph numbers and provide alternative proposals where applicable.

1. Do you agree with the amount of practical experience prescribed in paragraph 14?

2. Do you consider the criteria prescribed for the acceptability of practical experience are achievable (refer paragraph 19)?

3. Comment on the proposed effective date of 1 January 2005.

4. Please comment on any other issues.

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