The Ordre des experts-comptables' standard reference framework: issues and principles

What is the Ordre des experts-comptables' standard reference framework and what is its purpose?

The profession of chartered accountant involves observing a strict code of ethics, to the extent that all professionals in the sector are required to take an oath in order to practise. By attesting to the accuracy and regularity of their clients' accounts, chartered accountants are faced with major responsibilities. The performance of certain tasks, such as consolidating annual accounts, must comply with the prerogatives laid down by the Conseil de l'Ordre.

In this context, the standards framework is of vital importance: it provides a framework and structure for the activities of professionals.

So what exactly are they, what issues do they address and, above all, what do they contain in terms of standards and best practice?

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What is the standard reference framework for accountancy professionals?

Definition of the standards

The standard reference framework for chartered accountants is a document that lists a certain number of standards and best practices, with the aim of providing a framework for the profession. It is published by the Conseil supérieur de l'Ordre des experts-comptables, and the professional standards thus defined are approved by an order of the Minister for the Economy and the Budget.

It is important to note that the precepts set out in the standards :

• are in line with the fundamental principles of the Code of Ethics for Public Accountants;
• use the international standards issued by the IAASB (International Auditing and Assurance Standards Board) of the IFAC (International Federation of Accountants).

☝️ The accounting standards came into force in 2012. However, it is regularly updated. The latest version, approved on 7 December 2020, has been applicable since 14 December 2020.

Hierarchy and structure of the standards

The hierarchy

In order to carry out his work, the chartered accountant must comply with, in order of priority :

• the Code of Ethics,
• generally applicable professional standards:
  • the professional standard for quality control,
  • professional standards relating to obligations to combat money laundering and the financing of terrorism,
• any specific standards applicable to the engagement.

☝️ Note that the document specifies for each of these standards:

• the fundamental, mandatory principles
• the methods of application (indicated by the letter A at the beginning of each paragraph). The latter serve as a methodological guide to facilitate the practice of the profession. Operational tools are also provided (examples of reports, engagement letters, etc.).

The different levels of assurance

The engagements described in the standards are classified into three categories:

• Assurance engagements on full historical accounts. These are subject to an attestation by the chartered accountant:
  • presentation of the accounts
  • Limited examination of the accounts,
  • audit of financial statements.
    
    
• Other assurance engagements. Here too, a certificate must be drawn up. However, it does not relate to the full historical accounts:
  • assurance on information other than full historical accounts,
  • review of projected financial information.
    
    
• Non-assurance engagements, which do not give rise to a statement of opinion:
  • review of information on the basis of agreed procedures,
  • compilation of financial statements,
  • engagements without assurance required by law or regulation,
  • other services provided to the entity.

Download the 2020-2021 standards for certified public accountants

Would you like to access the latest version of the document? The Ordre des experts-comptables in the Pays de la Loire region is making the 2020-2021 standards available online free of charge in PDF format.

What is the purpose of the standard reference framework for chartered accountants? Objectives and challenges

Aligning with the same professional standards

The requirements of public accounting mean that professionals have to comply with a certain number of rules. In this sense, the standards provide a framework for all, regardless of :

• their experience
• the structure in which they work
• their clients' sector of activity
• or their working methods.

In fact, every engagement carried out by a chartered accountant must fall within the scope of one of the principles promulgated in the document.

Moreover, this concern for uniformity of practice extends beyond France, insofar as the standards are also based on international standards.

☝️ However, it is specified that compliance with these standards may be relative depending on the assignments performed. However, any deviation must be justified in the documentation produced by the chartered accountant.

Guaranteeing the quality of engagements and information issued

As we shall see below, the engagements contained in the standard reference framework for chartered accountants may give rise to the expression of moderate or reasonable assurance. As a result, the entity concerned is in a position to assess the level of confidence to be placed in the information produced as part of the engagement.

In addition, the NPMQ standard (professional standard for quality management) enables chartered accountants to integrate their processes into a quality approach, and therefore to adopt an organisation and good practices designed to improve their efficiency.

Increasing vigilance

The standards also include a whole section on the fight against money laundering and the financing of terrorism, in line with European regulations. In this context, the role of the chartered accountant is not insignificant, as he is required to :

• implement specific procedures to meet these requirements ;
• be vigilant and inform TRACFIN if they have any suspicions about a client.

Improving efficiency

In addition to the legal and regulatory framework, the standard reference framework for chartered accountants also provides methodological tools. They help professionals to carry out their work effectively, while complying with standards and meeting the real needs of businesses.

The different standards of the standard-setting framework for chartered accountants

Professional standards of general application

The professional standard for quality control - NPMQ

The purpose of this standard is to establish a quality control system to ensure that public accountancy professionals comply with :

• professional standards
• legal and regulatory obligations.

It is therefore based on compliance with defined rules, as well as their practical application and verification. To achieve this, the organisation must set up a quality control system, based on :

• The management team's responsibility for quality within the organisation,
• compliance with the rules of professional ethics
• acceptance and maintenance of assignments,
• sufficient, qualified human resources,
• proper performance of assignments (consultations, reviews, etc.),
• monitoring the quality control system.

Professional standards relating to the obligations of the chartered accountancy profession in the fight against money laundering and terrorist financing

Under this standard, chartered accountants implement procedures to combat money laundering and terrorism, adapted to :

• their organisation
• their size
• and the volume of data to be processed.

In this context, a number of principles should be observed:

• organising the professional structure accordingly (e.g. setting up internal procedures) ;
• identify and assess risks
• comply with obligations :
  • to be vigilant when entering into a business relationship ;
  • to be vigilant during the course of the business relationship;
  • reporting to TRACFIN;
• monitor compliance with these obligations within the professional structure;
• initiate sanction proceedings in the event of non-compliance with these obligations.

Specific professional standards

Professional standards applicable to the presentation of financial statements

This is an engagement in which the chartered accountant expresses moderate assurance as to the plausibility and consistency of the annual or interim accounts of the organisation for which he is working.

In particular, the aim is to determine the best way to present the accounts, in terms of both content and form. To achieve this, the professional must comply with a certain number of requirements, which we find in most of the standards set out in the framework:

• demonstrate critical thinking and professional judgement;
• draw up an engagement letter
• performing due diligence. For example, in this context:
  • obtaining a general understanding of the entity ;
  • assessing the organisation of the accounts
  • preparing the accounts, etc. ;
• document its work;
• issuing a report at the end of the presentation engagement; etc.

Professional standards applicable to limited reviews of accounts

This is an engagement for which the chartered accountant expresses moderate assurance as to the conformity of the entity's accounts with the associated accounting framework.

This standard provides the professional with knowledge of :

• the principles to be applied in order to properly conduct a limited review of the financial statements:
  • interviewing the entity's management
  • identification of sensitive areas and accounts,
  • reading the minutes of shareholders' meetings, board meetings, etc.
• but also the form and content of the reports issued at the end of this engagement.

The professional standard applicable to the audit of financial statements

This is an engagement in which the chartered accountant expresses reasonable assurance that the entity's financial statements comply with the applicable accounting standards.

As part of this audit, the professional ensures that the financial statements of the entity he is auditing :

• are free from material misstatement;
• have been prepared in accordance with the applicable financial reporting framework.

In addition, this standard governs the issuance of the report on the financial statements and the communications required by ISAs(International Standards on Auditing).

Certain procedures are required in this exercise, including the following:

• the implementation of a quality control system,
• Consideration of possible fraud during the audit,
• communicating with the individuals who make up corporate governance,
• identifying and assessing the risks of material misstatement based on an understanding of the entity and its environment, etc.

The professional standard applicable to assurance engagements on information other than full historical accounts (specific attestations)

This is an engagement for which the chartered accountant expresses reasonable or moderate assurance regarding the certification of the information concerned, using applicable criteria. In other words, it is the accountant's responsibility to identify any misstatements.

As the title of the standard indicates, the information covered by the engagement relates to something other than the full historical accounts. For example

• information of an accounting or financial nature:
  • composition of shareholders' equity
  • results for a financial year
  • the amount of a dividend distribution, etc,
• information of a legal or corporate nature:
  • number of shares making up the share capital
  • number of shares held by a shareholder,
  • legal status of a member of the company, etc,
• information of any other nature:
  • absenteeism rate
  • amount of retirement benefits,
  • effectiveness of internal controls, etc.

To carry out this assurance mission, the chartered accountant must carry out specific work and controls:

• document checks
• requests for information,
• physical observations,
• arithmetical checks,
• re-performance, etc.

The professional standard applicable to the review of projected financial information

This is an engagement for which the chartered accountant expresses moderate assurance that :

• the assumptions on which the forecast information is based are reasonable,
• the quantification of these assumptions is not erroneous,
• the information is prepared on a basis consistent with the entity's historical financial statements, using appropriate accounting policies.

The standard then sets out the principles and procedures for examining this forecast financial information and issuing declarations to management in due and proper form.

The professional standard applicable to the review of information based on agreed procedures

This is a so-called " non-assurance" engagement. This means that the chartered accountant does not need to express an opinion if the final report only deals with findings.

His objective is to carry out the due diligence procedures defined in conjunction with the entity's management, as well as with interested third parties where appropriate, in order to ensure that the financial statements are free of material misstatement.the necessary controls (audit, limited review, analytical procedures, etc.).).

The professional standard applicable to the compilation of financial statements

Like the previous one, this is also a " non-assurance" engagement.

Its purpose is to standardise the way in which the chartered accountant gathers, classifies and presents financial information :

• so that it is as comprehensible and usable as possible ;
• without, however, controlling the statements from which this information is derived.

Note that this compilation mission is mainly intended for entities entering the consolidation scope of a group:

• which has already undergone a statutory audit ;
• which produces its accounts internally;
• which requires, prior to the consolidation of its accounts, work to format the summary documents of its subsidiaries in compliance with French legislation.

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What tools can I use to comply with the standards?

Accountants, as we have already mentioned, the standards provide you directly with a number of tools to help you comply with them. In the appendix, you will find examples of various reports. By way of illustration, for the limited review of the accounts, the document provides model reports:

• unqualified
• without qualification and with a paragraph of observations highlighting information given in the notes,
• with reservations (disagreements or limitations),
• with an unfavourable conclusion (disagreements),
• with impossibility of conclusion (limitations, or serious and multiple uncertainties).

The framework also includes an extract from the ISA definitions to assist you in your financial statement audit work, and an extract from the glossary of terms used in assurance engagements other than full historical accounts.

Finally, you can also rely on a software solution. QuickBooks Experts-Comptables, for example, automates your accounting management by keeping it up to date with current regulations. This saves you time, allowing you to focus on advising and supporting your clients, in line with a quality approach.

You are now familiar with the issues and content of the accounting standards. Do not hesitate to refer to them on a regular basis, especially if you are called upon to carry out new assignments, in order to define the framework for their execution and the associated principles.

You should also bear in mind that these standards change regularly. We advise you to keep up to date with any changes that may occur, thanks in particular to the information (on regulations, chartered accountants' missions, etc.) and documentation issued by the Ordre des experts-comptables.