The Ordre des experts-comptables' standards: issues and principles

What is the Ordre des experts-comptables' standard reference framework, and what purpose does it serve?

The profession of chartered accountant requires the observance of a strict code of ethics, to the extent that all professionals in the sector are required to take an oath in order to practice. By attesting to the sincerity and regularity of their clients' accounts, chartered accountants are faced with important responsibilities. The performance of certain tasks, such as the consolidation of annual accounts, must comply with the prerogatives issued by the Ordre de l'Ordre.

In this context, the normative frame of reference is of paramount 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 practices to be applied?

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What is the standard reference framework for accountancy professionals?

Definition of the standards

The " référentiel normatif de l'expert-comptable " is a document listing 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 a decree issued by the Minister of the Economy and Budget.

It is important to note that the precepts laid down in the standards :

• are in line with the fundamental principles of the Code de Déontologie de l'expertise comptable;
• use the international standards published by the IAASB (International Auditing and Assurance Standards Board) of the IFAC (International Federation of Accountants).

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

Hierarchy and structure of the standards

The hierarchy

To carry out his missions, the chartered accountant must respect, 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 assignment.

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

• the fundamental, mandatory principles,
• application procedures (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.).

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 financial statements,
  • limited review of financial statements,
  • audit of financial statements.
    
    
• Other assurance engagements. Here too, an attestation is required. However, they do not relate to the full historical financial statements:
  • assurance on information other than full historical financial statements,
  • review of projected financial information.
    
    
• Non-assurance engagements, which do not give rise to an opinion:
  • review of information on the basis of agreed procedures,
  • compilation of financial statements,
  • non-assurance engagements provided for by law or regulation,
  • other services provided to the entity.

Download the Chartered Accountant Standards 2020-2021

Would you like to access the latest version of the document? The Ordre des experts-comptables de la région Pays de la Loire provides the 2020-2021 normative reference framework free of charge online, in PDF format.

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

Aligning with the same professional standards

The demands of public accounting mean that professionals must align themselves 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 reference framework is 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 by 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 (norme professionnelle de maîtrise de la qualité) enables chartered accountants to integrate their processes into a quality approach, and thus adopt an organization and best practices designed to improve their efficiency.

Increasing vigilance

The standards also include a 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 of any suspicions concerning a client.

Improving efficiency

In addition to the legal and regulatory framework, the standard reference framework for chartered accountants also provides methodological tools. They support professionals in the performance of their missions, always in compliance with standards and in line with the real needs of companies.

The various standards of the Chartered Accountant's standards reference framework

Professional standards of general application

The professional standard for quality control - NPMQ

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

• professional standards,
• as well as legal and regulatory obligations.

It is based not only on compliance with defined rules, but also on their practical application and verification. To achieve this, the structure must set up a quality control system, based on :

• the management team's responsibility for quality within the organization,
• compliance with ethical rules,
• acceptance and maintenance of missions,
• sufficient, qualified human resources,
• proper execution of assignments (consultations, reviews, etc.),
• monitoring the quality control system.

Professional standards relating to the accountancy profession's obligations to combat money laundering and the financing of terrorism

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

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

Within this framework, a number of principles must be observed:

• organize the professional practice structure accordingly (e.g., set up internal procedures);
• identify and assess risks;
• respect obligations :
  • to be vigilant when entering into a business relationship ;
  • of vigilance during 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

The professional standard applicable to financial reporting engagements

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

In particular, the aim is to define the best way to present the accounts, in terms of both form and content. 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 reference framework:

• demonstrate critical thinking and professional judgment;
• draw up an engagement letter;
• perform due diligence. For example, in this context :
  • obtaining a general understanding of the entity ;
  • assessing the accounting organization ;
  • preparation of financial statements, etc. ;
• document its work;
• issuing a report at the end of the presentation engagement; etc.

Professional standards applicable to limited review engagements

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

Under this standard, the professional is familiar with :

• the principles to be applied in order to properly conduct a limited review of the financial statements:
  • interview with 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.

Professional standards applicable to the audit of financial statements

This is an engagement in which the chartered accountant expresses reasonable assurance as to the conformity of the entity's financial statements with the applicable accounting standards.

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

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

This standard also governs the issuance of a report on the financial statements, as well as the communications required by ISAs(International Standards on Auditing).

This exercise requires us to perform certain procedures, such as

• the implementation of a quality control system,
• taking account of possible fraud during the audit,
• communication with individuals involved in corporate governance,
• identifying and assessing the risks of material misstatement based on an in-depth knowledge of the entity and its environment, etc.

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

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

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

• information of an accounting or financial nature:
  • composition of shareholders' equity,
  • earnings for the year,
  • 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 company member, etc,
• information of any other kind:
  • 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 numerical translation of these assumptions is not erroneous,
• the information is prepared in a manner consistent with the entity's historical financial statements, based on appropriate accounting principles.

The standard then sets out the principles and procedures to be followed when 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 " non-assurance" engagement. This means that the chartered accountant does not need to express an opinion if the final report concerns only findings.

His objective is to carry out the due diligence procedures defined in conjunction with the entity's management, and any interested third partiesto carry out 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 standardize 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 declarations from which this information is derived.

It should be noted that this compilation mission is primarily intended for entities entering the consolidation scope of a group:

• which has already undergone a statutory audit ;
• which produces its own accounting records;
• which, prior to the consolidation of its financial statements, requires the formatting of its subsidiaries' summary documents in compliance with French legislation.

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What tools do you need to comply with the standards?

Chartered accountants, as we have already mentioned, the standards provide you with a number of tools to help you achieve compliance. In the appendix, you will find examples of various reports. By way of illustration, for the limited review of financial statements, the document provides model reports:

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

The standard 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 customers, in line with a quality approach.

You are now familiar with the issues and content of 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 their framework and associated principles.

Remember, too, that these standards are subject to regular change. 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.