Continuing Professional Development (CPD) is essential for all professional accountants, irrespective of their role or sector. Traditional CPD systems focus on recording and measuring Why should all professional inputs, such as time spent on CPD activities, but fail to capture whether actual learning has accountants undertake occurred. This publication provides guidance CPD? intended for Professional Accountancy Organizations (PAOs) and other stakeholders In a constantly changing world, CPD ensures professional accountants maintain and develop seeking to implement output based CPD systems their competencies, strengthening public trust as a more genuine measure of learning and and confidence in their work. CPD activities allow professional improvement. professional accountants to learn throughout their career, maintaining and upgrading their skills so the quality of their work remains high and keeps pace Who is this guide for? with accountancy changes and innovations. The fundamental principle of professional This guide was developed to be used by any institution competence and due care of the Code of Ethics involved in the establishment, delivery and/or for Professional Accountants1 requires that all implementation of CPD requirements for professional professional accountants maintain their knowledge, accountants. The guide aligns with the content of skills, and competence to ensure they carry out International Education Standard™ (IES™) 7, Continuing their duties appropriately in client, employment, Professional Development, which is issued by the and other relationships. 1 Introduction and Fundamental Principles, IESBA Handbook of the Code of Ethics for Professional Accountants – 2016 Edition. International Accounting Education Standards Board™ Are CPD requirements the (IAESB™). It is intended not only for Professional Accountancy Organizations (PAOs), including same for all professional International Federation of Accountants® (IFAC®) member roles? organizations, universities and education providers, but also for employers, regulators, government authorities, The CPD requirements extend to all professional accountants, and prospective accountants. accountants engaged in practice and in business, irrespective of role, industry sector, or organization The IAESB defines a professional accountant as an they work for. individual who achieves, demonstrates, and further develops professional competence to perform a role PAOs may require and prescribe specific or additional in the accountancy profession and who is required to CPD requirements for professional accountants who comply with a code of ethics as directed by a PAO work in specialist areas or who undertake roles in or licensing authority. When a PAO is not a licensing areas with higher risk. For example, IES 8, Professional authority, the IES serve as a benchmark of good practice. Competence for Engagement Partners for Audits of Any licensing authority or other interested stakeholder Financial Statements (2016), prescribes additional is encouraged to make use of this guide to develop and learning outcomes for professional competence areas maintain the competence of professional accountants that audit partners are required to develop and maintain, in their jurisdictions. Furthermore, PAOs are strongly given the significance of this role to the public interest. encouraged to promote and support the use of this guide with licensing authorities and other interested stakeholders within their jurisdictions. How can learning and development be measured? What activities contribute to PAOs can implement input based, output based, or both approaches to measure the achievement of practical lifelong learning? experience and CPD by its members. Lifelong learning is a process by which professionals An input-based approach measures CPD activity in terms enhance their knowledge, acquire new skills, and build of time spent (e.g. hours of learning within a specified on existing ones throughout their career. Professional period of time) or equivalent learning units (e.g. number accountants are required to undertake learning to of points or credits accrued by way of attendance at develop and maintain their professional competence CPD events). Input based activities can be measured relevant to the role they perform and the professional and verified in a straightforward manner, for example responsibilities they undertake. reviewing course outlines and teaching materials, or CPD includes learning and development activities to confirmation of participation in a learning activity by maintain technical competencies, professional skills, a provider, employer, mentor, or independent source and professional values, ethics, and attitudes, over verifying that a learning activity has been completed the course of a career following Initial Professional successfully. Development (IPD) and qualification. In an output based approach, the focus is on whether a Structured activities such as education, training, specific competence has been developed or maintained practical experience, mentoring and coaching, and as a result of CPD, and is demonstrated by achieving conducting research all contribute to CPD. It also includes certain learning outcomes. The IAESB Glossary of Terms unstructured forms of acquiring knowledge, such as defines a learning outcome as “The content and the depth attending networking events or reviewing professional of knowledge, understanding, and application required literature, where there is no reflection on the knowledge for a specified competence area”. Under this approach, developed. evidence of achievement can be taken from various Proposed revisions to IES 7, Continuing Professional Development (Revised) In June 2017, the International Accounting Education Standards Board (IAESB) proposed an Exposure Draft, IES 7 Continuing Professional Development (Revised) requesting comments from member bodies and other interested stakeholders by September 5, 2017. The revisions to IES 7 are to be implemented with a view to improving the consistency, quality, and relevance of CPD undertaken by professional accountants. It is expected that the new standard will become effective by 2019. At the core of these revisions is the need for greater emphasis on actual learning and development relevant to the professional accountant’s responsibilities, rather than focused on the number of hours undertaken in learning activities or the number of CPD units achieved. PAOs are encouraged to develop relevant CPD systems that include measurement, monitoring, and enforcement processes to ensure professional accountants maintain their professional competence to deliver high quality services for their clients, employers, and other stakeholders. sources including workplace assessments validated by Producing output based measures may be more a suitably qualified supervisor, or undertaking a form of complicated and sophisticated. Common barriers periodic assessment of competence achieved through include the time, effort, and cost in developing output CPD. Methods of measuring output based learning based measures and adapting CPD methodologies currently range from self-assessments where members and training schemes. There may also be resistance to are asked to self-evaluate if a learning outcome has implementation from professionals who feel they are been achieved or not, to verifiable evaluation of being “tested”. Despite the implementation challenges, qualitative improvements such as testing to measure many feel the transition to output based CPD to be changes in knowledge. achievable and worth the effort. CPD cycles of various PAO’s already include elements of output based Input based schemes are regarded as simple and measures. cost effective, and provide an easily quantifiable method of measuring CPD activity (e.g. attendance at lectures, conferences, and workshops). However, more recently, policy makers, regulators, standard setters, and professional bodies have begun to question whether simply recording the time spent on CPD is an indication of genuine learning and whether it sufficiently encourages professional improvement. Examples: Emerging Output Based CPD Measures Periodic tests of knowledge mandated by law Institute of Authorized Macedonian Institute of Chartered Auditors Accountants and Certified of Albania (IEKA) Accountants (IACA) IEKA’s Managing Council is mandated by law to assess On completion of the required input based CPD, the professional competence of its members by means members of IACA are required to be tested and must of periodic testing of knowledge gained during CPD. pass a written exam administered by IACA. Members These assessments are performed on a cyclical basis who do not pass the test within two years should of between three and five years. IEKA is required to be removed from the register of accountants and make the results of the assessment public and to file authorized accountants and be subject to a three year a copy with the audit regulator. IEKA recently added cooling off period before reinstatement can be initiated. an enhanced requirement for the periodic testing of members recording significant proportions of unstructured CPD. Voluntary assessment of effectiveness of learning experiences Society of Certified Accountants and Auditors of Kosovo (SCAAK) SCAAK is piloting a voluntary assessment of the effectiveness of the learning experience and suggest effectiveness of certain lectures and CPD sessions improvements. The PAO has reported that CPD sessions by asking members who attended to take a written subject to these voluntary assessments have become test. Feedback is provided to members on their level of more interactive and often generate lots of professional achievement and the results are used to measure the discussions, interest, and questions from the audience. Leveraging Quality Assurance as a CPD Tool Institute of Certified Auditors of the Republic of Macedonia (ICARM) ICARM have developed a quality assurance review ►► Quality assurance reviews identify individual system integrated with the CPD system, so it can be requirements for specific or additional CPD with used as a tool to improve the CPD annual program. For supplementary targeted CPD made available to example: those practitioners; and ►► Frequent findings and assessment methodologies ►► Professionals auditing public interest entities are shared with members. CPD annual sessions are subject to more rigorous monitoring of CPD are tailored to cover areas where most findings requirements during quality assurance reviews. are noted; 5 Tips for PAOs and Other Stakeholders Implementing Output Based CPD Tip # 1 Approach CPD as a cyclical process The impact of CPD may be reduced if activities are undertaken in isolation, outside of a defined plan and structure of directed learning. The most effective schemes approach CPD as a sequence of related activities, often with four connected phases (the “CPD cycle”): ►► Planning: determining suitable CPD activities for short and long term professional development needs and setting goals to be achieved through the CPD learning; ►► Action/implementation of the learning plan: completing a variety of structured and unstructured development and learning activities; ►► Results/evaluation of learning: training evaluation, learner satisfaction feedback and surveys, self-assessments, examinations, performance evaluations, and other measurement activities; ►► Reflection: an essential part of the CPD cycle that allows professionals to think about their learning, what they have achieved, and how will this further help their further development and practice. The reflection phase has an important role to play in informing the next cycle of CPD and help professional accountants plan their future CPD activities. “Approaches to CPD Measurement, PARN”, Research Paper Undertaken for the International Accounting Education Standards Board™ (IAESB™). Tip # 2 Learning outcomes are at the core of output based CPD Learning outcomes are what professional accountants are expected to demonstrate in terms of knowledge, skills, and attitudes upon completion of a learning experience. Output based approaches focus on demonstrating achievement of learning outcomes as a genuine measure of learning and improvement. IES 8, Professional Competence for Engagement Partners for Audits of Financial Statements (2016), prescribes learning outcomes that build on learning outcomes identified in IESs 2, 3, and 4 for technical competences, professional skills, and professional values, ethics, and attitudes for audit partners. For other professional roles, PAOs who are implementing output-based CPD measurement approaches can develop learning outcomes covering a range of relevant professional competences or may rely on professional accountants to describe their personal learning outcomes for the next CPD cycle. Where possible they could also draw on employer performance assessment processes that determine the competences that professional accountants need to be able to perform for their role. Professional competence is a much wider concept than simple knowledge of facts, standards, and principles. The IAESB considers professional competence to be the integration and application of learning outcomes for: ►► “Technical competences — The ability to apply professional knowledge to perform a role to a defined standard; ►► Professional skills — Intellectual, interpersonal and communication, personal, and organizational skills that a professional accountant integrates with technical competence and professional values, ethics, and attitudes to demonstrate professional competence; and ►► Professional values, ethics, and attitudes — The characteristics that identify professional accountants as members of a profession. They include the principles of conduct (e.g., ethical principles) generally associated with and considered essential in defining the distinctive characteristics of, professional behavior.”2 2 IAESB Glossary of Terms (2015), Handbook of International Education Pronouncements, 2017 Edition. Tip # 3 Supporting a learner centered approach In implementing both input and output based approaches, to learn about it. More learner centered approaches can CPD providers need to address how CPD activities are also be achieved by incorporating sufficient CPD activities designed, delivered, and disseminated. It is believed that such as on the job-learning, coaching, mentoring, and traditional and long-established CPD activities, such as similar activities which are not often associated with conferences, lectures, and roundtables, have a limited CPD in an input approach. effect on improving professional’s competence and Irrespective of the CPD approach, approaching CPD in an performance. In contrast, interactive CPD activities are innovative manner is necessary to change the focus from more effective learning experiences, as they encourage a compliance mentality to a lifelong learning philosophy. reflection on practice, provide opportunities to use skills, Professionals need to be stimulated by debates on current and involve simulating real life situations that are focused issues, more sophisticated CPD approaches across roles on outcomes. and sectors, and modern methods of delivery. Online Using learning outcomes requires training courses that are tools and modern methods of delivery enhance the learner centered. These differ from traditional classroom learning experience and provide more options, greater lecturing because they involve the active participation frequency for professional networking and experience of the learners by asking them to do something in order exchange (e.g. social media), and flexibility. Modernizing the profession’s skills to serve small and medium enterprises (SMEs) The EU-REPARIS Audit Training of Trainers Program, implemented by the World Bank Center for Financial Reporting Reform (CFRR), brings together Small and Medium Practitioners (SMPs) and PAO educators from eleven professional bodies across Europe and Asia to engage in a peer-to-peer learning and knowledge exchange process facilitated by a regional Community of Practice. While focusing on enhancing the lifelong learning and continuous education systems for professional accountants, this Community of Practice explores ways to modernize the skills of the profession in order to provide effective financial reporting support to SMEs and private sector enterprises. The learning that takes place in this Community of Practice is highly interactive and includes simulating genuine business situations, enabling participants to tackle and solve real life problems through a “learning-by-doing” educational approach. Participants work in smaller groups on a practical case, sharing experiences and reflecting on how they might act in certain situations but also learning from other colleagues how they would handle similar situations elsewhere. The Community of Practice learning and its many practical cases and simulations offers opportunities for participants to reflect on learning. This helps change CPD teaching formats from a compliance mentality focus to a lifelong learning philosophy. The Community of Practice also aims to raise awareness of the transformational changes many SMPs globally are undergoing in their practice models in order to adjust to technological advancements, the evolving needs of their SME clients, and the changing business environment. The Audit Training of Trainers program provides both educational and practical resources to develop the wide-ranging set of soft skills essential for the modern practitioner, including competencies in selling, negotiating, communicating, and performing other business functions. The knowledge, educational resources, and practical tools developed at the regional level are then transferred locally through country replication training events delivered under the CPD systems of the national professional bodies. Tip # 4 Develop verifiable measures for CPD Verifiable evidence to demonstrate that learning outcomes have been achieved can be obtained from a variety of sources, including: ►► Examination results and knowledge tests; ►► Periodic assessments of learning outcomes achieved; ►► Assessing learning through techniques such as role play, learning games, simulations; ►► Achievement of specialist or other qualifications; ►► Records of work performed (work logs) verified against a competency map; ►► Evaluations or assessments of written or published material by a reviewer, publication of professional articles, or of the results of research projects; ►► Information collected from internal and external quality control reviews; ►► Surveys and evaluations (e.g. performance evaluations, self and peer assessments, client satisfaction surveys, etc.) Obtaining verifiable evidence to demonstrate that some learning outcomes have been achieved in an output based measurement system can be complex and/or time consuming, and often will be a combination of several sources. Knowledge tests, for example, are an effective tool to measure the achievement of some learning outcomes (e.g. requirements of new standards and developments) but are less effective to assess other “softer” learning outcomes, such as interpersonal, communication, or personal skills. In such cases, client surveys, workplace assessments, or peer assessments may be required. In the context of smaller practices such assessments may lack objectivity (or be unfeasible in the case of a sole practitioner) and a combination of sources and a variety of verifiable evidence should be considered instead. Tip # 5 Supporting members to plan and reflect on their CPD The planning and reflection phases of the CPD cycle have a fundamental role in the output based system because greater responsibility is placed on the professionals to set out their CPD requirement (plan) and demonstrate how their CPD has improved their professional performance (reflect). Documenting learning activities can be time consuming and difficult for members without support and guidance. Learning often takes place “on the job” but the individual may not recognize it as a learning experience. PAOs can support members to optimize learning opportunities and provide different tools and resources to help them record, plan, and reflect on CPD. Output based CPD models more explicitly recognize that different professionals have different development needs. By setting competence frameworks, PAOs assist professionals to set specific learning goals based on those competences. Further, competency maps are a good way for members, who are looking for promotion or moving from practice to business (or vice versa), to identify “competency gaps” in their learning. Learning plan templates can also help members capture “competency gaps” and include other desired learning when planning CPD activity. Reflection helps individuals to contemplate what they have learned and how this is relevant in practice and to identify personal areas for improvement within defined competence frameworks. PAOs can encourage this process by asking members to submit a series of reflective statements on their CPD. RECOGNITION Listed below, in order of country, are the participating universities and Professional Accountancy Organizations of the EU REPARIS Education Community of Practice (EduCop): ►► University of Tirana, Faculty of Economics ►► Institute of Authorized Chartered Auditors of Albania (IEKA) ►► Albanian Institute of Chartered Accountants ►► University of Sarajevo, School of Economics and Business Sarajevo (SEBS) ►► Union of Accountants, Auditors and Financial Workers of Federation of Bosnia and Herzegovina (SRRF-FBH) ►► University of Banja Luka, Faculty of Economics ►► Association of Accountants and Auditors of Republic Srpska (AAARS) ►► University of Pristina, Faculty of Economics ►► Society of Certified Accountants and Auditors of Kosovo (SCAAK) ►► Ss Cyril and Methodius University in Skopje, Faculty of Economics - Skopje ►► Institute of Certified Auditors of the Republic of Macedonia (ICARM) ►► Macedonian Institute of Accountants and Certified Accountants (IACA) ►► University of Montenegro, Faculty of Economics ►► Institute of Certified Accountants of Montenegro (ICAM) ►► University of Belgrade, Faculty of Economics ►► Serbian Association of Accountants and Auditors (SAAA) ►► Serbian Chamber of Authorized Auditors (CAA) © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions: The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Centre for Financial Reporting Reform Governance Global Practice The World Bank Praterstrasse 31 1020 Vienna – Austria T: +43 (0)1 2170-700 F: +43 (0)1 2170-701 cfrr@worldbank.org www.worldbank.org/cfrr Acknowledgments This publication grew out of the ideas and information exchanges among members of the Education Community of Practice (EduCop), under the EU-REPARIS Program. It was developed by Kalina Shukarova–Savovska, Senior Financial Management Specialist, CFRR, the World Bank, and includes the much valued input of Joseph Bryson, Deputy Director, Quality and Membership, International Federation of Accountants (IFAC), David McPeak, Principal, International Accounting Education Standards Board (IAESB) and Maria Chuvasheva, Senior Technical Manager, Quality and Membership, IFAC. The team wishes to thank Daniel Slezak, Technical Advisor, IAESB for his comments on this publication.