History of SOEL


The Period Until the Foundation of the Institute of Certified Public Accountants of Greece in 1957

Until the foundation and operation of the Institute of Certified Public Accountants in 1956, the audit that was provided for by law 2190/1920 on the financial statements of public limited companies was a pure formality and Greek experts on commercial law had opined that ‘‘ the audit of a public limited company is, in our country, a complete formality, constituting a mockery of the state as well as of shareholders and all other interested parties, because, as is well known, in reality the auditors engaged by the General Assembly of shareholders limit themselves to signing the audit report prepared for them by the board of directors’’.

The purely formal signing of the audit report without the conduct of an actual audit as was provided for by law 2190/1920 was due to the fact that the auditors concerned were not professionals as the law did not establish any prerequisite qualifications with the result that persons of any professional or educational background could be engaged as auditors. In addition to this, there was also the problem of conflict of interest, as auditors were engaged and remunerated by the board of directors of the company (since the General Assembly of shareholders simply concurred with the proposal of the board of directors), whose act they were called to audit, and consequently there were relations of dependency between the auditor and those whom the auditor was tasked with auditing.

The operation of the Institute of Certified Public Accountants of Greece from 1957 to 1992

The state in order to remedy the unacceptable situation described above and in order to establish the framework for the conduct of meaningful audits of public limited companies constituted the Institute of Certified Public Accountants with law 3329/1955. The institute began its operation on 19/11/1956 and was gradually charged with the audit first of large and then of small and medium sized public limited companies. Specifically this law stipulated that: there was to be no involvement on the part of the auditor in his engagement as auditor and in the determination of his/her compensation and neither could he have any financial interest in the firm since s/he remunerated by a monthly salary determined by the Supervisory Council of the Institute of Certified Public Accountants of Greece.

To the Supervisory Council of the Institute of Certified Public Accountants, whose membership of the was selected by the state and comprised of university professors, members of the Court of Audit, the elected President of the Institute of Certified Public Accountants etc, were assigned the following competences:

-          The appointment of new members, who were university educated and entered at the basic rank of ‘‘Articled CPA’’

-          The conduct of promotions and the exercise of disciplinary authority.

-          The determination of the monthly remuneration of members of the Institute.

-          The annual drawing up of a list of 6 Certified Public Accountants from which the audited public limited firm under statutory obligation of audit was to select its auditor. For all other audits the certified public accountant performing the audit was selected by the Supervisory Council upon recommendation by the Administrative Committee of the Institute of Certified Public Accountants.

-          The determination of the remuneration of each audit performed, its collection and its deposition in a special account of the Bank of Greece and the withdrawal from this account of the necessary sums for the payments of the operating expenses of the Institute.

Competencies relating to professional questions were assigned to the Administrative Committee which was made up of elected members of the Institute.

It was stipulated explicitly that: ‘‘Certified Public Accountants are not considered civil servants but as exercising a public function. In the discharge of their professional duties Certified Public Accountants are independent, any intervention whatsoever in their work being prohibited. The direct communication between Certified Public Accountant and the audited party for the purpose of determining compensation is prohibited.’’      

Stringent ordinances were instituted establishing the irreconcilability of the function of the Certified Public Accountant with any other profession and any compensated or uncompensated service so as to prevent the formation of relationships which could affect the auditor’s work. It must be stressed that the engagement of the same Certified Public Accountant as auditor of a firm could not be longer than 5 years.

Extremely high standards were set as regards moral irreproachability and personal integrity as well as technical skill and formal qualifications.

The above measures secured the complete independence of the professional opinion of the Certified Public Accountant. This is indicated by the generally recognition that the work of the Institute of Certified Public Accountants enjoyed during its 36 years of existence.

It is to be noted that the above rules, regulations and standards were adopted on the advice of English Chartered Accountants, who were the technical advisors of the Institute of Certified Public Accountants in its first years. The Chartered Accountants did not counsel the adoption of the legal and regulatory framework prevailing in their own country, perhaps because they judged that conditions prevailing in Greece were inimical to it, but also because they took into account the disadvantages of the conduct of the profession in their country.

On the counsel of the aforementioned English Chartered Accountants the Greek Audit Standards were established, these being based primarily on English Audit Standards. These standards were revised in 1979 and adjusted to conform to the basic principles of the International Accounting Standards as well as the specific specifications of Greek law regarding public limited companies.

During this period the opinion prevailed that the profession of the external auditor (Certified Public Accountant) could not be compared with the liberal profession of medicine or the law but with the profession of jurisprudence which is a public function. The Certified Public Accountant is not an advocate for the enterprise (its shareholders), as the lawyer defends the interests of his client and is legally enjoined to advance arguments in favor of his client and to silence those arguments detrimental to him. The Certified Public Accountant must act exactly as a judge ought to. The conclusions of the audit performed by the Certified Public Accountant must be objective and impartial to all.

From 1993 to Today

In 1992, the opinion prevailed in government that the profession in Greece ought to adopt the organizational framework prevailing in other countries of the European Union, that is to say audit firms. With presidential decree 226/1992 ‘‘on the formation, organization and function of the Institute of Certified Public Accountants, as well as on the terms of enrolment in a special register and exercise of the profession of Certified Public Accountant’’ were abolished many previous ordinances relating to the Institute of Certified Public Accountants and the following ordinances were promulgated:

The Institute of Certified Public Accountants is instituted by and comprised of professional auditors who enjoy personal and functional independence and are enrolled in a special register which is a public document.

In the special register are enrolled already serving members of the Institute of Certified Public Accountants as well as persons who possess the qualifications and prerequisites specified by the same presidential decree.

The organs of the Institute of Certified Public Accountants are the General Assembly, the Supervisory Council, the Scientific Council and the disciplinary council. Members of the Institue of Certified Public Accountants are all those possessing the rank of Certified Public Accountant, Assistant CPA, Articled CPA, and Trainee CPA. The introductory rank is that of Trainee CPA to which are admitted those having irreproachable morals and indubitable virtue and who possess a degree of a University economics faculty. Promotion to higher grades occurs after successful completion of professional examinations.

The constitution and function of the Institute of Certified Public Accountants has as its aim the auditing of public and private organizations, enterprises and concessions of all kinds, independently of their legal form (foundation, firm or any other legal personality public or private), by persons with high professional qualifications who carry out their work with transparency and responsibility  so that the validity and reliability of the conclusions of their audits is secured, in accordance with internationally recognized accounting standards and the stipulations of internal and European legislation.

The General Assembly of the Institute of Certified Public Accountants is comprised of those Certified Public Accountants registered in the special register who are not under voluntary suspension. The General Assembly is the supreme organ of the Institute and meets regularly within four months of the beginning of the year, and extraordinarily whenever convened by the Supervisory Council.

The General Assembly has the following competencies:

-          It passes judgment on any matter concerning the organization and conduct of the profession.

-          It approves the annual financial statements and the budget of the Institute.

-          Every three years it elects the President and Members of the Supervisory and Scientific councils.

-          The Supervisory Council is constituted by 9 members and its president, who are elected every three years by the General Assembly. The Supervisory Council administers the Institute of Certified Public Accountants as a legal person and is tasked with the supervision of the work of Certified Public Accountants. Specifically it has the following competencies:

-          It manages the finances of the Institute, draws up the annual financial statement and the budget and submits them for approval to the General Assembly.

-          It appoints those possessing the legally mandated qualifications as Certified Public Accountants (statutory auditors) and decides their enrolment in the special register.

-          It decides the expulsion from the institute of any of its members.

-          It conducts the professional examinations necessary for the acquisition of the license to undertake the profession of Certified Public Accountant.

-          It exercises through the appropriate organs, oversight and control over the Institute and supervises the work performed by Certified Public Accountants, in order to ensure that laws and standards of professional ethics are adhered to, and to secure the quality and transparency of the services provided by them and the prestige of the profession.

-          With the prior counsel of the Scientific Council, it published regulations concerning the shaping, supplementation and implementation of Accounting Standards.

-          With the prior counsel of the Scientific Council, it releases general guidelines concerning the auditing profession.

-          It exercises every other competency provided for by the legislation or assigned to it by decision of the General Assembly.

The Scientific Council is comprised of four Members and the President who are elected, from among practicing or former Certified Public Accountants or professors of institutions of higher learning in the disciplines of accounting or auditing, by the General Assembly of the Institute. The Scientific Council draws up or processes the regulations, directives and other scientific texts within the jurisdiction of the Supervisory Council and provides expert advice on the questions submitted to it. Also, the Scientific Council is competent to examine and deal with technical or practical questions relevant to the exercise of quality control on the work of Certified Public Accountants. Specifically, the Scientific Council can examine the worksheets that support the opinion of the Certified Public Accountant and submit the relevant report to the Supervisory Council if and when this is requested from it or in such cases where there are official allegations.

During the conduct of audits in the period 1993-2004, Certified Public Accountants utilized the accounting standards used by the Institute of Certified Public Accountants in its previous form, which were adopted by a decision of the Supervisory Council. These standards were in accord with the basic principles of the International Accounting Standards. From 2005 onwards, Certified Public Accountants utilize the International Accounting Standards.

In 2003, in accordance with the relevant law Greek Accounting-Auditing Oversight Board (ELTE) was established with the aim of controlling the quality of statutory audits performed by Certified Public Accountants, the provision of expert advice on questions of Accounting Plans as well as the supervision of the activities of the Institute of Certified Public Accountants.

In 2008 with law 3693, Greek legislation was harmonized with the provisions of Directive 2006/43/EK of the European Parliament. Specifically, with this law the following areas were regulated:

-          The prerequisites for gaining the professional practicing license for the profession.

-          The keeping of the public register of Certified Public Accountants

-          Adherence to the basic principles of the Code of Ethics for Professional Accountants.

-          Adherence to International Accounting Standards

-          Disciplinary and Civil Liability

The Institute of Certified Public Accountants following a decision of the Ministry of Finance and Economy is responsible for the organization and conduct of professional examinations for the practicing license as regards the profession of Certified Public Accountancy (Statutory Auditing). These examinations are conducted by the five-member Examination Board, which is nominated by decision of the Ministry of Finance and Economy and are under the supervision and control of ELTE. Also with a regulatory act by ELTE the Institute of Certified Public Accountants had been charged with keeping the public register of Certified Public Accountants.