Requirements for Continuing Education for Accountants

Circular Requirements for continuing education for accountants CIRCULAR: 11/2012 DATE: 16.05.2012 THE CIRCULAR APPLIES TO: Accountants Accounting firms FINANS TILSYNET Postboks 1187 Sentrum 0107 Oslo

Requirements for continuing education for accountants 2 | Finanstilsynet Contents 1 Introduction 3 2 Who must meet the requirement for continuing education? 3 3 Requirements for hours distributed across subject areas 3 3.1 Legal requirement 3 3.2 Financial accounting 4 3.3 Bookkeeping 4 3.4 Tax law/VAT law 4 3.5 Accountant regulations and good accounting practice 4 3.6 Legal theory 5 3.7 Other subject areas 5 3.8 Courses that are not accepted 6 3.9 Requirements for the professional level of continuing education and the accountant's assessment 6 4 How to carry out the continuing education? 6 4.1 Participate in continuing education courses 6 4.2 Pass an exam at a university/college where one credit corresponds to four hours of continuing education 8 4.3 Participate in teaching at a university/college 8 4.4 Lecture at continuing education courses and at university/college courses 8 5 The accountant's documentation of continuing education 8 5.1 Documentation of participation in continuing education courses 9 5.2 Documentation of passed exams at university/college 9 5.3 Documentation of participation in teaching at university/college courses 9 5.4 Documentation of lecturing at continuing education courses and university/college courses 10 6 Parental leave and dispensation 10 6.1 Regarding postponement due to parental leave 10 6.2 Regarding dispensation in special cases 11 7 Requirements for continuing education for accountants who are also approved auditors 12 8 Finanstilsynet's control of continuing education 12 9 Consequences of breaching the provisions on requirements for continuing education 13

Requirements for continuing education for accountants Finanstilsynet | 3 1 Introduction To maintain their authorization as an accountant, it is a condition to meet certain requirements for continuing education. The requirement for continuing education for authorized accountants follows from the Accountant Act § 5, with supplementary rules in the Accountant Regulations Chapter 4. It is assumed that all authorized accountants are familiar with the content of the rules on continuing education. This circular gives a more detailed description of the requirement for continuing education. The purpose of the continuing education requirement is to contribute to authorized accountants being professionally up-to-date in their professional practice. Finanstilsynet will hereafter base its practice on the implementation set out in the circular. 2 Who must meet the requirement for continuing education? The requirement for continuing education applies to all who have authorization as an accountant. The requirement for continuing education therefore applies regardless of whether one practices accounting services or not. The requirement applies regardless of how many accounting assignments the accountant has, and the scope of these. The continuing education requirement applies even if the accountant is sick, or if there are other circumstances that make it difficult to meet the requirement. See further on this in point 6. 3 Requirements for hours distributed across subject areas 3.1 Legal requirement An authorized accountant must at all times have completed 77 hours of continuing education during the three preceding calendar years. The requirement of 77 hours is a minimum requirement. The accountant must be able to document that the requirement is met at each year-end. There may be accountants who need special competence due to the nature and scope of the accounting business and the client's business, and who therefore must take additional continuing education to have sufficient knowledge in their business. Of the requirement for at least 77 hours, the continuing education must minimum cover 21 hours of financial accounting (of which at least 7 hours within bookkeeping regulations), 21 hours of tax law/VAT law, 14 hours on topics from accountant regulations/good accounting practice and 7 hours of legal theory. This amounts to a total of 63 hours. The remaining 14 hours must be within the subject areas mentioned above, or other subjects that are included as mandatory subjects in the bachelor's degree in economics and administration.

Requirements for continuing education for accountants 4 | Finanstilsynet 3.2 Financial accounting Financial accounting is understood as regulations and theory related to the Accounting Act, including good accounting practice, as well as financial analysis and key figure analysis of profitability, liquidity, financing and solvency. Courses in (electronic) accounting programs can only be counted to the extent that the course contains concrete, professional issues related to the annual accounts. Courses in public accounting, accountant regulations and good accounting practice (GRFS) do not cover the subject area of financial accounting. 3.3 Bookkeeping Bookkeeping is understood as regulations and theory related to the Bookkeeping Act, including good bookkeeping practice. Courses aimed at bookkeeping in industries subject to special legislation, for example retail, taxi services, construction and installation services, etc. will also be relevant. Courses in accountant regulations and good accounting practice (GRFS) do not cover the subject matter of bookkeeping. Courses in (electronic) accounting programs can only be counted to the extent that the course contains concrete, professional issues related to bookkeeping. 3.4 Tax law/VAT law Tax law/VAT law is understood as regulations and theory in connection with tax and VAT legislation, and the practice of this. Also courses in payroll accounting may be relevant. Courses in (electronic) payroll and accounting programs can only be counted to the extent that the course contains concrete, professional issues related to tax and VAT. 3.5 Accountant regulations and good accounting practice With accountant regulations is meant the Accountant Act and other laws that directly regulate the accounting business. With good accounting practice is meant the industry standards (GRFS) developed by the Norwegian Association of Authorized Public Accountants (NARF) and the Economic Association. Courses with topics from anti-money laundering legislation and risk management regulations will fall under this subject area.

Requirements for continuing education for accountants Finanstilsynet | 5 The subject area of ethics is included in the plan for the bachelor's degree in economics and administration that was adopted on October 17, 2011. The plan recommends that at least 5 credits should cover ethics. Any course hours in ethics will after this be approved as "other subject areas". ref. point 3.7 below. Examples of subject areas that are not covered by accountant regulations and good accounting practice are: • Ethics • Communication • Self-development courses • Good auditing practice 3.6 Legal theory Courses in legal theory must be directed towards legal topics that are not included in the other subject areas, and be relevant for the professional practice as an authorized accountant. Company law topics, labor law, pledge and property law, inheritance law, pension law and contract and contract law will normally fulfill hours within this subject area. Also course hours within legal method and general legal source theory can be counted. The same applies to courses on the board member's responsibility and rules related to registration in the Brønnøysund Register. 3.7 Other subject areas These 14 hours are intended to give the accountant flexibility in their planning of course participation. The hours should in principle be distributed within financial accounting, bookkeeping, tax law/VAT law, topics from accountant regulations and good accounting practice and legal theory. Other business economic and administrative topics can, however, supplement these hours. The limitation lies in what is mandatory subjects in the bachelor's degree, ref. plan for three-year bachelor's degree in economics and administration adopted by the National Council for Economic- Administrative Education (NRØA), 1 and at the same time is relevant for the execution of the accounting business. Examples of professional content that can be approved as other subject areas: • Business economic analysis (finance, investment, cost management, etc.) • Administrative subjects (strategy, management, organization, marketing, etc.) • Economics (micro- and macroeconomics) • Economic-administrative method subjects (statistics, mathematics, etc.) • Ethics • Accounting tools • Public accounting 1 The plan is available on the University and College Council's website, see: http://www.uhr.no/rad_og_utvalg/nasjonale_rad/nroa/oppgaver.

Requirements for continuing education for accountants 6 | Finanstilsynet 3.8 Courses that are not accepted Mandatory continuing education applies to subject areas related to authorization-required accounting business. This means that for example courses in auditing and general data courses (Word, Excel, PowerPoint etc.) cannot be counted as statutory continuing education. HMS courses can be approved to the extent that the content falls within the subject area of legal theory or the mandatory subjects in the bachelor's degree in economics and administration, and is relevant for the practice of the accounting profession. 3.9 Requirements for the professional level of continuing education and the accountant's assessment Continuing education should constitute a professional supplement, and therefore involve a competence increase or updating of existing knowledge. This means that continuing education must be at a sufficiently high professional level for the continuing education to be used to fulfill the legal requirement. Courses that are specifically aimed at the accounting profession will in principle be at a sufficiently high professional level, and therefore also be relevant. Also courses that target a larger group can be relevant, to the extent that they are at a level that involves a competence increase or updating of existing knowledge. For example, a course organized by the Norwegian Tax Administration aimed at accountants and auditors will normally be considered relevant. However, an introductory course in tax law will not meet the requirement for professional level. Finanstilsynet does not pre-approve courses. It is assumed that the accountant themselves has sufficient insight to assess the professional content of the courses in relation to the subject areas established in the regulations. The accountant must here exercise reasonable judgment. Finanstilsynet will normally not overrule the accountant's assessment of the course's professional content. If the accountant has assessed the course's professional content differently than what is stated in the course certificate or similar, the accountant must document the basis for their assessment. 4 How to carry out the continuing education? Continuing education can be carried out by:

1. participating in continuing education courses
2. passing an exam at a university/college where one credit corresponds to four hours of continuing education
3. participating in the teaching program for the exam mentioned in point 2 above
4. lecturing at continuing education courses or at university/college courses. 4.1 Participate in continuing education courses The continuing education requirement can be met by participating in courses arranged by professional course organizers, and others who are at a qualitatively similar level. Finanstilsynet does not approve course organizers. For the course to be used to fulfill the continuing education requirement, the accountant must ensure that the course organizer meets the criteria. Professional course organizers Professional course organizers means companies whose purpose is to develop and conduct courses. The industry organizations NARF, Økonomiforbundet and the Norwegian Association of Certified Public Accountants (DnR) are considered professional course organizers. For an organizer to be considered a professional course organizer, documentation for the course must be prepared. Documentation must minimum consist of a participant list and a course plan. The course plan must be prepared in advance of the course and describe the course's purpose and objectives, for example who the course is suitable for, professional level, learning goals, distribution of time spent on the different subject areas and similar. A professional course organizer must use competent lecturers, and the course plan must describe the background/competence of the speakers to be used. The documentation must also contain a copy of course material, presentations etc. Finanstilsynet assumes that the course organizer keeps the course documentation as long as the accountant themselves is required to keep documentation for their continuing education, for at least ten calendar years after the course was conducted. A professional course organizer will also ensure that the accountant is able to document course participation through a course certificate. Other course organizers Courses organized by others, who are at a qualitatively similar level to a professional course organizer, will be equated with courses from professional course organizers. Examples of this are courses organized internally in accounting or auditing firms and courses organized by the Norwegian Tax Administration. The course organizer must prepare and keep documentation in the same way as professional course organizers. The requirement for competent lecturer means that the person must have specialized competence in the subject being lectured on. It is not sufficient that an employee is used to relay from a course the person themselves has participated in. The accountant must ensure that the course organizer meets these prerequisites. Online courses Courses conducted via the Internet are approved provided that the requirements for professional content, professionalism and documentation are met. To ensure real participation, there is a requirement for a certain degree of interactivity. Online courses must therefore consist of individualized tests or responses from each participant during the course. The course organizer, who must issue the course certificate, must have systems that ensure that it is actually the registered accountant who completes the course. The course organizer must also document how many work hours the course normatively constitutes. When the online course is not organized by a professional course organizer, the accountant must ensure that the course organizer meets these requirements.

Requirements for continuing education for accountants 8 | Finanstilsynet 4.2 Pass an exam at a university/college where one corresponds to four hours of continuing education Finanstilsynet assumes that the continuing education requirement is fulfilled in its entirety in the year one completes a bachelor's degree in economics and administration, with specialization/continuation as mentioned in the regulations. This applies if one has followed the ordinary (normative) study program. If the bachelor's degree is completed part-time, relevant exams that fall within the last three calendar years can be counted in the continuing education. If the accountant after obtaining authorization documents passed exams at a university or college, this can be converted to course hours by one credit corresponding to four hours of continuing education. The course hours are dated to the year the exam was taken. The assessment of the course's professional content follows the same principles as mentioned above in point 3. 4.3 Participate in teaching at a university/college Participating in teaching without an exam can count as continuing education under the condition that participation can be documented by the study institution. Participation does not count hour for hour. It is assumed that the accountant has participated in at least 75 percent of the total teaching program, including any assignment submissions and similar. Attendance counts in the same way as passed exams. This means that if the course the accountant has participated in constitutes 6 credits, participation will correspond to 24 course hours. 4.4 Lecturing at continuing education courses and at university/college courses Lecturing at courses is approved hour for hour, with the limitation that one is not credited for content-wise identical courses more than once. The above requirements for professional content and professionalism apply correspondingly. 5 The accountant's documentation of continuing education Continuing education must be documented with a course certificate or similar (see further on this in point 5.1–5.4) and a combined chronological overview of the continuing education that has been conducted during the three preceding calendar years. The chronological overview must state the course organizer, the course name, course date, number of hours and subject area. This overview is not sufficient on its own to document continuing education. The accountant is required to ensure that continuing education can be documented and assess whether course documentation is sufficient in relation to the documentation requirement described below.

Requirements for continuing education for accountants Finanstilsynet | 9 below. The documentation must be sufficient for Finanstilsynet to control that the continuing education requirement is fulfilled. The accountant must keep documentation showing that the requirement for statutory continuing education is fulfilled for each of the ten preceding years. 5.1 Documentation of participation in continuing education courses Participation in continuing education courses must be documented with a course certificate. The course certificate must confirm that the accountant has completed the course, and must be issued by the organizer. The course certificate must minimum contain: • name of participant (accountant) • name of course organizer • short description of the course's professional content • course date and duration/number of hours Participant certificates for courses organized by NARF and DnR can be replaced by a printout from the industry association's website, which confirms all completed courses in a combined overview. Courses in regime of other organizers must be documented with a course certificate, even if they appear in a combined overview. 5.2 Documentation of passed exams at university/college If continuing education is carried out by taking an exam, the accountant must document this in the form of a diploma or grade transcript. In addition, the course plan for the course should be kept as documentation of the course's professional content. 5.3 Documentation of participation in teaching at university/college courses If continuing education is carried out by participating in a teaching program, the accountant must document this with a written confirmation from the educational institution. The confirmation must minimum contain: • name of participant (accountant) • name of educational institution and lecturer • short description of the professional content of the teaching • course name and course code • date and participation (in number of hours and percentage)

Requirements for continuing education for accountants 10 | Finanstilsynet 5.4 Documentation of lecturing at continuing education courses and university/college courses If continuing education is carried out by lecturing at courses, the accountant must document this with a confirmation from the course organizer or study institution. The confirmation must minimum contain: • name of lecturer (accountant) • name of course organizer or educational institution • short description of the course/lecture content • course name and course code • date and number of lecture hours 6 Parental leave and dispensation 6.1 Regarding postponement due to parental leave An automatic one-year postponement of the deadline for continuing education is granted where the accountant takes parental leave for more than six months. The rule should be understood such that the postponement year is dated to the year in which the person first obtains six months of ordinary leave within a twelve month period. This means that if the leave is taken with a time account over such a long period that it does not constitute six months within twelve consecutive months, the postponement rule does not apply. An automatic one-year postponement is granted for each three-year period the postponement year is included. No application to Finanstilsynet for dispensation is required on this basis. The accountant must however, together with the continuing education documentation, keep documentation on when and how the leave was taken. Further on the effect of the postponement rule The first year-end after at least six months of leave has been taken, does not enter into the control of continuing education. The reason for this is that pregnancy/adoption is difficult to plan, and that the accountant right after the expiration of the leave period may be in a situation where the continuing education requirement is not fulfilled. At the next year-end, the continuing education requirement must be fulfilled by looking back four calendar years time. This means that the year in which the postponement is dated can be ignored. If continuing education has actually been carried out in this year, this can be counted. If further parental leave is taken in the current continuing education period, this gives an extra year of postponement. Example: An accountant is authorized in year 2010. In principle, the person must document and have completed 77 hours of continuing education for the three preceding calendar years at each year-end from and including January 1, 2014.

Requirements for continuing education for accountants Finanstilsynet | 11 If the accountant has been on parental leave from September 1, 2012 to September 1, 2013, an automatic one-year postponement for continuing education is granted. The postponement year is dated to 2013, as this is the year the accountant first obtains six months of leave. This means that the accountant must document 77 hours of continuing education for the first time on January 1, 2015. Continuing education must therefore be completed in the period from the date of authorization to December 31, 2014. For the following period, the postponement year will still be within the last three years. This means that statutory continuing education must be completed in the period January 1, 2012 to December 31, 2015, per documentation date January 1, 2016. Year 2013 is not included in the calculation at the documentation deadline January 1, 2017. This means that the continuing education cycle continues as normal from and including this date, that is, that continuing education for the last three calendar years is to be counted. 6.2 Regarding dispensation in special cases Finanstilsynet may grant postponement or reduction of continuing education in "special cases". In the question of postponement or reduction of continuing education, the law's intent to protect the clients must weigh heavily. Finanstilsynet's administrative practice shows that the possibility to grant postponement or reduction is very narrow. The dispensation rule is only meant as a safety valve when unexpected circumstances outside the accountant's control have prevented the person from completing the minimum requirement. Illness is the most common exception situation. This means, however, that if the illness does not prevent the accountant from practicing business, the accountant cannot be considered prevented from meeting the requirement for continuing education. That the accountant temporarily has left the profession and has chosen not to complete continuing education does not constitute grounds for dispensation. It is a prerequisite for dispensation that the accountant catches up with continuing education as soon as possible after the original deadline, and that the cause underlying the hindrance falls away within a reasonable time. This means among other things that if the accountant needs postponement due to serious illness, dispensation is only granted if it is likely that the accountant's condition improves in the relatively near future. Furthermore, this means that it is normally no decisions are made on dispensation with a duration beyond one year. Where an application for dispensation from the continuing education requirement is required, Finanstilsynet demands the following documentation: • Documentation of the circumstances claimed, for example a medical certificate • Indication of when the continuing education requirement is expected to be fulfilled • Overview of continuing education hours completed in the current period • Any courses the accountant is registered for in the near future

Requirements for continuing education for accountants 12 | Finanstilsynet 7 Requirements for continuing education for accountants who are also approved auditors The requirement for continuing education under the Auditor Act applies only to those who are responsible auditors, and are assigned an auditor registry number. The requirement for continuing education under the Accountant Act applies to all who have authorization, regardless of whether they practice business or not. This means that an approved auditor who is also an authorized accountant