ICAEW has always monitored individual members’ compliance with the CPD Regulations, but this is the first time monitoring has extended to firms. This is because the revised regulations now place a specific responsibility on firms to ensure staff to whom the regulations apply are meeting requirements for their CPD category.
It was encouraging to see that in this first year of reviews carried out under the new regulations, reviewers found that the firms we visited had made changes to their policies and procedures to accommodate the changes, and they had all communicated the new CPD requirements to staff.
It was interesting to see how these largest firms had approached recording and evidencing CPD in different ways, with all but one using a Learning Management System (LMS) to do this. They were also developing some innovative tools to help manage CPD requirements. Unsurprisingly, given the size of the firms included in the first year of monitoring, all of those visited provided their own mandatory ethics training, which was comprehensive and covered the required areas.
How we approached our visits
“To assess how firms have responded to the new responsibilities, we carried out specific on-site CPD reviews where we reviewed each firm's policies and procedures, including guidance issued to their employees,” explains Liz.
The visits looked at how each of the 10 firms determined the CPD requirements for their staff, how they addressed the mandatory ethics requirement, and recorded CPD. “We also sample-tested a number of individuals within the scope of the regulations,” adds Liz, “and we looked at the firms’ monitoring processes to see how they checked that they'd complied with the regulations.”
What did visits look at?
The visits aimed to establish if firms were meeting their responsibilities under the revised CPD Regulations. ICAEW firms engaged in public practice, as well as those regulated by ICAEW and those that use the Chartered Accountant's description, all have a responsibility to ensure that staff who fall within the regulations are compliant. This means they need:
- a process to review and monitor employee CPD records;
- to consider whether individuals have correctly assessed which CPD category they sit in;
- to check individuals have carried out the minimum required verifiable hours and mandatory ethics training; and
- to retain records, including evidence of verifiable CPD, for three years after the completion of a CPD year.
What did we find?
A particular issue was found with some firms’ monitoring activities. “We expect to see firms monitoring to assess whether all of the ICAEW members and relevant persons working within the firms are carrying out the correct CPD for their category. This was the main compliance issue we identified during these visits,” says Liz.
Four of the 10 firms visited had not yet implemented monitoring activities to assess their staff. "We're asking these firms to review the ICAEW members and relevant persons and give us assurances that they will implement monitoring activities going forward,” says Liz. “We're also reminding all firms to check they have systems to monitor compliance going forward.”
There is no correct or prescribed approach to monitoring. Of the firms that were monitoring, some used exception reporting to identify people who had not recorded the minimum number of CPD hours. Others selected a sample of individuals and checked their CPD records – or there was a mixture of both.
We urge all firms to check their monitoring arrangements and make sure they’re providing the necessary assurance. “Where firms are sampling individuals, we’d expect them to check whether the correct CPD category has been assigned, and they have carried out the minimum number of CPD hours, and completed their mandatory ethics training,” says Liz. “If firms identify people who haven't achieved this minimum, they should investigate and develop a plan to address any shortfall.”
What else did we find?
“All of the firms we visited had spent time communicating the changes to the CPD Regulations internally,” says Liz. “And they'd all made changes to their policies and procedures,” she added. A majority of firms had developed frequently asked questions (FAQs) to address the main queries from staff. Reviewers saw some good examples of central query logs being used to drive the preparation of additional FAQs or to identify themes which could be used to communicate or clarify internal policies.
Nine of the firms used an LMS to record their CPD. “Most of these were global systems, which means it may not be easy to change fields or terminology to address the requirements of the revised regulations,” explains Liz. Firms had mostly dealt with this by using previously unused fields, or sticking to terminology they'd used before, such as structured and unstructured training to represent verifiable and non-verifiable CPD.
During reviews of individual members within the staff teams, Karen explained, “The most frequent cause of non-compliance was when they had not assessed their CPD category at all or had placed themselves in the wrong category.” Of the 10 large firms, we found eight had decided they would assess the required CPD category on behalf of staff, while the remaining two required staff to self-assess their CPD category. Most firms had also designed processes to approve exceptions to these categories where someone considered they did not fit into the pre-assigned category. Four of the firms that made the assessment for staff expected all professional staff to meet Category 1 requirements (the highest number of hours).
Several firms didn't record an individual's assigned CPD category, or they didn’t record it in a consistent way. “We found this was largely due to limitations within systems, or difficulties with software, such as HR systems and LMSs being unable to interact with each other,” explains Liz. “The downside of this, of course, is that it makes it more difficult when monitoring.”
Training needs analysis
All the firms visited had spent time developing a “training needs analysis”. "While this process would be simpler in smaller firms, we'd recommend that such firms should still consider any firm-wide training requirements, including training for specific service lines, specialisms, or role profiles," says Liz.
At the start of each CPD year, individual members are required to reflect on what their CPD needs are likely to be and create a plan to meet them. "It’s really important for individuals to assess their needs personally too,” emphasises Karen. “They might feel they need additional training in a certain area, for example.”
This CPD reflection could be covered in a firm’s appraisal process, where additional development needs are considered and discussed, or individuals could do it themselves. “But individuals still need to record this reflection,” advises Liz, “and we will ask to see it when we select people for testing during our firm CPD visits.
“During individual member reviews, we found people who didn't have an appropriate reflection statement,” she adds. “So, this is something for both firms and individuals to bear in mind in terms of compliance.”
Challenges and innovations
The visits also shed some light on key challenges firms are facing. “We found that firms are not always finding it straightforward to identify who is in the scope of the regulations,” says Liz. This may be because firms are not recording professional body membership, or that the information is contained in HR systems, which aren't linked to LMSs or other CPD recording systems.
“One way to ensure your data is complete and up to date is to gather this information using an annual declaration process,” she advises.
Another challenge has been adapting existing software systems to the new CPD requirements. “We've seen difficulties with how firms record the different CPD hours requirement driven by the different CPD categories,” says Liz. Though some firms have addressed this by keeping everyone in Category 1. There have also been problems reconfiguring systems to record verifiable and non-verifiable CPD. In some cases, firms have repurposed or used previously hidden fields to record non-verifiable CPD or to incorporate non-firm-provided CPD.
Supplying supporting evidence for verifiable CPD emerged as an issue for both members and firms. For example, 20% of non-compliances for individual members related to insufficient evidence. When it came to firms, one of the main challenges was how to support on-the-job training. “ICAEW has developed a template for members to capture this type of CPD, and a number of firms we visited have used this or developed their own,” says Liz.
Alongside the challenges, reviewers observed examples of innovative approaches and tools to help manage the new CPD requirements. Some of these were internally developed specifically for CPD compliance. Firms had used training calendars to help people plan their CPD activity across the year, and mapping tools to allocate CPD to staff. “We also saw dashboards for individuals to track and manage their CPD hours, and Power BI dashboards to provide management information,” explains Liz.
Review your procedures
If reviewers assess a firm as non-compliant, they’ll ask for assurances that it will address issues raised, and this includes reviewing whether there are individuals who don't comply with the regulations and remediating those records where necessary.
“We may refer the firm to the Practice Assurance Committee if we don't receive such assurances. If we identify similar issues on subsequent visits, or twice within five years, the regulations include the ability to refer firms to the Conduct Department,” explains Liz.
“We will be continuing with visits to firms on a cyclical basis,” she says. “If your firm is selected for review, we will contact you in plenty of time to let you know that you have been selected, and arrange the visit. In the meantime, all firms should be reviewing their policies and systems to ensure they’re meeting their obligations under the CPD Regulations. If firms need further support, our CPD hub contains a range of resources for individuals and firms.”
Resources
- Visit our CPD hub
- Find information on firms’ responsibilities for CPD
- Browse our FAQs for firms
- Watch our webinar recording on CPD monitoring insights for members and firms
- Continuing Professional Development (CPD) Regulations 2023
- Members’ guide to CPD
