Lebanese Association of Certified Public Accountants

In 2013, the Lebanese Association of Certified Public Accountants (LACPA) amended its bylaws to establish a mandatory peer-review quality assurance (QA) system for all CPAs, which by law must be members of LACPA. As of the date of this assessment, the relevant standards— ISQM 1, 2, and ISA 220 (revised)—are adopted.

To support the initial implementation of the QA review system, LACPA conducted a series of events and activities, including: production of an audit manual and related working papers for Small and Medium Practices (SMPs); workshops to support SMPs; identification of international and local partners to provide financial support for the peer review program in the early years; selection and training of external quality assurance reviewers; and hosting technical workshops for its members, trainees, and the business community. Additionally, LACPA hosted a technical workshop in 2015 with trainers from the American Institute of Certified Public Accountants for approximately 70 peer reviewers from Egypt, Lebanon, and Jordan to constitute a core source of peer reviewers in the region. The LACPA completed a post-implementation review of the system in 2017.

Since 2019, however, LACPA’s activity has stalled due to national circumstances that are out of LACPA’s control. In 2023, LACPA conducted a self-assessment of its QA review system against SMO 1 requirements and identified gaps to address. While LACPA reported several plans for 2024, it remains uncertain whether the institute will be able to secure the funding needed for implementation. Plans include training on ISQM 1 & 2, as well as workshops to support practical implementation, and the launch of a five-person volunteer program to help with funding the cost of peer reviews. It remains unclear if the reviews are mandatory or completed voluntarily as of the date of this assessment.

It is commendable that LACPA completed a self-assessment in 2023 against SMO 1 requirements. LACPA is encouraged to continue using its best endeavors under the circumstances that it operates to address the gaps that were identified. LACPA is also encouraged to follow the developments and publication of implementation support materials related to ISQM 1 to be cost efficient; raise awareness of its members via virtual training; and update its educational programming to support members with the application of ISQM 1 & 2. Lastly, LACPA is encouraged to clarify whether QA reviews are mandatory or completed voluntarily as of the date of this assessment.

Current Status: Execute

According to the Accountancy Profession Act No. 364 of 1994, all Certified Public Accountants (CPAs) are required to be registered and licensed members of the LACPA, and the association has the authority to establish continuing professional development (CPD) requirements for its members. The act itself defines initial professional development (IPD) requirements for aspiring CPAs, including a university degree, work experience, and examinations. LACPA requires CPAs to attend a minimum of 40 hours of CPD annually. The association monitors the fulfillment of CPD requirements by requiring members to submit evidence.

During 2013–2015, LACPA established its own training institute which offers specialized seminars and workshops on topics such as ISA, IFRS, Business Soft Skills, and Law and Taxation. Furthermore, the association—in collaboration with the World Bank—launched a program to offer professional diplomas in association with international organizations such as the American Institute of Certified Public Accountants (AICPA), the Institute of Management Accountants (IMA), and the Association of Certified Chartered Accountants (ACCA).

During the same timeframe, the association amended the bylaws of the Examination Committee to ensure rotation of its members every three years and to schedule two exams on a semi-annual basis. Furthermore, the LACPA adopted a new examination syllabus to align with international requirements. To support adoption of the IES, the association makes the examination syllabus available to all universities operating in Lebanon and promotes and assists universities to adopt the relevant requirements. In October 2022, LACPA established a University Committee (UC) that signed Memorandums of Understanding (MoUs) with universities to update the accountancy curricula on an ongoing basis. Under these MoUs, LACPA can ensure that universities incorporate the latest accountancy standards and best practices on an ongoing basis.

Between October 2022- October 2023, LACPA conducted a gap analysis of educational requirements at the jurisdiction level and identified gaps that are being reviewed by the UC. LACPA is in the process of securing financial assistance to address the gaps (please refer to LACPA’s 2023 SMO Action Plan).

Alignment with the IES requirements is an important foundation for a competent and capable accountancy profession at all levels. LACPA is encouraged to continue collaborating with universities to promote alignment with 2019 revised IES requirements. The Accountancy Education E-Tool developed by IFAC may be useful to identify implementation support materials.

Current Status: Execute

According to the Accountancy Profession Act No. 364 of 1994, the LACPA proposes auditing standards to the Ministry of Finance (MoF), which adopts the applicable auditing standards through ministerial decrees and orders. As the MoF has adopted ISA as issued by the IAASB without modifications based on proposals by the LACPA, the association primarily focuses its activities on providing implementation support for its members.

The LACPA reports that it continuously informs members of new and revised pronouncements issued by the IAASB through articles in its professional magazine, website, and email alerts. Furthermore, the association has incorporated new and revised standards into its continuous professional development program as well as the seminars and specialized workshops organized for members and regulators.

If deemed feasible, LACPA is encouraged to participate in the international-standard setting process by providing comments and response to exposure drafts and other consultation issued by the IAASB.

Current Status: Sustain

The Accountancy Profession Act No. 364 of 1994 grants authority to the Lebanese Association of Certified Public Accountants (LACPA) to set ethical requirements for Certified Professional Accountants, subject to the approval of the Ministry of Finance (MoF). LACPA’s Code was last approved in 2006.

As of the date of this assessment, LACPA reports to be drafting revisions to the Act No. 364 to allow revisions to its Code without the approval of the MoF.

Nevertheless, LACPA reports to monitor and disseminate new and revised pronouncements from IESBA as issued to its members. While legal barriers compel LACPA members to adhere to the 2006 Code, LACPA still encourages its members to refer to the latest Handbooks and incorporates recent revisions and standards in continuing professional development training.

It is in the public interest that all professional accountants adhere to the latest ethical requirements issued by the IESBA. As a matter of priority, LACPA is encouraged to provide an update on its activities to push forward revisions to the Code that are pending MoF approval since the 2006 Code is very outdated. In the meantime, LACPA is encouraged to continue disseminating new and revised pronouncements from IESBA as well as incorporating them in training.

Current Status: Consider

The Ministry of Finance (MoF) is responsible for adopting public sector accounting standards and uses national standards on a cash-basis. LACPA reports that the MoF plans to transition to cash-basis IPSAS without any modifications by 2025. Despite not having any direct legal authority for adoption of public sector accounting standards, LACPA actively engaged with the Ministry of Finance (MoF) to advance this proposal, particularly between 2014-2015.

In 2015, LACPA took the initiative to arrange a special three-day technical congress on IPSAS with the MoF and in collaboration with the IPSASB as part of an educational and awareness campaign. Following the event, the LACPA received a recommendation from the MoF to form a committee comprised of representatives from regulators to establish a roadmap aimed at preparing an adoption and implementation plan for IPSAS.

Between 2015-present, LACPA has had limited engagement with the Ministry of Finance and has focused its efforts on supporting members with preparing for cash-basis IPSAS that will come into effect in Lebanon by 2025.

LACPA indicates it continues to incorporate new and revised IPSAS into its continuing professional development program, events, and guidance material to further support members.

LACPA is encouraged to re-engage with the MoF and provide technical and advocacy support to the as part of enhancing public financial management in the jurisdiction. It may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful in this regard. LACPA should provide updates as the government transitions to cash-basis IPSAS by 2025.

Current Status: Execute

The Accountancy Profession Act No. 364 of 1994 and the bylaws of the LACPA establish the rules and procedures for investigative and disciplinary (I&D) system of the association, which are subject to the approval of the Ministry of Finance. All CPAs must be licensed and registered members of the LACPA; therefore, its system applies to all professional accountants

Between 2014-2023, LACPA amended its bylaws to be in line with SMO 6 requirements where it has authority to do so. However, gaps pertaining the composition of the committees and several administrative processes, such as tracking mechanisms, record-keeping, and public interest initiatives, remain outstanding due to pending draft amendments to Act No. 364. The changes to its bylaws did enable the establishment of a complaints box, a confidential case register, an investigative body, a disciplinary board, an appeals board, and a court appeals process.

To support the implementation of the system, the association reports that it launched an awareness campaign clarifying the responsibilities of CPAs towards the profession, clients, and users of financial statements. LACPA also explained how the public may file complaints via the institute’s I&D system.

As is legally feasible, LACPA may consider opportunities to advocate for the legislative amendments that are pending passage that would enable its enforcement procedures to more completely meet the SMO 6 global best practices.

Current Status: Execute

According to Ministerial Decisions 6258 of 1996 and 673/1 of 2001. Financial reporting standards are adopted by the Ministry of Finance (MoF). Most companies are required to prepare annual financial statements using the International Financial Reporting Standards (IFRS) with the list of all applicable IFRS published in the Official Gazette. Where differing interpretations exist, the official English version of IFRS should be referred to.

LACPA’s focus has been on supporting its members with the implementation of the standards. The association has had ongoing plans in place since 2014 to raises awareness on the importance of the implementation of IFRS by providing information on new and revised standards to its members in LACPA’s magazines and publications. Despite operating in a volatile jurisdiction that is facing a financial crisis and hyperinflation, LACPA held more than 10 workshops between June – October 2023 dedicated to IFRS as part of the continuing professional development program.

LACPA may wish to consider participating in the international standard-setting process by submitting comments to exposure drafts issued by the IASB.

Current Status: Review & Improve