Egypt

The financial reporting framework in Egypt is established under the Companies Law No. 159 of 1981, and the Capital Market Law No. 95 of 1992.

Accounting Framework

In accordance the Companies Law and the Capital Market Law, all companies must prepare annual financial statements following the financial reporting requirements specified by a Ministerial Decree, which is published in the Egyptian Gazette. The Minister of Investment (MoI) has the authority to issue financial accounting standards in Egypt.

Prime Minister Decree No. 2115 of 2023 established a multi-stakeholder Standard-Setting Committee for accounting and auditing standards to present recommendations to the MoI to issue the relevant standards.

In 2019, the MoI issued Decision No. 69/2019 adopting Egyptian Accounting Standards (EAS). As reported in the IFRS Foundation profile, the EAS are close to IFRS Accounting Standards but not identical or as comprehensive. The EAS were updated in 2019 and 2023 to align with certain updates in IFRS including IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases. In early 2023, a standard similar to IFRS 17 Insurance Contracts was issued, effective for accounting periods beginning on or after July 1, 2024. The EAS are applied by all public interest entities (PIEs)—defined as listed companies, public subscription companies, securities companies, and investment funds established by banks and insurance companies. In addition to EAS, there is an accounting framework for the banking sector, issued by the Central Bank of Egypt in 2008 and amended in 2019. There is also an accounting guidance for the insurance sector, although effective July 2024, this will be superseded by requirements based on EAS 50.

The EAS include special requirements for small and medium-sized entities. However, IFRS for SMEs is not under consideration.

Auditing Framework

The Companies Law and the Capital Market Law require all companies, except for partnership companies and limited partnership companies, to prepare annual audited financial statements. The MoI is also the auditing standard-setter and, in 2008, issued Decision No. 166/2008, adopting the Egyptian Standards on Auditing Review and Other Assurance Services (ESAROAS), which are aligned with the 2015 version of International Standards on Auditing (ISA). The Egyptian Society of Accountants and Auditors (ESAA) reports that the ESAROAS has not been updated to align with the latest version of the ISA.

Accounting Practice Law 133 of 1951 and its amendments provide the foundation for the regulations of the accountancy profession in Egypt, depending on the type of services and entities audited.

Regulation of Professional Accountants and Auditors of Non-Listed Entities

It is required for a person to be registered with the Ministry of Finance’s registry to practice as a professional accountant (provision of services to a third party) or an auditor within Egypt. This registry falls under the Central Financial Management unit which is housed in the Department of Accounts and Finance Directorate.

In order to be registered by the Ministry, an individual must have graduated from a university program with a degree in accounting, maintain membership and a certificate from the Syndicate of Commerce - Accountants and Auditors (SOC) and have completed the necessary paperwork. As such, SOC membership is compulsory to publicly practice.

The SOC was established by Law No. 4 of 1972. Its responsibilities include: (i) maintaining national registries of professional accountants; (ii) issuing a code of professional conduct and ethics for all professional accountants in Egypt; and (iii) establishing an investigative and disciplinary system for all auditors registered with the MoF. SOC membership and certificate is generally provided to all those who have completed a university accounting education program.

Initially after graduating and obtaining an SOC certificate, a professional can be registered in the MoF list as a “Trainee Auditor”. After three years of work experience, a professional can apply to be taken off the trainee list and join the “Auditor” list under which an auditor can audit companies other than joint stock corporations. Only after an additional five years of work experience (total of 8 years) can they join the “Full Auditor” list entitling the individual to audit corporations. No examination, continuing professional development, nor specific audit experience are required to obtain or maintain registration with the Ministry.

Regulation of Auditors of Listed Companies

In order to audit listed companies, an auditor must be listed in the Egyptian Financial Services Authority (EFSA) registry of auditors. EFSA was established by Law No. 10 of 2009 to regulate listed entities and all Non-Banking Financial Institutions (NBFIs). EFSA is responsible for (i) maintaining a register of auditors licensed to audit listed companies and NBFIs; (ii) establishing a quality assurance review system and an investigative and discipline system for EFSA-registered auditors; (iii) setting CPD requirements for EFSA-registered auditors; and (iv) establishing ethical requirements for EFSA-registered auditors.

EFSA is the only body that has a public oversight board ensuring the proper conduct of members. All EFSA registered auditors have an annual Continuing Professional Development (CPD) requirement.

Alternatively, individuals with a membership certificate from the SOC and which hold membership with the Egyptian Society of Accountants and Auditors (ESAA) may register directly with the MoF—instead of the EFSA—as an auditor of listed companies. The ESAA is a voluntarily Professional Accountancy Organization (PAO) for professional accountants and auditors established by a Royal Decree in 1946 and given further statutory recognition by the Ministerial Order No. 2280. Resolution 554 of 2007. ESAA has three categories of members: professional accountants, auditors, and students. Its responsibilities include: (i) setting Initial Professional Development (IPD) and Continuing Professional Development (CPD) requirements for its members; (ii) promoting the EFSA Code of Ethics for its members registered with the EFSA (there are no other ethical requirements established by the ESAA for other members); (iii) establishing an investigative and disciplinary system for its members; and (iv) proposing revisions to the Egyptian Accounting Standards and Egyptian Standards on Auditing Review and Other Assurance Services to the Minister of Investment and International Cooperation (MoI).

Candidates for ESAA membership must satisfy one of the following conditions: (i) have at least three years of full-time work experience in the office of a practicing ESAA member, and successfully complete of the ESAA’s two-part examination; (ii) hold membership in the Institute of Chartered Accountants in England and Wales, or another acceptable foreign professional body (provided they pass the ESAA’s examinations on Egyptian tax law and Egyptian company law); or (iii) hold a doctoral degree in accounting with three years of experience in practice.

Regulation of Auditors of Banking Institutions

To enroll in the Central Bank’s auditor registry, a practitioner must maintain:

• Registration in the MoF register;
• Registration in the Central Audit Organization (the country’s supreme audit institution); and
• Have practiced audit for fifteen years outside the government sector OR have a PhD in accounting or auditing and have practiced for 10 years, OR hold membership in the ESAA or an equivalent peer entity.

There is no independent audit oversight entity in Egypt. Auditors are primarily regulated by the Ministry of Finance and the Egyptian Financial Services Authority (EFSA) as outlined in the Regulation section.

Egyptian Society of Accountants and Auditors (ESAA)

The ESAA is a voluntary Professional Accountancy Organization (PAO) established by a Royal Decree in 1946 and given further statutory recognition by Ministerial Order No. 2280. Resolution 554 of 2007 mandates the ESAA to raise the technical and practical awareness of its members and ensure the profession operates in accordance with international best practice. Its responsibilities include: (i) setting initial and continuing professional development (IPD and CPD) requirements for its members; (ii) promoting the EFSA Code of Ethics for its members registered with the EFSA (there are no other ethical requirements established by the ESAA for its members); (iii) establishing an investigative and disciplinary system for its members; and (iv) proposing revisions to the Egyptian Accounting Standards and Egyptian Standards on Auditing Review and Other Assurance Services to the Minister of Investment and International Cooperation.

In addition to being a member of IFAC, ESAA is a member of the Federation of Mediterranean Certified Accountants.

Syndicate of Commerce—Accountants and Auditing (SOC)

The SOC was established by Law No. 4 of 1972 and generally provides a membership certificate to those who completed a recognized university accounting education program. Membership in SOC in mandatory for all professional accountants and auditors in the country. Its responsibilities include: (i) maintaining national registries of professional accountants and auditors; (ii) issuing a code of professional conduct and ethics for professional accountants and auditors in Egypt; and (iii) establishing an investigative and disciplinary system for all auditors registered with the Ministry of Finance. The SOC is not a member of IFAC.

A draft of a new Accounting Law has been under discussion for the past several years with little indication of a timeline for its progression. The new law was originally drafted under the sponsorship of the Ministry of Finance, the Syndicate of Commerce—Accountants and Auditing (SOC), and the Egyptian Society for Accountants and Auditors (ESAA) in the late 1990s. The draft law contains text introducing (i) a qualifying examination to obtain an auditing license and establishing continuing education schemes, (ii) recognizing audit firms and individual auditors as providers of statutory audit services, (iii) amending the public oversight architecture over the professional performance, and (iv) strengthening the operational capacity of the professional bodies and emphasizing coordination through the creation of a Supreme Council for Accounting and Auditing.

Law No. 10 of 2009 empowers the Egyptian Financial Services Authority (EFSA) to establish a quality assurance (QA) review system for auditors that are licensed to conduct audits of listed companies and Non-Banking Financial Institutions (NBFIs). The EFSA created the Auditors Oversight Board (AOB), which has been carrying out QA reviews since 2008.The Egyptian Society of Accountants & Auditors (ESAA) reports in its 2024 SMO Action Plan that ISQM 1 & ISQM 2 are required to be applied effective 2025.

The EFSA’s QA system incorporates only some components of the SMO 1 best practices. Additionally, at the time of this assessment, not all audits are subject to QA reviews (e.g., non-listed company audits). Under proposed amendments to the Accounting Practice Law, the scope of QA reviews would be extended to include all audits.

Current Status: Partially Adopted

All professional accountants (providing services to external clients) and auditors must register with the Ministry of Finance (MoF) Registry to practice. To become registered with the MoF, one must have graduated from a university program with a degree in accounting, maintain membership and a certificate from the Syndicate of Commerce - Accountants and Auditors (SOC) and have completed the necessary paperwork. SOC membership and certificate is generally open to all those who have completed a university accounting education program.

After three years of work experience, a professional can apply to be taken off the MoF trainee list and join the “Auditor” list under which an auditor can audit companies other than joint stock corporations. Only after an additional five years of work experience can they join the “Full Auditor” list entitling the individual to audit corporations. No examination, continuing professional development, nor specific audit experience are required to obtain or maintain registration with the MoF.

In order to audit listed companies, and non-banking financial institutions (NBFIs), an auditor must be registered with the Egyptian Financial Services Authority (EFSA). EFSA was established by Law No. 10 of 2009 and maintains its own requirements. These include registration with the MoF and fulfillment of an annual Continuing Professional Development (CPD) requirement.

Alternatively, individuals with a membership certificate from the SOC and that are members of the Egyptian Society of Accountants and Auditors (ESAA) may register directly with the MoF as an auditor of listed companies. Candidates for ESAA membership must satisfy one of the following conditions: (i) have at least three years of full-time work experience in the office of a practicing ESAA member, and successfully complete of the ESAA’s two-part examination; (ii) hold membership in the Institute of Chartered Accountants in England and Wales, or another acceptable foreign professional body (provided they pass the ESAA’s examinations on Egyptian tax law and Egyptian company law); or (iii) hold a doctoral degree in accounting with three years of experience in practice. The ESAA has also instituted a mandatory CPD requirement for it is members of 120 hours over three years and established a process to monitor compliance with CPD requirements.

In addition to the EFSA and ESAA, the Central Bank also maintains additional educational requirements for auditing banking institutions.

However, all these stipulated educational requirements continue to only partially meet the IES requirements.

Current Status: Partially Adopted

According to the Companies Law No. 159 of 1981 and the Capital Market Law No. 95 of 1992, all companies, except for partnership companies and limited partnership companies, must present annual audited financial statements.

The Minister of Investment and International Cooperation (MoI) is the recognized auditing standard-setter. In 2008, the MoI issued Decision No. 166/20008 to adopt the Egyptian Standards on Auditing Review and Other Assurance Services (ESAROAS), which the Egyptian Society of Accountants and Auditors (ESAA) indicates are aligned with the 2015 version of ISA. The ESAA reports that the ESAROAS has not been updated to align with the latest version of the ISA and therefore, assessed as partially adopted.

Current Status: Partially Adopted

The ethical requirements for all professional accountants and auditors in Egypt are specified in the Code of Ethics developed by the Syndicate of Commerce—Accountants and Auditing. According to the World Bank (2002), the requirements only include ethics breach criteria, such as fraud, and are not based on the IESBA Code of Ethics.

In accordance with Law No. 10 of 2009, the Egyptian Financial Services Authority (EFSA) is empowered to set ethical requirements for auditors registered with the EFSA and licensed to conduct audits of listed companies and non-banking financial institutions. The EFSA issued Decision No. 79/2007, adopting the Egyptian Code of Ethics (ECE) in line with the requirements of the 2006 version of the IESBA Code of Ethics.

The ESAA notes that the EFSA has not updated the ECE to be aligned with the most recent version of the IESBA Code of Ethics. Nevertheless, in its 2024 SMO Action Plan, the Egyptian Society for Accountants and Auditors (ESAA) reports that it is in the process of modifying its code of ethics to be in alignment with the latest IESBA Code of Ethics in 2024.

Current Status: Not Adopted

The Egyptian Ministry of Finance (MoF) is responsible for adopting public sector accounting standards. At present, cash-basis nationally promulgated public sector accounting standards form the basis of public sector accounting in the country. The Egyptian Society of Accountants and Auditors (ESAA) reports that there is no timeline nor plans to adopt IPSAS.

Current Status: Not Adopted

The legal foundation for an investigative and discipline (I&D) system for professional accountants in Egypt is established under various regulations. As such, responsibility for this function is shared amongst various regulators.

Law No. 4 of 1972 stipulates that Syndicate of Commerce—Accountants and Auditing is authorized to establish and implement an I&D system for all professional accountants and auditors in Egypt. The Egyptian Society of Accountants and Auditors (ESAA) reports that some of the requirements set out in the law are not in line with SMO 6 best practices.

Additionally, in accordance with Law No. 10 of 2009, the Financial Regulatory Authority (EFSA) is empowered to establish an I&D system for auditors of listed entities and non-banking financial institutions. The EFSA created the Auditors Oversight Board (AOB) and has an Enforcement Department which is responsible for implementing an enforcement mechanism to ensure compliance with applicable accounting and auditing standards. The ESAA states that the EFSA’s I&D system also do not fully incorporate the SMO 6 best practices.

The ESAA is also authorized to establish an I&D system for its members and has created an Investigation and Disciplinary Committee. In 2020, the ESAA conducted a self-assessment against the revised SMO 6 requirements and indicated that several areas require improvements, such as, no publicly available information about the types of misconduct which may bring about investigative actions; no linkage with the results of QA reviews; members of the committee are only accountants; limited extent of penalties; and results of the I&D procedures are not made publicly available, among others. The ESAA indicates that it would need to modify its by-laws to align its I&D system with the SMO 6 requirements. As such, at the jurisdictional level, the I&D systems are considered only partially adopted.

Current Status: Partially Adopted

In accordance the Companies Law and the Capital Market Law, all companies must prepare annual financial statements following the financial reporting requirements specified by a Ministerial Decree, which is published in the Egyptian Gazette. The Minister of Investment (MoI) has the authority to issue financial accounting standards in Egypt.

In 2019, the MoI issued Decision No. 69/2019 adopting Egyptian Accounting Standards (EAS). As reported in the IFRS Foundation profile, the EAS are close to IFRS Accounting Standards but not identical or as comprehensive. The EAS were updated in 2019 and 2023 to align with certain updates in IFRS including IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases. In early 2023, a standard similar to IFRS 17 Insurance Contracts was issued, effective for accounting periods beginning on or after July 1, 2024. The EAS are applied by all public interest entities (PIEs)—defined as listed companies, public subscription companies, securities companies, and investment funds established by banks and insurance companies. In addition to EAS, there is an accounting framework for the banking sector, issued by the Central Bank of Egypt in 2008 and amended in 2019. There is also an accounting guidance for the insurance sector, although effective July 2024, this will be superseded by requirements based on EAS 50.

The EAS include special requirements for small and medium-sized entities. However, IFRS for SMEs is not under consideration.

Current Status: Partially Adopted

Relevant Organizations

• Auditors Oversight Board (AOB)
• Egyptian Society of Accountants and Auditors (ESAA)
• Financial Regulatory Authority (EFSA)
• Ministry of Investment and International Cooperation

Relevant Legislation

• Companies Law No. 159 1981
• Egyptian Accounting Standards (EAS)
• Egyptian Standards on Auditing Review and Other Assurance Services (ESAROAS)
• Law No. 10 of 2009

Relevant Publications

• Abdelhak, E., Elamer, A., & AlHares, A. (2019) Auditors’ ethical reasoning in developing countries: The case of Egypt, International Journal of Ethics and Systems. Forthcoming (Accepted 7th June 2019).
• Baker and McKenzie, Doing Business in Egypt Report, 2016.
• ESAA, SMO Action Plan, 2024.
• Elbayoumi, Ahmed & Awadallah, Emad & Basuony, Mohamed. “Development of Accounting and Auditing in Egypt: Origin, Growth, Practice and Influential Factors”. The Journal of Developing Areas. 2019.
• IFRS Foundation, “IFRS Application Around the World-Jurisdictional Profile: Egypt,” January 2024.
• Mostafa, D., Hussien, M. “The impact of auditor rotation on the audit quality: A field case from Egypt,” November 2010.
• UNCTAD, Review of Practical Implementation Issues Relating to International Financial Reporting Standards, Case Study of Egypt, 2008.
• World Bank, Report on the Observance of Standards and Codes: Accounting and Auditing, Egypt, 2002.