Iraq

Accounting Framework

The financial reporting framework in Iraq is established under the Iraqi Company Law No. 21 of 1997 (as amended in 2004), which contains basic requirements for financial reporting for all companies, including requirements for the preparation of financial statements.

The IFRS Foundation reports that the Iraqi Company Law No. 21 of 1997 (as amended in 2004) references the general concept of applying ‘international accounting standards’ in joint stock companies and private companies in Iraq. However, IFRS Standards are not specifically named in law. In practice, many Iraqi companies apply the standards promulgated by the Iraqi Board of Accounting and Auditing Standards (IBAAS). The IBAAS is a professional body established by the office of the President in 1988 to provide the government with advice on financial services and to set National Accounting Standards (NAS) and auditing standards. While NAS were initially modelled on International Accounting Standards (IAS Standards) and have sought to follow international standard-setting, there are significant differences between the NAS issued by the IBAAS and IFRS Standards. IFRS for Small and Medium-sized Enterprises (SMEs) are not required and there are no known plans for adoption.

Auditing Framework

The Law of Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) defines audit and audit activities, specifies the scope of the entities subject to mandatory audit requirements, and establishes the Iraqi Union of Accountants and Auditors (IUAA) as the professional organization for auditors, among other matters. While ISA are not specified in the law, the IUAA, which is a mandatory membership organization for all accountancy professionals, requires its members to adhere to the most recent Arabic translations of ISA. As of the date of the assessment, this includes ISA 540 (revised), ISRS 4400 and ISA 315 (revised 2019)—2021 IAASB Handbook.

Accountants and auditors are regulated in accordance with the Law of the Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) by the Iraqi Union of Accountants and Auditors (IUAA).

Under the Law, IUAA is responsible for (i) maintaining the register for accountants and auditors; (ii) organizing and implementing a quality assurance review system; (iii) arranging and delivering the continuing professional development (CPD) program for auditors (accountants are not required to fulfill CPD requirements); (iv) establishing and implementing an investigation & disciplinary system; and (v) establishing and monitoring compliance with ethical requirements.

To qualify as an accountant, candidates must complete a bachelor’s degree in accounting. To practice accounting, these individuals must become members of IUAA. Accountants may also choose to complete the Certified Public Accountant (CPA) education program offered by the Arab Institute of Certified Public Accountants’ (ARICPA) — a subdivision of the IUAA — and obtain the CPA certification which would qualify them to provide audit services. To practice audit, CPAs must become members of IUAA and be included in the register of auditors.

The period of study in ARICPA is 5 years after graduating from university and includes 3 years of theoretical study and 2 years for practical research. Candidates must complete 4,500 hours of training in accounting and auditing and a 2-year vocational training (3000 hours) specifically on audit. Candidates must also pass a final examination at the end of the professional accountancy education program to receive their final certification.

Auditors working in the public sector are subject to additional requirements as stipulated by the Federal Board of Supreme Audit of Iraq (FBSAI) as per Law No. 31 of 2011. CPAs seeking to practice audit in the public sector must obtain licenses from the FBSAI and remain in compliance with ethical requirements as stipulated by the Council of Profession Monitoring and Auditing of Accounting in Iraq (CPMAAI) in line with the CPMAAI Profession of Monitoring and Audit Regulation No. 7 of 1984 (as amended in 2000). They must also remain members of IUAA in good standing.

There are no independent audit oversight arrangements in Iraq.

Auditors are regulated by the Iraqi Union of Accountants and Auditors (IUAA), a professional association for both accountants and auditors in Iraq, under the Law of the Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973).

According to the Law, auditors are required to be members of IUAA. The Law authorizes the IUAA to carry out the following functions: (i) maintaining the register for auditors; (ii) organizing and implementing a quality assurance review system; (iii) arranging and delivering the continuing professional development program for auditors; (iv) establishing and implementing an investigations & disciplinary system; and (v) establishing and monitoring compliance with ethical requirements.

Auditors working in the public sector are subject to additional regulation by the Federal Board of Supreme Audit of Iraq (FBSAI) as per Law No. 31 of 2011. CPAs seeking to practice audit in the public sector must obtain licenses from the FBSAI and remain in compliance with ethical requirements as stipulated by the Council of Profession Monitoring and Auditing of Accounting in Iraq (CPMAAI) in line with the CPMAAI Profession of Monitoring and Audit Regulation No. 7 of 1984 (as amended in 2000). They must also remain members of IUAA in good standing.

The Law of the Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) establishes the Iraqi Union of Accountants and Auditors (IUAA) as a professional association for accountants and auditors in Iraq. According to the Law, all accountants and auditors are required to be members of IUAA. The Law authorizes the IUAA to carry out the following functions: (i) maintaining the register for accountants and auditors; (ii) organizing and implementing a quality assurance review system; (iii) arranging and delivering the continuing professional development program for accountants and auditors; (iv) establishing and implementing an investigations & disciplinary system; and (v) establishing and monitoring compliance with ethical requirements.

On March 15, 2021, ICAEW signed an agreement with IUAA to prepare a three-year strategic plan, which reviews its strengths and weaknesses to boost priority areas and increase growth. ICAEW and IUAA will also work together to develop professional education for accountants in Iraq. ICAEW will advise IUAA on achieving its strategic goals, review its current certified public accountant syllabus, and develop a roadmap and action plan for reform.

The Law of the Iraqi Union of Accountants and Auditors No. 185, 1969 (as amended in 1973) requires all auditors to be members of the Iraqi Union of Accountants and Auditors (IUAA) and be subject to its quality assurance (QA) review system. IUAA established an independent Quality Assurance & Inspection Committee (QAIC) in 2003 to operate a cycle-based QA review system.

The IUAA completed a self-assessment of the QA review system against the revised SMO 1 and reports that the QA review system is in line with the SMO 1 requirements.

Current Status: Adopted

The Law of the Iraqi Union of Accountants and Auditors No. 185, 1969 (as amended in 1973) outlines basic requirements for professional accountants in Iraq. The Iraqi Union of Accountants and Auditors (IUAA), alongside other entities such as the Ministry of Higher Education’s Accounting Sector Committee and the Arab Institute of Certified Public Accountants (ARICPA), are responsible for adopting and implementing initial and continuing professional development requirements in the jurisdiction further.

To qualify as an accountant, candidates must complete a bachelor’s degree in accounting. To practice accounting, these individuals must become members of IUAA. Accountants may also choose to complete the Certified Public Accountant (CPA) education program offered by the Arab Institute of Certified Public Accountants’ (ARICPA) — a subdivision of the IUAA — and obtain the CPA certification which would qualify them to provide audit services. To practice audit, CPAs must become members of IUAA and be included in the register of auditors.

The period of study in ARICPA is 5 years after graduating from university and includes 3 years of theoretical study and 2 years for practical research. Candidates must complete 4,500 hours of training in accounting and auditing and a 2-year vocational training (3000 hours) specifically on audit. Candidates must also pass a final examination at the end of the professional accountancy education program to receive their final certification.

The Ministry of Higher Education’s Accounting Sector Committee is responsible for developing the accountancy education curricula and supports universities in delivering undergraduate accountancy education.

Revised requirements of the IES 2, 3, and 4 are effective as of 2021. The revisions to these standards reflect the increasing demand for accountants skilled in information and communications technologies and place further emphasis on the professional skepticism skills and behaviors. These apply to both aspiring and current professional accountants. It is unclear if the current IPD in the jurisdiction is aligned with these revisions as of the time of the assessment.

IUAA reports that it addresses CPD requirements through its Training & Continuous Professional Development Committee, Consultancy Office and in coordination with the International Association of Certified Public Accountants. IUAA indicates that it has mandated 20–40 hours of CPD for auditors, while non-auditors are not required to fulfill CPD requirements. Consequently, its CPD requirements require further alignment with IES 7 - 8.

Current Status: Partially Adopted

The Law of Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) defines audit and audit activities, specifies the scope of the entities subject to mandatory audit requirements, and establishes the Iraqi Union of Accountants and Auditors (IUAA) as the professional organization for auditors, among other matters. While ISA are not specified in the law, the IUAA, which is a mandatory membership organization for all accountancy professionals, requires its members to adhere to the most recent Arabic translations of ISA. As of the date of the assessment, this includes ISA 540 (revised), ISRS 4400 and ISA 315 (revised 2019)—2021 IAASB Handbook.

Current Status: Adopted

The Law of the Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) grants the Iraqi Union of Accountants and Auditors (IUAA) with the authority to set ethical requirements for professional accountants in Iraq.

IUAA reports that it revises its Code of Ethics on a regular basis to ensure that it is converged with the latest version of the IESBA Code of Ethics. As of the date of this assessment, IUAA requires its members to adhere to the Arabic translation of the 2018 Handbook of the International Code of Ethics for Professional Accountants. International Standard on Assurance Engagements (ISAE) 3000 (Revised) (effective June 2021), and revisions to Parts 1 and 2 to promote the role and mindset expected of professional accountants (effective December 2021), have not yet been translated into Arabic.

Current Status: Partially Adopted

The Ministry of Finance is responsible for setting the public sector accounting standards, and according to the Iraqi Union of Accountants and Auditors (IUAA), has not adopted IPSAS. It remains unclear if there are plans to adopt IPSAS.

As of the date of the assessment, IUAA reports that self-financing public entities use Iraqi Unified Accounting System (IUAS) on an accrual-basis, whereas entities that are funded by government use the Governmental Accounting System (GAS) on a cash-basis.

Current Status: Not Adopted

According to Article 28 of the Law of the Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973), the Iraqi Union of Accountants and Auditors (IUAA) is responsible for the investigation and discipline (I&D) of its members, which are all professional accountants in Iraq. IUAA indicates that it established a Discipline Committee (DC) with the authority to monitor compliance with rules, regulations, and standards. Disciplinary decisions and sanctions are enforced by specialized courts, and in the case of serious crimes, by the Justice Council.

IUAA completed a self-assessment of its I&D system against the revised SMO 6 and reports that the I&D system is in line with SMO 6 requirements.

Current Status: Adopted

The financial reporting framework in Iraq is established under the Iraqi Company Law No. 21 of 1997 (as amended in 2004), which contains basic requirements for financial reporting for all companies, including requirements for the preparation of financial statements.

The IFRS Foundation reports that the Iraqi Company Law No. 21 of 1997 (as amended in 2004) references the general concept of applying ‘international accounting standards’ in joint stock companies and private companies in Iraq. However, IFRS Standards are not specifically named in law. In practice, many Iraqi companies apply the standards promulgated by the Iraqi Board of Accounting and Auditing Standards (IBAAS). The IBAAS is a professional body established by the office of the President in 1988 to provide the government with advice on financial services and to set National Accounting Standards (NAS). While NAS were initially modelled on International Accounting Standards (IAS Standards) and have sought to follow international standard-setting, there are significant differences between the NAS issued by the IBAAS and IFRS Standards. IFRS for Small and Medium-sized Enterprises (SMEs) are not required and there are no known plans for adoption.

Current Status: Partially Adopted

Relevant Organizations

• Central Bank of Iraq
• Iraq Ministry of Finance
• Iraq Ministry of Planning
• Iraq Securities Exchange Commission
• Iraq Union of Accountants and Auditors (IUAA)

Relevant Legislation

• Iraqi Company Law No. 21 of 1997 (as amended in 2004)

Relevant Publications

• IUAA, SMO Action Plan, June 2021.
• Deloitte, Iraq highlights, 2016.
• IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Iraq,” December 2020.