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 notes that the Iraqi Banking Law (2004) includes a general provision for applying "international accounting standards" within banking institutions (Article 42) but does not explicitly require the adoption of IFRS Standards as the sole basis for accounting. While the law does not specifically mandate IFRS, sub-section 1.c of Article 42 requires that the principles and methods of accounting used in financial statement preparation align with any special directives from the Central Bank of Iraq (CBI). In 2016, the CBI issued an instruction mandating that Iraqi banks use IFRS Standards as the designated "international accounting standards." This requirement was further reinforced in 2019 when the CBI mandated compliance with IFRS 9, and in March 2020, it provided additional guidance on IFRS 9 application. Additionally, in 2004, the Iraqi Company Law (Number 21, 1997, article 133) was amended to refer generally to "international accounting standards" for joint-stock and private companies, although IFRS Standards are not specifically cited. This ambiguity has led to uncertainty regarding the legal requirement to adopt IFRS Standards in Iraq. Consequently, many Iraqi companies continue to apply standards developed by the Iraqi Board of Accounting and Auditing Standards (IBAAS).

IFRS for Small and Medium-sized Enterprises (SMEs) are not required and there are no known plans for adoption. For SMEs that are not required to use the IFRS for SMEs Accounting Standard, they use National Accounting Standards as the accounting framework.

Auditing Framework

In Iraq, auditing standards are primarily established by the Iraqi Board of Accounting and Auditing Standards (IBAAS). This body develops and issues accounting and auditing standards for use in Iraq, aiming to align with international practices while addressing the specific needs of the Iraqi economy. Additionally, the Central Bank of Iraq (CBI) plays a significant role in setting and enforcing auditing requirements, particularly within the banking sector. While the IBAAS develops national standards, there is a significant influence from the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB). The Iraqi Union of Accountants and Auditors (IUAA), a mandatory membership organization for all accountancy professionals in Iraq, requires its members to adhere to the most recent Arabic translations of ISA. This means that, in practice, many auditors in Iraq follow ISA as part of their professional obligations. However, the extent of ISA adoption may vary, and some entities might still adhere to national standards developed by the IBAAS.

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) and the entities under its umbrella—namely the Iraqi Association of Certified Accountants (IACA) and the Arab Institute of Certified Public Accountants’ (ARICPA).

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.

IUAA established the Iraqi Association of Certified Accountants (IACA) in 2005 which plays a significant role in the regulation and development of the accountancy profession in Iraq, under the umbrella of IUAA. Specifically, it is involved in: (i) promoting implementation of international accounting and auditing standards in collaboration with IUAA; (ii) providing training programs and workshops for auditors and accountants; and (iii) establishing ethical standards together with the IUAA for accountancy professionals.

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 also be 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 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).

The IUAA’s responsibilities are described in the Regulation section.

Iraqi Union of Accountants and Auditors (IUAA)

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 (iv) establishing and implementing an investigations & disciplinary system; and (v) establishing and monitoring compliance with ethical requirements.

Iraqi Association of Certified Accountants (IACA)

IUAA established the Iraqi Association of Certified Accountants (IACA) in 2005 which plays a significant role in the regulation and development of the accountancy profession in Iraq, under the umbrella of IUAA. Specifically, it is involved in: (i) promoting implementation of international accounting and auditing standards in collaboration with IUAA; (ii) providing training programs and workshops for auditors and accountants; and (iii) establishing ethical standards together with the IUAA for accountancy professionals.

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 and reports that the QA review system is in line with the SMO 1 requirements.

However, as of November 2024, the Iraqi Board of Accounting and Auditing Standards (IBAAS) has not officially adopted the International Standards on Quality Management (ISQM) 1 and 2, or the revised International Standard on Auditing (ISA) 220. IBAAS continues to develop and implement national accounting and auditing standards tailored to Iraq's specific economic and regulatory environment. While these national standards may incorporate elements of international best practices, they do not fully align with the ISQM and ISA as issued by the IAASB.

Current Status: Partially 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 — a subdivision of the IUAA) 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 ARICPA 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 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 and 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 established the Iraqi Association of Certified Accountants (IACA) in 2005 to provide CPD training programs and workshops for auditors and accountants that are members of IUAA. 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

In Iraq, auditing standards are primarily established by the Iraqi Board of Accounting and Auditing Standards (IBAAS). This body develops and issues accounting and auditing standards for use in Iraq, aiming to align with international practices while addressing the specific needs of the Iraqi economy.

While the IBAAS develops national standards, there is a significant influence from the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB).

The Iraqi Union of Accountants and Auditors (IUAA), a mandatory membership organization for all accountancy professionals in Iraq, requires its members to adhere to the most recent Arabic translations of ISA. As of the date of the assessment, this is the 2022 IAASB Handbook. This means that, in practice, many auditors in Iraq follow ISA as part of their professional obligations. However, the extent of ISA adoption may vary, and some entities might still adhere to national standards developed by the IBAAS.

Current Status: Partially 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) 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 IESBA Code of Ethics. As of the date of this assessment, IUAA requires its members to adhere to the latest Arabic version of the Handbook available, which is the 2022 Handbook of the International Code of Ethics for Professional Accountants.

Current Status: Partially Adopted

The Ministry of Finance is responsible for setting public sector accounting standards.

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. There are no reported plans to adopt IPSAS.

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 and reports that the I&D system is in line with SMO 6 requirements.

Current Status: Adopted

The IFRS Foundation notes that the Iraqi Banking Law (2004) includes a general provision for applying "international accounting standards" within banking institutions (Article 42) but does not explicitly require the adoption of IFRS Standards as the sole basis for accounting. While the law does not specifically mandate IFRS, sub-section 1.c of Article 42 requires that the principles and methods of accounting used in financial statement preparation align with any special directives from the Central Bank of Iraq (CBI). In 2016, the CBI issued an instruction mandating that Iraqi banks use IFRS Standards as the designated "international accounting standards." This requirement was further reinforced in 2019 when the CBI mandated compliance with IFRS 9, and in March 2020, it provided additional guidance on IFRS 9 application. Additionally, in 2004, the Iraqi Company Law (Number 21, 1997, article 133) was amended to refer generally to "international accounting standards" for joint-stock and private companies, although IFRS Standards are not specifically cited. This ambiguity has led to uncertainty regarding the legal requirement to adopt IFRS Standards in Iraq. Consequently, many Iraqi companies continue to apply standards developed by the Iraqi Board of Accounting and Auditing Standards (IBAAS).

IFRS for Small and Medium-sized Enterprises (SMEs) are not required and there are no known plans for adoption. For SMEs that are not required to use the IFRS for SMEs Accounting Standard, they use National Accounting Standards as the accounting framework.

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, 2024.
• IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Iraq,” December 2020.