Jordan

The Companies Law No. 22 of 1997 (as amended 2006) governs the corporate financial reporting framework in Jordan, mandating the preparation of financial statements for established entities under the law.

The Jordanian Companies Law No. 22 of 1997 (as amended 2006) requires all public shareholding companies, limited liability companies, private shareholding companies, and foreign companies operating in Jordan to prepare annual audited financial statements in accordance with “internationally recognized accounting and auditing principles”. Companies whose securities trade in a public market—“public shareholding companies”—are regulated by the Jordanian Securities Commission, which requires the adoption of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Similarly, financial institutions regulated by the Central Bank of Jordan and insurance companies regulated by the Jordanian Insurance Commission must use IFRS. In summary, IFRS have been adopted and are currently effective for all public interest entities. All other companies may use IFRS or IFRS for Small and Medium-Sized Entities.

Companies Law No. 22 dated 1997 (as amended 2006) and Accountancy Profession Law No. 73 of 2003 authorize the Jordanian Association of Certified Public Accountants (JACPA) and the Higher Council for the Accountancy Profession (HCAP) to specify applicable auditing standards in Jordan. Under the Accountancy Profession Law No. 73 of 2003, JACPA is responsible for recommending the auditing standards for adoption by the HCAP. In 1992, the HCAP adopted all International Standards on Auditing (ISA) as issued by the International Auditing and Assurance Standards Board (IAASB) for current and future audits. All revised and new ISA are applicable in Jordan with the effective date issued by the IAASB.

The Accountancy Profession Law No. 73 of 2003 empowers the Higher Council for the Accountancy Profession (HCAP) and the Jordanian Association of Certified Public Accountants (JACPA) to regulate the accountancy profession in Jordan. Only Certified Public Accountants (CPA) are regulated at the national level.

The Accountancy Profession Law No. 73 of 2003 defines the requirements for initial professional development and continuing professional development requirements for CPAs, while the country’s universities and the Ministry of Higher Education and Scientific Research share responsibility for developing the degree curricula which comprises a part of initial professional development (IPD).

Candidates for the CPA designation must (i) possess either an accounting degree from a recognized university; or a degree in any of the specialties related to the profession from a recognized university (which can include foreign university degrees as long as the candidate is able to pass an examination with relevant Jordanian legislation) and (ii) pass the JACPA CPA examination. Upon successful completion of these requirements, candidates must apply to join JACPA and fulfill the following conditions (i) provide proof of Jordanian citizenship and (ii) provide proof of ‘full civil eligibility’ and no criminal background to receive a CPA license. Additionally, they must complete two years of practical experience.

JACPA, whose membership is mandatory for CPAs, is responsible for (i) administering professional certification examinations and verifying fulfillment of practical experience / continuing professional development requirements; (ii) enforcing and monitoring members’ compliance with ethical requirements, rules, and accountancy standards through an investigative & disciplinary system; and (iii) recommending ethical requirements and accounting and auditing standards to the HCAP. Although JACPA does not have the authority to establish and operate a mandatory quality assurance review system, under Accountancy Profession Law No. 73 of 2003, it can inspect its members’ working papers. Additionally, it has authority to operate a voluntary program of audit quality assurance.

HCAP, led by the Minister of Industries and Trade, is primarily responsible for the oversight of the profession, as well as the approval of applicable ethical requirements, sanctions, and accounting and auditing standards. It also approves the granting or revocation of CPA licenses issued by JACPA.

Further, the Jordan Securities Commission maintains a list of auditors who are authorized to conduct audits for public companies, as auditors need to meet additional requirements imposed by the Jordan Securities Commission. The Central Bank of Jordan also maintains a list of auditors who are authorized to conduct audits of banks’ financial statements.

Additionally, the International Arab Society of Certified Accountants (IASCA) determines Initial Professional Development (IPD) certification and Continuing Professional Development (CPD) requirements for the two voluntary designations that it offers: International Arab Certified Public Accountant and International Arab Certified Management Accountant. Accountants and Management Accountants are subject to regulation by IASCA if they choose to become members, which includes enforcement via its system of investigation and discipline.

Presently, there is no independent audit oversight authority in Jordan.

In accordance with the Accountancy Profession Law No. 73 of 2003, the Higher Council for the Accountancy Profession (HCAP), led by the Minister of Industries and Trade, is primarily responsible for the oversight of the audit profession, as well as the approval of applicable ethical requirements, sanctions, and auditing standards. It also approves the granting or revocation of Certified Public Accountant (CPA) licenses issued by the Jordanian Association of Certified Public Accountant (JACPA) which is necessary for carrying our audits in the jurisdiction.

Auditors are subject to the regulation of the JACPA, whose membership is mandatory for CPAs. The institute is mainly responsible for (i) administering professional certification examinations and verifying fulfillment of practical experience / continuing professional development requirements; (ii) enforcing and monitoring members’ compliance with ethical requirements, rules, and accountancy standards through an investigative & disciplinary system; and (iii) recommending ethical requirements and auditing standards to the Higher Council for the Accountancy Profession. Although JACPA does not have the authority to establish and operate a quality assurance review system, under Accountancy Profession Law No. 73 of 2003, it can inspect its members’ working papers. To further the concept of QA in the country, the JACPA has undertaken and operationalized its emerging QA system as a voluntary system.

The International Arab Society of Certified Accountants (IASCA)

IASCA was established in 1984 in the United Kingdom as a non-profit professional accounting association and was formally registered in Jordan in 1994 by the Ministry of Industry and Trade as the Arab Society of Certified Accountants. It is a voluntary membership organization with a mission to enhance the professional and technical competence of the accountancy profession. It offers various certification schemes to fulfill its mandate. In addition to being a Member of IFAC, IASCA is a member of the International Committee for Accounting Education and Research and has consultative status with the United Nations Economic and Social Council.

The Jordanian Association of Certified Public Accountant (JACPA)

The Audit Profession Law No. 32 of 1985 established the Jordanian Association of Certified Public Accountants (JACPA). It is a mandatory membership organization for Certified Public Accountants.

Under Accountancy Profession Law No. 73 of 2003, JACPA is mainly responsible for (i) administering professional certification examinations and verifying fulfillment of practical experience / continuing professional development requirements; (ii) enforcing and monitoring members’ compliance with ethical requirements, rules, and accountancy standards through an investigative & disciplinary system; and (iii) recommending ethical requirements and accounting and auditing standards to the Higher Council for the Accountancy Profession—the oversight entity in the jurisdiction.

In addition to being a member of IFAC, JACPA is a member of the Arab Federation of Accountants and Auditors (AFAA).

The Jordanian Association of Certified Public Accountant is in the process of designing a quality assurance review system under a World Bank-financed grant. As it awaits approval for an amendment to Accountancy Profession Law No. 73 of 2003 that would grant it the authority to operate the system, it has begun initial operation on a voluntary basis.

Additionally, the Ministry of Finance launched a plan to implement IPSAS (cash basis) in the public sector in 2015 with assistance from the United States Agency for International Development. Since announcement of the plan, Jordan has undertaken a gap analysis and identified deviations from IPSAS. Various technical missions have been conducted to provide hands-on training and recommendations in preparing cash-basis IPSAS financial statements, which include a cash flow statement, a statement of comparison of budget and actual amounts, and notes. The project envisions a gradual transformation from cash basis to accrual basis of accounting with completion of this project slated for 2025.

Under Accountancy Profession Law No. 73 of 2003, the Jordanian Association of Certified Public Accountants (JACPA) can inspect its members’ working papers, but it does not yet have authority to establish and operate a mandatory quality assurance review system.

JACPA has proceeded with creating a voluntary QA review system. It is pursuing amendments to the law to provide JACPA with the authority to operate a compulsory system for its membership. As of the date of this assessment, draft amendments are pending approval by the Jordanian Parliament.

To support its system of voluntary QA, JACPA reports that it established 10 sub-committees under its Quality Assurance Committee to undertake the inspections of members’ working papers on a risk-basis. The sub-committees’ review reports are discussed at JACPA Board Meetings and can lead to sanctions when violations are found. JACPA has conducted a self-assessment of the voluntary inspection process and identified areas that require improvements in order to better align with the SMO 1 requirements, particularly the scope of its system, the review cycle, and disciplinary actions.

As of the date of this assessment, ISQM 1 & ISQM 2 are adopted in Jordan.

Current Status: Partially Adopted

Accountancy Profession Law No. 73 of 2003 defines the requirements for Initial Professional Development (IPD) and Continuing Professional Development (CPD) requirements for CPAs. In regards to IPD, the country’s universities and the Ministry of Higher Education and Scientific Research share responsibility for developing the degree curricula and program structure, while entrance to the profession, examination, licensure, practice experience and CPD are the shared responsibilities of The Higher Council for the Accountancy Profession (HCAP) and JACPA.

JACPA maintains mandatory membership and is responsible for administering professional certification examinations and verifying both the fulfillment of practical experience and CPD requirements. The HCAP maintain authority for approval of granting and revocation of licenses. To apply obtain CPA license, candidates must apply to JACPA and fulfill the following conditions (i) provide proof of Jordanian citizenship; (ii) provide proof of ‘full civil eligibility’ and no criminal background; (iii) pass the CPA examination; and (iv) possess either an accounting degree from a recognized university; or a degree in any of the specialties related to the profession from a recognized university (which can include foreign university degrees as long as the candidate is able to pass an examination with relevant Jordanian legislation). To retain the CPA license, CPAs must remain members of JACPA in good standing, which involves completing a minimum of 20 hours of CPD annually, in accordance with the Law. JACPA monitors CPD fulfillment and conducts periodic audits to ensure compliance by its members.

JACPA reports in its SMO Action Plan that the education requirements are aligned with the revised IES (2019).

The International Arab Society of Certified Accountants (IASCA) further adds that their IPD syllabus and training programs that support the professional designations that it confers—the International Arab Certified Public Accountant, the International Arab Certified Management Accountant, and the IFRS Expert—are aligned with revised IES (2019) as well as their CPD requirements.

Current Status: Adopted

The Companies Law No. 22 dated 1997 (as amended 2006) and Accountancy Profession Law No. 73 of 2003 authorize the Jordanian Association of Certified Public Accountants (JACPA) and the Higher Council for the Accountancy Profession (HCAP) to specify applicable auditing standards to be applied in Jordan. JACPA is responsible for recommending the auditing standards for the HCAP to adopt. In 1992, the HCAP adopted all ISA as issued by the IAASB for current and future audits. All revised and new ISA are applicable in Jordan with the effective date issued by the IAASB.

Current Status: Adopted

In accordance with Accountancy Profession Law No. 73 of 2003, the Jordanian Association of Certified Public Accountants (JACPA) and the Higher Council for the Accountancy Profession (HCAP) specify applicable ethical standards in Jordan. JACPA is responsible for recommending the ethical standards for HCAP to adopt.

In 1992, HCAP adopted the IESBA Code of Ethics for all Professional Accountants in Jordan. All revised and new requirements of the IESBA Code are applicable in Jordan with the effective date issued by the IESBA.

The International Arab Society of Certified Accountants (IASCA) — a PAO in the jurisdiction which offers voluntary designations – also requires its members to adhere to the latest version of IESBA Code of Ethics.

Current Status: Adopted

The Ministry of Finance is responsible for the adoption of public sector accounting standards in Jordan which are cash-basis (IFAC, CIPFA 2021). In 2015, the government officially endorsed the adoption and implementation of IPSAS. An IPSAS implementation road map is in place, with implementation assistance coming from the United States Agency for International Development (USAID) under Jordan’s Fiscal Reform Project. Significant progress has been made in supporting the Government of Jordan’s application of the cash-basis IPSAS. The project envisions a gradual transformation from cash basis to accrual basis of IPSAS accounting with completion of this project now slated for 2025.

Current Status: Partially Adopted

The Jordanian Association of Certified Public Accountants (JACPA) and the Higher Council for the Accountancy Profession (HCAP) have the authority to operate an investigative and disciplinary (I&D) system in accordance with Accountancy Profession Law No. 73 of 2003 for CPAs.

Overall, the JACPA system is largely aligned with the requirements of SMO 6; and is expected to be fully aligned once the amendments to the Accountancy Profession Law No. 73 of 2003 pass (still pending as of the date of this assessment) pertaining to (i) publicizing information about the types of misconduct which may bring about investigative actions; and (ii) including professional accountants and non-accountants as members of the disciplinary committee.

The International Arab Society of Certified Accountants established its own I&D system for its members (Accountants and Management Accountants) that voluntarily join the institute. IASCA completed a self-assessment of its I&D system and confirmed that its system incorporates the main requirements of SMO 6 and is operational.

Current Status: Partially Adopted

In summary, IFRS have been adopted and are currently effective for all public interest entities. The Jordanian Companies Law No. 22 of 1997 (as amended 2006) requires all public shareholding companies, limited liability companies, private shareholding companies, and foreign companies operating in Jordan to prepare annual audited financial statements in accordance with “internationally recognized accounting and auditing principles”. Companies whose securities trade in a public market— “public shareholding companies”—are regulated by the Jordanian Securities Commission, which requires the adoption of IFRS as issued by IASB. Similarly, financial institutions regulated by the Central Bank of Jordan and insurance companies regulated by the Jordanian Insurance Commission must use IFRS as promulgated by the IASB. All other companies may use IFRS or IFRS for Small and Medium-Sized Entities as promulgated by the IASB.

Current Status: Adopted

Relevant Organizations

• International Arab Society of Certified Accountants (IASCA)
• Jordan Association of Certified Public Accountants (JACPA)

Relevant Legislation

• Accountancy Profession Law No. 73 of 2003
• Banking Law No. 28 of 2000 (with subsequent amendments)
• Companies Law No. 22 of 1997 (with subsequent amendments)
• Jordan Securities Commission, “Instructions of Issuing Companies Disclosure, Accounting and Auditing Standards,” 2004

Relevant Publications

• ACE International Consultants, Jordan: Repeat Public Financial Management Assessment, September 2011.
• Deloitte & Touche, IPSAS in Your Pocket, 2015.
• Farrah, et al., The Accounting and Auditing Profession in Jordan: Its Origin and Development, 2015. School of Business- Al-Balqa Applied University. ISSN 2225-0565.
• IASCA, SMO Action Plan, Month YEAR.
• IFRS Foundation, IFRS Application Around the World—Jurisdictional Profile: Jordan, June 2016.
• JACPA, SMO Action Plan, October 2020.
• World Bank, Report on the Observance of Standards and Codes (ROSC): Hashemite Kingdom of Jordan (Jordan). Accounting and Auditing, June 2004.
• United States Agency for International Development, Adoption of New Accounting Standards Enhances Government of Jordan Financial Management, 2015.