Lebanon

Accounting Requirements

Accounting reporting standards are adopted by the Ministry of Finance. Most companies are required to prepare annual financial statements using the International Financial Reporting Standards (IFRS), according to Ministerial Decisions 6258 of 1996 and 673/1 of 2001. Furthermore, all businesses are required to report in Arabic, English, or French.

Under Order No. 1/6258, the following types of entities are required to use IFRS to prepare their financial statements: (1) all holding, offshore, limited liability and joint stock companies, regardless of type, size, and number of employees; (2) all branches of foreign companies; and (3) all sole proprietorships and partnership whose total number of employees exceeds 25 or that have annual turnover above LB750 million. Companies listed on the Beirut Stock Exchange must use full IFRS. Unlisted companies have the option of using full IFRS. The list of all applicable IFRS is published in the Official Gazette on an annual basis. Where differing interpretations exist, the official English version of IFRS should be referred to.

The Code of Money and Credit, the Banking Law of 1963, and Resolution 10/1 of 1984 and related decrees requires banks and other financial institutions (except insurance companies) to comply with accounting requirements set forth by the Banking Control Commission (BCC), in addition to complying with decrees issued by the MoF. According to the 2003 World Bank Report on the Observance of Standards and Codes, the requirements of the BCC were largely consistent with IAS but with some significant deviations. It is unclear how these requirements currently compare with IFRS.

Audit Requirements

Ministerial Decree No. 8089 of 1996 established the annual audit requirement for the following types of companies: (1) all holding, offshore, limited liability and joint stock companies, regardless of type, size, and number of employees; (2) all branches of foreign companies; and (3) all sole proprietorships and partnership whose total number of employees exceeds 25 or that have annual turnover above LB750 million.

According to Ministerial Circular No. 742 of 2002, auditors must apply ISA for all audits of financial statements, as issued by the IAASB. The rules of the Beirut Stock Exchange and the BCC stipulate that financial statements of all listed companies and banks should be audited using ISA.

The Accountancy Profession Act No. 364 of 1994 established the Lebanese Association of Certified Public Accountants (LACPA) as the sole professional accountancy organization in Lebanon. Only Certified Public Accountants (CPAs) registered with and having practicing certificates awarded by LACPA are permitted to perform audits and issue an auditor’s report.

The act defines initial professional development requirements of aspiring CPAs, requires all CPAs to be registered and licensed members of the LACPA, and grants the association the authority to establish continuing professional development (CPD) requirements for its members. The IPD requirements for CPAs include a university degree in accounting, three to five years’ work experience supervised by a LACPA member, and successful completion of LACPA’s professional examinations. The curricula for university accounting programs for public and private universities are established by the Ministry of Higher Education.

According to act, the LACPA proposes auditing standards to the Ministry of Finance (MoF). The act also grants authority to the LACPA to set a Code of Ethics for CPAs and to investigate and impose sanctions on members for non-compliance with its statutes or professional ethics; however, both must be approved by the MoF.

In addition, the internal bylaws of the LACPA further outline other membership requirements related to CPD, applicable penalties for members’ misconduct, and the process for becoming a member of the association. In 2013, the LACPA amended its internal bylaws to establish the necessary mechanisms for a mandatory quality assurance review system.

The Capital Markets Authority (CMA) was established under Law No. 161 of 2011 with broad responsibility for market regulation, investor protection, and with the remit to encourage market development.

There are no independent audit oversight arrangements in Lebanon. Auditors are regulated by the Lebanese Association of Certified Public Accountants (LACPA), established under the Act No. 364 of 1994. Only Certified Public Accountants (CPAs) registered with and having practicing certificates awarded by the LACPA are permitted to perform audits and issue an auditor’s report. LACPA’s responsibilities are outlined in the Regulation section.

Lebanese Association of Certified Public Accountants (LACPA)

LACPA represents all professional accountants in Lebanon. It was established under the Accountancy Profession Act No. 364 of 1994. The act stipulates that all Certified Public Accountants (CPAs) must be registered with LACPA and specifies the registration and initial professional development requirements. The act also grants authority to the LACPA to set a Code of Ethics for CPAs and to investigate and impose sanctions on members for non-compliance with its statutes or professional ethics; however, the Code of Ethics must be approved by the Ministry of Finance.

In addition, the bylaws of the LACPA further outline other membership requirements related to continuing professional development, applicable penalties for members’ misconduct, and the process for becoming a member of the association. In 2013, the LACPA amended its bylaws to establish the necessary mechanisms for a mandatory quality assurance review system.

In addition to being a member of IFAC, LACPA maintains membership in the Federation Internationale des Experts-Comptables Francophone and the Arab Federation for Accountants and Auditors.

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. It remains unclear if mandatory QA reviews are in fact in effect, or if the system is still voluntary.

In 2023, LACPA conducted a self-assessment of its QA review system against SMO 1 requirements and identified gaps (please refer to LACPA’s 2023 SMO Action Plan for details).

Current Status: Partially Adopted

The Accountancy Profession Act No. 364 of 1994 defines initial professional development (IPD) requirements for aspiring Certified Public Accountants (CPAs). The act requires all CPAs to be registered and licensed members of the Lebanese Association of Certified Public Accountants (LACPA) and grants the association the authority to establish continuing professional development (CPD) requirements.

The IPD requirements for CPAs include a university degree in accounting, three to five years’ work experience supervised by a LACPA member, and successful completion of LACPA’s professional examinations. The curricula for universities are established by the Ministry of Higher Education.

LACPA requires CPAs to acquire a minimum of 40 hours of CPD annually. The association monitors the fulfillment of CPD requirements by requiring members to submit evidence.

According to LACPA’s gap analysis completed in 2023 against the 2019 IES requirements, a number of gaps were identified in each of the IESs for improvement (please refer to LACPA’s 2023 SMO Action Plan for details).

Current Status: Partially Adopted

The Ministry of Finance (MoF) is responsible for adopting audit standards. The Beirut Stock Exchange (BSE) and Banking Control Commission (BCC) may also set requirements for entities under their supervision.

According to Ministerial Circular No. 742 of 2002, auditors must apply ISA as issued by IAASB for all audits of financial statements.

The rules of the BSE and BCC also stipulate that financial statements of all listed companies and banks should be audited using ISA as issued by IAASB.

Current Status: Adopted

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). The LACPA last had its Code issued and 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.

Current Status: Not Adopted

The Ministry of Finance (MoF) is responsible for adopting public sector accounting standards. The government uses national standards on a cash-basis (IFAC/CIPFA International Public Sector Financial Accountability Index 2020).

The Lebanese Association of Certified Public Accountants (LACPA) reports that the MoF plans to transition to cash-basis IPSAS without any modifications by 2025.

Current Status: Not Adopted

The Lebanese Association of Certified Public Accountants (LACPA), through the Accountancy Profession Act No. 364 of 1994 and its internal bylaws, establishes the rules and procedures for an investigative and disciplinary (I&D) system of the association. All CPAs must be licensed and registered members of the LACPA; therefore, its system applies to all professional accountants.

Complaints are sent to LACPA’s President, who then presents them to the LACPA Board. The LACPA Board votes to relay the complaint to the Investigations Committee. The Investigations Committee decides on whether to relay the case to the Disciplinary Committee after questioning both parties—the plaintiffs and defendants separately. The President of LACPA has the authority to convene the Disciplinary Board to verify evidence in the presence of an attorney. The Disciplinary Board may impose the following sanctions: (i) expulsion, (ii) reprimands; and (iii) monetary fines.

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 mainly to administrative processes, remain outstanding due to pending draft amendments to Act No. 364.

Current Status: Partially Adopted

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), the list of all applicable IFRS is published in the Official Gazette. Where differing interpretations exist, the official English version of IFRS should be referred to.

The decisions specify the types of entities required to use IFRS to prepare their financial statements: (1) all holding, offshore, limited liability and joint stock companies, regardless of type, size, and number of employees; (2) all branches of foreign companies; and (3) all sole proprietorships and partnership whose total number of employees exceeds 25 or that have annual turnover above LB750 million. Additionally, companies listed on the Beirut Stock Exchange must use full IFRS. Unlisted companies have the option of using full IFRS.

The Code of Money and Credit, the Banking Law of 1963, and Resolution 10/1 of 1984 and related decrees requires banks and other financial institutions (except insurance companies) to comply with accounting requirements set forth by the Banking Control Commission (BCC), in addition to complying with decrees issued by the MoF. According to the 2003 World Bank Report on the Observance of Standards and Codes, the requirements of the BCC were largely consistent with IAS but with some significant deviations. It is unclear how these requirements currently compare with IFRS.

As of the date of this assessment, IFRS for SMEs is not yet adopted and there are no known plans for adoption.

Current Status: Partially Adopted

Relevant Organizations

• Lebanese Association of Certified Public Accountants (LACPA)
• Capital Markets Authority (CMA)

Relevant Legislation

• Accountancy Profession Act No.364/1994
• LACPA Bylaws

Relevant Publications

• LACPA, SMO Action Plan, 2024.
• World Bank, Report on Observance of Standards and Codes (ROSC) Accounting and Auditing: Republic of Lebanon, 2003.