Madagascar

Act No. 2003-036 of 30 January 2004 on Commercial Companies outlines accounting, auditing, and financial reporting requirements for companies in Madagascar. All companies are required to prepare their financial statements in accordance with the “Plan Comptable General” (PCG) 2005 issued by the standard-setting body, the Conseil Supérieur de la Comptabilitié (CSC). The PCG-2005, which was approved by Ministerial Decree No. 2004-272 of February 18, 2004, is based on the 2004 version of IFRS. Companies are permitted to apply full IFRS or the IFRS for Small- and Medium-sized Entities (SMEs) if it can demonstrate that the resulting financial statements are an improvement over financial statements prepared under PCG-2005. However, a company that wants to comply with both IFRS and the PCG-2005 would prepare two different sets of financial statements.

In practice, as reported by the Ordre des Experts Comptables et Financiers de Madagascar (OECFM), entities (and subsidiaries of foreign entities) prefer having two sets of financial statements prepared: (a) one set of statements compliant with PCG-2005, which is used for tax purposes and other local purposes, and (b) a second set compliant with IFRS, which is incorporated in the consolidated financial statements of the parent company.

The PCG also outlines simplified accounting requirements for micro entities (defined as those having annual turnover of less than MGA 100 million) and allows such entities to maintain accounting records on a cash basis in accordance with the accounting framework known as the “Système Minimal de Trésorerie” (SMT).

The “Commission de Supervision Bancaire et Financière” (CSBF) sets financial reporting requirements for banks and financial institutions in accordance with Banking Law No.95-030 of February 22, 1996. Banks and financial institutions are required to apply the accounting standards stated within the “Plan Comptable des établissements de credit” (PCEC), which was approved by Ministerial Decree 20469/2004 of October 27, 2004. Under the Law on Insurance Activities, the Ministry of Finance and Budget is responsible for issuing accounting rules for insurance companies and the rules are stipulated in the Insurance Accounting Plan based on Decree 2007-152 of December 19, 2007. The respective plans for banking and insurance companies are also based on the 2004 IFRS.

Incorporated and limited liability companies are required to have their financial statements audited based on size or turnover as stated in the Act on Commercial Companies, 2004. Ordre des Experts Comptables et Financiers de Madagascar (OECFM) sets auditing standards in pursuance to the Article 70 of Ordinance No. 92-047 November 5, 1992 related to the Organization of the Profession of Chartered Accountant (and all subsequent amendments). OECFM has adopted the ISA as issued by the IAASB for application in the jurisdiction.

Ordinance No. 92-047 of November 5, 1992 related to the Organization of the Profession of Chartered Accountant, which was amended by Law No. 96-019 of September 4, 1996 and Law No. 2001-023 of January 2, 2002, outlines the functions of Ordre des Experts Comptables et Financiers de Madagascar (OECFM) with respect to the regulation of the accountancy profession. OECFM is responsible for determining the initial professional development (IPD) and continuous professional development (CPD) requirements.

IPD requirements stipulate that candidates for the title of “Expert comptable et financier” (Chartered Accountant) must hold a diploma from an OECFM-accredited higher education institution; complete an entrance exam on accounting, law, taxation, audit, and management; complete three years’ practical experience with an OECFM-member accounting or auditing firm; complete a written final exam; and then present and defend a final thesis and dissertation. Individuals may then register with the OECFM and the institute maintains a list of registered Chartered Accountants and firms as the title is protected by law and membership of the institute is mandatory. Once members of OECFM, members must fulfill 40 hours of CPD per year (120 over a three-year period).

In accordance with Article 70 of Ordinance No. 92-047 of November 5, 1992 (and subsequent amendments), OECFM has authority to (i) ensure members’ compliance with ethical standards, rules of professional conduct, and technical standards; (ii) organize and monitor professional education and training; (iii) monitor the performance of its members through a quality assurance review system; (iv) implement and manage an investigation and disciplinary system to address members’ breaches of professional conduct; (v) set ethics and audit standards; (vi) maintain a registry of Charted Accountants; and (vii) represent and defend the interest of the profession, nationally and internationally.

There is no independent audit oversight entity in Madagascar.

In accordance with Article 70 of Ordinance No. 92-047 of November 5, 1992 (and subsequent amendments), the Ordre des Experts Comptables et Financiers de Madagascar (OECFM) offers the title of “Expert comptable et financier” (Chartered Accountant), which is protected under law. Once an individual is an OECFM-registered Chartered Accountant, they are subject to the regulation of OECFM and may offer auditing services.

The OECFM has the authority to: (i) to ensure members’ compliance with ethical standards, rules of professional conduct, and technical standards; (ii) to organize and monitor professional education and training; (iii) to monitor the performance of its members through a quality assurance review system; (iv) to implement and to manage an investigation and disciplinary system to address members’ breaches of professional conduct; (v) set ethics and audit standards; (vi) maintain a registry of Charted Accountants; and (vii) represent and defend the interest of the profession, nationally and internationally.

Ordre des Experts Comptables et Financiers de Madagascar (OECFM)

OECFM is a mandatory membership organization, which was established in 1962 in accordance with Ordinance No. 62-104 of October 1, 1962. It offers the title of “Expert comptable et financier” (Chartered Accountant). OECFM’s mandate and responsibilities, which are outlined in Ordinance No. 92-047 of November 5, 1992 related to the Organization of the Profession of Chartered Accountant (and all subsequent amendments), are: (i) to ensure members’ compliance with ethical standards, rules of professional conduct, and standards; (ii) to organize and monitor professional education and training; (iii) to monitor the performance of its members through a quality assurance review system; (iv) to implement and to manage an investigation and disciplinary system to address members’ breaches of professional conduct; (v) set ethics and audit standards; (vi) maintain a registry of Charted Accountants; and (vii) represent and defend the interest of the profession, nationally and internationally.

In addition, OECFM is an adviser to the accounting standard-setting body, Conseil Supérieur de la Comptabilitié (CSC). In addition to being an IFAC Member, OECFM is also a member of the Fédération Internationale Des Experts-Comptables Francophones (FIDEF) and the Pan African Federation of Accountants (PAFA).

In 2008, the World Bank published accounting and auditing Report on the Observance of Standards and Codes (ROSC), Ordre des Experts Comptables et Financiers de Madagascar (OECFM) designed an action plan to address, with the financial support from the Bank, the recommendations of the ROSC. The actions identified in the plan were planned to be completed by 2014. Unfortunately, a political crisis that began in 2009 and continues presently has led to restricted access to finance for the country and the implementation of the project has been stalled.

Nonetheless, OECFM reports that important improvements have still progressed, including holding final certification exams, an increase in OECFM’s membership, the hiring of an Executive Secretary, the implementation of a QA review system, and continuous strengthening of the profession through trainings and various exchanges and partnerships with other local or international organizations. OECFM has received technical support and grants to finance some of these activities from local and international organizations (i.e. the Fédération Internationale Des Experts-Comptables Francophones (FIDEF) and the European Union).

In accordance with Article 70 of Ordinance No. 92-047 of November 5, 1992 (and subsequent amendments), the Ordre des Experts Comptables et Financiers de Madagascar (OECFM) is responsible for the establishment of a quality assurance (QA) review system.

Through the European Union-funded Program of Support to Employment and Regional Integration (PROCOM), the OECFM began implementing QA reviews in January 2018. Thirteen firms have been subject to a first round of QA reviews in February 2018 and June 2018. OECFM expects to review another thirteen more by Q4 2019 and will complete the first cycle of reviews by 2021.

The institute reports that its QA review procedures largely align with SMO 1 requirements, however, there are still some components that remain to be formalized and included within the bylaws prior to implementation. These include: the approach for selecting firms for QA review; linking the QA review results to the investigation and discipline mechanism; and regular reviews to assess the implementation of the system.

Current Status: Partially Adopted

Initial professional and continuing professional development (IPD and CPD respectively) requirements are outlined in the Decree No.92-960 of November 11, 1992 for “Expert comptable et financier” (Chartered Accountants). In accordance with the decree, the Ordre des Experts Comptables et Financiers de Madagascar (OECFM) determines education and practical experience requirements. Universities and the National Institute of Accounting Sciences and Business Administration deliver the IPD programs.

IPD requirements stipulate that candidates for the title of “Expert comptable et financier” (Chartered Accountant) must hold a diploma from an OECFM-accredited higher education institution; complete an entrance exam on accounting, law, taxation, audit, and management; complete three years’ practical experience with an OECFM-member accounting or auditing firm; complete a written final exam on audit; and then present and defend a final thesis and dissertation. Individuals may then register with the OECFM and the institute maintains a list of registered Chartered Accountants and firms as the title is protected by law.

Once a member of OECFM, individuals must fulfill 40 hours of CPD per year (120 over a three-year period), which meet the input-based approach outlined in revised IES 7 and 8.

There are legal constraints in fully aligning national IPD and CPD requirements with the revised 2015 IES, but OECFM has initiated processes to facilitate convergence.

The institute’s Education Board is working to compare national requirements to the IES to identify any changes that might need to be made but face challenges as there is no French translation of the IES.

Current Status: Partially Adopted

Under Ordinance No. 92-047 of November 5, 1992 (and subsequent amendments), the Ordre des Experts Comptables et Financiers de Madagascar (OECFM) is responsible for defining applicable auditing standards. Since 2009, the OECFM has adopted all ISA as issued by the IAASB and has signed an agreement with IFAC to use the French translation of the 2018 ISA Handbook.

Current Status: Adopted

The Ordre des Experts Comptables et Financiers de Madagascar (OECFM) is responsible for the adoption of ethical standards in accordance with Ordinance No. 92-047 of November 5, 1992 (and subsequent amendments). OECFM reports that it has adopted the 2018 International Code of Ethics.

Current Status: Adopted

The Conseil Supérieur de la Comptabilité (CSC) within the Ministry of Finance and Budget determines public sector accounting standards in accordance with Decree No. 89-161 of June 13, 1989 as amended by Decree No. 98-442 of June 18, 1998.

Since 2006, government entities are required to apply the “Plan Comptable des Opérations Publiques” (PCOP). The PCOP is cash-basis and based on the 2004 version of IPSAS while also incorporating elements of the National Accounting Plan, Plan Comptable General (PCG) 2005, which is based on the 2004 version of IAS/IFRS (IFAC, CIPFA 2018).

Current Status: Partially Adopted

The Ordre des Experts Comptables et Financiers de Madagascar (OECFM) is responsible for the establishment and administration of an investigative and disciplinary (I&D) system in accordance with Ordinance No. 92-047 of November 5, 1992 (and subsequent amendments).

The OECFM’s I&D procedures are outlined in the institute’s bylaws dated July 19, 2013. The institute has an Ethics & Discipline committee that will conduct investigations and report findings to the Disciplinary Chamber. The Disciplinary Chamber will issue any sanctions and members have the option of appealing. A representative from the government oversees the Disciplinary Chamber proceedings.

The OECFM has indicated that its I&D procedures would benefit from further improvements to meet the SMO 6 requirements—for example, having non-accountants serve on the Disciplinary Chamber, formalizing the link with QA reviews, administrative processes, and public interest considerations such as publishing results and providing more information on how the public can bring a complaint.

The OECFM is revising some articles within its bylaws to address and formalize some of these issues; however, the approval of the changes is subject to government approval procedures.

Current Status: Partially Adopted

The Conseil Supérieur de la Comptabilitié (CSC), which is based within the Ministry of Finance and Budget, is responsible for setting corporate accounting standards. Companies are required to prepare financial statements in accordance with the National Accounting Plan, Plan de Comptable General (PCG) 2005, which is based on the 2004 version of IFRS. Companies are permitted to apply full IFRS or the IFRS for small- and medium-sized entities (SMEs) if it can demonstrate that the resulting financial statements are an improvement over financial statements prepared under PGC-2005. However, a company that wants to comply with both IFRS and the PCG-2005 would prepare different two sets of financial statements.

Banks and other financial institutions are required to apply the Plan Comptable des éstablissements de crédit (PCEC), while insurance companies must use Insurance Accounting Plan (PCAs) which are both also based on the 2004 IFRS.

The PCG also outlines simplified accounting requirements for micro entities and allows such entities to maintain accounting records on a cash basis in accordance with the “Système Minimal de Trésorerie” (SMT).

In May 2018, the International Monetary Fund (IMF) requested that the financial statements of the Central Bank agencies conform to the most recent version of the IFRS. The Ordre des Experts Comptables et Financiers de Madagascar (OECFM) has been tasked with undertaking a study in collaboration with the CSC to determine the feasibility of adopting the most recent IFRS for these entities.

Current Status: Not Adopted

Relevant Organizations

Conseil Supérieur de la Comptabilité (CSC)

Ordre des Experts Comptables et Financiers de Madagascar (OECFM)

Relevant Legislation

Act No. 2003-036 of 30 January 2004 On Commercial Companies

Ministerial Decree No. 2004-272

Order No. 6801/92 MINF / SG determining the equivalence level of DESCF and DEC

Order No. 62-104 of October 19, 1962

Ordinance No. 92-047 of November 5, 1992 related to the Organization of the Profession of Chartered Accountant, amended by Law No. 96-019 of September 4, 1996 and Law No. 2001-023 of January 2, 2002

Relevant Publications

Antonia, Mamisoa, Metier—les experts comptables en nombre insuffisant in L’Express de Madagascar, 28 September 2018.

IFRS Foundation, IFRS Application Around the World?Jurisdictional Profile: Madagascar, 16 June 2016.

News Mada, “Nouvelles dispositions fiscales: rencontre avec les experts comptable”, 13 Feb 2018.

OECFM, “SMO Action Plan,” November 2019.

World Bank, Report on the Observance of Standards and Codes—Accounting and Auditing: Madagascar, June 2008.