Myanmar

The accounting and financial reporting framework in Myanmar is stipulated in various notifications issued by the Myanmar Accountancy Council (MAC) and the Myanmar Companies Law. Standard-setting responsibilities are stipulated under the MAC Law.

Accounting Framework

Under Article 17(d) of the MAC Law, the MAC is responsible for setting accounting standards to be applied in Myanmar. The standards to be applied in Myanmar are the Myanmar Financial Reporting Standards (MFRS) that are converged with the 2010 version of the International Financial Reporting Standards (IFRS). Under the Myanmar Companies Law, companies that are not defined as SMEs by the IFRS Conceptual Framework are required to prepare their financial statements using MFRS. Companies defined as SMEs by IFRS are to apply the 2010 MFRS for SMEs, which are identical to the 2009 version of the IFRS for SMEs.

Notification No. 18/2018 and No. 19/2018 from the MAC authorizes that starting FY 2022–2023, public-interest entities (PIEs) as described in #45 will be required to directly apply IFRS that are effective at the start of 2022. Notification No. 19/2018 defines SMEs as entities that are not PIEs and SMEs will be required to directly apply IFRS for SMEs that are effective at the start of 2022. Early application of IFRS and IFRS for SMEs is allowed. IFRS and IFRS for SMEs will be adopted by direct reference in 2022 and the MFRS and MFRS for SMEs will be phased out.

Auditing Framework

Under Article 17(d) of the MAC Law, the MAC is responsible for setting auditing standards in Myanmar. The standards to be applied in Myanmar are the Myanmar Standards on Auditing (MSA) which are converged with the 2009 International Standards on Auditing (ISA). The MSA are not translated into the local language. Under the Myanmar Companies Law, every company in Myanmar is required to undergo an audit of their financial statements unless they are classified as a small company. A small company is defined as having annual turnover below 50,000,000 MMK and total number of employees below 30. Notification No. 20/2018 from the MAC authorizes that starting FY 2022–2023, public interest entities (PIEs) designated as: (i) financial institutions (such as banks, non-bank financial institutions, rural development bank, agriculture bank, micro finance institutions, credit societies, and postal savings banks) as defined in Section 2(b) of the Financial Institutions Law; (ii) insurance companies and insurance business entities established under the Insurance Business Law; (iii) public companies, joint venture companies with the government, significant subsidiaries of public companies incorporated under the Myanmar Companies Law; and (iv) companies, business entities and individuals described in Section 12 of the Securities Exchange Law, will all be required to be audited using the effective ISA at the start of 2022. The ISA will be adopted by direct reference at the start of FY 2022 and the MSA will be phased out.

In Myanmar, Certified Public Accountants (CPAs) are regulated at the state level by the Myanmar Accountancy Council (MAC). CPAs in Myanmar are defined as either Practicing Accountants (PA) or Non-Practicing Accountants (NPA). PAs are CPAs who have passed the CPA qualifying exam (administered by the MAC) and are registered with the MAC to provide audit and assurance services. NPAs are those who have passed the exams but are not registered to provide audit and assurance services.

The MAC’s authority is set out in the Myanmar Accountancy Council Law of 2015, (amended 2018) (referred to as MAC Law). Under the law, the MAC is responsible for: (i) establishing entry requirements for CPAs; (ii) certifying and licensing auditors; (iii) maintaining a registry of auditors and audit firms; (iv) establishing continuing professional development (CPD) requirements for CPAs; (v) establishing an investigation committee and taking disciplinary action in case of misconduct; and (vi) establishing a quality assurance (QA) review system. The MAC Law also authorizes the MAC to set auditing, accounting, and ethical standards.

Entry into the profession is overseen by the MAC. Citizens of Myanmar who wish to pursue the CPA must hold a bachelor’s degree in business administration, accounting, or commerce. They then undertake Part I and Part II of the CPA qualifying exam and are then certified as CPA (Passed) if they pass. If they pass, they undergo a three-year practical experience program with an approved employer or firm. To receive a license to conduct audit work, CPA (Passed) individuals must complete their practical experience with a MAC approved audit firm. Once these requirements have been met, they are then certified as CPA (Qualified). In order to conduct audit work in Myanmar, individuals must pass the CPA qualifying exam, fulfill the practical experience requirements, and register with the MAC to practice as auditors.

Individuals who graduate with a bachelor’s degree other than the majors listed above would be required to pass an entrance exam if they wish to pursue the CPA qualification. Myanmar citizens who attain foreign accountancy qualifications such as those issued by the Association of Certified Chartered Accountants (ACCA) and Chartered Institute of Management Accountants (Association-CIMA) are not regulated by the MAC and are subject to the regulations of their respective bodies. These individuals can attain the CPA if they pass the CPA qualifying exam and have their practical or work experience verified by the MAC.

Notification No. 13/2015 by the MAC distinguishes the type of regulated services that are allowed to be performed by CPA (Qualified) in Myanmar, and the non-regulated services, which can be performed by either CPA (Qualified), CPA (Passed), and other professionals:

• Regulated Services – Statutory Audit, Forensic Audit, Review Engagement, Assurance Engagement, Agreed Upon Audit Procedures (including independent internal audit), and provision of assurance services as an external auditor on financial statements and signing of any declaration of operational results of financial conditions of a business entity that has been audited or prepared.
• Non-Regulated Services – Bookkeeping and financial accounting, cost and management accounting, preparation of financial statements, financial management consultancy, investment consultancy, tax consultancy, tax filing, company registration and secretarial services, liquidation and insolvency, accounting system design and development, accounting system review and analysis, and internal audit that is not independent, accounting education, and share and business valuation services.

There are no independent audit public oversight arrangements in Myanmar. The MAC Law designates the Myanmar Accountancy Council (MAC) to regulate and set standards for auditors in Myanmar. Under the law, the MAC is responsible for: (i) establishing entry requirements for CPAs; (ii) certifying and licensing auditors; (iii) maintaining a registry of auditors and audit firms; (iv) establishing continuing professional development (CPD) requirements for CPAs; (v) establishing an investigation committee and taking disciplinary actions; (vi) establishing a quality assurance (QA) review system; and (vii) taking disciplinary action in case of misconduct. The MAC is not a member in the International Forum of Independent Audit Regulators (IFIAR).

In 2003, the Myanmar Institute of Certified Public Accountants (MICPA) was established following the issuance of an Association Permit from the Associations Formation and Control Central Committee (under the Ministry of Home Affairs of Myanmar). In 2013, MICPA was then re-constituted as a not-profit corporate entity under the authority of the Directorate of Investment and Companies Administration. Following the enactment of the MAC Law in 2015, MICPA was recognized as an independent national accountancy body. And in 2017, in addition to the provisions under the MAC Law, MICPA was re-registered as a company limited by guarantee.

MICPA was established to protect the rights of professional accountants in compliance with relevant laws and regulations, to promote the accounting profession by acting as a platform for training and development, and to serve as the voice for the accountancy profession in Myanmar. Membership with MICPA is mandatory for all CPAs. MICPA is an IFAC Associate member and a Primary Member of the ASEAN Federation of Accountants (AFA).

Under the MAC Law, the Myanmar Accountancy Council (MAC) is responsible for establishing a quality assurance (QA) review system in Myanmar. Per Notification No. 9/2018, an Audit Monitoring Committee (AMC), operating under the oversight of the MAC, was established to monitor the work of auditors; however, as of December 2020, a QA system in Myanmar has not been established due to resource constraints. The AMC via Notification No. 2/2018 made ISQC 1 adoption mandatory for all firms.

There has been an effort in Myanmar, by the MAC and the Myanmar Institute of Certified Public Accountants (MICPA), in establishing and implementing a QA review system, most notably, under a joint-funded project aimed at improving financial management by both the Asian Development Bank (ADB) and Institute of Chartered Accountants of England and Wales (ICAEW). This project has two phases, the first includes the development of a guide (Quality Assurance for Audit: A Good-Practice Guide) that helps break down what goes into establishing a QA system and the second phase which focuses on implementation. MICPA indicates that the second phase is currently on hold because of challenges in recruiting qualified staff to conduct reviews. MICPA expects that a QA review system should be operational in the jurisdiction by FY 2022–2023.

Current Status: Not Adopted

The Myanmar Accountancy Council Law stipulates initial professional development (IPD) and continuing professional development (CPD) requirements in Myanmar and provides both the Myanmar Accountancy Council (MAC) and Myanmar Institute of Certified Public Accountants (MICPA), with the mandate to implement these requirements.

MICPA reports that although the IES are not formally adopted in Myanmar, IPD and CPD requirements do partially align with a majority of the IES. MICPA reports that CPD requirements are in line with IES 7. No timetable has been established to when the IES will be formally adopted.

Current Status: Not Adopted

Under Article 17(d) of the MAC Law, the Myanmar Accountancy Council (MAC) is responsible for setting auditing standards in Myanmar. The standards to be applied in Myanmar are the Myanmar Standards on Auditing (MSA) which are converged with the 2009 ISA. The MSA are not translated into the local language.

Under the Myanmar Companies Law, every company in Myanmar is required to undergo an audit of their financial statements unless they are classified as a small company. A small company is defined as having annual turnover below 50,000,000 MMK and total number of employees below 30.

Notification No. 20/2018 from the MAC authorizes that starting FY 2022–2023, public interest entities (PIEs) designated as: (i) financial institutions (such as banks, non-bank financial institutions, rural development bank, agriculture bank, micro finance institutions, credit societies, and postal savings banks) as defined in Section 2(b) of the Financial Institutions Law; (ii) insurance companies and insurance business entities established under the Insurance Business Law; (iii) public companies, joint venture companies with the government, significant subsidiaries of public companies incorporated under the Myanmar Companies Law; and (iv) companies, business entities and individuals described in Section 12 of the Securities Exchange Law, will all be required to be audited using the effective ISA at the start of 2022. The ISA will be adopted by direct reference at the start of FY 2022 and the MSA will be phased out.

Current Status: Partially Adopted

Under the MAC Law, the Myanmar Accountancy Council (MAC) is responsible for establishing ethical requirements for CPAs in Myanmar. The Myanmar Institute of Certified Public Accountants (MICPA) reports that in September 2019, the MAC adopted and published the 2018 International Code of Ethics.

Current Status: Adopted

Under the Auditor General of the Union Law of 2010, the Office of the Auditor General (OAG) is responsible for setting public sector accounting standards in Myanmar. The current system in place in Myanmar is a single-entry modified cash-based accounting system except for state-owned enterprises who use a double-entry accounting system that is in line with Myanmar Financial Reporting Standards (MFRS). IPSAS are not adopted in Myanmar, and while the Myanmar Institute of Certified Public Accountants (MICPA) indicates that there are plans to eventually adopt IPSAS, no timeline has been established.

Current Status: Not Adopted

Under the MAC Law, the Myanmar Accountancy Council (MAC) is responsible for establishing an investigation and discipline (I&D) system in Myanmar. Section 72–79 of the MAC Law establishes an Investigation Board and a Discipline Supervisory Committee where the Myanmar Institute of Certified Public Accountants (MICPA) also contributes as members of both entities. Section 68 and 69 of the MAC Law outlines breaches of rules and regulations issued by the MAC that would warrant and investigation and disciplinary action being taken by the MAC. Based on an assessment of the existing I&D system conducted by MICPA, the current system Myanmar partially complies with SMO 6 requirements.

Areas where there are gaps include: (a) initiation of proceedings where only a complaints-based approach is utilized; (b) the I&D system is not linked to QA reviews; (c) the disciplinary process does not include an independent tribunal; (d) a third appeals body does not exist; (e) within the administrative process, timeframes for disposal of cases are not established and there are no tracking mechanisms to monitor progress; (f) with regards to public interest considerations, there is no mechanism of sharing investigations with the public; (g) the system does not liaise with outside bodies on serious crimes; and (h) there are no regular reviews of the overall process.

Current Status: Partially Adopted

Under Article 17(d) of the MAC Law, the Myanmar Accountancy Council (MAC) is responsible for setting accounting standards to be applied in Myanmar. The standards to be applied in Myanmar are the Myanmar Financial Reporting Standards (MFRS) that are converged with the 2010 version of the International Financial Reporting Standards (IFRS). Under the Myanmar Companies Law, companies that are not defined as SMEs by the IFRS Conceptual Framework are required to prepare their financial statements using MFRS. Companies defined as SMEs by IFRS are to apply the 2010 MFRS for SMEs, which are identical to the 2009 version of the IFRS for SMEs.

Notification No. 18/2018 and No. 19/2018 from the MAC authorizes that starting FY 2022–2023, PIEs as described in #45 will be required to directly apply IFRS that are effective at the start of 2022. Notification No. 19/2018 defines SMEs as entities that are not PIEs and SMEs will be required to directly apply IFRS for SMEs that are effective at the start of 2022. Early application of IFRS and IFRS for SMEs is allowed. IFRS and IFRS for SMEs will be adopted by direct reference in 2022 and the MFRS and MFRS for SMEs will be phased out.

Current Status: Partially Adopted

Relevant Organizations

• Office of the Auditor General of Myanmar
• Myanmar Accountancy Council
• Myanmar Institute of Certified Public Accountants

Relevant Legislation

• Myanmar Accountancy Council Law
• Myanmar Companies Law
• Notification No. 18/2018
• Notification No. 19/2018
• Notification No. 20/2018

Relevant Publications

• ASEAN Federation of Accountants, AFA Annual Report, December 2015.
• IFRS, Myanmar, April 17, 2019.