Armenia

Member Organizations

Member Organization Associate Other PAOs

  Association of Accountants and Auditors of Armenia

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The Law on Accounting of 2002, as amended, establishes financial reporting requirements for companies in Armenia. The Law requires application of IFRS effective 2011 for (i) public interest entities (PIEs); (ii) large companies; and (iii) state-owned enterprises. The Law defines PIEs as banks, credit organizations, payment and settlement organizations, investment fund managers, securities market reporting issuers, investment companies, regulated market operators, the Central Depositary, insurance companies, reinsurance companies, and insurance brokers. Other entities, except micro entities that follow a simplified Chart of Accounts, must follow IFRS for SMEs.

    Commercial sector auditing is regulated by the Law on Audit Activity of 2002, which requires financial statements of open joint stock companies, banks, and other financial institutions, stock exchange participants, gambling establishments, and large companies be audited. Audits must be conducted by auditors licensed by the Ministry of Finance. Open joint stock companies, banks and branches of foreign banks are required to publish their annual financial statements.

    Article 11 of the Law on Audit Activity establishes that auditing standards are to be adopted by the Government of the Republic of Armenia and be based on international auditing standards. In 2011, the International Standards on Auditing, 2009 version, were officially adopted as national auditing standards by the Government’s Resolution of December 29, 2011.

  • Regulation of Accountancy Profession

    Regulation of professional accountants in Armenia is shared between the Ministry of Finance (MoF), which regulates auditors, and the profession, which regulates accounting professionals by providing certification for auditors and uniting the rest of the profession through voluntary membership in the Armenian Association of Accountants and Auditors (AAAA).

    The MoF regulates statutory auditors under the Law on Audit Activity of 2002, Government Decision No. 748-n of 2013, and Government Resolution on Licensing Procedure for Audit Services of 2012. The MoF’s responsibilities include: (i) licensing and certification of auditors; (ii) administering qualification examinations; (iii) investigation and discipline of auditors; and (iv) performing quality assurance reviews. The Government of Armenia establishes the professional standards for auditors, such as auditing standards, ethical standards, and others that are prescribed by Armenian laws and regulations.

    The Law on Audit Activity requires auditors of corporate entities to hold a license granted by the MoF. Holders of such audit licenses can be individuals or firms with at least two auditors. To obtain a license, candidates must have a Certified Professional Accountant (CPA) designation from the AAAA or the Association of Certified and Chartered Accountants (ACCA), and pass the Audit Qualification Examination administered by the MoF. According to Government Decision No. 748-n of 2013, the responsibility for the certification of auditors in Armenia was delegated to the AAAA, under the oversight of the MoF and Central Bank, which are the members of the MoF’s Examinations Commission.

    To obtain the AAAA’s CPA designation, which has been offered since 2005, candidates are required to complete a professional education program based on the ACCA program, pass a series of professional examinations, and satisfy the practical experience requirement. CPAs are subsequently subject to continuing professional development requirements.

    The regulation of the accountancy profession in Armenia is currently undergoing substantial changes, with the Accounting and Audit Reform Commission established by the Prime Minister of the Republic of Armenia tasked with overseeing the reforms. Proposed amendments to the Law on Accounting and the Law on Auditing Activity, as well as a new proposed Law on Regulation and Oversight of the Audit, have been drafted. Under the proposed laws, a number of regulatory functions would be delegated to two newly established entities: the Public Oversight Board (POB) and the Chamber of Auditors and Accountants (CAAA). The AAAA is expected to be reorganized as the CAAA, with a mandate to certify auditors, conduct quality assurance reviews, perform auditor training/qualification functions, and to adopt and translate professional standards such as auditing and ethical standards. The POB is to oversee the CAAA’s activities. To this effect, the Law on Audit Activity has been amended and a new Law on Regulation and Oversight of Audit has been drafted and is being reviewed by the MoF.

  • Audit Oversight Arrangements

    As of 2016, there is no independent public oversight arrangement in Armenia. The Ministry of Finance (MoF) regulates auditors under the Law on Audit Activity of 2002, Government Decision No. 748-n of 2013, and Government Resolution on Licensing Procedure for Audit Services of 2012. The MoF’s responsibilities include: (i) licensing and certification of auditors; (ii) conducting qualification examinations; (iii) investigation and discipline of auditors; and (iv) performing quality assurance reviews.

    As part of the overall effort to improve the legal and regulatory framework for accounting and auditing, a new Law on Regulation and Oversight of Audit has been drafted and, as of 2016, is being reviewed by the MoF. The proposed law envisions the establishment of the Public Oversight Board and the Chamber of Auditors and Accountants (CAAA) to regulate and oversee the audit profession in Armenia. The CAAA is expected to be tasked with conducting quality assurance reviews and the certification of auditors.

  • Professional Accountancy Organizations

    The Armenian Association of Accountants and Auditors (AAAA) is a non-government voluntary public organization established in October 1997 as a Union of Certified Accountants and subsequently reestablished in 1999 as the AAAA under Resolution No. 659 of 1999. Its membership comprises individual practitioners, both accountants and auditors. The association is formally recognized by the Ministry of Finance (MoF) as a professional accountancy organization. Since 2005, the AAAA has been offering a voluntary CPA certification, and is involved in the certification of auditors under the authority delegated by the MoF through Government Decision No. 748-n of 2013.

    As part of the reform of audit regulation and oversight, the establishment of a Chamber of Auditors and Accountants (CAAA)—to be overseen by the Public Oversight Board—is under consideration in Armenia. It is envisioned that the AAAA be reorganized as the CAAA, with a mandate to certify auditors, conduct quality assurance reviews, perform auditor training/qualification functions, and to adopt and translate professional standards such as auditing and ethical standards. These activities would be overseen by the POB. To this effect, the Law on Audit Activity has been amended and a new Law on Regulation and Oversight of Audit has been drafted and is being reviewed by the MoF.

  • Projects or Other Information

    In 2008, the World Bank published the Report on the Observance of Standards and Codes on accounting and auditing in Armenia, which made a number of recommendations for improving the legal and statutory framework for corporate financial reporting. In 2014, based on those recommendations, a comprehensive program for the short- to medium-term reform of corporate financial reporting in Armenia was set out in a Country Strategy and Action Plan for the period of 2014–2022. The plan focuses on: (i) strengthening accountancy and audit education; (ii) raising public awareness of the benefits of corporate financial reporting and audit; (iii) further developing an appropriate legislative framework for the regulation and oversight of financial reporting and auditing; and (iv) strengthening the implementation of the statutory framework.

    The Prime Minister of the Republic of Armenia established the Accounting and Audit Reform Commission to oversee the reforms. Proposed amendments to the Law on Accounting and Law on Auditing Activity, as well as a new proposed Law on Regulation and Oversight of the Audit, have been drafted. Under the proposed Laws, several regulatory functions are expected to be delegated to the two newly established entities: the Public Oversight Board (POB) and the Chamber of Auditors and Accountants (CAAA). The Armenian Association of Accountants and Auditors is expected to be reorganized as the CAAA, with a mandate to certify auditors, conduct quality assurance reviews, perform auditor training/qualification functions, and to adopt and translate professional standards such as auditing and ethical standards. The POB is to oversee the CAAA’s activities. As of 2016, the new laws have not yet been adopted.

Adoption of International Standards

  • Quality Assurance

    The Ministry of Finance (MoF) is responsible for establishing and implementing a quality assurance (QA) review system for auditors under the Law on Auditing Activity, which contains only very general requirements. During 2010–2013, the MoF passed a number of resolutions to introduce a requirement for carrying out inspections of audit firms, and established the Audit Inspection Department to assess the compliance of auditors and audit firms with auditing standards and regulations. The system has not become operational yet, however, and the extent of its compliance with the requirements of SMO 1 is not clear.

    In 2013, in the absence of a functioning QA review system, the Armenian Association of Accountants and Auditors (AAAA) launched a voluntary initiative with major auditing firms to implement an Audit Quality Review Process Monitoring program reportedly based on SMO 1 requirements. Since 2013, one review has been conducted.

    The Draft Law on Regulation and Public Oversight of Accounting and Auditing developed in 2014 envisions the reorganization of the AAAA as a Chamber of Accountants and Auditors with a direct responsibility for conducting QA reviews, among other functions.

    Current Status: Not Adopted

  • International Education Standards

    Apart from auditors and members of the Armenian Association of Accountants and Auditors (AAAA), the rest of the accountancy profession is not regulated and does not seem to be subject to initial professional development (IPD) and continuing professional development (CPD) requirements.

    The responsibility for establishing and administering the IPD and CPD requirements for auditors in Armenia is shared among the universities, the Ministry of Finance (MoF), and the AAAA. According to the Law on Auditing, the MoF determines the content of the examination syllabus for audit certification, licensing requirements, and the related examination program. In 2013, through Decree No. 748-N of 2013, the certification of auditors was transferred from the MoF to the AAAA, although the MoF continues to oversee the AAAA in this activity. The AAAA states in its 2016 SMO Action Plan that its certification scheme for auditors is based on the Association of Certified and Chartered Accountants program and is in line with IES. The AAAA reports that it is in the process of bringing the practical experience and final assessment requirements fully in line with IES and is involved in efforts to incorporate IES into the accounting curricula of the country’s universities.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The requirements governing the conduct of audit in Armenia are set out in the Law on Audit Activity of 2002, which authorizes the Ministry of Finance to adopt auditing standards based on international auditing standards. In 2011, the Armenian translation of Clarified ISA was officially adopted by Government Resolution of December 29, 2011. The translation was performed in line with the IFAC Translation Policy.

    It is not clear, however, whether ongoing processes have been established to incorporate new and revised ISA into national requirements. It is also not clear whether other IAASB pronouncements, such as International Standards on Review Engagements, International Standards on Assurance Engagements, and International Standards on Related Services have been adopted.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    Only auditors and members of the Armenian Association of Accountants and Auditors (AAAA), a professional accountancy organization with voluntary membership, are subject to ethical requirements. The Law on Audit Activity of 2002 requires auditors to follow a prescribed code of conduct established by the Government of Armenia in line with international standards. It is not clear whether such a Code has been adopted and whether all auditors are, in fact, subject to ethical requirements.

    The AAAA establishes ethical requirements for its members and has had a Code of Ethics in place since 2007, which, AAAA reports, is fully compliant with the IESBA Code of Ethics for Professional Accountants. As of 2016, the AAAA has translated the 2014 version of the IESBA Code.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    Under the Law on Public Sector Accounting, the Ministry of Finance (MoF) has the responsibility for establishing public sector accounting standards. The Government of Armenia made a decision to adopt accrual-based IPSAS. The MoF translated the IPSAS translated into Armenian in 2009 and then again in 2012. The 2012 version of IPSAS served as a reference for developing the Armenian Public Sector Accounting Standards (APSASs). According to the World Bank, APSASs are now being piloted in a number of government organizations and a Training-of-Trainers program is planned.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Law on Audit Activity of 2002 designated the MoF as the body responsible for the establishment of the investigative and disciplinary (I&D) system for statutory auditors. It needs to be clarified whether the Ministry of Finance has an operational I&D system in place and, if so, whether it complies with the requirements of SMO 6.

    In addition, in 2005, the Armenian Association of Accountants and Auditors (AAAA) took some initial steps to introduce an I&D system for its members based on the SMO 6 requirements existing at the time; however, due to resource constraints, such a system has not been implemented. According to the AAAA, it is in the initial stages of operationalizing its I&D system and aligning it with SMO 6.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Law on Accounting of 2002 requires the application of IFRS as issued by the IASB and translated into Armenian for (i) public interest entities; (ii) large companies; and (iii) state-owned enterprises. Other entities, other than micro, must follow IFRS for SMEs. The official translation of IFRS for SMEs into Armenian was done in 2010 and published under a resolution of the Government of the Republic of Armenia.

    New and revised IFRS become mandatory six months after the official translation of a new or revised IFRS has been published. Companies are allowed to apply IFRS as issued by the IASB before the official translation becomes effective. The translation is performed by the Ministry of Finance with Armenian Association of Accountants and Auditors assistance, in accordance with the IFRS Foundation Translation Policy. As of 2016, the 2012 version of IFRS has been translated and is being applied in Armenia.

    Under the Law on Banks and Banking, the Central Bank of Armenia defines accounting standards for entities under its supervision and requires application of IFRS. The English version of IFRS as issued by the IASB is to be applied. For financial institutions, no translation—and therefore no endorsement action—is required.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 05/2016
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