Egypt

Member Organizations

Member Organization Associate

  Egyptian Society of Accountants & Auditors

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The financial reporting framework in Egypt is established under the Companies Law No. 159 of 1981, and the Capital Market Law No. 95 of 1992.

    Accounting Framework

    In accordance the Companies Law and the Capital Market Law, all companies must prepare annual financial statements following the financial reporting requirements specified by a decree of the Minister of Economy. However, in practice, the Minister of Investment and International Cooperation (MoI) is recognized as the accounting standard-setter in Egypt and has adopted Egyptian Accounting Standards (EAS) based on IFRS since 2006. In 2019, the MoI issued Decision No. 69/2019 adopting EAS, which are based on the 2018 IFRS, for all public interest entities (PIEs). In Egypt, PIEs are defined as listed companies, public subscription companies, securities companies, and investment funds established by banks and insurance companies. The EAS includes special requirements for small and medium-sized entities. The IFRS for SMEs is not under consideration. The IFRS Foundation and the Egyptian Society of Accountants and Auditors (ESAA) note that the EAS does not incorporate all the requirements of IFRS.

    Auditing Framework

    The Companies Law and the Capital Market Law require all companies, except for partnership companies and limited partnership companies, to prepare annual audited financial statements. The MoI is also the auditing standard-setter and, in 2008, issued Decision No. 166/2008, adopting the Egyptian Standards on Auditing Review and Other Assurance Services (ESAROAS), which are aligned with the 2015 version of International Standards on Auditing (ISA). The Egyptian Society of Accountants and Auditors (ESAA) reports that the ESAROAS has not been updated to align with the latest version of the ISA.

  • Regulation of Accountancy Profession

    Accounting Practice Law 133 of 1951 and its amendments lays the foundation for the regulations of the accountancy profession in Egypt. The following list the current practicing requirements depending upon the desire of the professional to practice (permission to audit non-listed, listed, banks and insurance companies) and receive recognition (through voluntary registration with the EFSA or voluntary membership with the ESAA). Only the Ministry of Finance (MoF) registry and requirements are presently required (mandatory) in order to practice in Egypt with the other optional levels of practicing requirements and recognition being voluntary.

    Regulation of Professional Accountants and Auditors of Non-Listed Entities

    The Ministry of Finance registry is the most comprehensive list of accountants in Egypt and it is required for a person to be registered with the Ministry of Finance Registry in order to practice as a professional accountant (provision of services to a third party) or an auditor within Egypt. All auditors who wish to provide services must be registered with the MoF. This registry falls under the Central Financial Management unit which is housed in the Department of Accounts and Finance Directorate.

    In order to become registered by the Ministry, one must have graduated from a university program with a degree in accounting, maintain membership and certificate from the Syndicate of Commerce - Accountants and Auditors Section (SOC) and have completed the necessary paper work. As such, SOC membership is compulsory to practice.

    The SOC was established by Law No. 4 of 1972. Its responsibilities include: (i) maintaining national registries of professional accountants; (ii) issuing a code of professional conduct and ethics for all professional accountants in Egypt; and (iii) establishing an investigative and disciplinary system for all auditors registered with the MoF. Syndicate membership and certificate is generally provided to all those who have completed a university accounting education program.

    Initially after graduating and obtaining SOC certificate, a professional can be registered in the MoF list as a “Trainee Auditor”. After three years of work experience, a professional can apply to be taken off the trainee list and join the “Auditor” list under which an auditor can audit companies other than joint stock corporations. Only after an additional five years of work experience (total of 8 years) can they join the “Full Auditor” list entitling the individual to audit corporations. As such, only university education and the passage of time determine the registration and practicing rights of auditors and accountants in Egypt. No examination, continuing professional development, nor audit experience are required to obtain or maintain registration with the Ministry.

    Regulation of Auditors of Listed Companies

    In order to audit listed companies, an auditor must be listed in the Egyptian Financial Services Authority (EFSA) list of auditors. EFSA was established by Law No. 10 of 2009 to regulate listed entities and all Non-Banking Financial Institutions (NBFIs). This Law notes that the EFSA is responsible for (i) maintaining a register of auditors who are licensed to audit listed companies and NBFIs; (ii) establishing a quality assurance review system and an investigative and discipline system for EFSA-registered auditors; (iii) setting CPD requirements for EFSA-registered auditors; and (iv) establishing ethical requirements for EFSA-registered auditors.

    As the present MoF system lacks alignment with international standards and good practices, the EFSA has sought to address these weaknesses by maintaining its own requirements to ensure quality audit services and the provision of high quality financial information. As such, the requirements to become listed in EFSA’s auditors’ list are more stringent than the Ministry of Finance registry. EFSA is the only body that has a public oversight board ensuring the proper conduct of members. All EFSA registered auditors have a Continuing Professional Development (CPD) requirement with a certain number of training hours mandatory per year.

    Alternatively, individuals with a membership certificate from the SOC and which hold membership with the Egyptian Society of Accountants and Auditors (ESAA) may bypass the EFSA system and register directly with the MoF as an auditor of listed companies. The ESAA is a voluntarily Professional Accountancy Organization (PAO) for professional accountants and auditors established by a Royal Decree in 1946 and given further statutory recognition by the Ministerial Order No. 2280. Resolution 554 of 2007. ESAA has three categories of members: professional accountants, auditors, and students. Its responsibilities include: (i) setting Initial Professional Development (IPD) and Continuing Professional Development (CPD) requirements for its members; (ii) promoting the EFSA Code of Ethics for its members registered with the EFSA (there are no other ethical requirements established by the ESAA for other members); (iii) establishing an investigative and disciplinary system for its members; and (iv) proposing revisions to the Egyptian Accounting Standards and Egyptian Standards on Auditing Review and Other Assurance Services to the Minister of Investment and International Cooperation (MoI).

    Candidates for ESAA membership must satisfy one of the following conditions: (i) have at least three years of full-time work experience in the office of a practicing ESAA member, and successfully complete of the ESAA’s two-part examination; (ii) hold membership in the Institute of Chartered Accountants in England and Wales, or another acceptable foreign professional body (provided they pass the ESAA’s examinations on Egyptian tax law and Egyptian company law); or (iii) hold a doctoral degree in accounting with three years of experience in practice.

    Regulation of Auditors of Banking Institutions

    There are several special registers which have been set up by supervisory authorities for auditors who audit certain entities. The registries have different educational and practicing requirements for auditing entities under their purview – the most prominent of these would be the Central Bank of Egypt. To enroll in the Central Bank’s auditor registry, a practitioner must maintain:

    • Registration in MoF register.
    • Registration in the Central Audit Organization (the country’s supreme audit institution); and
    • Have practiced audit for fifteen years outside the government sector, or have a PhD in accounting or auditing and have practiced for 10 years, or hold membership in the ESAA or an equivalent peer entity.
  • Audit Oversight Arrangements

    The Egyptian Financial Services Authority (EFSA) is responsible for the regulation and supervision of non-banking financial markets and instruments in accordance with Law 10 of 2009. Therefore, the EFSA oversees auditors who are licensed to audit listed entities and NBFIs, and it is responsible for (i) maintaining a register of auditors who are licensed to audit these entities; (ii) establishing a quality assurance review system and an investigative and discipline system for EFSA-registered auditors; (iii) setting CPD requirements for EFSA-registered auditors; and (iv) establishing ethical requirements for EFSA-registered auditors. The EFSA is not a member of the International Forum of Independent Audit Regulators.

    Additionally, in accordance with Law No. 4 of 1972, auditors of non-listed entities that are listed in the General Registrar maintained by the Ministry of Finance are subject to the code of professional conduct and ethics and the investigation and discipline system established by the Syndicate of Commerce—Accountants and Auditing (SOC). Membership in the SOC is mandatory for all auditors.

    Auditors may also voluntarily join the Egyptian Society of Accountants and Auditors (ESAA) and become subject to its membership requirements. Its responsibilities include: (i) setting IPD and CPD requirements for its members; (ii) promulgating the EFSA Code of Ethics for its members registered with the EFSA; (iii) establishing an investigative and disciplinary system for its members; and (iv) proposing revisions to the Egyptian Accounting Standards and Egyptian Standards on Auditing Review and Other Assurance Services to the Minister of Investment and International Cooperation (MoI).

  • Professional Accountancy Organizations

    The professional accountancy organizations (listed alphabetically) in Egypt are:

    Egyptian Society of Accountants and Auditors (ESAA)

    The ESAA is a voluntarily Professional Accountancy Organization (PAO) established by a Royal Decree in 1946 and given further statutory recognition by Ministerial Order No. 2280. Resolution 554 of 2007 mandates the ESAA to raise the technical and practical awareness of its members and ensure the profession operates in accordance with international best practice. Its responsibilities include: (i) setting initial and continuing professional development (IPD and CPD) requirements for its members; (ii) promoting the EFSA Code of Ethics for its members registered with the EFSA (there are no other ethical requirements established by the ESAA for its members); (iii) establishing an investigative and disciplinary system for its members; and (iv) proposing revisions to the Egyptian Accounting Standards and Egyptian Standards on Auditing Review and Other Assurance Services to the Minister of Investment and International Cooperation.

    In addition to being a member of IFAC, ESAA is a member of the Federation of Mediterranean Certified Accountants.

    Syndicate of Commerce—Accountants and Auditing (SOC)

    The SOC was established by Law No. 4 of 1972 and generally provides a membership certificate to those who completed a recognized university accounting education program. Membership in SOC in mandatory for all professional accountants and auditors in the country. Its responsibilities include: (i) maintaining national registries of professional accountants and auditors; (ii) issuing a code of professional conduct and ethics for professional accountants and auditors in Egypt; and (iii) establishing an investigative and disciplinary system for all auditors registered with the Ministry of Finance. The SOC is not a member of IFAC.

  • Projects or Other Information

    A draft of a new Accounting Law has been under discussion for the past several years with little indication of a timeline for its progression. The new law was originally drafted under the sponsorship of the Ministry of Finance, the Syndicate of Commerce—Accountants and Auditing (SOC), and the Egyptian Society for Accountants and Auditors (ESAA) in the late 1990s. Important features of the draft law include introducing (i) a qualifying examination to obtain an auditing license and establishing continuing education schemes, (ii) recognizing audit firms and individual auditors as providers of statutory audit services, (iii) amending the public oversight architecture over the professional performance, and (iv) strengthening the operational capacity of the professional bodies and emphasizing coordination through the creation of a Supreme Council for Accounting and Auditing.

Adoption of International Standards

  • Quality Assurance

    Law No. 10 of 2009 empowers the Egyptian Financial Services Authority (EFSA) to establish a quality assurance (QA) review system for auditors that are licensed to conduct audits of listed companies and Non-Banking Financial Institutions (NBFIs). The EFSA created the Auditors Oversight Board (AOB), which has been carrying out QA reviews since 2008 and has adopted the 2005 version of ISQC 1 and ISA 220.

    The AOB's Audit Inspection Department inspects auditors. While the EFSA’s QA system incorporates some components of the SMO 1 requirements, the Egyptian Society of Accountants and Auditors (ESAA) reports that a full review of the QA system is still in process. Additionally, at the time of this assessment, not all audits are subject to QA reviews (e.g. non-listed company audits). Under proposed amendments to the Accounting Practice Law, the scope of QA reviews would be extended to include all audits.

    Current Status: Partially Adopted

  • International Education Standards

    All professional accountants (providing services to external clients) and auditors must register with the Ministry of Finance (MoF) Registry in order to practice. In order to become registered by the MoF, one must have graduated from a university program with a degree in accounting, maintain membership and certificate from the Syndicate of Commerce - Accountants and Auditors Section (SOC) and have completed the necessary paper work. Syndicate membership and certificate is generally open to all those who have completed a university accounting education program.

    After three years of work experience, a professional can apply to be taken off the MoF trainee list and join the “Auditor” list under which an auditor can audit companies other than joint stock corporations. Only after an additional five years of work experience can they join the “Full Auditor” list entitling the individual to audit corporations. As such, only university education and the passage of time determine the registration and practicing rights of auditors and accountants in Egypt. No examination, continuing professional development, nor audit experience are required to obtain or maintain registration with the MoF.

    In order to audit listed companies, and non-banking financial institutions (NBFIs), an auditor must be listed in the Egyptian Financial Services Authority (EFSA) list of auditors. EFSA was established by Law No. 10 of 2009 and maintains its own requirements to ensure quality audit services and the provision of high quality financial information. As such, the educational requirements to become listed in EFSA’s auditors’ list are more stringent than the Ministry of Finance registry and include registration with the MOF and fulfillment of a Continuing Professional Development (CPD) requirement.

    Alternatively, individuals with a membership certificate from the SOC and that are members of the Egyptian Society of Accountants and Auditors (ESAA) may register directly with the MoF as an auditor of listed companies. Candidates for ESAA membership must satisfy one of the following conditions: (i) have at least three years of full-time work experience in the office of a practicing ESAA member, and successfully complete of the ESAA’s two-part examination; (ii) hold membership in the Institute of Chartered Accountants in England and Wales, or another acceptable foreign professional body (provided they pass the ESAA’s examinations on Egyptian tax law and Egyptian company law); or (iii) hold a doctoral degree in accounting with three years of experience in practice. Although not required by law, the ESAA has instituted a mandatory CPD requirement for it is members of 120 hours over three years and established a process to monitor compliance with CPD requirements.

    In addition to the EFSA and ESAA, the Central Bank also maintains additional educational requirements for auditing banking institutions. Although there are additional education and certification requirements for auditing listing entities, banks and non-banking financial institutions, even when viewed cumulatively, these continue to fall short of the IES. The piece-meal nature of the requirements for accounting education, practical experience, and continuing professional development In general, at the jurisdictional level, the country is only partially aligned with IES requirements.

    Current Status: Partially Adopted

  • International Standards on Auditing

    According to the Companies Law No. 159 of 1981 and the Capital Market Law No. 95 of 1992, all companies, except for partnership companies and limited partnership companies, must present annual audited financial statements.

    The Minister of Investment and International Cooperation (MoI) is the recognized auditing standard-setter. In 2008, the MoI issued Decision No. 166/20008 to adopt the Egyptian Standards on Auditing Review and Other Assurance Services (ESAROAS), which the Egyptian Society of Accountants and Auditors (ESAA) indicates are aligned with the 2015 version of ISA. The ESAA reports that the ESAROAS has not been updated to align with the latest version of the ISA. As the country is aligned with an outdated version of the standards, it is recognized as being partially adopted.

    Current Status: Partially Adopted

  • Code of Ethics for Professional Accountants

    The ethical requirements for all professional accountants and auditors in Egypt are specified in the Code of Ethics developed by the Syndicate of Commerce—Accountants and Auditing. According to the World Bank (2002), the requirements only include ethics breach criteria, such as fraud, and are not based on the IESBA Code of Ethics.

    In accordance with Law No. 10 of 2009, the Egyptian Financial Services Authority (EFSA) is empowered to set the ethical requirements for auditors registered with the EFSA and licensed to conduct audits of listed companies and NBFIs. The EFSA issued Decision No. 79/2007, adopting the Egyptian Code of Ethics (ECE) in line with the requirements of the 2006 version of the IESBA Code of Ethics. The Egyptian Society of Accountants and Auditors (ESAA) reports that the ECE has not been updated in line with the subsequent revisions made to the IESBA Code. As such, the jurisdiction is noted to only have partially adopted the IESBA Code of Ethics.

    Current Status: Not Adopted

  • International Public Sector Accounting Standards

    The Egyptian Ministry of Finance (MoF) is responsible for adopting public sector accounting standards. At present, cash-basis nationally promulgated public sector accounting standards form the basis of public sector accounting in the country. The Egyptian Society of Accountants and Auditors (ESAA) reports that there is no timeline nor plans to adopt International Public Sector Accounting Standards (IPSAS) in the immediate future but that it works to raise awareness of IPSAS and promote adoption.

    Current Status: Not Adopted

  • Investigation and Discipline

    The legal foundation for an investigative and discipline (I&D) system for professional accountants in Egypt is established under various regulations. As such, responsibility for this function is shared amongst various regulators.

    Law No. 4 of 1972 stipulates that Syndicate of Commerce—Accountants and Auditing is authorized to establish and implement an I&D system for all professional accountants and auditors in Egypt. The Egyptian Society of Accountants and Auditors (ESAA) reports that some of the requirements set out in the law are not in-line with SMO 6 best practices.

    Additionally, in accordance with Law No. 10 of 2009, the Financial Regulatory Authority (EFSA) is empowered to establish an I&D system for auditors of listed entities and NBFIs. The EFSA created the Auditors Oversight Board (AOB) and has an Enforcement Department which is responsible for implementing an enforcing mechanism to ensure compliance with applicable accounting and auditing standards. The ESAA states that the EFSA’s I&D system incorporates most of the SMO 6 requirements.

    The ESAA is also authorized to establish an I&D system for its members and has created an Investigation and Disciplinary Committee. In 2020, the ESAA conducted a self-assessment against the revised SMO 6 requirements and indicated that several areas require improvements, such as, no publicly available information about the types of misconduct which may bring about investigative actions; no linkage with the results of QA reviews; members of the committee are only accountants; limited extent of penalties; and results of the I&D procedures are not made publicly available, among others. The ESAA indicates that it would need to modify its by-laws to align its I&D system with the SMO 6 requirements.

    As such, at the jurisdictional level, the I&D systems are only partially aligned.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    In accordance with the Companies Law No. 159 of 1981 and the Capital Market Law No. 95 of 1992, all companies must prepare annual financial statements in accordance with the financial reporting requirements specified by a decree of the Minister of Economy. In practice, the Minister of Investment and International Cooperation (MoI) is recognized as the accounting standard-setter in Egypt and has adopted Egyptian Accounting Standards (EAS) based on IFRS. In 2019, the MoI issued Decision No. 69/2019 adopting EAS, which are based on the 2018 IFRS, for all). The EAS includes special requirements for small and medium-sized entities. The IFRS for SMEs is not under consideration. The IFRS Foundation and the Egyptian Society of Accountants and Auditors (ESAA) note that the EAS does not incorporate all the requirements of IFRS.

    Current Status: Partially 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: 09/2020
We welcome feedback. Please email membership@ifac.org

 

Thank you for your interest in our publications. These valuable works are the product of substantial time, effort and resources, which you acknowledge by accepting the following terms of use. You may not reproduce, store, transmit in any form or by any means, with the exception of non-commercial use (e.g., professional and personal reference and research work), translate, modify or create derivative works or adaptations based on such publications, or any part thereof, without the prior written permission of IFAC.

Our reproduction and translation policies, as well as our online permission request and inquiry system, are accessible on the Permissions Information web page.

For additional information, please read our website Terms of Use. ALL RIGHTS RESERVED.

Agree