Liberia

Member Organizations

Member Organization Associate Other PAOs

  Liberian Institute of Certified Public Accountants

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    Liberian corporate entities, aside from banks, non-bank financial institutions, and insurance companies, are governed by the Liberian Associations Law 1977 (amended 2002) as well as the Liberian Institute of Certified Public Accountants (LICPA) Act of April 2011. Title 5 of the Liberian Associations Law 1977 stipulates the presentation and publication of financial statements, while the LICPA Act 2011 authorizes the LICPA to adopt and issue accounting standards for the private sector. LICPA’s by-laws require that all the standards it issues be in line with international standards. Accordingly, in July 2015, LICPA adopted IFRS and IFRS for SMEs, with an effective date of December 2018 but with early adoption encouraged. Which types of companies would apply full IFRS and which types would qualify for applying IFRs for SMEs is unclear, however. Prior to the effective date of December 2018, financial statements continue to be prepared in accordance with U.S. GAAP.

    The Central Bank of Liberia regulates the financial reporting and audit requirements of banks, non-bank financial institutions, and insurance companies. Non-bank financial institutions must prepare financial statements in accordance with its prudential guidelines, which are not fully in line with IFRS. Since 2013, however, all banks are required to prepare financial statements in accordance with IFRS. Banks and financial institutions are required to make their annual audited financial statements public. The reporting requirements for insurance companies are unclear at the time of this assessment.

    Amendments to Title 5 of the Liberian Associations Law outline the conditions for appointing and disqualifying auditors; however, there is no legal requirement for companies—other than banks and financial institutions—to present audited accounts. Under Section 24 of the LICPA Act 2011, only members of LICPA licensed as Certified Public Accountants or Registered Practicing Accountants are permitted to conduct public audits in Liberia. LICPA is the auditing standard-setting body in Liberia under the LICPA Act 2011. In July 2015, LICPA issued Regulation 1: Professional Standards and Related Practice Statements, which formally adopted Clarified ISA as the applicable auditing standards.

  • Regulation of Accountancy Profession

    The profession is self-regulated by the Liberian Institute of Certified Public Accountants (LICPA), which was established by the LICPA Act 2011 as the regulatory body. Sections 7 and 8 of the Act empower LICPA to: (i) set accounting and auditing standards; (ii) license qualified individuals and firms to engage in public practice; (iii) maintain and publish a register of Certified Public Accountants (CPAs), Registered Practicing Accountants (RPAs), and Associate Accounting Technicians (AATs); (iv) develop, implement, and monitor compliance with initial professional development and continuing professional development requirements; (v) set ethical requirements; (vi) adopt quality control standards and implement quality assurance requirements; (vii) establish disciplinary mechanisms for investigating and disciplining members for breach of rules and misconduct; and (viii) advise the Government of Liberia on public sector accounting standards.

    Membership in LICPA is mandatory to publicly practice accountancy in Liberia. Furthermore, only LICPA members who are qualified CPAs and RPAs may conduct audits.

    LICPA has four membership categories that are recognized under the LICPA Act 2011: (i) Chartered Members, (ii) RPAs, (iii) CPAs, and (iv) AATs.

    The Act permits the grandfathering of individuals who were members of the Institute of Certified Public Accountants, Liberia (ICPAL)—established under the 1933 Act as the predecessor of LICPA—by recognizing the status of Chartered Members and RPAs. Chartered Members include all individuals who were ICPAL members who legalized their LICPA membership. Similarly, RPAs are accountants who were already in public practice before the LICPA Act became effective, but do not qualify for admission into the Institute as CPAs. Under the Act, they are permitted to continue in public practice provided they had registered with the institute by September 2012.

    Aspiring candidates for LICPA’s CPA membership must have earned a Bachelor’s degree, completed the required practical experience of three or more years under a member of the institute who is authorized to provide such training and experience, and passed the final qualifying examinations. LICPA began offering its professional examinations in May 2011 through a Memorandum of Understanding with the Institute of Charted Accountants (Ghana) (ICAG). LICPA’s final examinations, therefore, are ICAG’s professional accounting qualification exams. Candidates who pass LICPA’s final examination are then qualified to become CPA members of LICPA and Chartered Accountant members of ICAG.

    AATs are members who have passed the institute’s technician certification program, which is administered under the Association of Accountancy Bodies of West Africa’s Accounting Technician Scheme, West Africa.

  • Audit Oversight Arrangements

    The audit profession is self-regulated and there is no independent audit oversight body.

    Auditors are regulated by the Liberian Institute of Certified Public Accountants (LICPA) in accordance with the LICPA Act 2011. Only members of LICPA who hold the designation of Certified Public Accountant (CPA) and Registered Public Accountant (RPA) are permitted to conduct audits in Liberia.

    Sections 7 and 8 of the LICPA Act 2011 empower LICPA to: (i) set auditing standards; (ii) license qualified individuals and firms to engage in public practice; (iii) maintain and publish a register of CPAs, RPAs, and Associate Accounting Technicians; (iv) develop, implement, and monitor compliance with initial professional development and continuous professional development requirements; (v) set ethical requirements; (vi) adopt quality control standards and establish a quality assurance review system; (vii) establish disciplinary mechanisms for investigating and disciplining members for breach of rules and misconduct; and (viii) advise the Government of Liberia on public sector accounting standards.

  • Professional Accountancy Organizations

    The Liberian Institute of Certified Public Accountants (LICPA) is the successor of the Institute of Certified Public Accountants Limited of Liberia (ICPAL), which was established by an act of the National Legislature in 1933. ICPAL was essentially not operational until the 1980s when it was renamed LICPA under an Executive Order. The LICPA Act 2011 empowers the institute to represent, promote, and regulate the accountancy profession in Liberia. LICPA’s membership comprises Chartered Members, Certified Public Accountants (CPAs), Associate Accounting Technicians (AATs), and Registered Public Accountants (RPAs). ICPAL membership is mandatory for publicly practicing accountancy in Liberia. Only CPAs and RPAs may conduct audits.

    Sections 7 and 8 of the LICPA Act 2011 empower LICPA to: (i) set accounting and auditing standards; (ii) license qualified individuals and firms to engage in public practice; (iii) maintain and publish a register of CPAs, RPAs, and AATs; (iv) develop, implement, and monitor compliance with initial professional development and continuing professional development requirements; (v) set ethical requirements; (vi) adopt quality control standards and implement quality assurance requirements; (vii) establish disciplinary mechanisms for investigating and disciplining members for breach of rules and misconduct; and (viii) advise the Government of Liberia on public sector accounting standards.

    In addition to being a member of IFAC, LICPA is a member of the Association of Accountancy Bodies of West Africa and the Pan African Federation of Accountants.

  • Projects or Other Information

    Liberia is in the middle of a recovery process following 14 years of a devastating civil war that ended in 2003 and the 2014 Ebola crisis. Since 2008, Liberia has partnered with international organizations to re-build and revive its economy, economic growth, and development. This has included revising several pieces of legislation that prescribe corporate accounting and auditing requirements. The revisions have empowered the Liberian Institute of Certified Public Accountants (LICPA) to be the accounting and auditing standard-setter in Liberia.

    In addition, LICPA has signed a twinning arrangement with the Institute of Chartered Accountants (Ghana) to support LICPA’s quality assurance review system and education and qualification program, and provide training and seminars for LICPA members on various standard-related topics. At this time, efforts are being made to seek donor support to extend the twinning arrangement.

Adoption of International Standards

  • Quality Assurance

    Under the 2011 LICPA Act, the Liberian Institute of Certified Public Accountants (LICPA) is responsible for establishing a quality assurance (QA) review system and an Audit Quality Assurance Board to oversee the QA review process. The Act states that mandatory periodic QA reviews be performed for all audits.

    In 2013, as part of LICPA and Institute of Chartered Accountants (Ghana) (ICAG)’s twinning arrangement, the ICAG conducted audit quality monitoring and QA reviews as part of a pilot phase exercise. The ICAG reviewers are expected to return in June and July 2016 to complete that exercise. LICPA expects to formally establish the AQAB in September 2016 and launch it at the Annual General Meeting in October 2016. Subsequently, it expects to formally conduct QA reviews beginning in April 2017.

    As part of its 2016 SMO Action Plan update, LICPA conducted a self-assessment of its QA system against the revised SMO 1 requirements and reports that its planned system is line with SMO 1.

    Current Status: Partially Adopted

  • International Education Standards

    In accordance with the 2011 LICPA Act, the Liberian Institute of Certified Public Accountants (LICPA) is responsible for developing, implementing, and monitoring compliance with initial professional development and continuing professional development (CPD) requirements for its members.

    LICPA reports that its examinations and syllabus are in line with the IES.

    In July 2015, LICPA’s Governing Council established CPD requirements for its members. CPD is now a requirement for members wanting to renew their practicing license, and LICPA monitors compliance with the requirements. It is unclear, however, if the CPD requirements are in line with IES.

    LICPA indicates in its Action Plan that it is carrying out a comparison of its education requirements and those of the IES to address any gaps in compliance.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Section 8 of the LICPA Act authorizes the Liberian Institute of Certified Public Accountants (LICPA) to adopt auditing standards. LICPA’s by-laws require that all standards issued by LICPA be in line with international standards. In July 2015, LICPA issued Regulation 1: Professional Standards and Related Practice Statements, which formally adopted Clarified ISA as the applicable auditing standards. LICPA indicates that it will update the standards on an ongoing basis.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    Sections 8, 9, and 16 of the Liberian Institute of Certified Public Accountants (LICPA) Act stipulate that the LICPA is responsible for the adoption and enforcement of a professional code of ethics.

    The Institute issued Regulation 1 in July 2015 adopting the 2015 IESBA Code of Ethics for its members. LICPA indicates that it will update the Code on an ongoing basis.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    The Liberian Government is responsible for adopting public sector accounting standards while, under the 2011 Liberian Institute of Certified Public Account (LICPA) Act, the LICPA is responsible for advising the government on public sector financial management.

    In 2009, the government enacted the Public Financial Management Act, which adopted and established cash-basis IPSAS as the official standards for public sector accounting in Liberia, with the aim of eventually transitioning to accrual-basis IPSAS in 2014. However, at the time of the intended transition, the Ebola virus outbreak delayed the transition.

    Current Status: Partially Adopted

  • Investigation and Discipline

    Sections 3 and 16 of the 2011 LICPA Act authorize the Liberian Institute of Certified Public Accountants (LICPA) to establish mechanisms for the investigation and discipline of its members. LICPA has established an Ethics, Investigation, and Discipline Committee (EIDC) that is responsible for investigating allegations of professional misconduct. Based on its investigations, the EIDC recommends appropriate sanctions to LICPA’s Council. The Council must approve any sanctions before the EIDC can actually impose them.

    LICPA indicates in its Action Plan that the EIDC is fully functional and its system incorporates some elements of the revised SMO 6 requirements. Certain components, however, such as a separate entity to make disciplinary decisions, composition of the EIDC, an appeals body, and certain administrative processes require further implementation efforts.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    Section 3 of the 2011 Liberian Institute of Certified Public Accountants (LICPA) Act empowers the LICPA to adopt and issue accounting standards. LICPA’s by-laws require that all standards issued by LICPA be in line with international standards. Accordingly, in July 2015, LICPA adopted IFRS for the private sector effective December 2018, with early adoption encouraged. LICPA indicates that it will update the standards on an ongoing basis. Prior to the effective date of December 2018, financial statements will continue to be prepared in accordance with US GAAP.

    The Central Bank of Liberia (CBL) regulates the financial reporting of banks, non-bank financial institutions, and insurance companies. Non-bank financial institutions must prepare financial statements in accordance with its prudential guidelines, which are not fully in line with IFRS. As of 2013, the CBL requires all banks to prepare financial statements in accordance with IFRS.

    The Government of Liberia has requested all State Owned Enterprises to prepare financial statements in accordance with 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: 06/2016
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