Lithuania

Member Organizations

Member Organization Associate Other PAOs

  Lithuanian Association of Accountants and Auditors
  Lithuanian Chamber of Auditors

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    As a member of the European Union (EU), Lithuania is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations.

    The Accounting Law No. IX-574 of 2001 (as amended on January 1, 2016) sets the requirements for the preparation of corporate financial statements in Lithuania. The law outlines accounting standards to be applied based on company size and type: EU-endorsed IFRS or Lithuanian Business Accounting Standards (LBAS), which constitute the Lithuanian Generally Accepted Accounting Principles. The Ministry of Finance is responsible for developing accounting legislation and for setting the LBAS which are based on IFRS.

    The law requires all public interest entities (PIEs), including listed entities, credit institutions, insurance companies, and financial brokerage companies, to apply EU-endorsed IFRS in both the consolidated and separate company financial statements. All other companies including small and medium enterprises (SMEs) have the option to apply EU-endorsed IFRS or LBAS in both the consolidated and separate financial statements. IFRS for SMEs has not been adopted in Lithuania.

    The auditing requirements are set in the Audit Law No. XIII-96 of 2017, which was updated to transpose the Audit Directive and Regulation (EU) No 537/2014. The law directly adopts ISA as issued by the IAASB and promulgated by the Authority of Audit, Accounting, Property Valuation, and Insolvency Management (AAAPVIM) and requires statutory audits to be performed according to the standard. The law also gives responsibility to AAAPVIM for the translation of ISA and other IAASB pronouncements, as well as other international standards. AAAPVIM has delegated certain translation responsibilities to the Lithuanian Chamber of Auditors (LCA). A mandatory audit is required for PIEs and all public limited liability entities if at least two of the following criteria are met: (i) net revenue from sales exceeds EUR 3.5 million for the financial year; (ii) value of assets in the balance sheet exceeds EUR 1.8 million; and (iii) average number of employees exceeds 50 for the financial year.

    Other legislations that regulate Lithuanian corporate financial reporting and performance include the following: Financial Statements of Entities Law No. X-575 of 2001 (as amended May 14, 2015) and Consolidated Accounts of Groups of Undertakings Law No. 576 of 2001 (as amended May 14, 2015), along with additional requirements that are applied to listed companies and other PIEs. These companies are regulated by the Bank of Lithuania and other supervising institutions.

  • Regulation of Accountancy Profession

    The Audit Law No. XIII-96 of 2017 regulates certified auditors in Lithuania. The Audit Law regulates the profession by establishing initial and continuing professional development (IPD and CPD respectively) requirements, ethical requirements, quality assurance reviews, and investigation and discipline procedures. The law directly adopts the IESBA Code of Ethics as the code of professional conduct for certified auditors in the jurisdiction.

    To be eligible for the designation of certified auditor, individuals must: have a university degree, have work experience of at least three years in an audit enterprise, pass the auditor’s qualification examination, obtain an auditor’s certificate, be a member of the Lithuania Chamber of Auditors (LCA), and have an irreproachable reputation as defined in the Audit Law.

    There are two official bodies involved in the regulation of the auditing profession: the Authority of Audit, Accounting, Property Valuation, and Insolvency Management (AAAPVIM), under the supervision of the Ministry of Finance and the LCA. AAAPVIM’s scope of responsibilities include the following: (i) audit and accounting standard-setting; (ii) supervision of the activities of the LCA; (iii) supervision of the quality assurance (QA) and investigative and disciplinary (I&D) systems; (iv) performance of audit investigations and enforcement of sanctions based on the results of inspections and investigations; (v) supervision of the approval, licensing, and registration of certified auditors; (vi) supervision of CPD of certified auditors; (vii) cooperation with other public audit oversight authorities and standard-setters; and (viii) translation of the IESBA Code of Ethics, ISA, and other standards issued by the IESBA and the IAASB into Lithuanian. The AAAPVIM delegates certain translation responsibilities to the LCA.

    In accordance with the Audit Law, the LCA regulates certified auditors and is responsible for the following: (i) administering the auditor qualification examination; (ii) issuing the auditor’s certificate; (iii) administering and monitoring of the CPD program; (iv) maintaining the registry of certified auditors; (v) translation of international standards under the delegation and supervision of AAAPVIM; and (vi) establishing QA and I&D systems for registered auditors in cooperation with the AAAPVIM.

    Lastly, professional accountants are not regulated at the state level but they may join a professional accountancy organization and be subject to its regulations and guidelines. In Lithuania, the profession is self-regulated by the Lithuania Association of Accountants and Auditors (LAAA) through voluntary membership. The LAAA undertakes the following activities in regards to its members: (i) establishing IPD, CPD, and professional conduct requirements; (ii) administering a “Professional Accountant” title designed for accountants seeking advanced level qualifications; and (iii) establishing and operating QA and I&D systems.

  • Audit Oversight Arrangements

    The Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), under the supervision of the Ministry of Finance, empowered by the Act No. 458 of 06-05-2015 and Audit Law No. XIII-96 of 2017 is the public audit oversight entity in Lithuania.

    AAAPVIM’s scope of responsibilities include: (i) audit and accounting standard-setting; (ii) supervision of the activities of the Lithuania Chamber of Auditors (LCA); (iii) supervision of the quality assurance (QA) and investigative and disciplinary (I&D) systems; (iv) performance of audit investigations and enforcement of sanctions based on the results of inspections and investigations; (v) supervision of the approval, licensing, and registration of certified auditors; (vi) supervision of continuing professional development of certified auditors; (vii) cooperation with other public audit oversight authorities and standard-setters; and (viii) translation of the IESBA Code of Ethics, ISA, and other standards issued by the IESBA and the IAASB into Lithuanian. The AAAPVIM delegates certain translation responsibilities to the LCA.

    The AAAPVIM is a member of the International Forum of Independent Audit Regulators.

  • Professional Accountancy Organizations

    The Lithuanian Association of Accountants and Auditors (LAAA)

    The LAAA is a public, non-profit, non-governmental, voluntary organization uniting professional accountants in Lithuania. The LAAA’s mission is to provide high-quality professional services, raise the knowledge level of accounting specialists, and encourage continuous development in the profession. The association regulates its members by: (i) establishing initial and continuing professional development requirements and professional ethics requirements; (ii) administering a “Professional Accountant” designation for accountants seeking advanced level qualifications; and (iii) establishing and implementing quality assurance (QA) review and an investigative and disciplinary (I&D) systems.

    In addition to being an IFAC member, LAAA is a member of Accountancy Europe, formerly known as the Federation of European Accountants.

    The Lithuania Chamber of Auditors (LCA)

    The LCA is a public legal entity unifying all certified auditors of Lithuania. In accordance with the Audit Law No. XIII-96 of 2017, the LCA has the following responsibilities: (i) administering the auditor qualification examination; (ii) issuing the auditor’s certificate; (iii) administering and monitoring of the continuing professional development program; (iv) maintaining the registry of certified auditors; (v) translation of international standards under the supervision of the Authority of Audit, Accounting, Property Valuation, and Insolvency Management (AAAPVIM); and (vi) establishing a QA review system and an I&D system for registered auditors in cooperation with the AAAPVIM.

    In addition to being an IFAC member, LCA is also a member of Accountancy Europe and a member of the International Valuation Standards Council.

  • Projects or Other Information

Adoption of International Standards

  • Quality Assurance

    In Lithuania, a mandatory quality assurance (QA) review system has existed since 1999 as stipulated by the Audit Law No. VIII-1227 of 1999. The law and subsequent updates directly adopts ISQC 1 and ISA 220.

    In 2008, amendments to the Audit Law resulted in the sharing of QA responsibility between the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM) and the Lithuania Chamber of Auditors (LCA), with the former having oversight over the entire QA process. AAAPVIM is responsible for conducting QA reviews for all public interest entities (PIEs), including listed entities, credit institutions, insurance companies, and financial brokerage companies, while LCA performs the QA reviews for non-PIEs. Reviews must be conducted every six years for non-public interest entities and every three years for PIEs.

    In 2017, LCA conducted a self-assessment of the QA review’s systems in the jurisdiction against the requirements of SMO 1 and reported that the systems are aligned with the requirements.

    In addition, the Lithuanian Association of Accountants and Auditors (LAAA)—which unites accountants on a voluntary basis— has also established a voluntary QA review system for the work activities of its members since 1990. LAAA reports that the association has been working to align its system with SMO 1 requirements.

    Current Status: Adopted

  • International Education Standards

    The Audit Law No. XIII-96 of 2017 establishes the initial and continuing professional development (IPD and CPD) requirements for auditors and authorizes the Lithuania Chamber of Auditors (LCA) to implement the requirements under the oversight of Authority of Audit, Accounting, Property Valuation and Insolvency Management.

    To be eligible for the designation of certified auditor, individuals must: have a university degree, have work experience of at least three years in an audit enterprise, pass the auditor’s qualification examination, obtain an auditor’s certificate, be a member of the Lithuania Chamber of Auditors (LCA), and have an irreproachable reputation as defined in the Audit Law. The LCA reports that its IPD and CPD requirements for its members, as established in the law, are in line with IES.

    Professional accountants are not regulated at the state level and the law does not specify professional qualifications, education, and licensing requirements. Nevertheless, the Lithuanian Association of Accountants and Auditors (LAAA)—which unites accountants on a voluntary basis—establishes IPD and CPD requirements for its members. LAAA reports that its education and training programs are aligned with IES.

    While some requirements of the IES seem to have been incorporated into Lithuania’s national educational requirements for the accountancy profession, plans to incorporate the revised 2015 IES requirements remain to be clarified by the respective organizations.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The auditing requirements are set in the Audit Law No. XIII-96 of 2017. The Audit Law directly adopts ISA as issued by the IAASB and requires statutory audits to be performed according to the standards.

    The Audit Law also empowers Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), as the public oversight body, to determine related guidance to the auditing standards. Under the supervision of AAAPVIM, the Lithuania Chamber of Auditors has been responsible for the ongoing translation of ISA and other IAASB pronouncements according to the IFAC Translation Policy.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    In Lithuania, only certified auditors are mandated by the law to adhere to ethical requirements. The Audit Law No. XIII-96 of 2017 requires all certified auditors to follow the IESBA Code of Ethics for Professional Accountants.

    Under the oversight of the Audit, Accounting, Property Valuation and Insolvency Management, the Lithuania Chamber of Auditors has translated and published the 2016 IESBA Code of Ethics.

    In addition, while requirements for professionals other than auditors are not specified in the law, the Lithuanian Association of Accountants and Auditors (LAAA)—which unites accountants on a voluntary basis—reports that it has established and implemented a Code of Ethics for its members since 2006. Known as the Decalogue of LAAA Ethics Standards, the association reports that their Code was established in accordance with the IESBA Code of Ethics and has been updated over the years to continue following the IESBA Code of Ethics. The 2015 IESBA Code of Ethics requirements are in effect for its members.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The Ministry of Finance (MoF) is responsible for establishing public sector accounting and reporting standards in Lithuania. In 2005, the MoF launched a reform to transfer all public sector accounting from modified cash basis to accrual basis.

    Since 2010, all public sector entities on both state and municipal levels have the obligation to implement the National Public Sector Accounting and Reporting Standards (NPSAS), which were prepared based on 2010 IPSAS. The Lithuania Chamber of Auditors reports that since then NPSAS are updated regularly based on the pronouncements issued by the IPSASB; however the latest version in effect needs to be clarified.

    Current Status: Partially Adopted

  • Investigation and Discipline

    In Lithuania, a mandatory I&D system for certified auditors has existed since 1999 based on the Audit Law No. VIII-1227 of 1999. In 2008, amendments to the Audit Law resulted in the sharing of responsibility for the implementation of the investigative and disciplinary (I&D) system between the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM) and the Lithuania Chamber of Auditors (LCA).

    Under the law, both AAAPVIM and LCA are empowered to initiate sanctions; however in cases regarding audit quality, only AAAPVIM has the authority to investigate certified auditors and enforce disciplinary actions. In matters related to ethics, LCA has established the Auditors’ Court of Honor which has the authority to issue sanctions. In 2017, LCA conducted a self-assessment of the I&D system in the jurisdiction against the requirements of SMO 6 and reported that the system is aligned with the requirements.

    In addition, while not required by law, the Lithuanian Association of Accountants and Auditors (LAAA)—which unites accountants on a voluntary basis—has also established an I&D system for its members. LAAA reports that the system is almost fully aligned with the requirements of SMO 6. Proceedings are initiated based on complaints. According to the LAAA, it does not have the authority to initiate proceedings based on information received as only AAAPVIM has the legal mandate to conduct investigations when information is received on the possibility of misconduct.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Accounting Law No. IX-574 of 2001 sets the requirements for the preparation of corporate financial statements in Lithuania. The law outlines which accounting standards entities should apply based on their firm size and type: EU-endorsed IFRS or Lithuanian Business Accounting Standards (LBAS), which constitute the Lithuanian Generally Accepted Accounting Principle. The Ministry of Finance is responsible for developing accounting legislation and for establishing the LBAS.

    The law requires all public interest entities (PIEs), including listed entities, credit institutions, insurance companies, and financial brokerage companies, to apply EU-endorsed IFRS in both the consolidated and separate company financial statements. All other companies including small and medium enterprises (SMEs) have the option to apply EU-endorsed IFRS or LBAS in both the consolidated and separate financial statements. IFRS for SMEs has not been adopted in Lithuania and there is no known timetable for adoption.

    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: 10/2018
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