Malawi

Member Organizations

Member Organization Associate Other PAOs

  Institute of Chartered Accountants in Malawi

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    In May 2016, the Companies Act, Act No. 15 of 2013 became effective and replaced the Companies Act of 1984. The Companies Act 2013 continues to establish the foundation for the financial reporting framework in Malawi and outlines the formation of the various types of entities, applicable governance arrangements, and the requirements for preparing financial statements. The Companies Act 2013 also provides extensive stipulations about company accounting systems, auditors’ reports, the appointment, remuneration, and removal of auditors, as well as the rights and obligations of auditors; however under the new law, there is no mandatory audit requirement for private companies, as explained below. The new Act now provides legal backing to the application of IFRS or IFRS for SMEs where relevant and requires mandatory application of ISA when conducting audits.

    Accounting Framework

    The Companies Act, Act No. 15 of 2013 stipulates that financial statements for all companies must be prepared in accordance with IFRS or IFRS for Small- and Medium-sized Entities (SMEs). Companies that are considered public interest entities (PIEs) must use full IFRS while all other companies may choose to use full IFRS or IFRS for SMEs. The Institute of Chartered Accountants in Malawi (ICAM), which was the de facto standard-setter until May 2016 and had adopted IFRS and IFRS for SMEs by reference, issued an official definition of PIEs in 2009. PIEs are companies that: are listed with the Malawi Stock Exchange or any other recognized stock exchange; have articles of incorporation providing for unrestricted transfer of shares or is a Public Company in terms of the Malawi Companies Act 2013; are permitted to offer shares to the public; hold assets in a fiduciary capacity for a broad group of outsiders, such as a bank, an insurance entity, securities dealer/broker, pension fund or mutual fund; are owned by the public through the Government; have a legal requirement to publish general purpose financial statements in any public media; and are material subsidiary of an entity with public accountability.

    There are no separate requirements for the preparation of general purpose financial statements of regulated entities such as banks, credit institutions, and listed companies.

    Auditing Framework

    With the new Companies Act becoming effective, there is no longer a mandatory audit requirement for private companies, although such companies may resolve to appoint an auditor. Private companies are defined as companies with a minimum of one and a maximum of 50 shareholders; companies that are prohibited from offering its securities to the public; and companies with an annual turnover of 20 million Kwacha or less (approximately USD 27,000).

    For all other companies, the Companies Act 2013 states that audits must be carried out in accordance with ISA. In accordance with the Public Accountant and Auditors Act 2012, only Practicing Accountants of ICAM, registered with the Malawi Accountancy Board, are permitted to perform audit attest functions.

  • Regulation of Accountancy Profession

    The accountancy profession in Malawi is regulated at the state level by the Malawi Accountant Board (MAB), and at the professional level by the Institute of Chartered Accountants of Malawi (ICAM).

    There are three designations that individuals seeking to enter the profession in Malawi may obtain: Accounting Technician (Diplomate Accountant), Chartered Accountant (CA(M)), and Practicing Accountant. The CA(M) designation introduced by ICAM in December 2014 is protected under the Public Accountant and Auditors Act (PAA) 2012.

    Individuals pursuing the Accounting Technician qualification must hold a bachelor’s degree in accounting or finance from the University of Malawi or another accredited university, complete examinations and practical training, and finally, register with the MAB after applying for membership of ICAM.

    Candidates for the Chartered Accountant designation must hold a bachelor’s degree, pass ICAM’s introductory and final examinations, complete practical training requirements, and then register with the MAB after becoming a CA(M) member of ICAM. Individuals who receive foreign qualifications from ACCA, CIMA, or Institute of Chartered Accountants in England and Wales may also qualify as a CA(M) after completing any additional requirements recommended by ICAM and approved by the MAB. Finally, Practicing Accountants must meet the same requirements as a CA(M) plus complete three years of work experience in audit and assurance in an audit firm. The PAA 2012 only allows Practicing Accountants of ICAM that are registered with the MAB to perform audit attest functions

    All professional accountants in Malawi must be members of ICAM and be registered with the MAB. The MAB was established under the PAA of 1982 to regulate the practice and training of all professional accountants. In 2012, the PAA was amended to, among other things, extend the MAB’s mandate to include oversight of auditors of public interest entities (PIEs).

    Additionally, the MAB’s responsibilities include to: (i) maintain a register of Chartered Accountants and Accounting Technicians (Diplomate Accountants); (ii) oversee and accredit professional accountancy bodies, including their training and professional qualification examinations; (iii) review PIEs’ statutory financial statements and financial reports; (iv) adjudicate/make determinations on appeals of disciplinary actions meted out by ICAM; (v) provide advice to the government and education providers on relevant matters; and (vi) conduct quality assurance reviews of auditors.

    ICAM is the only professional accountancy organization in Malawi and regulates the profession through: (i) issuing practicing certificates for the profession; (ii) establishing initial professional development and continuing professional development requirements; (iii) setting ethical standards; and (iv) establishing an investigation and discipline system for professional accountants.

  • Audit Oversight Arrangements

    Auditors in Malawi are subject to the regulation and oversight of the Malawi Accountant Board (MAB) and the regulation of the Institute of Chartered Accountants in Malawi (ICAM). All auditors must be a Practicing Accountant member of ICAM and registered with the MAB in order to practice.

    The Public Accountants Act (PAA) of 1982 established MAB to regulate the practice and training of all professional accountants. The PAA was amended in 2012 to extend the MAB’s mandate to include oversight of the preparation and audit of financial statements of public interest entities (PIEs). The MAB’s mandate as it relates to the oversight of auditors includes: (i) maintaining a register of Chartered Accountants and Accounting Technicians (Diplomate Accountants); (ii) overseeing and accrediting professional accountancy bodies, including their training and professional qualification examinations; (iii) reviewing statutory financial statements and financial reports of PIEs; (iv) adjudicating/making determinations on appeals of disciplinary actions meted out by ICAM; (v) conducting quality assurance reviews for auditors; and (vi) providing advice to the government and education providers on relevant matters. The MAB is not a member of the International Forum of Independent Audit Regulators.

    In addition, auditors are subject to rules and regulations issued by the ICAM. In regards to auditors, ICAM is responsible for: (i) issuing practicing certificates for the profession; (ii) establishing initial professional development and continuing professional development requirements; (iii) setting ethical standards; and (iv) establishing an investigation and discipline system for its members.

  • Professional Accountancy Organizations

    The Institute of Chartered Accountants in Malawi (ICAM)

    ICAM, the only professional accountancy organization in Malawi, was established in 2013 under the Public Accountant and Auditors Act (PAA) of 1982 as amended in 2012. It was created through a merger of the Public Accountants Examination Council of Malawi, which was established under the PAA 1982 to set syllabi and organize professional examinations for entry into the profession, and the Society of Chartered Accountants of Malawi. All accountants (Accounting Technicians/Diplomate Accountants and Chartered Accountants) and auditors (Practicing Accountants) must be members of ICAM.

    ICAM’s responsibilities, which are outlined in its Article of Association and the PAA 2012, include: (i) issuing practicing certificates for the profession; (ii) establishing initial professional development and continuing professional development requirements; (iii) setting ethical standards; and (iv) establishing an investigation and discipline system for its members.

    Lastly, in addition to being a Member of IFAC, ICAM is a member of the Pan African Federation of Accountants.

  • Projects or Other Information

    In 2007, the World Bank produced a Report on the Observance of Standards and Codes (ROSC)Accounting and Auditing: Malawi. Based on the ROSC’s recommendations, a Country Action Plan was developed in 2008, which included the revision of the accountancy Public Accountant and Auditors Act (PAA) of 1982 and capacity development interventions. The Institute of Chartered Accountants in England and Wales (ICAEW), as the twinning partner, provided technical assistance in the “Strengthening the Accountancy Profession in Malawi” project. Under the project, a three-year (2012–2015) strategic plan was developed for Institute of Chartered Accountants in Malawi (ICAM); the PAA of 2012 was enacted effective 2013; ICAM was fully established in 2013; and a national professional accountancy designation—Chartered Accountant of Malawi—based on ICAEW’s designation—was launched in December 2014.

    ICAM reports that a new strategic plan to be implemented within the next five years (2017–2021) is being finalized as of May 2017. It builds on the foundations of the last four years and will focus on strengthening the regulation of ICAM members in the areas of continuing professional development and ethics as well consolidating the professional qualification.

Adoption of International Standards

  • Quality Assurance

    Under the Public Accountants and Auditors Act of 2012, the Malawi Accountant Board (MAB) is responsible for quality assurance (QA) reviews of audits of financial statements. In 2017, ICAM completed a self-assessment of the MAB’s QA review system and reports that system is compliant with SMO 1 requirements.

    Prior to enactment of the law, the Institute of Chartered Accountants in Malawi (ICAM) was tasked with the QA function and had contracted the Association of Chartered Certified Accountants to conduct QA reviews in Malawi. The institute also adopted ISQC 1 as the quality control standard.

    From 2012–2015, ICAM and MAB received capacity building assistance from the Institute of Chartered Accountants of England and Wales as part of a three-year twinning arrangement that was funded by the World Bank.

    In 2014, the MAB assumed responsibility for implementing a QA review system with ICAM continuing to play an active, collaborative role.

    Current Status: Adopted

  • International Education Standards

    The Institute of Chartered Accountants of Malawi (ICAM) is responsible for establishing initial professional development (IPD) and continuing professional development (CPD) requirements under the Public Accountants Act of 2012. The Malawi Accountant Board oversees ICAM’s activities in this area.

    ICAM reports that, with the assistance of development agencies and twinning partners, it has aligned the IPD and CPD requirements with IES.

    Current Status: Adopted

  • International Standards on Auditing

    In May 2016, the Companies Act, Act No. 15 of 2013 became effective and replaced the Companies Act of 1984. The 2013 Companies Act introduced the legal requirement to apply ISA.

    Prior to the enactment of the CA 2013, the Institute of Chartered Accountants of Malawi was the de facto standard-setter and had adopted ISA and other standards by reference as issued by the IAASB without modifications. The currently effective English version of ISA continues to be applicable in all mandatory audits.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    The Institute of Chartered Accountants of Malawi (ICAM) has the authority to adopt, and monitor compliance with, ethical standards for members of the profession in accordance with the Public Accountants and Auditors Act of 2012.

    Since 2012, in line with its mandate, ICAM reports that it has established an ongoing process of adopting the IESBA Code of Ethics for Professional Accountants as issued and without modifications. Accordingly, as of the time of the assessment, ICAM indicates that the 2016 IESBA Code has been adopted.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    The Public Finance Management Act (Act No, 7 of 2003) provides that government financial reporting shall be in accordance with international standards and best practices as applicable to governments and statutory bodies. This legal framework provides for the adoption of IPSAS in public financial statements. Although, as of 2017, the Government of Malawi utilizes a cash-basis accounting framework, it has implemented the Integrated Financial Management Information System, which other governments in the African region are using as a platform for adopting IPSAS.

    The Office of the Accountant General has officially announced the adoption of IPSAS as the applicable accounting framework for Malawi and the government has received technical assistance to adopt and implement IPSAS within a defined timeframe. The timeline will be announced in September 2017 when the IPSAS Task Force presents its roadmap to the government authorities.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Public Accountants and Auditors Act 2012 (PAA 2012) authorizes the Institute of Chartered Accountants of Malawi (ICAM) to ensure that its members—which includes all professional accountants in the jurisdiction—adhere to applicable ethical and professional standards and to discipline members who fail to comply. In 2017, ICAM conducted a self-assessment of its investigative and disciplinary (I&D) system and indicates that it is line with the SMO 6 requirements and is operational. In 2016, the institute handled four cases. ICAM refers cases that require judicial intervention or appeals to the Malawi Accountants Board, which is responsible under the PAA 2012 for hearing appeals that arise from ICAM’s I&D system.

    In addition, the PAA 2012 has a provision for the imposition of sanctions, such as fines, suspension, and revocation of licenses, for disciplinary infractions by members of the profession.

    Current Status: Adopted

  • International Financial Reporting Standards

    In May 2016, the Companies Act, Act No. 15 of 2013 became effective and replaced the Companies Act of 1984. The Companies Act 2013 introduced the legal requirement to apply IFRS or IFRS for Small- and Medium-sized Entities (SMEs).

    Companies that are considered public interest entities (PIEs) must use full IFRS while all other companies may choose to use full IFRS or IFRS for SMEs. The Institute of Chartered Accountants in Malawi, which was the de facto standard-setter until May 2016 and had adopted IFRS and IFRS for SMEs by reference, issued an official definition of PIEs in 2009.

    The currently effective version of both sets of standards is obtained annually from the IFRS Foundation for application in Malawi and no translation of the standards 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: 11/2017
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