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Association of Professional Financial Managers

Associate | Established: 2007

The Association of Professional Financial Managers (APFM) was established in 2007 as a non-for-profit legal entity with the mission of developing the accountancy profession. In 2019, following the adoption of a new Law on Accounting that introduced regulation of the accounting profession, APFM was acknowledged as a professional accountancy organization (PAO) for chief accountants, financial managers, and other professionals with the responsibility of supervising the professional activities of its members, representing their interests, and providing expert advice to other stakeholders involved in policy development. By end of 2023, qualification as a Professional Accountant and membership in an accredited PAO is mandatory for all chief accountants. APFM organizes the pre-requisite education programs for obtaining a Professional Accountant certificate, offers several other specialization certificates, organizes seminars, information exchanges, and round table discussions, both nationally and internationally. APFM is a member of the European Federation of Accountants and Auditors for SMEs.

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Statements of Membership Obligation (SMO)

The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.

Last updated: 11/2022
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SMO Action Plan

Status of Fulfillment by SMO

  • SMO 1: Quality Assurance

    The Law on Audit of 1994 as amended in 2004 requires all auditors to be members of the Chamber of Auditors of Azerbaijan Republic (CAAR) and be subject to its quality assurance (QA) review system. The APFM’s membership is comprised of chief accountants, financial managers, and accounting consultants among others and therefore, it is not involved in the QA review system in the jurisdiction. It does indicate that it is striving to carry out reviews around the preparation of financial statements done by its members in cooperation with the CAAR. APFM intends to have a QA manual completed by the end of 2023 and would work in collaboration with CAAR to implement QA review procedures for its members.

    APFM currently carries out awareness-raising activities for members developed by its IFRS Committee, which includes support in the proper formulation and preparation of financial statements and providing recommendations to professionals for establishing internal control and inspection systems. Additionally, together with the Association of Professional Accountants and Auditors of the Republic of Moldova (ACAP), APFM has held seminars on “Diagnostics, monitoring, and analysis of financial statements, QA reviews of preparations of financial statements.”

    In line with SMO 1, it is preferred that the largest range of professional services performed by professional accountants be subject to quality assurance review systems, including the preparation of financial statements. It is positive that the APFM is exploring how to do this for its members and should clarify the status of this initiative within the institute. APFM is encouraged to refer to the SMO 1 best practices for establishing its review system and engaging with other PAOs regionally and/or globally who have set-up QA review systems for accountants to learn from their experiences.

    Current Status: Review & Improve

  • SMO 2: International Education Standards

    IPD and CPD requirements for obtaining and maintaining the Professional Accountant qualification are prescribed in Law of the Republic of Azerbaijan on Accounting 2018 and are implemented by the Ministry of Finance, the State Examination Center, and PAOs for accountants.

    To obtain a qualification of a Professional Accountant, a candidate must have higher education; confirm theoretical knowledge and professional competence by successfully passing relevant exams conducted by the State Examination Center; and obtain practical training in accounting activities.

    All Professional Accountants must be a member of a PAO for accountants accredited by the Ministry of Finance. The APFM indicates that it has integrated some of the IES into its education and training for the SEC exams. It reports that its Professional Education Committee meets with SEC monthly to discuss examinations, syllabi, and provide recommendations, which includes the application of international educational standards.

    Additionally, the APFM works with universities e.g., UNEC-State Economy University, Sumgayit State University, Western-Caspian University) to ensure that students are prepared for their practical experience/employment and the APFM training that leads to the SEC exam. APFM began working with universities after it began receiving students in its educational program (pre-SEC examination) and noticed significant knowledge gaps. It now has memorandums with 4 universities, primarily focusing on IFRS content. It is analyzing the syllabi of universities related to financial reporting and management and working toward one common syllabus for all students. This will achieve a baseline of knowledge when beginning APFM’s program and achieving the Professional Accountant certification faster. APFM expects to introduce the new syllabus in September 2022. APFM highlights several interactions it has had with universities on its website.

    The APFM requires members to fulfill 120 hours of CPD over three years and its annual CPD plan is approved by the MoF. It maintains a system for monitoring CPD fulfillment with each APFM member required to submit evidence of CPD completion. The APFM has agreements with several training centers to offer IPD and CPD.

    While APFM appears active in the education and training space, the extent of alignment of the educational programming of the APFM with those of latest IESs (2019 Handbook) remains to be established. APFM reports that it is reviewing IES 1 – 4 in particular and determining how to create assessment activities that check competencies and learning outcomes as indicated in the standards. The 2010 version of IES has been translated by the CAAR and is available as a reference point.

    It is an appropriate first step that APFM has indicated plans related to IES 1 – 4 to address the latest revised IES (2019 Handbook; effective January 2021) that outline competency based approaches as well as learning and development for information and communications technologies (ICT) and professional skepticism. It is also encouraging to see that APFM has already begun to work with universities to analyze and assess syllabi. APFM should review the analysis from the World Bank’s National Education Initiatives – Azerbaijan (2019) report and consider actions to address the recommendations in the report wherever feasible. APFM may also use the IES Checklist and the Accountancy Education E-Tool developed by IFAC to conduct a self-assessment and to consider available implementation support materials. Once a self-assessment is completed, APFM can better identify and prioritize actions to eliminate any gaps or weak areas. These plans with reasonable timeframes should be outlined in its Action Plan. APFM is encouraged to continue proactively liaising with all relevant stakeholders in the jurisdiction to promote and facilitate the implementation of the IESs, such as universities, the MoF and SEC, and the training centers it works with. 

    Current Status: Plan

  • SMO 3: International Standards on Auditing

    The Law on Audit of 1994 as amended in 2004 defines audit and audit activities, specifies the scope of the entities subject to mandatory audit requirements, and establishes the Chamber of Auditors of Azerbaijan Republic (CAAR) as the professional self-regulatory organization for auditors. However, neither the Law on Audit or other rules and regulations specify auditing standards to be applied. De facto, standards translated and published by the CAAR are used. To date, CAAR translated the 2016–2017 version of the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements. CAAR is currently translating the revised standards in the 2020 Handbook and expects to complete this by the end of June 2022.

    The APFM’s membership is comprised of chief accountants, financial managers, and accounting consultants among others and therefore, its members do not conduct audits. APFM indicates that its role is to support CAAR’s activities and will inform members and organize events that include sessions on ISA as needed. In 2019, APFM states it delivered trainings on ISA 300, 315, and 320.

    As feasible, APFM is encouraged to consider how it can support CAAR to identify opportunities to reduce the time lag in translating the latest IAASB pronouncements.

    Current Status: Sustain

  • SMO 4: Code of Ethics for Professional Accountants

    In 2018, amendments to the Law of the Republic of Azerbaijan on Accounting introduced mandatory regulation of chief accountants of certain specified entities. All professional accountants must be a member of a professional accountancy organization (PAO) for accountants accredited by the Ministry of Finance. The criteria for accreditation are prescribed in the MoF Resolution No. 204 of 2019 and while the criteria include having investigative and disciplinary procedures, there is no mention of ethical requirements. The APFM indicates its members are required to comply with a “norm of professional conduct and principles of independence, objectivity, and competence.” APFM plans to align its internal requirements with the IESBA Code while, in the meantime, recommending its members to refer to the latest IESBA Code.

    It has done this by collaborating with Chamber of Auditors of Azerbaijan Republic (CAAR)—the professional self-regulatory organization for auditors—to present an Azerbaijani translation of the 2018 International Code of Ethics to its members. By the end on the year CAAR will begin translating the 2021 Code and APFM intends to cooperate with CAAR on this matter.

    There are proposed amendments to the Law on Accounting that would adopt the IESBA Code of Ethics for professional accountants. The APFM indicates it is active in the consultations with the Ministry of Finance but the expected date of adoption of the law is not clear. APFM along with other registered PAOs continue to advocate for this to have ethical requirements for accountants embedded in law. 

    The APFM reports that it organizes continuing professional development (CPD) and other events on ethical requirements, including the latest pronouncements issued by the IESBA. The APFM has agreements with several training centers, including an Ethics Academy, to offer CPD.

    The APFM has created a Professional Membership and Ethics Committee to address key aspects of IESBA Code of Ethics and provide member support and communication. This Committee develops documents and provides information via the APFM website and journal “Financier” about the IESBA’s new materials and exposure drafts. Beginning from January 2021, the APFM indicates that a new section in its magazine is dedicated to Ethics for Professional Accountants, which covers explanations and key points of Code of Ethics issued by IESBA.

    The IESBA Code of Ethics establishes the fundamental principles of professional ethics for professional accountants and provides a conceptual framework and guidance for applying those principles. In fulfilling SMO 4, the APFM is encouraged to adopt the latest IESBA Code of Ethics for its members as part of being an accredited PAO for accountants. Where feasible, it is encouraged to support CAAR in its translation processes to ensure that all new and revised requirements of the IESBA Code of Ethics are translated and available to practitioners in a timely manner. The 2021 version of the International Code of Ethics is now available. The Handbook includes revisions to Part 4B of the Code and revisions to promote the role and mindset of professional accountants, which are effective as of December 2021. The 2021 Handbook also includes approved revisions that will become effective in December 2022, such as: revisions to non-assurance services, fees, and objectivity of an engagement quality reviewer.

    Disseminating and communicating with members regarding ethical requirements is important. APFM could also consider enhancing its activities to support implementation of the Code, such as establishing a hotline for confidential questions, among other activities.

    Current Status: Execute

  • SMO 5: International Public Sector Accounting Standards

    Under the Law of the Republic of Azerbaijan on Accounting that came into force in January 2019, budgetary organizations and municipalities must prepare financial statements in accordance with IPSASs as adopted for application in the jurisdiction by the Ministry of Finance.

    State organizations are already preparing to report in accordance with IPSAS. It is expected that the standards will transition to full accrual-basis IPSAS. The IPSAS adoption process began in 2009 under the World Bank’s Corporate and Public Sector Accountability Project (CAPSAP) with the Government of Azerbaijan that included a component dedicated to the adoption and implementation of accrual-based IPSAS.

    While APFM has no direct responsibility for adoption or implementation of IPSAS, it indicates it continues to support and promote the standards by (i) recruiting staff with relevant expertise; (ii) engaging with the Ministry of Finance; (iii) producing relevant educational material; and (iv) holding relevant events.

    The State Examination Center (SEC) issues exams for individuals to be certified as professional accountants in the public sector. There two levels to the exams that cover IPSAS. Chief accountants of budgetary organizations of central agencies and chief accountants of municipalities must be certified by December 2023. APFM has prepared training materials and started courses for those who need to pass examinations on IPSAS. APFM considers itself to be at the forefront of PFM initiatives in Azerbaijan by supporting the professionalization of the public sector. 

    The APFM is committed to fulfilling its obligations under SMO 5. The APFM is encouraged to consider further opportunities in the area of public sector accounting. The Ministry of Finance seems to have translated the 2012 IPSASB Handbook; however, several revisions have been issued since then. As feasible, APFM may consider how it provide support for a translation of the 2021 IPSASB Handbook which was effective as of January 2021. APFM may also find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful for training and educational activities it offers.

    Current Status: Review & Improve

  • SMO 6: Investigation and Discipline

    In 2019, the amended Law of the Republic of Azerbaijan on Accounting introduced a requirement for certification of professional accountants and their mandatory membership in an accredited professional accountancy organization (PAO) by the Ministry of Finance. Accredited PAOs must have in place a system for investigating and disciplining their members.

    APFM has a disciplinary committee that can receive complaints and make recommendations about removal from membership and/or additional training for the member, etc. However, APFM has not had to deal with any investigative or disciplinary matter in the past as there was no formal, legal certification/designation to enforce. Its members are not in public practice, but in business. Any disciplinary matter is directed from the business to the Tax Authority who can withdraw the practicing license. The Ministry of Finance can also issue penalties.

    Now, as a registered PAO, APFM expects to have more authorization around enforcement and plans to address some of these needs via legislation, such as mandating adherence to the IESBA Code in law. 

    APFM indicates that it is sensitizing members to the I&D process and consequences of any misconduct or non-compliance.

    Enforcement mechanisms that meet the SMO 6 benchmark for all professional accountants are essential to public trust and confidence in the accountancy profession. APFM’s current procedures need improvements to meet the SMO 6 best practices. Recognizing that it is implementing various amendments from 2019 legislation, it should prioritize making improvements to its enforcement system where needed following IFAC’s comments and recommendations. These plans with reasonable timeframes should be outlined in its Action Plan.

    Current Status: Plan

  • SMO 7: International Financial Reporting Standards

    The APFM has no direct responsibility for the adoption of corporate accounting standards. The standards to be applied are defined in law and enacted by the Ministry of Finance (MoF). To date, based on the information on the Ministry of Finance website, the 2018 version of IFRS has been translated and is mandatory for application. APFM plans to complete the translation of revised standards that were effective in 2018 – 2021 by the end of 2022. Regarding standard-setting, APFM indicates that it has regular meetings with the MoF and Training Center of the State Tax Service under the Ministry of Economy about relevant legislation, amendments, and cooperation in the training of professional accountants on IFRS.

    Regarding implementation support, APFM offers the ACCA’s IFRS Diploma – in both Russian and Azerbaijani – as well as the Institute of Certified Financial Managers (ICFM)’s Professional Financial Manager certificate, which includes a module of IFRS. Individuals who complete these certificates are exempt from some exams for the Professional Accountant qualification organized by the State Examination Center. The APFM has agreements with several training centers to offer CPD on IFRS as well.

    Additionally, APFM recently began engaging with universities (e.g., UNEC-State Economy University, Sumgayit State University, Western-Caspian University) to include IFRS in accounting, economics, and finance curricula. APFM is analyzing the syllabi of universities related to financial reporting and management and working toward one common syllabus for all students. This will achieve a baseline of knowledge when beginning APFM’s program and achieving the Professional Accountant certification faster. APFM expects to introduce the new syllabus in September 2022.

    Recognizing that translation and endorsement of IFRS is not within the direct responsibilities of APFM, the institute is encouraged to maintain & strengthen its support to the MoF regarding processes that will ensure timely translation and adoption of new and revised IFRSs as they become effective. This would provide significant implementation support to its members – which are primarily those preparing financial statements.

    Current Status: Execute


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.


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