Chamber of Auditors of Azerbaijan Republic

In accordance with the Law on Audit of 1994, as amended, the Chamber of Auditors of the Azerbaijan Republic (CAAR) is responsible for establishing and operating a quality assurance (QA) review system for auditors in the jurisdiction.

CAAR has established a QA review system that is operational and includes periodic inspections of audit firms and engagement-level reviews. The system is supported by a Quality Control Committee, which oversees inspections, reports on findings, and refers matters, where appropriate, to the investigative and disciplinary system.

CAAR has undertaken efforts to assess and enhance its QA system over time, including conducting self-assessments against SMO 1 requirements and implementing improvements. The system incorporates a review cycle and mechanisms for monitoring compliance, and CAAR provides guidance and training to its members based on inspection findings.

Notwithstanding these efforts, gaps remain in achieving full alignment with SMO 1 requirements, including the need to adopt and implement the most recent quality management standards issued by the IAASB and to further strengthen elements related to review cycle and public oversight.

CAAR is encouraged to continue strengthening its QA review system to achieve full alignment with SMO 1 requirements, including adoption and implementation of the latest quality management standards and enhancement of system elements related to independence, review cycle, and public interest oversight.

Current Status: Execute

Initial professional development (IPD) and continuing professional development (CPD) requirements for auditors are established in the Law on Audit of 1994, as amended, and are implemented by universities, training institutions, and the Chamber of Auditors of the Azerbaijan Republic (CAAR).

CAAR administers professional education programs for auditors, including conducting professional examinations and delivering continuing professional development activities. CAAR also engages with academic institutions and professional bodies to support the development of education and training programs.

While CAAR reports efforts to incorporate International Education Standards (IES) into its educational framework, available information indicates that alignment with the most recent IES in effect at the time of the assessment has not been fully demonstrated, including with respect to updated competency-based approaches and emerging areas such as information and communications technology and professional skepticism.

CAAR is engaged in ongoing efforts to enhance the regulatory framework for the audit profession, including advocating for the incorporation of IES references in legislation and strengthening collaboration with stakeholders involved in professional education.

CAAR is encouraged to conduct a comprehensive review of its education and training requirements against the latest International Education Standards and to implement a structured action plan with defined timelines to achieve full alignment.

Current Status: Execute

Neither the Law on Audit of 1994, as amended, nor other regulations explicitly mandate the application of International Standards on Auditing (ISA) in the Republic of Azerbaijan. While the Chamber of Auditors of the Azerbaijan Republic (CAAR) requires the use of ISA in practice, the legal framework does not formally establish ISA as the applicable auditing standards.

CAAR has undertaken efforts to support the implementation of ISA, including translation of the 2016–2017 edition of the IAASB Handbook and delivery of training and professional development activities for its members.

However, the most recent ISA in effect at the time of the assessment have not been adopted and made effective in the jurisdiction, and no clear plan has been demonstrated to ensure timely adoption and implementation of current and future IAASB pronouncements.

CAAR is strongly encouraged to establish a formal process and timeline for the adoption and implementation of the latest ISA, including securing appropriate legal backing and ensuring timely translation and effective application of all current and future IAASB standards.

Current Status: Plan

The Law on Audit of 1994, as amended, does not explicitly mandate the application of the International Code of Ethics for Professional Accountants. However, the Chamber of Auditors of the Azerbaijan Republic (CAAR) requires its members, including all practicing auditors, to comply with the IESBA Code of Ethics and has translated the 2018 version for use in the jurisdiction.

CAAR monitors compliance with ethical requirements through its investigative and disciplinary mechanisms, and outcomes of disciplinary processes are reported publicly. CAAR also supports implementation of the Code through education and training activities, including incorporation of ethics-related topics into its initial and continuing professional development programs and dissemination of relevant guidance and updates to members.

While these processes are established and operational, the Code is not explicitly mandated in legislation, and the most recent version of the IESBA Code in effect at the time of the assessment has not been fully adopted and incorporated into national requirements.

CAAR is encouraged to strengthen alignment with the latest IESBA Code by ensuring timely adoption and implementation of new and revised requirements and by supporting the establishment of a legislative framework mandating its application across the profession.

Current Status: Execute

Responsibility for the adoption and implementation of International Public Sector Accounting Standards (IPSAS) in the Republic of Azerbaijan rests with the Ministry of Finance. CAAR does not have direct responsibility for the adoption or implementation of IPSAS.

Notwithstanding the absence of direct responsibility, CAAR supports awareness of public sector accounting developments through engagement with relevant stakeholders and inclusion of public sector topics in its continuing professional development activities and professional events.

CAAR maintains ongoing processes to monitor developments in public sector accounting and to promote awareness among its members, as appropriate.

Current Status: Sustain

In accordance with the Law on Audit of 1994, as amended, the Chamber of Auditors of the Azerbaijan Republic (CAAR) is responsible for establishing and operating an investigative and disciplinary (I&D) system for auditors and audit firms in the jurisdiction.

The I&D system is implemented through the Ethics, Disputes, and Disciplinary Committee, which investigates cases and makes recommendations to the CAAR Board for disciplinary action. CAAR also incorporates awareness of ethical requirements and disciplinary procedures into its education and training activities.

CAAR has undertaken assessments of its I&D system against SMO 6 requirements and identified areas for improvement, including the range of sanctions, public awareness of the system, and transparency of disciplinary outcomes. While the system is operational, full alignment with SMO 6 requirements has not yet been demonstrated.

CAAR is encouraged to further strengthen its I&D system to achieve full alignment with SMO 6 requirements, including enhancing the range of sanctions, improving transparency and public awareness, and establishing a clear plan with defined timelines to address identified gaps.

Current Status: Execute

Responsibility for the adoption and implementation of International Financial Reporting Standards (IFRS) in the Republic of Azerbaijan rests with the Ministry of Finance. CAAR does not have direct responsibility for the adoption or implementation of IFRS.

Notwithstanding the absence of direct responsibility, CAAR supports the application of IFRS through its participation in advisory and consultative processes and through the delivery of education and training programs for its members.

CAAR maintains ongoing processes to monitor developments in financial reporting standards and to promote awareness among its members, as appropriate.

Current Status: Sustain