Iraqi Union of Accountants and Auditors
Member | Established: 1969 | Member since 1984
The Law of the Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) establishes the Iraqi Union of Accountants and Auditors (IUAA) as a professional association for accountants and auditors in Iraq. According to the Law, all accountants and auditors are required to be members of IUAA. The Law authorizes the IUAA to carry out the following functions: (i) maintaining the register for accountants and auditors; (ii) organizing and implementing a quality assurance review system; (iii) arranging and delivering the continuing professional development program for accountants and auditors; (iv) establishing and implementing an investigations & disciplinary system; and (v) establishing and monitoring compliance with ethical requirements.
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.
SMO 1: Quality Assurance
In accordance with the Law of the Iraqi Union of Accountants and Auditors No. 185, 1969 (as amended in 1973), IUAA is responsible for establishing and implementing quality assurance (QA) reviews of all auditors. IUAA established an independent Quality Assurance & Inspection Committee (QAIC) in 2003 to operate a cycle-based QA review system. Despite being formally independent, the QAIC’s development and functions are supported by the IUAA Board.
After the revised SMO 1 requirements were issued in 2012, the IUAA indicates that it reviewed the requirements of the QAIC system against SMO 1, and supported the QAIC in adjusting its procedures as necessary to ensure continued compliance. It also reports to have established processes to review and improve existing procedures on an ongoing basis.
Furthermore, the IUAA reports that it supports the QAIC in developing education programs to raise awareness of the importance of QA reviews and quality control standards, including the requirements of ISA 220 and ISQC 1, which have been adopted.
Considering that the new and revised quality management standards will become effective on December 15, 2022, IUAA is encouraged to develop plans, raise awareness, and overall prepare its members for the changes. IUAA will also need to communicate and coordinate with the ARICPA and the Ministry of Higher Education to update training programming to ensure that its professionals are sufficiently prepared for the application of the standards once they become effective.
SMO 2: International Education Standards
The Law of the Iraqi Union of Accountants and Auditors No. 185, 1969 (as amended in 1973) outlines basic requirements for professional accountants in Iraq. The Iraqi Union of Accountants and Auditors (IUAA), alongside other entities such as the Ministry of Higher Education’s Accounting Sector Committee and the Arab Institute of Certified Public Accountants (ARICPA), are responsible for adopting and implementing initial and continuing professional development requirements in the jurisdiction further. As of the date of this assessment, the extent of alignment with 2019 IES at the jurisdiction level needs to be established.
IUAA indicates that it has mandated 20–40 hours of CPD for auditors, while non-auditors are not required to fulfill any CPD requirements. Consequently, its CPD requirements require further alignment with IES, and it remains unclear if IUAA is executing plans to mandate CPD requirements for non-auditors. IUAA reports to conduct an annual random audit for a sample among its auditor members to ensure compliance.
To support its members with fulfilling CPD, IUAA develops and implements an annual events & CPD calendar that offers a range of training activities on key topics such as audit and assurance, financial reporting, tax, ethics and integrity, and leadership. Courses are offered online and in-person to support its’ members continuing education. IUAA also publishes educational and examination requirements in its IUAA Quarterly Magazine to increase awareness and understanding of the entry requirements in the jurisdiction and support candidates’ preparation.
Staff reiterates its recommendation from 2017 that IUAA conduct a comprehensive review of the existing educational requirements for professional accountants in Iraq as well as its own educational programming against the latest IES requirements. Specific actions to close gaps need to be developed and included in its SMO Action Plan. The IES Checklist and the Accountancy Education E-Tool developed by IFAC may be used to conduct an assessment and to consider available implementation support materials.
SMO 3: International Standards on Auditing
The Law of Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) does not specify applicable audit standards. However, IUAA, which is a mandatory membership organization for all accountancy professionals in Iraq, requires its members to adhere to the most recent Arabic translations of ISA which as of the date of this assessment is the 2018 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements.
Between 2018-2021, IUAA focused efforts on disseminating Arabic translations of the 2018 Handbook to its members and monitoring implementation. IUAA provides its members with continuing professional development (CPD) courses on ISA and any updates to the standards via a subdivision, the Iraqi Association of Certified Public Accountants (IACPA). The institute offered targeted training on the new auditor’s reporting standards and revisions to standards in the 2018 Handbook.
Finally, the institute states that it reviews and submits comments to Exposure Drafts issued by the IAASB.
The 2021 Handbook, once published later in the year, will incorporate ISA 315 and its conforming amendments. IUAA should consider outlining its activities for implementation support, and is encouraged to continue preparing members for the changes from quality control standards to quality management standards.
SMO 4: Code of Ethics for Professional Accountants
The Law of the Iraqi Union of Accountants and Auditors No. 185 of 1969 (as amended in 1973) grants the Iraqi Union of Accountants and Auditors (IUAA) with the authority to set ethical requirements for professional accountants in Iraq.
IUAA reports that it revises its Code of Ethics on a regular basis to ensure that it is converged with the latest version of the IESBA Code of Ethics. As of the date of this assessment, IUAA requires its members to adhere to the Arabic translation of the 2018 Handbook of the International Code of Ethics for Professional Accountants.
To support implementation of the IESBA Code of Ethics, IUAA has been incorporating the requirements of the Code into its continuing professional development program for auditors, including case studies. IUAA monitors the activities of the IESBA and reportedly includes revisions to the Code into its programs. It has also developed a system for communicating new developments and changes in national and international standards and other guidance to IUAA membership and the public through magazines, emails, and its website.
The 2020 Handbook of the International Code of Ethics for Professional Accountants?is now available and includes the following changes:Revisions to Part 4B of the Code?to reflect terms and concepts used in the IAASB's International Standard on Assurance Engagements (ISAE) 3000 (Revised).?Revised Part 4B and the related conforming amendments to the Glossary will come into effect in June 2021.?Early adoption is permitted.? Revisions to promote the role and mindset?expected of professional accountants.?These revisions are to Sections 100, 110, 120, 220 and the Glossary to the Code and will come into effect in December 2021. Early adoption is permitted.?
These changes can be accessed using the?IESBA eCode and IUAA is encouraged to raise awareness of the changes among its membership and update training workshops to ensure that its members are sufficiently prepared for the application of the standards once they become effective. Lastly, IUAA should consider preparing members for the upcoming revisions that will become effective in December 2022 pertaining to the objectivity of an engagement quality reviewer (EQR) and other appropriate reviewers, the revised non-assurance services, and fee-related provisions.
SMO 5: International Public Sector Accounting Standards
The Ministry of Finance is responsible for setting the public sector accounting standards, and according to the Iraqi Union of Accountants and Auditors (IUAA), has not adopted IPSAS. It remains unclear if there are plans to adopt IPSAS. As of the date of the assessment, IUAA reports that self-financing public entities use Iraqi Unified Accounting System (IUAS) on an accrual-basis, whereas entities that are funded by government use the Governmental Accounting System (GAS) on a cash-basis.
IUAA reports to focus its efforts on raising awareness and promoting the adoption of accrual-basis IPSAS to the Ministry of Finance and Ministry of Planning. IUAA indicates that it promotes the adoption and implementation of IPSAS through its Association of Internal Auditors (AIA) monthly joint committee meetings focused on accrual-basis IPSAS. The institute also holds IPSAS workshops to raise awareness, for example, the Ministry of Finance IPSAS Training Series workshops that took place in December 2016 for Ministry of Finance staff. The objective is to continue promoting the importance of adopting accrual-basis IPSAS for governmental entities with central funding.
IUAA publishes information on the developments occurring in the field of public sector accounting via its quarterly magazine, and reportedly supports its members with implementation of current standards by providing them with training opportunities and workshops via AIA.
The IUAA is encouraged to continue its technical and advocacy support to the Ministry of Finance as part of enhancing public financial management in the jurisdiction. It may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful in this regard.
SMO 6: Investigation and Discipline
IUAA has responsibility for the investigation and discipline (I&D) of its members, which are all professional accountants in Iraq, in accordance with Article 28 of the Law of Iraqi Union of Accountants and Auditors No. 185, 1969 (as amended in 1973). IUAA indicates that it established a Discipline Committee (DC) with the authority to monitor compliance with rules, regulations, and standards. Disciplinary decisions and sanctions are enforced by specialized courts, and in the case of serious crimes, by the Justice Council.
In 2019, IUAA completed a self-assessment of its I&D system against the revised SMO 6 and reports that the I&D system is in line with its requirements. Between 2016-2019, IUAA reports to have included information on the requirements and procedures of the I&D system in the continuing professional development programming for auditors. Non-auditors are also kept informed of the I&D processes through informational sessions and workshops that are accessible virtually. The institute also raises awareness of the system through the publication of cases and verdicts in its quarterly newsletter and provides members with guidance on how to initiate complaints.
IUAA is encouraged to provide more recent and specific examples on activities it undertakes to support its members, particularly non-auditors. It should also report on actions it takes to disseminate information to the public on the I&D processes and how to make a complaint.
SMO 7: International Financial Reporting Standards
The Iraqi Company Law No. 21 of 1997 (as amended in 2004) references the general concept of applying ‘international accounting standards’ in joint stock companies and private companies in Iraq. However, IFRS Standards are not specifically named in law. In practice, many Iraqi companies apply the standards promulgated by the Iraqi Board of Accounting and Auditing Standards (IBAAS), which are the National Accounting Standards (NAS). There are significant differences between the NAS issued by the IBAAS and IFRS Standards. IFRS for Small and Medium-sized Enterprises (SMEs) are not required and there are no known plans for adoption.
Even though IFRS Standards and IFRS for Small- and Medium-sized Entities (SMEs) are not adopted by law, IUAA encourages its members to apply IFRS where appropriate and supports them with implementation. IUAA indicates that it trains its members on the application of the standards and created a dissemination mechanism to distribute IFRS and IFRS for SMEs. Additionally, IUAA promotes the application and understanding of the standards by disseminating IFRS and IFRS for SMEs-related materials to universities in Iraq to encourage its incorporation in the accounting curricula. IUAA offers its members with an IFRS specialization certification, which has been well-received by professionals since 2005.
Lastly, IUAA participates in the international standard-setting process by providing comments to exposure drafts.
IUAA is encouraged to continue engaging regulators and stakeholders to promote the adoption and implementation of IFRS and IFRS for SMEs as the applicable accounting standards in the jurisdiction. This would help bring reporting in line with international best practices and would likely benefit the SME financial reporting environment in the country.
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