Armenia

The Law on Accounting of 2019, together with the Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019, establishes the financial reporting framework in the Republic of Armenia. The Ministry of Finance is the body implementing accounting policy. The Public Oversight Board, established under the Ministry of Finance, exercises public oversight and is responsible for ensuring the translation and official publication of full International Financial Reporting Standards (IFRS) Accounting Standards, the Conceptual Framework, and the IFRS for Small and Medium-sized Entities Accounting Standard (IFRS for SMEs), together with related amendments and annexes.

Under the Law on Accounting, public interest organizations and large entities are required to apply full IFRS Accounting Standards. Medium-sized and small entities are required to apply the IFRS for SMEs, although they may elect to apply the full IFRS Accounting Standards instead. Micro-entities apply a separate simplified framework. The Central Bank of Armenia, in cooperation with the Ministry of Finance, regulates accounting requirements for banks, credit organizations, organizations carrying out pawning activities, payment and settlement organizations, investment companies, regulated market operators, the central depository, insurance companies, reinsurance companies, insurance brokerage organizations, and investment fund managers. These regulated entities are required to apply full IFRS Accounting Standards within the effective dates established by the International Accounting Standards Board, regardless of whether the standards have already been translated into Armenian.

The Law on Audit Activity of 2019, together with the Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019, establishes the legal framework for audit regulation in Armenia. The Ministry of Finance is the body implementing audit policy, while the Public Oversight Board exercises public oversight over audit activity. Regulatory legal acts on audit activity comprise the Law on Audit Activity, the Law on Regulation and Public Oversight of Accounting and Audit Activity, international standards on auditing activities, and the Code of Professional Ethics as applied in Armenia.

Financial statements of public interest organizations, large entities, small entities, groups whose parent company is a public interest organization, large groups, and medium-sized groups are subject to mandatory audit. Other laws may also establish mandatory audit requirements for additional entities and groups. Under the Law on Audit Activity, mandatory audits are conducted in accordance with the regulatory legal acts on audit activity in Armenia, which include International Standards on Auditing and other relevant international standards adopted for use in the jurisdiction.

Auditors and expert accountants in the Republic of Armenia are regulated at the state level under the Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019, the Law on Accounting of 2019, and the Law on Audit Activity of 2019, which have been in force since January 2020. These laws establish the legal framework for entry into the profession, professional requirements, and the application of international standards in areas such as auditing, ethics, and continuing professional development.

To qualify as an auditor, individuals are required to obtain a university degree, successfully pass professional qualification examinations, and complete a minimum of three years of practical experience. To provide audit services, qualified auditors must be members of an accredited public organization and be included in its register.

To qualify as an expert accountant, individuals are required to obtain a university degree, pass professional qualification examinations, and complete relevant practical experience. The qualification of expert accountant is required to perform certain functions, including serving as a chief accountant of public interest organizations and large and medium-sized entities. The Central Bank of Armenia establishes additional requirements for chief accountants of financial institutions under its supervision. Qualified expert accountants must be members of an accredited public organization and be included in its register.

Regulation of auditors and expert accountants is carried out through accredited public organizations under the oversight of the Public Oversight Board. Accreditation criteria for an accredited public organization include maintaining a minimum number of members and audit firms, applying international standards in the conduct of audit activity, and administering a certification and education system aligned with International Education Standards. As of the time of assessment, the Chamber of Auditors and Expert Accountants of Armenia is the only organization accredited by the Ministry of Finance.

Accredited public organizations, under the oversight of the Public Oversight Board, are responsible for certifying auditors and expert accountants, developing and administering qualification examinations, enforcing continuing professional development requirements, conducting quality assurance reviews of audit practitioners, maintaining member registers, and operating investigative and disciplinary systems.

The Public Oversight Board is responsible for independent oversight of the profession. Its functions include ensuring the translation and official publication of International Financial Reporting Standards, International Standards on Auditing, and the International Code of Ethics for Professional Accountants, including incorporating amendments to these standards; overseeing the activities of accredited public organizations; approving investigative and disciplinary procedures; overseeing qualification examinations and continuing professional development; monitoring quality assurance review systems; and maintaining a unified register of auditors and expert accountants.

The Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019, effective January 1, 2020, established the Public Oversight Board as the independent body responsible for the public oversight of accounting and audit activity in the Republic of Armenia. The Public Oversight Board was created under the Ministry of Finance and is responsible for exercising public oversight over the regulation of financial accounting and audit activity in the jurisdiction.

The responsibilities of the Public Oversight Board include overseeing accredited public organizations, approving and supervising quality assurance and investigative and disciplinary systems, overseeing qualification examinations and continuing professional development requirements, ensuring the translation and official publication of international standards applicable in the jurisdiction, and maintaining the unified register of auditors and expert accountants.

Since its establishment, the Public Oversight Board has become operational and its functions are supported through the Ministry of Finance’s accounting and audit framework. Accordingly, it would be more accurate to reflect that the Board is operational and exercising its statutory oversight responsibilities, rather than indicating that its operations and procedures are still being established.

The Chamber of Auditors and Expert Accountants of Armenia (CAAA)

The Chamber of Auditors and Expert Accountants of Armenia, formerly the Association of Accountants and Auditors of Armenia, is a non-government public organization established in 1997. Following the reform of the regulatory and oversight framework for the profession, in 2020 the Chamber was accredited by the Ministry of Finance as an accredited public organization and was entrusted with state regulatory functions in the fields of accounting and auditing under the oversight of the Public Oversight Board.

The Chamber is responsible for carrying out the qualification and certification of auditors and expert accountants, administering examinations and continuing professional development requirements, maintaining member and practitioner registers, conducting external quality assessments of its members, and administering investigative and disciplinary processes in accordance with the statutory framework. The Chamber also provides implementation support, professional education, and technical resources to accountants and auditors operating in Armenia.

The Chamber has been an Associate of the International Federation of Accountants since 2005.

The Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019, effective January 1, 2020, introduced mandatory quality assurance reviews for all statutory audits in the Republic of Armenia. Accredited public organizations are responsible for establishing and implementing a quality assurance review system for their members under the oversight of the Public Oversight Board. The Public Oversight Board approves annual inspection plans and has the authority to conduct and oversee quality assurance reviews.

To date, the Chamber of Auditors and Expert Accountants of Armenia is the only accredited public organization. The Chamber reports that a quality assurance review system aligned with Statement of Membership Obligations 1 requirements was developed with support from World Bank specialists and became operational in 2022. Since then, the Chamber has carried out external quality assessments of audit organizations and has established documented procedures, inspection plans, and reporting mechanisms.

The Public Oversight Board and the Chamber are actively operating a quality assurance review framework; however, there is insufficient publicly available evidence to confirm that the latest International Standards on Quality Management (ISQM 1 and ISQM 2) have been formally translated, adopted, and made effective at the jurisdiction level. Accordingly, the jurisdiction continues to be assessed as Partially Adopted.

Current Status: Partially Adopted

The Law on Accounting of 2019, the Law on Audit Activity of 2019, and the Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019 establish initial professional development and continuing professional development requirements for the two regulated professional designations in the Republic of Armenia: auditors and expert accountants. Under the statutory framework, the professional institution is responsible for organizing qualification examinations and establishing continuing professional development requirements, subject to agreement with the Public Oversight Board.

To obtain the qualification of auditor, candidates must have higher education, pass the qualification examinations, and have at least three years of relevant professional experience, including at least one year related to the provision of audit services. To obtain the qualification of expert accountant, candidates must have higher education, pass the qualification examinations, and have at least three years of relevant professional experience in accounting, financial reporting, and or audit.

The Chamber of Auditors and Expert Accountants of Armenia is the only accredited professional organization and operates the qualification program for both auditors and expert accountants. The Chamber states that its educational program, examinations, and qualification requirements are designed in accordance with International Education Standards and are based on the standards of the International Federation of Accountants. Its examination program is structured around the educational requirements reflected in International Education Standards 2, 3, and 4, and the Chamber conducts at least two examination sessions each year.

Auditors and expert accountants are required to complete continuing professional development beginning in the year following qualification. The statutory and Chamber requirements provide for at least 20 hours of continuing professional development per calendar year and at least 80 hours over every two consecutive years.

At the same time, the World Bank’s National Education Initiatives – Armenia indicates that further reforms are needed to achieve closer alignment with international best practices and the International Education Standards, including strengthening university curricula in key technical and professional areas and moving practical experience assessment further toward a competency-based approach. Accordingly, while Armenia has established a functioning qualification and continuing professional development framework and explicitly references International Education Standards, not all requirements of the International Education Standards in effect as of the time of the assessment are demonstrably adopted in full. The jurisdiction therefore continues to be assessed as Partially Adopted.

Current Status: Partially Adopted

The Law on Audit Activity of 2019 and the Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019 establish the legal framework for audit regulation in the Republic of Armenia. The Ministry of Finance is responsible for audit policy, while the Public Oversight Board exercises public oversight over audit activity. Under the Law on Audit Activity, mandatory audits must be conducted in accordance with international standards on auditing activities as applied in Armenia. The law defines these standards by direct reference to pronouncements issued by the International Auditing and Assurance Standards Board, including International Standards on Auditing, International Standards on Review Engagements, International Standards on Assurance Engagements, International Standards on Related Services, and quality management standards.

Financial statements of public interest organizations, large entities, small entities, groups whose parent company is a public interest organization, large groups, and medium-sized groups are subject to mandatory audit under the statutory framework.

Since the statutory framework requires application of the international standards on auditing activities by legal reference, the jurisdiction is assessed as Adopted.

Current Status: Adopted

The Law on Audit Activity of 2019 and the Law on Accounting of 2019 require auditors and expert accountants in the Republic of Armenia to comply with the International Code of Ethics for Professional Accountants (including International Independence Standards). Under Article 3 of the Law on Audit Activity, the Code is defined by direct reference to the Code issued by the International Ethics Standards Board for Accountants and applied in the Republic of Armenia in accordance with the statutory framework. The Code of Professional Ethics forms part of the regulatory legal acts governing audit activity in Armenia, and auditors are expressly required to comply with its requirements.

Current Status: Adopted

Under the Law on Public Sector Accounting, the Ministry of Finance is responsible for establishing public sector accounting standards in the Republic of Armenia. Public sector accounting reforms have been supported through the World Bank’s Public Sector Accounting and Reporting Program (PULSAR).

Armenia applies Armenian Public Sector Accounting Standards (APSAS), which are accrual-based national standards developed with reference to International Public Sector Accounting Standards (IPSAS). According to the World Bank / PULSAR Public Sector Accounting Assessment (PULSE) Report of Armenia, APSAS were developed based on IPSAS, with certain local adaptations to support transition to accrual accounting and to align with national public financial management requirements. The report further indicates that APSAS demonstrates a high level of compliance with IPSAS principles.

Since Armenia applies accrual-basis national standards developed with reference to IPSAS, rather than IPSAS in their entirety, the jurisdiction continues to be assessed as Partially Adopted.

Current Status: Partially Adopted

The Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019, the Law on Audit Activity of 2019, and the Law on Accounting of 2019 establish the legal framework for investigation and discipline of auditors and expert accountants in the Republic of Armenia. These laws authorize accredited public organizations to establish and implement investigation and disciplinary systems for their members under the oversight of the Public Oversight Board.

The Chamber of Auditors and Expert Accountants of Armenia is the only accredited public organization and is responsible for implementing the investigation and disciplinary system for its members. The Chamber has established formal and documented investigation and disciplinary procedures, including dedicated committees responsible for professional ethics and disciplinary matters. The system incorporates linkages with the quality assurance review process, whereby findings from inspections may trigger disciplinary actions.

The investigation and disciplinary system is operational. In 2023 and 2024, the Chamber conducted quality assurance inspections and applied disciplinary measures, including the suspension of membership of several audit organizations, demonstrating the functioning of enforcement mechanisms in practice.

While a legal framework and operational system are in place, and enforcement actions are being carried out, it is not yet fully evident that all requirements of Statement of Membership Obligations 6 are incorporated in the system for all professional accountants. Accordingly, the jurisdiction continues to be assessed as Partially Adopted.

Current Status: Partially Adopted

The Law on Accounting of 2019 and the Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019 establish the financial reporting framework in the Republic of Armenia. Under the Law on Accounting, public interest organizations and large entities are required to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) Accounting Standards. Medium-sized and small entities are required to apply the IFRS for Small and Medium-sized Entities Accounting Standard (IFRS for SMEs), with the option to apply full IFRS Accounting Standards instead. Micro-entities apply a simplified reporting framework.

Entities regulated by the Central Bank of Armenia, including banks, credit institutions, insurance companies, investment companies, and other financial institutions, are required to apply full IFRS Accounting Standards. According to the IFRS Foundation jurisdiction profile, Armenia requires IFRS Accounting Standards for all domestic publicly accountable entities.

The Public Oversight Board is responsible for ensuring the official publication and implementation of IFRS Accounting Standards in the jurisdiction. While the most recent officially translated version publicly evidenced remains the 2018 version and the 2015 IFRS for SMEs Standard, this is considered an implementation and translation matter rather than a jurisdictional adoption issue.

Since IFRS Accounting Standards are required by law for all domestic publicly accountable entities, the jurisdiction is assessed as Adopted.

Current Status: Adopted

Relevant Organizations

• Chamber of Auditors and Expert Accountants of Armenia (CAAA)
• Central Bank of Armenia (CBA)
• Ministry of Finance of the Republic of Armenia
• Public Oversight Board (POB)

Relevant Legislation

• Law on Accounting of 2019
• Law on Audit Activity of 2019
• Law on Regulation and Public Oversight of Accounting and Audit Activity of 2019
• Law on Public Sector Accounting

Relevant Publications

• Asian Development Bank, Enhancing Financial Disclosure Standards in Transitional Economies II, October 2010
• Chamber of Auditors and Expert Accountants of Armenia (CAAA), SMO Action Plan, 2023
• IFRS Foundation, IFRS Application Around the World — Jurisdictional Profile: Armenia
• World Bank, National Education Initiatives – Armenia, 2019
• World Bank / PULSAR, Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: Armenia, 2020
• World Bank / PULSAR, Book on Public Sector Accounting Reforms Implementation Status in PULSAR Countries, 2022
• World Bank, Country Strategy and Action Plan (CSAP) for Enhancing Corporate Financial Reporting in the Republic of Armenia, 2014
• World Bank, Report on the Observance of Standards and Codes (ROSC) — Accounting and Auditing: Armenia, June 2008