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The Law on Accounting and Financial Statements No. 25/2018 determines the financial reporting requirements applicable in Albania. The law classifies the economic entities in micro-economic, small, medium-sized and large entities based on three criteria: total assets, revenues from economic activity, and average number of employees. 

For general purpose financial reporting, two reporting frameworks are applicable depending on the size of reporting entities and public interest considerations: (i) National Accounting Standards (NASs) and (ii) IFRS as issued by the IASB, translated and published in Albanian language by the National Accounting Council (NAC).

Public interest entities (PIEs) are required to apply IFRS. PIEs are defined as stock exchange listed companies, financial institutions, insurance and reinsurance companies, and investment and voluntary pension funds, together with other companies deemed by the Council of Ministers to be relevant to the public interest owing to the nature of their business, their size, or the number of their employees. The Council of Ministers’ Decision No. 17/2019, stipulates that entities that meet any of the three criteria of size of business and number of employees (turnover, total assets, or number of employees) are of public interest.

The Bank of Albania (BOA), however, has deferred implementation of IFRS by banks for regulatory purposes and requires prudential reporting from the banking sector. Banking legislation requires banks to prepare their financial statements in accordance with the Financial Reporting Manual (FRM), which is based on the 1998 IFRS, according to the World Bank (2019).

Micro, small and medium-sized entities (SMEs) use NASs issued by the NAC and approved by the Ministry of Finance of Albania in accordance with the procedures established under Law No. 25/2018. These companies may also choose to apply full IFRS. NASs are based on the international standards. In 2015, the NAC, with the assistance of the World Bank, completed the revision of NASs to bring them closer in line with the requirements of the 2009 IFRS for SMEs.

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091, modified in April 2016 by Law No. 47/2016, stipulates provisions governing audit of financial statements, and requires application of ISA in carrying out statutory audits of entities that meet certain thresholds, including those entities that apply IFRS and joint stock companies which apply NASs. The Albanian Institute of Authorized Chartered Auditors is responsible for the translation of ISA in Albania and, as of 2020, has adopted and translated all ISAs effective as of November 2019.

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091, modified in April 2016 by Law No. 47/2016, establishes initial professional development (IPD), continuing professional development (CPD), as well as ethical and other requirements for offering auditing and accounting services in Albania and empowers recognized professional accountancy organizations (PAOs) to enforce the requirements under the oversight of the Public Oversight Board (POB).

The POB, which was established in September 2009 under the Law No. 10091 of 2009 and the Decision of Council of Ministers No. 874 of 2009, is responsible for: (i) overall oversight of the professional accountancy organizations; (ii) approving the bylaws of professional accountancy organizations and the Code of Ethics for Professional Accountants; (iii) certification of authorized auditors and certified accountants: (iv) conducting quality assurance reviews of public and non-public interest entities with the right to delegate reviews of non-public interest entities to recognized professional organizations of auditors; and (v) taking disciplinary actions against sole practitioners and audit firms.

Aspiring professional accountants in Albania must complete a university degree in business or economic studies and then a master’s degree in either accounting or auditing. The candidate is then eligible to enter a professional training program in either the audit (Certified Public Accountant or Statutory Auditor) or accounting streams (Certified Accountant, CA). Statutory auditors may also perform accounting services (e.g. preparation of financial statements) for their clients to whom they do not provide auditing services (i.e. accounting and auditing of the financial statements for the same client is not allowed).

Aspiring auditors enroll in the training program administered by the professional body of auditors—the IEKA. Aspiring accountants enroll in the training programs offered by the professional organizations of accountants.

Upon completing a professional body’s training program, the candidate needs to pass the Examination Commission’s statutory exams. The Commission operates under the POB and comprises five members (representing the Ministry of Finance, Ministry of Economy, National Accounting Council, IEKA and one representative from the PAO for accountants) nominated for a period of three years.

Accounting Profession

The Law No. 10091 regulates some aspects of practicing the accounting profession and restricts provision of certain services to Certified Accountants. Certified Accountants must fulfill some basic criteria on education and experience, pass a final exam on financial reporting, taxes and business laws, and become a member of a recognized PAO.

To improve the quality of accounting services, the POB has developed, and is implementing, a Strategy and Action Plan on Certified Accountant Profession Development. In February 2019, the POB issued Regulation No. 9 on the Regulation and Supervision of the Certified Accountant Profession and Professional Organizations of Accountants. The Regulation outlines specific requirements for the certification of accountants and details the oversight process over PAOs for accountants and the profession itself to ensure that all practicing accountants comply with the legal requirements.

Under the regulation, PAOs for accountants must follow the professional standards established by IFAC, in particular the SMOs and the Code of Ethics. Recognition as an authorized PAO for accountants is automatically granted to Members and Associates of IFAC; other PAOs need to provide evidence that they comply with the IFAC requirements. The POB reserves the right to request IFAC’s opinion on certain matters.

As of September 2020, there are three PAOs uniting accountants in Albania: the Albanian Institute of Certified Accountants (IKM), the Association of Accountants and Financiers of Albania; and the Association of Certified Accountants. PAOs regulate their members (accountants) through their own internal procedures and guidelines, producing and maintaining a registry of their members, including a register of their active members who provide external accounting services in public practice, and providing ongoing trainings to them.

Two of the existing PAOs, including IKM, applied to the POB to confirm their recognition as a PAO for accountants under the Regulation of 2019. As of September 2020, IKM is the only PAO for accountants recognized by the POB. The recognition will be valid for ten years and will be reviewed after that period.

Auditing Profession

The audit profession is regulated by Law No. 10091. The amendments to the Law No. 10091 introduced in 2016 revised some of the provisions related to the regulation of the audit profession and the role of the PAO of statutory auditors.

The Law specifies the requirements to enter the audit profession and to register as auditors and audit firms and adopts ISA as translated in Albanian for application in all audits. The Law also requires auditors and audit firms to establish internal control quality procedures, authorizes the POB to establish an external quality assurance (QA) system, with an option to delegate to recognized professional organizations QA reviews of non-PIEs; and mandates participation in CPD programs for all statutory auditors practicing the audit profession, among other requirements.

Aspiring auditors are required to have a master’s degree prior to enrollment in a three-year professional education program; to have performed at least three years of practical experience under the supervision of an auditor or an audit firm; and to have attended advanced professional training on IAS/IFRS, National Accounting Standards, ISA, professional ethics, performance management and governance and tax law, before they sit for a final professional exam administered by the POB.

The authority for organizing and regulating statutory audit profession in Albania is granted to IEKA, supervised by the POB, which according to the Law, oversees all aspects related to the audit profession. Membership in the IEKA is mandatory for practicing statutory auditors only. IEKA’s responsibilities include translation and adoption of ISA, developing professional educational modules for the statutory audit profession, establishing a proper process of recognizing higher education institutions’ professional curricula for candidates attending statutory audit programs, and establishing an investigation and discipline system and ethical requirements in line with the IESBA Code of Ethics under the oversight of the POB.

Statutory auditors providing services to banks and insurance companies are subject to additional regulation by their respective regulators. Both the Bank of Albania (BoA) and the Financial Supervisory Authority (FSA) have the power to annually approve the auditors of banks and insurance companies, respectively. Auditors are obligated to report immediately to the regulator any material fact that is in breach of the legislation. A qualified opinion normally triggers an investigation by the regulators. Both the BoA and FSA have the power to ask for re-audit and to disallow the auditor to perform audits in the future.

The Public Oversight Board (POB) was established in September 2009 under the Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 and the Decision of Council of Ministers No. 786 of 2016 as the independent audit oversight entity in Albania. The Law was substantially amended in 2016 to strengthen the POB in terms of human and financial resources as well as operations and enhance the investigation and discipline as well as quality assurance review processes of auditors, among other areas.

The POB is comprised of five non-practitioners with experience in the field of finance, accounting, and auditing, nominated by the Minister of Finance. In performing its supervisory duties POB is supported by an administrative secretariat.

Under Law No. 10091, the POB’s remit comprises: (i) overall oversight of the professional accountancy organizations; (ii) approving the bylaws of professional accountancy organizations and the Code of Ethics for Professional Accountants; (iii) certification of authorized auditors and certified accountants: (iv) conducting quality assurance reviews of public and non-public interest entities with the right to delegate reviews of non-public interest entities to recognized professional organizations of auditors; and (v) taking disciplinary actions against sole practitioners and audit firms. The POB is a member of International Forum of Independent Audit Regulators.

The Albanian Institute of Authorized Chartered Auditors (IEKA)

IEKA is the only professional body of statutory auditors in Albania, recognized by the Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as modified by law 47/2016. IEKA is a non-profit association that unites all statutory auditors (local and foreign) who exercise their profession in public practice in Albania, either independently or as part of an audit firm. Membership in IEKA is mandatory for both practicing and non-practicing auditors (non-practicing auditors do not participate in IEKA governance). IEKA’s responsibilities include translation and adoption of ISA, developing professional educational modules for the statutory audit profession, establishing a proper process of recognizing higher education institutions’ professional curricula for candidates attending statutory audit programs, and establishing an investigation and discipline system and ethical requirements for auditors in line with the IESBA Code of Ethics under the oversight of the Public Oversight Board (POB).

The Albanian Institute of Certified Accountants (IKM)

IKM was originally established as the Liaison of Certified Accounting Professionals (LPKM) by the Decision of the First Instance Court of Tirana No. 1590 dated 18/05/2000. During its 2006 organizational reforms, LPKM re-established itself as IKM, a non-governmental, non-profit, non-religious, and non-political organization. IKM’s membership is comprised solely of Certified Accountants. As of September 2020, IKM is the only PAO for accountants recognized by the POB. The recognition will be valid for ten years and will be reviewed after that period. Members of IKM provide a variety of services including bookkeeping; compilation of financial statements; preparation of prospective financial statements; tax consulting; financial management consulting; internal control systems design and internal audit services; non-statutory auditing, and other services. A substantial percentage of IKM’s membership are accountants in business. Members of IKM do not provide statutory audit services.

The Association of Accountants and Financiers of Albania (SHFKSH)

SHFKSH is comprised of individuals who have an interest in accountancy in Albania. It is a private entity with some requirements for membership. Its members include Certified Accountants, accounting professors, teachers, students, and tax and customs inspectors. SHFKSH is not a member of IFAC. No further information is available.

The Association of Certified Accountants (SHKM)

SHPKM is comprised of individuals who bear the title of Certified Accountants. No further information Is available.

The Government of Albania is committed to bringing its financial reporting framework in line with the international standards and best practices. The amendments to the Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 in April 2016 provide for strengthening the Public Oversight Board in terms of human and financial resources as well as operations and for enhancing the investigation and discipline and quality assurance review processes of auditors, among other areas. These efforts have been supported by the World Bank through its Vienna-based Centre for Financial Reporting Reforms under the Road to Europe: Program of Accounting Reform and Institutional Strengthening program. Both IFAC member organizations—the Albanian Institute of Certified Accountants and the Albanian Institute of Authorized Chartered Auditors—are active participants in the program.

Under the Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016, the responsibility for conducting quality assurance (QA) reviews of statutory audits is vested with the Public Oversight Board (POB), with an option to delegate QA reviews of audits of non-public interest entities (PIEs) to the Albanian Institute of Authorized Chartered Auditors (IEKA). As of 2020, the POB conducts reviews of PIEs only and the authority to conduct the reviews of non-PIEs to IEKA has not been delegated.

Prior to the revision of the Law No. 10091 in 2016, IEKA was responsible for the conduct of QA reviews and had established and implemented its own QA review system that was in line with the requirements of SMO 1. The extent of alignment of the existing QA arrangement implemented by the POB remains to be established.

Current Status: Partially Adopted

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016, establishes initial professional development (IPD)) and continuing professional development (CPD) requirements for statutory auditors. For certified accountants, the law establishes some IPD requirements and a general requirement for CPD, which is further defined by the professional organizations for accountants.

Aspiring professionals are required to have a formal professional education, obtain practical experience, pass examinations, and maintain continuous professional development. Although the requirement for obtaining practical experience exists, it is not being monitored for certified accountants.

Certification of professionals is conducted by the Examination Commission under the Public Oversight Board (POB) in line with the requirement of the amended Law No. 10091 that authorizes the POB to certify auditors and accountants.

Professional accounting education programs are developed and delivered by professional accountancy organizations, licensed state owned and/or private higher education institutions, and universities.

For aspiring auditors, the Albanian Institute of Authorized Chartered Auditors (IEKA) is responsible for the development of the educational programming. In 2019, IEKA launched a new model for education of auditors, with advanced modules of the program delivered by IEKA and fundamental and intermediate modules by state owned and/or private higher education institutions and universities. Other PAOs are also involved in trainings candidates prior to final exams. Although IEKA reports that overall curricula, offered by the institute and universities, i in full compliance with the 2019 IESs, it remains to be established whether other requirements outlined in IESs are complied with for auditors.

For accountants, activities are underway to bring the requirements in line with IESs. According to the World Bank 2017 Accountancy Education: Benchmarking Study and the 2019 World Bank report, IPD requirements need to be brought further in line with the international best practices, especially regarding the content of the curricula for university education and professional certification. As mentioned above, the law stipulates some CPD requirements for accountants to be further implemented by PAOs for accountants.

As of September 2020, there is one recognized PAO by the POB uniting accountants in Albania: the Albanian Institute of Certified Accountants (IKM). IKM, an IFAC member, reports that its CPD requirements differ from IES as the output approach has not been introduced, among other differences. With the assistance of the World Bank, IKM is working to bring its CPD requirements with IES 7.

There is no information whether other professional organizations uniting accountants have brought their programming and CPD in line with the revised IES.

Current Status: Partially Adopted

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016 requires application of ISA as issued by the IAASB and translated and adopted for application in Albania in all statutory audits. The Albanian Institute of Authorized Chartered Auditors (IEKA) is responsible for the translation of ISA.

A joint committee was set up between IEKA and Society of Certified Accountants and Auditors of Kosovo (SCAAK) with the main objective to implement the translation process of new or revised ISA as they become available. As of 2020, the 2018 version of ISA has been translated.

Current Status: Adopted

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 of 2009 as amended in 2016 requires application of the IESBA Code of Ethics for all professional accountants, authorized auditors and certified accountants, as translated and adopted for application in Albania. The Albanian Institute of Authorized Chartered Auditors (IEKA) is responsible for the translation of the IESBA Code under the oversight of the Public Oversight Board (POB). As of 2020, IEKA has translated the 2018 IESBA Code.

Current Status: Adopted

The authority responsible for establishing public sector accounting standards in Albania is the Ministry of Finance of Albania (MoF), which receives the opinion of the National Accounting Council on this subject in accordance with Law on Accounting and Financial Statement No. 9228 of 2004. As reported the Albanian Institute of Certified Accountants (IKM), as of 2019, the public sector entities in Albania apply adjusted cash-based accounting rules as stipulated in the Law No. 9228 of 2004.

The MoF has not yet adopted IPSAS but has translated IPSAS in 2010 and is considering adoption of the international pronouncements in a phased approach: first the cash-based IPSAS and subsequently accrual-based IPSAS. No timeframe has been established, however.

Current Status: Not Adopted

The Law on Statutory Audit and Organization of the Accountancy Profession No. 10091 as amended in 2016 authorizes the Public Oversight Board (POB) to investigate and discipline auditors. The extent of alignment of the existing I&D arrangement implemented by the POB remains to be established.

Prior to 2016, the Institute of Authorized Chartered Auditors (IEKA) was responsible for the regulation of auditors, including investigation and discipline, and has established a system that was reported to be fully in line with the requirements of SMO 6. Following the transfer of the overall legal responsibility, IEKA reports that it continues to operate its I&D system. The Investigation Committee of IEKA investigates its members and forwards the cases to the POB, which imposes sanctions involving removal or practicing rights for any regulatory breaches by IEKA`s members.

In addition, auditors of entities regulated by the Bank of Albania (BoA) and the Financial Supervisory Authority (FSA) are obligated to report immediately to the regulator any material fact that is in breach of the legislation. A qualified opinion normally triggers an investigation by the regulators. Both BoA and FSA have the power to ask for re-audit and to disallow the auditor to perform audits in the future. The POB cooperates with regulators.

As of 2020, the Law No. 10091 does not contain specific requirement for I&D of accountants, with a reported I&D process for accountants being limited to the discipline of members of professional accountancy organizations, of which certified accountants must be members. As of September 2020, there is one recognized PAO by the POB uniting accountants in Albania: the Albanian Institute of Certified Accountants (IKM), and IFAC member. IKM reports that it has reviewed the requirements of SMO 6 (revised 2012) and is working to bring it in full compliance with the best practices. As of 2020, IKM reports that the areas of less than full compliance is lack of separation between investigation and discipline functions.

Current Status: Partially Adopted

Under the Law on Accounting and Financial Statements No. 25/2018, two reporting frameworks are applicable in the jurisdiction: (i) National Accounting Standards (NASs) and (ii) IFRS as issued by the IASB, translated and published in Albanian language by the National Accounting Council (NAC).

Public interest entities (PIEs) are required to apply IFRS. PIEs are defined as stock exchange listed companies, financial institutions, insurance and reinsurance companies, and investment and voluntary pension funds, together with other companies deemed by the Council of Ministers to be relevant to the public interest owing to the nature of their business, their size or the number of their employees. The Council of Ministers’ Decision No. 17/2019, stipulates that entities that meet any of the three criteria of size of business and number of employees (turnover, total assets, or number of employees) are of public interest.

The Bank of Albania (BOA), however, has deferred implementation of IFRS by banks for regulatory purposes and requires prudential reporting from the banking sector. As of 2020, banks must follow the Financial Reporting Manual (FRM), which is based on the 1998 IFRS.

According to the World Bank (2019), generally, there are no significant delays in translation of new and revised IFRSs, and translations are published before the effective dates of IFRSs. As of 2020, it appears that the 2020 IFRS Red Book has been translated.

Micro, small and medium-sized entities (SMEs) use NASs issued by the NAC and approved by the Ministry of Finance of Albania in accordance with the procedures established under Law No. 25/2018. These companies may also choose to apply full IFRS. In 2015, the NAC, with the assistance of the World Bank, completed the revision of NASs to bring them closer in line with the requirements of the 2009 IFRS for SMEs.

Current Status: Adopted

Relevant Organizations

• Public Oversight Board (POB)
• Albanian Institute of Authorized Chartered Auditors (IEKA)
• Albanian Institute of Certified Accountants (IKM)
• National Accounting Council (NAC)

Relevant Legislation

• Law on Accounting and Financial Statement No. 25/2018
• Law on Accounting and Financial Statement No. 9228, 2004
• Law on Statutory Audit and Organization of Accountancy Profession No. 10091, 2009 (in Albanian)
• Law No. 47/2016, 2016 (in Albanian)
• National Accounting Standards (NASs)
• IFRSs as translated in Albanian

Relevant Publication

• IEKA, SMO Action Plan, September 2020.
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Albania, May 2019.
• IKM, SMO Action Plan, October 2019.
• International Forum of Independent Audit Regulators website.
• World Bank, Accountancy Education: Benchmarking Study, 2017.
• World Bank, Accountancy Education: A Collection of Good Practices, 2017.
• World Bank, Financial Sector Assessment Program: Albania Corporate Sector Financial Reporting?Technical Note, February 2014.
• World Bank, Report on the Observance of Standards and Codes?Accounting and Auditing: Albania, 2019.
• World Bank, Report on the Observance of Standards and Codes?Accounting and Auditing: Albania, 2006.