Israel

The Israel Companies Law, 5759-1999 establishes the statutory framework for corporate financial reporting in Israel. The law requires companies to maintain accounting records and prepare audited annual financial statements for filing with the Registrar of Companies and the Israeli tax authorities.

Accounting standard-setting in Israel is primarily undertaken by the Israel Accounting Standards Board (IASB Israel). Through Israel Accounting Standard No. 29, Adoption of International Financial Reporting Standards, and in conjunction with the Israeli Securities Authority Regulations (Periodic and Immediate Reports), publicly traded entities are required to apply International Financial Reporting Standards (IFRS Accounting Standards) as issued by the International Accounting Standards Board (IASB). According to the IFRS Foundation jurisdictional profile, this requirement applies to listed entities, with the exception of certain banking institutions and foreign issuers.

Banking institutions, including credit card companies and certain financial institutions, are subject to reporting requirements established by the Banking Supervision Department of the Bank of Israel. These requirements are primarily based on United States Generally Accepted Accounting Principles (US GAAP), with certain adaptations and references to IFRS Accounting Standards. Insurance companies supervised by the Capital Market, Insurance and Savings Authority are required to apply IFRS Accounting Standards, including IFRS 17 Insurance Contracts.

Private companies generally apply Israeli Generally Accepted Accounting Principles issued by IASB Israel, which are substantially based on IFRS Accounting Standards but contain certain modifications and differential reporting requirements. Private entities are also permitted to voluntarily apply full IFRS Accounting Standards.

Israel has adopted the IFRS for Small and Medium-sized Entities (IFRS for SMEs) through Israel Accounting Standard No. 32 issued by IASB Israel. Eligible small and medium-sized entities may apply the IFRS for SMEs Standard, full IFRS Accounting Standards, Israeli Generally Accepted Accounting Principles, or US GAAP, depending on the applicable legal and regulatory framework.

Statutory audits are required for companies under the Companies Law and related legislation. The Institute of Certified Public Accountants in Israel (ICPAI) is legally recognized as the auditing standard-setter under the Auditors Regulations (Manner of Auditor’s Practice), 5733-1973. Through its Auditing Standards Committee, ICPAI issues Israeli auditing standards and guidance.

Auditing standards in Israel are based on a combination of International Standards on Auditing (ISA) and national standards. ICPAI has adopted certain clarified ISA, including ISA 200, ISA 220, ISA 230, ISA 250, ISA 260, ISA 265, ISA 320, ISA 450, ISA 560, ISA 580, ISA 620, ISA 700, ISA 701, ISA 705, ISA 706, and ISA 710. However, many other auditing standards remain based on pre-2018 versions of ISA or national standards developed for local requirements.

Only auditors are regulated at the state level in Israel. The audit profession is governed by the Auditors Law, 5715-1955 and related regulations. The Auditors Council, operating under the Ministry of Justice, is responsible for licensing auditors, maintaining the register of licensed auditors, administering examinations, approving completion of practical training, and exercising disciplinary powers over licensed auditors.

The Certified Public Accountant designation is restricted to individuals who have been licensed by the Auditors Council. Candidates must successfully complete or obtain exemptions from the Council’s examinations, complete the practical experience period required under the Auditors Law, and receive Council approval before a license is granted. Only licensed auditors may perform statutory audits in Israel.

The Institute of Certified Public Accountants in Israel (ICPAI) operates as the principal professional accountancy organization in the jurisdiction on a voluntary membership basis. ICPAI supports the development of the profession, issues auditing standards through its professional structures, establishes ethical requirements for its members, provides professional guidance and training, and undertakes member-level investigative and disciplinary activities.

Audit quality assurance arrangements apply to Certified Public Accountant firms that audit reporting corporations under the securities framework. These reviews are carried out through the Israeli Oversight Board, while the Auditors Council and ICPAI continue to play roles in the broader regulation, professional standards, ethics, education, and discipline of the audit profession.

Israel maintains a mixed system of audit regulation and oversight involving the Auditors Council, the Israeli Oversight Board, and the Institute of Certified Public Accountants in Israel (ICPAI). Public oversight responsibilities are exercised primarily through the Israeli Oversight Board in relation to audits of reporting corporations subject to securities regulation.

The Israeli Oversight Board is responsible for conducting quality assurance inspections of Certified Public Accountant firms that audit reporting corporations under the Israeli Securities Law framework. The Board coordinates its activities with the Ministry of Justice, the Israeli Securities Authority, and the Supervisor of Banks and publishes inspection findings and related reports.

The Auditors Council, established under the Auditors Law, 5715-1955 and operating under the Ministry of Justice, retains responsibility for licensing auditors, administering examinations, supervising practical training requirements, and exercising disciplinary authority over licensed auditors. ICPAI continues to play an important supporting role in auditing standard-setting, ethics, professional development, and member oversight.

Israel is not listed as a member jurisdiction of the International Forum of Independent Audit Regulators as of the date of this assessment.

Institute of Certified Public Accountants of Israel (ICPAI)

ICPAI was established in 1931 and operates as the principal professional accountancy organization in Israel. Membership in ICPAI is voluntary and is comprised primarily of licensed Certified Public Accountants as well as other accountancy professionals.

ICPAI plays a significant role in supporting the development and advancement of the accountancy profession in Israel. Its activities include issuing auditing standards through its professional committees, establishing ethical requirements for members, providing continuing professional education and technical guidance, supporting professional development initiatives, and undertaking investigative and disciplinary activities for its membership. ICPAI also participates in legislative and regulatory consultations relating to financial reporting, auditing, taxation, and professional matters and serves as a professional advisor to governmental and regulatory stakeholders.

In addition to its national role, ICPAI is a founding member of the International Federation of Accountants and is also a member of Accountancy Europe and the Fédération des Experts Comptables Méditerranéens.

The quality assurance (QA) review system in Israel is established under the Israeli Securities Law framework and applies to Certified Public Accountant firms that audit reporting corporations. The Israeli Oversight Board (IOB) is responsible for conducting QA reviews of these firms and coordinates its inspection activities with the Ministry of Justice, the Israeli Securities Authority, and the Supervisor of Banks.

The QA review system is operational for audits of reporting corporations and incorporates several elements of SMO 1 requirements. However, it does not extend to all mandatory audits in the jurisdiction. Accordingly, the QA review system is assessed as Partially Adopted under the 2026 IFAC adoption definitions.

International Standard on Quality Management 1, International Standard on Quality Management 2, and International Standard on Auditing 220 (Revised) have not yet been adopted in Israel.

Current Status: Partially Adopted

Initial professional development requirements for licensed auditors in Israel are established under the Auditors Law, 5715-1955 and administered by the Auditors Council under the Ministry of Justice. Candidates must pass or obtain exemptions from the Council’s examinations, complete the required practical training period, and receive Council approval before being granted an auditor license.

The education framework incorporates certain elements of the International Education Standards (IES), including examination and practical experience requirements for licensed auditors. However, the IES have not been formally adopted in Israel, and the framework does not apply to all professional accountants. No mandatory continuing professional development requirement was identified at the jurisdiction level for all licensed auditors or professional accountants.

Accordingly, the jurisdiction-level education framework is not fully aligned with SMO 2 requirements and is assessed as Partially Adopted under the 2026 IFAC adoption definitions.

Current Status: Partially Adopted

The Auditors Regulations (Manner of Auditor’s Practice), 5733-1973 provide the legal basis for auditing standards in Israel. The Institute of Certified Public Accountants in Israel (ICPAI), through its Auditing Standards Committee, is responsible for issuing Israeli auditing standards for application in statutory audits.

Israeli auditing standards are developed through selective adoption and adaptation of International Standards on Auditing (ISA). ICPAI has adopted certain clarified and revised ISA, including ISA 700, 705, 706, and 710, which are based on the IAASB auditor reporting standards effective from 2016 onward. However, no full version of the International Auditing and Assurance Standards Board Handbook has been adopted in its entirety in Israel, and many standards continue to be based on pre-2018 ISA or localized national standards. Accordingly, ISA are assessed as Not Adopted under the 2026 IFAC adoption definitions.

As of the date of this assessment, the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) has not been identified as adopted in Israel.

Current Status: Not Adopted

Ethical requirements for auditors in Israel are established under the Auditors Law, 5715-1955 and related regulations, and through the Rules of Professional Conduct issued by the Institute of Certified Public Accountants in Israel (ICPAI) for its members. ICPAI’s Rules of Professional Conduct apply to members on a voluntary membership basis and are supported by the work of its Ethics Committee.

ICPAI reports that its ethical requirements are based on the 2016 International Ethics Standards Board for Accountants (IESBA) Code of Ethics. No evidence was identified that the 2018 or later restructured International Code of Ethics for Professional Accountants, including International Independence Standards, has been adopted in Israel. Accordingly, the IESBA Code is assessed as Not Adopted under the 2026 IFAC adoption definitions.

Current Status: Not Adopted

The Israel Government Accounting Standards Board (IGASB) is responsible for setting public sector accounting standards in Israel. Government Resolution No. 2375 requires the use of accrual-based public sector accounting standards for government ministries and non-commercial statutory corporations.

IGASB has developed national public sector accounting standards with reference to International Public Sector Accounting Standards (IPSAS). The Board adopted and published 21 IPSAS-based standards in Hebrew in 2011 and two additional standards in 2012, based on the 2007 IPSASB Handbook. Accordingly, the jurisdiction applies accrual-basis national standards with reference to IPSAS and is therefore assessed as Partially Adopted under the 2026 IFAC adoption definitions.

Current Status: Partially Adopted

The investigation and discipline (I&D) system for licensed auditors in Israel is established under the Auditors Law, 5715-1955 and related regulations. The Auditors Council, operating under the Ministry of Justice, is authorized to receive and address complaints concerning professional misconduct and breaches of ethical requirements by licensed auditors.

The Auditors Council may impose a range of sanctions, including reprimands, fines, restrictions or loss of practice rights, and loss of professional title. Appeals are subject to the judicial process established under the legal framework.

The Institute of Certified Public Accountants in Israel (ICPAI) also maintains a member-level I&D system through its Ethics Committee and Disciplinary Tribunal. ICPAI’s system applies to its voluntary membership and may impose sanctions for breaches of ICPAI rules, including expulsion from membership.

The jurisdiction-level framework is operational and applies to licensed auditors, while ICPAI’s member-level system supplements the statutory framework for its members. Accordingly, the I&D system is assessed as Adopted under the 2026 IFAC adoption definitions.

Current Status: Adopted

The Israel Accounting Standards Board (IASB Israel) is the official accounting standard-setting body in Israel. Through Israel Accounting Standard No. 29, issued in July 2006, entities governed by the Israeli Securities Law, 1968 are required to apply International Financial Reporting Standards (IFRS Accounting Standards) as issued by the International Accounting Standards Board for periods beginning on or after January 1, 2008. This includes domestic companies whose equity or debt securities are publicly traded, subject to specified exceptions.

The IFRS Foundation jurisdictional profile confirms that IFRS Accounting Standards are required for all domestic companies whose securities trade in the Israeli public market and for insurance companies, except for banking institutions, credit card companies, pension funds, provident funds, and certain dual-listed entities. Private companies may apply either IFRS Accounting Standards or Israeli Accounting Standards.

Accordingly, IFRS Accounting Standards as issued by the IASB have been adopted for most domestic publicly accountable entities, but not all. IFRS Accounting Standards are assessed as Partially Adopted under the 2026 IFAC adoption definitions.

Israel has adopted the IFRS for Small and Medium-sized Entities Accounting Standard through Israel Accounting Standard No. 32, effective January 1, 2011.

Current Status: Partially Adopted

Relevant Organizations

Bank of Israel – Banking Supervision Department

IFRS Foundation Jurisdiction Profile – Israel

Institute of Certified Public Accountants in Israel

Israel Accounting Standards Board

Israeli Oversight Board

Israeli Securities Authority

Ministry of Justice – Auditors Council

Relevant Legislation

Auditors Law, 5715-1955

Auditors Regulations (Manner of Auditor’s Practice), 5733-1973

Government Resolution No. 2375 on IPSAS Implementation

Israel Accounting Standard No. 29 – Adoption of IFRS

Israel Accounting Standard No. 32 – IFRS for SMEs

Israel Companies Law, 5759-1999

Israeli Securities Law, 1968

Relevant Publications

ICPAI Rules of Professional Conduct

Israeli Auditing Standard 701