Lao PDR

The statutory framework for accounting, auditing, and corporate financial reporting in the Lao People’s Democratic Republic is established by the Accounting Law (Amended) No. 46/NA dated 20 November 2023, the Law on Independent Audit No. 51/NA dated 22 July 2014, and the Enterprise Law (Amended) No. 33/NA dated 29 December 2022. These laws set out the requirements for the preparation of financial statements, statutory audits, and the responsibilities of the Ministry of Finance (MoF) in regulating corporate financial reporting and audit activity.

Under the Accounting Law, the MoF is responsible for establishing accounting standards in the jurisdiction. Public interest entities, including banks and financial institutions under the supervision of the Bank of the Lao PDR, insurance companies, securities companies, and public companies, are required to apply International Financial Reporting Standards (IFRS) in preparing financial statements. Recent government and market sources confirm that the amended 2023 law expressly requires public interest enterprises to prepare financial statements in accordance with IFRS. Other entities apply the Lao Financial Reporting Standards for Non-Public Interest Enterprises, which are based on the 2009 version of the IFRS for Small and Medium-sized Entities.

Under the Law on Independent Audit, the MoF is also responsible for establishing auditing standards and statutory audit requirements. Mandatory audits are required for public interest entities, foreign enterprises, state-owned enterprises, and external loan and grant projects. In addition, under the Enterprise Law, the requirement for limited liability companies to undergo an audit is subject to decisions made at shareholders’ meetings in accordance with the relevant provisions of the independent audit legislation. International Standards on Auditing (ISA), as issued by the International Auditing and Assurance Standards Board in English, have legal status and apply to all mandatory audits in the jurisdiction.

Under the Law on Independent Audit No. 51/NA dated 22 July 2014, the accountancy profession in the Lao People’s Democratic Republic is regulated through a shared framework between the Ministry of Finance (MoF) and the Laos Chamber of Professional Accountants and Auditors (LCPAA). The MoF acts as the state regulator and oversight authority, while LCPAA is the professional accountancy organization responsible for implementing professional requirements and supporting the development of the profession.

Under the law, the MoF is responsible for issuing audit licenses and maintaining a registry of practitioners who meet the initial professional development and continuing professional development requirements established in the legislation. In addition, the MoF is responsible for establishing auditing and assurance standards, setting ethical requirements, conducting quality assurance reviews for all statutory audits, and operating the investigative and disciplinary system jointly with LCPAA.

All professional accountants are required to complete LCPAA’s certification program, obtain membership, and renew practicing licenses through compliance with continuing professional development requirements. Following the renewal of its partnership agreement with the Association of Chartered Certified Accountants in November 2022, LCPAA continues to align its Lao Certified Public Accountant (Lao CPA) qualification with the ACCA syllabus and examination framework. As of 2023, candidates are required to pass professional examinations, complete three years of practical experience, and attend a professional ethics module.

In accordance with Articles 52 to 56 of the Law on Independent Audit, individuals seeking to become statutory auditors must first qualify as a Lao CPA, hold LCPAA membership, and occupy the position of director or engagement partner of an audit firm. Once the MoF determines that all statutory requirements have been met, it issues the statutory auditor license and retains the authority to suspend or withdraw such licenses where necessary.

Articles 78 to 81 of the Law on Independent Audit No. 51/NA dated 22 July 2014 designate the Ministry of Finance (MoF) as the audit oversight authority in the Lao People’s Democratic Republic. Under the law, the MoF is responsible for issuing audit licenses and maintaining a registry of practitioners who meet the initial professional development and continuing professional development requirements established in the legislation. In addition, the MoF is responsible for establishing auditing and assurance standards, setting ethical requirements, conducting quality assurance reviews for all statutory audits, and operating the investigative and disciplinary system jointly with the Laos Chamber of Professional Accountants and Auditors (LCPAA).

The MoF is not a member of the International Forum of Independent Audit Regulators.

Laos Chamber of Professional Accountants and Auditors (LCPAA)

The Laos Chamber of Professional Accountants and Auditors (LCPAA) was established in 1998 with the objective of uniting and advancing the accountancy profession in the Lao People’s Democratic Republic. Its legal recognition is established under the Law on Independent Audit No. 51/NA dated 22 July 2014, under which membership is mandatory for all professional accountants and statutory auditors in the jurisdiction. LCPAA is responsible for arranging and delivering the initial professional development and continuing professional development programs for practitioners, managing and administering professional examinations for the Lao Certified Public Accountant (Lao CPA) qualification, and operating the investigative and disciplinary system jointly with the Ministry of Finance. In addition, the organization plays an important role in supporting the implementation of international standards and strengthening professional capacity through partnerships with regional and international professional accountancy organizations.

LCPAA is an Associate member of the International Federation of Accountants and a primary member of the ASEAN Federation of Accountants. Recent publicly available information also confirms that LCPAA maintains active cooperation agreements with the Association of Chartered Certified Accountants, the Malaysian Institute of Accountants, and the Federation of Accounting Professions of Thailand to support qualification development, continuing professional development, and regional capacity building initiatives.

Under the Law on Independent Audit No. 51/NA dated 22 July 2014, the Ministry of Finance (MoF) is responsible for establishing and operating the mandatory quality assurance (QA) review system for audits and audit firms in the Lao People’s Democratic Republic.

In April 2017, the MoF operationalized the Lao Audit Quality Assurance System (LAQAS), which includes the review of audit firms’ performance and the implementation of a multi-year monitoring program to evaluate the quality of audit work being performed. Under this framework, quality assurance reviews are conducted once every three years for firms auditing public interest entities and once every four years for all other firms. In 2019, the MoF issued Decree No. 0974/MoF on Audit Quality Assurance, providing the legal framework for the QA review system and aligning it with the requirements of SMO 1.

The jurisdiction previously adopted the quality control framework based on International Standard on Quality Control 1 (ISQC 1). However, no credible evidence was identified confirming that the International Standards on Quality Management (ISQM 1 and ISQM 2), which are now the relevant standards, have been formally adopted and made effective in the jurisdiction. Recent publicly available information indicates that the Ministry of Finance and the Laos Chamber of Professional Accountants and Auditors are still in the process of preparing firms and the oversight framework for transition to the quality management standards.

Accordingly, while a mandatory and operational QA review system is in place for all mandatory audits, the latest relevant quality management standards do not appear to have been formally adopted. The jurisdiction is therefore assessed as Partially Adopted.

Current Status: Partially Adopted

The Law on Independent Audit No. 51/NA dated 22 July 2014 establishes the initial professional development and continuing professional development requirements in the Lao People’s Democratic Republic and provides authority to the Laos Chamber of Professional Accountants and Auditors (LCPAA), under the oversight of the Ministry of Finance (MoF), to implement these requirements.

Under the law, all professional accountants are required to complete the LCPAA certification program, obtain membership, and renew an annual practicing license through compliance with continuing professional development requirements. LCPAA continues to align the Lao Certified Public Accountant (Lao CPA) qualification with the Association of Chartered Certified Accountants (ACCA) syllabus and examination framework, thereby supporting alignment with International Education Standards (IES) 2, 3, 4, and 6.

In 2020, LCPAA introduced Practical Training Regulations No. 059/LCPAA to formalize the practical experience requirements and align them with IES 5. The regulations require trainee supervisors to monitor and record progress in demonstrating professional competencies.

Article 32 of the Law on Independent Audit establishes a continuing professional development requirement of 120 hours over a three-year period, with a minimum of 20 hours in any one year for all practitioners. This requirement is also confirmed on LCPAA’s website and remains operational.

Given the mandatory application of these requirements for all regulated professional accountants and the demonstrated alignment with the relevant IES requirements, the jurisdiction is assessed as Adopted.

Current Status: Adopted

Under the Law on Independent Audit No. 51/NA dated 22 July 2014, the Ministry of Finance (MoF) is responsible for establishing auditing standards in the Lao People’s Democratic Republic. The MoF adopts International Standards on Auditing (ISA) as issued by the International Auditing and Assurance Standards Board in English for all mandatory audits. This wording indicates direct adoption of ISA as issued and supports the application of the standards in effect at the time of the assessment.

Mandatory audits are required for public interest entities, foreign enterprises, state-owned enterprises, and external loan and grant projects. In addition, under the Enterprise Law, limited liability companies may be subject to audit depending on decisions made at shareholders’ meetings and in accordance with the relevant provisions of the independent audit legislation.

Recent publicly available information also confirms that the Laos Chamber of Professional Accountants and Auditors supports implementation through continuing professional development and technical training, including training on ISA 315 (Revised), further evidencing ongoing application of ISA in practice. Accordingly, the jurisdiction is assessed as Adopted.

Current Status: Adopted

Under the Law on Independent Audit No. 51/NA dated 22 July 2014, the Ministry of Finance (MoF) is responsible for establishing ethical requirements for all professional accountants in the Lao People’s Democratic Republic.

The most recent publicly available information confirms that, in October 2016, the MoF adopted and published the Lao Code of Ethics, which is aligned with the principles of the 2015 International Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). Public sources further indicate that the Laos Chamber of Professional Accountants and Auditors (LCPAA) and the MoF had plans to review the 2022 IESBA Code for adoption by 2025; however, no credible evidence was identified confirming that this update has been formally adopted and made effective in the jurisdiction.

As the most recently confirmed version in force predates the 2018 restructured Code, the jurisdiction is assessed as Not Adopted.

Current Status: Not Adopted

Under the Accounting Law No. 47/NA of 2013, as subsequently amended, the Ministry of Finance (MoF) is responsible for establishing public sector accounting standards in the Lao People’s Democratic Republic. Article 13 of the law requires implementing government accounting entities to apply cash-basis International Public Sector Accounting Standards (IPSAS) as a preparatory step toward transition to accrual-basis IPSAS.

Recent publicly available information confirms that government entities continue to apply cash-basis IPSAS, while the transition to accrual-basis IPSAS remains a longer-term reform objective that will require significant time and resources. The Laos Chamber of Professional Accountants and Auditors (LCPAA) reports that it continues to support implementation efforts through collaboration with the MoF and international partners, including technical guidance, chart of accounts revisions, and continuing professional development training on cash-basis IPSAS. From 2022 to 2023, LCPAA participated in consultative meetings and workshops with the MoF to support ongoing implementation efforts.

As the jurisdiction currently applies cash-basis IPSAS rather than accrual-basis IPSAS, the jurisdiction is assessed as Partially Adopted.

Current Status: Partially Adopted

The Law on Independent Audit No. 51/NA dated 22 July 2014 designates the Laos Chamber of Professional Accountants and Auditors (LCPAA) and the Ministry of Finance (MoF) with shared responsibility for establishing and operating the investigative and disciplinary (I&D) system in the Lao People’s Democratic Republic. To avoid overlaps in responsibilities, LCPAA and the MoF have agreed that primary responsibility for administration and case management is undertaken by LCPAA, while the MoF retains responsibility for the imposition of sanctions.

Recent publicly available information indicates that the I&D procedures continue to be reviewed by the Accounting Regulatory Department as part of the broader legislative reform process linked to the revisions of the Accounting Law and the Law on Independent Audit. LCPAA reports that the system is intended to comprise an Investigations Committee, a Disciplinary Committee, and an independent Appeals Board. Members of the Disciplinary Committee have already been identified and appointed.

LCPAA has completed a self-assessment of the proposed system against the requirements of SMO 6 and indicates that, once fully operational, the system is expected to align with international best practices. However, no credible evidence was identified confirming that the revised system is fully operational and effective for all professional accountants at the time of assessment. Accordingly, the jurisdiction is assessed as Partially Adopted.

Current Status: Partially Adopted

Under the Accounting Law No. 46/NA dated 20 November 2023, the Ministry of Finance (MoF) is responsible for establishing corporate accounting standards in the Lao People’s Democratic Republic.

The MoF requires the application of International Financial Reporting Standards (IFRS) by public interest entities, including banks and financial institutions under the supervision of the Bank of the Lao PDR, insurance companies, securities companies, and public companies. Recent publicly available information confirms that the amended 2023 Accounting Law expressly requires public interest enterprises to prepare financial statements in accordance with IFRS.

For non-public interest entities, including large, medium, and small entities that are not publicly accountable, the MoF has established the Lao Financial Reporting Standards for Non-Public Interest Enterprises, which are based on the 2009 version of the IFRS for Small and Medium-sized Entities. These standards apply as the differential reporting framework for non-public interest entities.

As IFRS are required for all domestic publicly accountable entities, the jurisdiction is assessed as Adopted.

Current Status: Adopted

Relevant Organizations

• Laos Chamber of Professional Accountants and Auditors
• Laos Ministry of Finance

Relevant Legislation

• Accounting Law No. 46/NA, 2023 (as amended)
• Enterprise Law No. 33/NA, 2022 (as amended)
• Law on Securities No. 21/NA, 2012 (as amended)
• HYPERLINK "https://laoofficialgazette.gov.la/kcfinder/upload/files/Independent%20Audit%20Law.pdf?id=115&r=site%2Fdisplaylegal"Law on Independent Audit No. 51/NA, 2014

Relevant Publications

• Lexology, Accounting Operations in the Laos PDR: New Application of International Standards, September 2014.
• LCPAA, Legal Financial Reporting Framework and IFRS in Laos PDR, November 2019.
• LCPAA, SMO Action Plan, 2023.
• Organisation for Economic Co-operation and Development, OECD Investment Policy Reviews: Lao PDR, July 2017
• World Bank, Report on the Observance of Standards and Codes (ROSC), Accounting and Auditing: Lao PDR, January 2009
• Vientiane Times, reporting on 2023 Accounting Law and IFRS implementation