International Federation of Accountants

Lao PDR

Member Organizations

Member Organization Associate

  Lao Chamber of Professional Accountants and Auditors

Legal and Regulatory Environment

  • Overview of Statutory Framework for Accounting and Auditing

    The Law on Accounting of 2013, the Law on Independent Audit of 2014, and the Enterprise Law of 2016 form the statutory framework for accounting, auditing, and corporate financial reporting in Laos.

    Accounting Framework

    Under the Law on Accounting, public interest entities (PIEs), which are banks and financial institutions under the control of the Bank of Laos, insurance companies, securities companies and public companies, are required to apply International Financial Reporting Standards (IFRS) when preparing financial statements. Non-public interest entities (non-PIEs), which comprise large-, medium- and small- sized enterprises, apply the Laos Financial Reporting Standards for Non-Public Interest Enterprises (LFRS for Non-PIEs), which are based on the 2009 version of the IFRS for SMEs, to prepare their financial statements. Under the Law on Accounting, the Ministry of Finance (MoF) is responsible for setting accounting standards.

    Auditing Framework

    Two laws, the Law on Independent Audit and Enterprise Law, establishes statutory audit requirements in Laos. Under the Enterprise Law, limited liability companies above a threshold (more than 50 billion kip in assets ~USD 6.2 million) are required to be audit. In accordance with the Law on Independent Audit, mandatory audit is required for all PIEs as indicated above, foreign enterprises, state-owned enterprises, and external loan and grant projects. Under the Law on Independent Audit, the MoF is responsible for setting auditing standards, which are the International Standards on Auditing (ISA). The ISA as issued by the IAASB in English have legal status, and therefore the most recent version of the standards are in force.

  • Regulation of Accountancy Profession

    Under the Law on Independent Audit of 2014, accountancy professionals are regulated at the state level by the Ministry of Finance (MoF) and at the professional level by the Laos Chamber of Professional Accountants and Auditors (LCPAA)

    According to the law, all professional accountants—which include Laos Certified Public Accountants (Laos CPA) in public and private practice, accounting and audit firms, as well as in public interest entities (PIEs) and large enterprises—are required to complete LCPAA’s certification program, become its members, and renew practicing licenses by completing continuing professional development (CPD) requirements. The Law on Independent Audit establishes the CPD requirement of 120 hours over three years with a minimum of 20 hours in any one year for all practitioners in the jurisdiction.

    To qualify as a Laos CPA, candidates are required to have: (i) passed 14 exams; (ii) attained three years of practical experience; and (iii) attended a professional ethics module. Individuals who attend and complete a university program in Accounting, Tax or Audit at the National University of Laos are able to obtain certain exemptions. “Accounting Consultants” or persons who qualified under the previous LCPAA certification program (in operation from 1998-2015) are required to pass the five Association of Chartered Certified Accountants (ACCA) P- Level papers in order to maintain their licenses.

    Under the law, LCPAA is responsible for (i) arranging and delivering the CPD program for all practitioners; (ii) managing and conducting professional examinations for CPA certifications; and (iii) conducting an investigations and disciplinary system with the MoF.

    In accordance with Article 52 of the law, individuals who seek to practice auditing must first be CPAs and become engagement partners or director of an audit firm. Once the MoF determines that the requirements have been met, it issues an audit license. All individuals that are issued audit licenses are subject to a mandatory quality assurance review system. The MoF may suspend or withdraw audit licenses.

    Practitioners in the jurisdiction are required to adhere to the Laos Code of Ethics, adopted and published by the MoF, which is based on the 2016 IESBA Code of Ethics.

  • Audit Oversight Arrangements

    Article 78 to 81 of the Law on Independent Audit of 2014 designates the Ministry of Finance (MoF) as the independent audit oversight authority in the jurisdiction. Under the law, the MoF is responsible for: (i) issuing audit licenses and maintaining a registry of practitioners who meet initial professional development and continuing professional development requirements outlined in the law; (ii) developing auditing and assurance standards; (iii) setting ethical standards; (iv) conducting quality assurance reviews for all audits; and (v) conducting an investigation and disciplinary system with the Laos Chamber of Professional Accountants and Auditors.

    The Ministry of Finance is not a member in the International Forum of Independent Audit Regulators.

  • Professional Accountancy Organizations

    Laos Chamber of Professional Accountants and Auditors (LCPAA)

    The LCPAA was established in 1998 with an objective to unite accountancy professionals in Laos. The organization’s recognition is established under the Law on Independent Audit of 2014. The organization offers Certified Public Accountant (CPA) licenses for its members and is responsible for: (i) arranging and delivering the continuing professional development program for all practitioners; (ii) managing and conducting professional examinations for CPA certifications; and (iii) conducting an investigations and disciplinary system with the Ministry of Finance. CPAs may practice as auditors in audit firms that are members of LCPAA.

    LCPAA is a primary member of ASEAN Federation of Accountants.

  • Projects or Other Information

Adoption of International Standards

  • Quality Assurance

    Under the Law on Independent Audit of 2014, the Ministry of Finance (MoF) is responsible for establishing a mandatory quality assurance (QA) review system for audits and audit firms in Laos.

    In April 2017, the MoF operationalized its first QA system in the jurisdiction—the Laos Audit Quality Assurance System (LAQAS). The scope of the LAQAS includes reviewing the performance of audit firms, as well as implementing a multi-year monitoring program that evaluates the quality of audit work being performed. Under this system, QA reviews are undertaken once every three years for firms of public interest entities, and once every four years for all other firms. LCPAA assists the MoF with conducting the reviews, and also provides administrative support.

    Based on LCPAA’s self-assessment, as of November 2019, the QA system in Laos aligns with the requirements of SMO 1.

    Current Status: Adopted

  • International Education Standards

    The Law on Independent Audit of 2014 stipulates initial professional development and continuing professional development (CPD) requirements in Laos and provides authority to the Laos Certified Public Accountants (LCPAA), under the oversight of the Ministry of Finance, as the body responsible for setting these requirements.

    Under the Law on Independent Audit, all professional accountants—which include Laos Certified Public Accountants (Laos CPA) working in public and private practice, accounting and audit firms, as well as in public interest entities and large enterprises—are required to complete the LCPAA certification program, become a member, and renew an annual license by completing CPD requirements. Article 32 of the Law on Independent Audit of 2014 establishes a CPD requirement of 120 hours over 3 years with a minimum of 20 hours in any one year for all practitioners in the jurisdiction.

    To comply with its legal and regulatory obligation, the LCPAA signed a partnership agreement with the Association of Chartered Certified Accountants (ACCA) in February 2016 which allows LCPAA to use the ACCA syllabus as a basis for the Laos CPA qualification. As of January 2019, to qualify as a Laos CPA, candidates are required to: (i) pass 14 exams; (ii) attain three years of practical experience; and (iii) attend a professional ethics module. Individuals who attend and complete a university program in Accounting, Tax or Audit at the National University of Laos are able to obtain certain exemptions. “Accounting Consultants” and other individuals who qualified under the previous LCPAA certification program (in operation from 1998–2015) are required to pass the five ACCA P- Level papers in order to maintain their licenses.

    Although some of the requirements of the revised IES have been incorporated into the national requirements, LCPAA reports the following gaps in practical experience (IES 5) and CPD for auditors (IES 8): (i) practical experience requirements lack specific performance objectives and qualification elements; (ii) there is no system for monitoring or evaluating achievement; (iii) the current law allows exemption from practical experience requirements for certain categories of persons (e.g., professors of accounting); and (iv) there is no specific CPD requirement or program for audit engagement partners. By the end of 2019, LCPAA reports that it expects to complete the adoption of the same practical experience requirements as the ACCA.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Under the Law on Independent Audit, the Ministry of Finance (MoF) is responsible for setting auditing standards in Laos. The MoF adopts the International Standard on Auditing as issued by the IAASB in English and are effective for all mandatory audits.

    Under the Enterprise Law of 2016, limited liability companies above a threshold of more than 50 billion kip in assets (~USD 6.2 million), are required to be audited. In accordance with the Law on Independent Audit of 2014, mandatory audits are required for all public interest entities, foreign enterprises, state-owned enterprises, and external loan and grant projects.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    Under the Law on Independent Audit of 2014, the Ministry of Finance (MoF) is responsible for establishing ethical requirements for all professional accountants in Laos. The Laos Chamber of Professional Accountants and Auditors (LCPAA) reports that in October 2016, the MoF adopted and published the Lao Code of Ethics, which is aligned with the principles of the 2015 IESBA Code of Ethics.

    The LCPAA reports that while the current Code does not incorporate the full requirements of the IESBA Code, the Chamber has plans in place to review the 2018 revised and restructured IESBA Code and NOCLAR standard, to identify any gaps. The LCPAA has indicated plans in its SMO Action Plan to review the 2018 International Code of Ethics and NOCLAR standard for adoption by 2021/2022.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    Under the Law on Accounting of 2013, the Ministry of Finance is responsible for setting public sector accounting standards in Laos. Under the law, government entities are required to apply cash-basis IPSAS. While accrual-basis IPSAS is stated in the Law on Accounting, implementation will take much longer as cash-basis IPSAS is still being learned. The Laos Chamber of Professional Accountants and Auditors (LCPAA) reports a trial run of cash-basis IPSAS was initially planned to take place between 2018–2019; however, the start date has been moved to mid to end 2019.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Law on Independent Audit of 2014 designates the Laos Chamber of Professional Accountants and Auditors (LCPAA) and the Ministry of Finance (MoF) with the responsibility to establish and conduct an investigative and disciplinary (I&D) system in the jurisdiction. To avoid any overlaps, both the MoF and LCPAA agreed that primary responsibility for management of the system would be undertaken by LCPAA. The MoF would retain its responsibility to impose sanctions for any breaches to the law. As of November 2019, LCPAA reports that regulations around I&D and a proposed system have been drafted, with a view of the system being operationalized in September 2019.

    LCPAA reports that the system will be comprised of a Disciplinary Committee, an Investigations Committee, and an independent Appeals Board. LCPAA conducted a self-assessment of the proposed I&D system against the requirements of SMO 6 and concluded that it would be in line with the requirements once operational.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    Under the Law on Accounting of 2013, the Ministry of Finance (MoF) is responsible for setting accounting standards to be applied in Laos.

    The MoF has adopted International Financial Reporting Standards (IFRS) to be applied by public interest entities (PIEs), which are banks and financial institutions under the control of the Bank of Laos, insurance companies, securities companies, and public companies. The MoF has also developed accounting standards for non-PIEs which comprise large-, medium- and small- sized enterprises. These companies apply the Lao Financial Reporting Standards for Non-Public Interest Enterprises (LFRS for Non-PIEs), which are based on the 2009 version of the IFRS for Small- and Medium-sized Entities, to prepare their financial statements.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

 

Methodology

Methodology
Last updated: 11/2019
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