Lithuania

As a member of the European Union (EU), Lithuania is subject to accounting, auditing, and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations. Lithuania’s corporate reporting and audit framework has been aligned with the EU acquis communautaire, including the EU Accounting Directive and the EU Statutory Audit Directive and Regulation.

The preparation of corporate financial statements is governed by the Law on Financial Accounting and the Law on Corporate Sustainability Reporting, which replaced the former Law on Accounting No. IX-574. The Ministry of Finance is responsible for developing accounting legislation and issuing national accounting standards. Companies in Lithuania apply either EU-endorsed International Financial Reporting Standards (IFRS) or Lithuanian Financial Reporting Standards, depending on the type and size of the entity. Lithuanian Financial Reporting Standards are developed with reference to IFRS and are primarily applied by entities that are not required to use IFRS.

Public interest entities (PIEs), including entities whose securities are admitted to trading on a regulated market, credit institutions, insurance undertakings, pension funds, and other entities designated under national legislation, are required to apply EU-endorsed IFRS in the preparation of consolidated financial statements. Other entities may apply either EU-endorsed IFRS or Lithuanian Financial Reporting Standards, subject to applicable legal requirements. Lithuania has not adopted the IFRS for Small and Medium-sized Entities (IFRS for SMEs).

Statutory audit requirements are established under the Law on Audit of Financial Statements No. XIII-96 of 2017, as amended, which transposed the EU Statutory Audit Directive and Regulation (EU) No. 537/2014 into national legislation. The law regulates the approval, registration, oversight, quality assurance, and discipline of statutory auditors and audit firms. Mandatory audits are required for PIEs and other entities meeting prescribed size thresholds.

Audits in Lithuania are required to be conducted in accordance with International Standards on Auditing (ISA) as issued by the International Auditing and Assurance Standards Board and translated for application in the jurisdiction by the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM). Lithuania also adopts other IAASB pronouncements through the same framework.

Only statutory auditors are regulated at the state level in Lithuania. The audit profession is governed by the Law on Audit of Financial Statements, which establishes requirements for the approval, registration, public oversight, quality assurance, ethics, and discipline of statutory auditors and audit firms. Auditors are required to apply International Standards on Auditing (ISA) and the Code of Ethics for Professional Accountants when conducting audits of financial statements.

The Certified Auditor designation is the protected professional title for statutory auditors in Lithuania. Entry into the profession requires an academic university master’s degree, good reputation, three years of practical training, and successful completion of professional examinations covering general matters, law, taxes, accounting, and audit. Accountancy Europe identifies the Lithuanian Chamber of Auditors (LCA) as the professional body for statutory auditors, with mandatory membership and responsibility for registration of Lithuanian auditors.

Public oversight of statutory auditors and audit firms is exercised by the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), operating under the Ministry of Finance. The AAAPVIM is responsible for public oversight of auditors and audit entities, including oversight of audit quality, professional standards, and enforcement arrangements.

The LCA supports the regulation of statutory auditors through its legally recognized functions, including auditor qualification, registration, continuing professional development, and quality assurance activities for audits of non-public interest entities, under the oversight of the AAAPVIM. Accountancy Europe reports that standard-setting is shared between the LCA and the AAAPVIM, while disciplinary measures are carried out by the AAAPVIM.

Other professional accountants are not regulated at the state level. They may voluntarily join a professional accountancy organization and become subject to that organization’s education, ethical, quality assurance, and investigation and discipline requirements. The Lithuanian Association of Accountants and Auditors (LAAA) operates on a voluntary basis and offers a Professional Accountant designation for members who meet its education, experience, examination, and professional conduct requirements. Accountancy Europe identifies the LAAA as a voluntary professional body involved in initial education, examinations, approval and registration, continuing professional development, standard-setting, quality assurance, and disciplinary measures for its members.

Independent public oversight of the audit profession in Lithuania is established under the Law on Audit of Financial Statements, which provides the legal framework for the regulation and oversight of statutory auditors and audit firms.

The Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), operating under the Ministry of Finance, is the public oversight authority for auditors and audit firms in Lithuania. The Ministry of Finance confirms that AAAPVIM carries out the public oversight function for auditors and audit entities.

AAAPVIM’s oversight responsibilities include supervising auditors and audit firms, overseeing audit quality, and supporting the application of professional requirements in the jurisdiction. Auditors are required to apply International Standards on Auditing (ISA) and the Code of Ethics for Professional Accountants when conducting audits of financial statements.

The Lithuanian Chamber of Auditors (LCA) supports elements of the oversight framework, including quality assurance activities for audits of non-public interest entities, while AAAPVIM is responsible for public oversight and disciplinary measures.

AAAPVIM is a member of the International Forum of Independent Audit Regulators.

The Lithuanian Association of Accountants and Auditors (LAAA)

The LAAA is a voluntary professional accountancy organization representing accountants and other finance professionals in Lithuania. Established in 1990, the organization operates as a non-governmental and non-profit professional body focused on supporting the development of the accountancy profession and strengthening professional competence in the jurisdiction.

LAAA’s activities include establishing educational and professional conduct requirements for its members, administering the Professional Accountant qualification program, supporting continuing professional development, and operating quality assurance and investigation and discipline mechanisms for members. The organization also provides training, professional guidance, and technical support to accountants and auditors in Lithuania.

Membership in LAAA is voluntary. In addition to being an Associate member of the International Federation of Accountants, LAAA is a member of Accountancy Europe.

The Lithuania Chamber of Auditors (LCA)

The LCA is the legally recognized professional body for statutory auditors in Lithuania. Membership in the organization is mandatory for certified auditors. The LCA operates under the Law on Audit of Financial Statements and works in cooperation with the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), which exercises public oversight of the profession.

The LCA’s responsibilities include administering professional examinations for statutory auditors, issuing auditor certificates, maintaining the register of auditors, supporting and monitoring continuing professional development requirements, and participating in quality assurance and professional disciplinary arrangements in cooperation with the AAAPVIM. The organization also supports the implementation of auditing, ethics, and professional standards within the profession.

In addition to being a member of the International Federation of Accountants, the LCA is a member of Accountancy Europe and participates in regional and international professional activities related to audit regulation and professional development.

The quality assurance (QA) review system in Lithuania is established under the Audit Law No. XIII-96 of 2017 and is operational for statutory audits. The Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM) is responsible for public oversight and conducts QA reviews of auditors and audit firms of public interest entities, while the Lithuanian Chamber of Auditors (LCA) organizes QA reviews for non-public interest entity audits under AAAPVIM oversight. Reviews are conducted at least every three years for auditors of large public interest entities and at least every six years for other public interest entity audits, while LCA is required to organize reviews so that all auditors and audit firms are reviewed at least once every six years.

Relevant standards (ISQM 1, 2, and ISA 220 (revised)) have been adopted for application and the AAAPVIM and LCA have updated QA documentation accordingly.

LCA reports that the QA review system in the jurisdiction is aligned with SMO 1 requirements.

Current Status: Adopted

The Audit Law No. XIII-96 of 2017 establishes initial professional development and continuing professional development requirements for statutory auditors in Lithuania. The Lithuanian Chamber of Auditors (LCA), under the oversight of the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), is responsible for administering professional examinations, practical experience requirements, and continuing professional development requirements for certified auditors. Candidates are required to hold a university degree, complete at least three years of practical experience, and successfully pass professional examinations covering accounting, auditing, ethics, taxation, law, and related subjects. Certified auditors are also required to complete 120 hours of continuing professional development over a rolling three-year period.

Other professional accountants are not regulated at the state level. The Lithuanian Association of Accountants and Auditors (LAAA) establishes voluntary initial professional development and continuing professional development requirements for members pursuing the Professional Accountant designation, including education, practical experience, examination, and continuing professional development requirements.

The jurisdiction-level framework incorporates requirements relating to entry, professional education, practical experience, assessment, and continuing professional development for statutory auditors. However, further clarification is required regarding the extent to which the most recent International Education Standards requirements have been fully adopted across the profession. Accordingly, IES are assessed as Partially Adopted.

Current Status: Partially Adopted

The Audit Law No. XIII-96 of 2017 requires statutory audits in Lithuania to be conducted in accordance with International Standards on Auditing (ISA) as issued by the International Auditing and Assurance Standards Board. The Ministry of Finance confirms that auditors must apply ISA when conducting audits of financial statements.

ISA for Audits of Financial Statements of Less Complex Entities has also been adopted for use in Lithuania.

Current Status: Adopted

In Lithuania, only certified auditors are mandated by the law to adhere to ethical requirements. The Audit Law No. XIII-96 of 2017 requires all certified auditors to follow the IESBA Code of Ethics for Professional Accountants.

The Audit Law also states that the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM), as the public oversight body, is to translate the IESBA Code and publish it on its website. As of the date of the assessment, the AAAPVIM has translated and published the 2023 International Code of Ethics.

In addition, while requirements for professionals other than auditors are not specified in the law, the Lithuanian Association of Accountants and Auditors (LAAA)—which unites accountants on a voluntary basis—reports that it has established and implemented a Code of Ethics for its members since 2006. Known as the Decalogue of LAAA Ethics Standards, the association reports that their Code was established in accordance with the IESBA Code of Ethics and has been updated over the years to continue following the IESBA Code of Ethics. LAAA members also adhere to the translated Code of Ethics published by the AAAPVIM.

Current Status: Partially Adopted

The Ministry of Finance is responsible for establishing public sector accounting and reporting requirements in Lithuania. Public sector entities are required to apply the Law on Public Sector Reporting and the Public Sector Accounting and Financial Reporting Standards.

Lithuania has applied accrual-basis public sector accounting since 2010. The Ministry of Finance states that the public sector accounting reform was designed to apply the accrual principle, and the International Public Sector Financial Accountability Index identifies Lithuania’s framework as accrual-basis standards based on International Public Sector Accounting Standards (IPSAS), modified for the national context.

As accrual-basis IPSAS modified for the national context have been adopted for public sector entities, IPSAS are assessed as Adopted.

Current Status: Adopted

In Lithuania, a mandatory I&D system for certified auditors has existed since 1999 based on the Audit Law No. VIII-1227 of 1999. In 2008, amendments to the Audit Law resulted in the sharing of responsibility for the implementation of the investigative and disciplinary (I&D) system between the Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM) and the Lithuania Chamber of Auditors (LCA).

Under the law, both AAAPVIM and LCA are empowered to initiate sanctions; however, in cases regarding audit quality, AAAPVIM has the authority to investigate all certified auditors (regardless of if the audit was for a PIE or non-PIE) and enforce disciplinary actions. In matters related to ethics and misconduct, LCA has established the Auditors’ Court of Honor which has the authority to issue sanctions. LCA reports that the enforcement system for auditors is aligned with the SMO 6 requirements.

In addition, while not required by law, the Lithuanian Association of Accountants and Auditors (LAAA)—which unites professional accountants on a voluntary basis—has also established an I&D system for its members. LAAA reports that the system corresponds with the requirements of SMO 6.

Current Status: Adopted

The Accounting Law No. IX-574 of 2001 sets the requirements for the preparation of corporate financial statements in Lithuania. The law outlines which accounting standards entities should apply based on their firm size and type: EU-endorsed IFRS or Lithuanian Business Accounting Standards (LBAS), which constitute the Lithuanian Generally Accepted Accounting Principle. The Ministry of Finance is responsible for developing accounting legislation and for establishing the LBAS.

EU-endorsed IFRS have slight modifications from IFRS (e.g., temporary 'carve-out' from IAS 39 Financial Instrument: Recognition and Measurement and a temporary extension of the scope of applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts) but according to the IFRS Foundation, the majority of companies can state full compliance with the IFRS.

The law requires all public interest entities (PIEs), defined by the EU as listed entities, credit institutions, insurance companies, and other national designated entities, to apply EU-endorsed IFRS in both the consolidated and separate company financial statements. The MoF has expanded the definition of PIEs to include banks, pension funds, brokerage houses, and state and government enterprises, among several other types of entities. All other companies including small and medium enterprises (SMEs) have the option to apply EU-endorsed IFRS or LBAS in both the consolidated and separate financial statements. IFRS for SMEs has not been adopted in Lithuania.

Current Status: Adopted

Relevant Organizations

Accountancy Europe

Authority of Audit, Accounting, Property Valuation and Insolvency Management (AAAPVIM)

International Forum of Independent Audit Regulators (IFIAR)

Lithuanian Association of Accountants and Auditors (LAAA)

Lithuanian Chamber of Auditors (LCA)

Ministry of Finance of the Republic of Lithuania

Relevant Legislation

Audit Law No. VIII-1227 of 1999

Law on Financial Accounting

Law on Public Sector Accountability

Relevant Publications

Accountancy Europe, Facts and Figures: Lithuania

Authority of Audit, Accounting, Property Valuation and Insolvency Management, Auditing Standards and Ethics Requirements

Authority of Audit, Accounting, Property Valuation and Insolvency Management, Audit Quality Reviews

IFRS Foundation, Use of IFRS Accounting Standards by Jurisdiction: Lithuania

International Public Sector Financial Accountability Index

Ministry of Finance of the Republic of Lithuania, Accounting Reform in Public Sector

Ministry of Finance of the Republic of Lithuania, Audit of Financial Statements