Skip to main content

Palestine

Member Organizations

  Member Organization   Associate

  Palestinian Association of Certified Public Accountants

 

Legal and Regulatory Environment

  • Overview of Statutory Framework for Accounting and Auditing

    Accounting Framework

    In accordance with the Securities Law No. 12 of 2004 and its amendments, entities subject to the regulations of the Palestinian Monetary Authority (PMA) and Palestinian Capital Markets Authority are required to follow IFRS and make their financial statements available to the public. These entities include banks and other financial institutions, insurance companies, and listed companies.

    For all other private companies, the Companies Law No. 12 of 1964 stipulates financial statements be prepared in accordance with “internationally accepted standards.” PMA drafted amendments to the Companies Law clearly specifying the use of IFRS. The draft amendments were approved on January 27, 2019, requiring the adoption of IFRS and IFRS for SMEs.

    Auditing Framework

    The Companies Law No. 12 of 1964 outlines mandatory audit requirements for entities in Palestine but does not specify applicable auditing standards. Similarly, the Palestinian Capital Market Authority, Palestinian Stock Exchange, and the Palestinian Monetary Authority stipulate in their respective regulations that the audits of the financial statements of entities within their purview should be performed using international auditing standards, but the standards are also not specified. Amendments that were approved on January 27, 2019, require the adoption of ISA as issued by IAASB in conducting audits.

  • Regulation of Accountancy Profession

    Certified Public Accountants (CPAs) are regulated by two bodies: the Board of Professional Auditing (BPA) and the Palestinian Association of Certified Public Accountants (PACPA). Other segments of the profession, such as bookkeepers, can join PACPA voluntarily and be subject to its regulations. The Palestinian Association of Certified Public Accountants (PACPA) requires other segments of the profession to complete a university degree in accounting or related discipline. They are not required to pass any qualification examination to apply for membership at PACPA as Associate members.

    Only CPAs can practice as auditors. For an individual to offer auditing services in the jurisdiction, they must (i) obtain a university degree in accounting or related discipline; (ii) complete at least five years of practical experience in auditing; (iii) pass the CPA examination set by the BPA to receive the CPA qualification; (iv) obtain a license to practice as an auditor from the BPA; and (v) become a member of PACPA.

    The BPA, which was established in accordance with Auditing Profession Law No. 9 of 2004, has the following regulatory responsibilities: (i) award licenses for the practice of auditing in the jurisdiction; (ii) draft regulations for the implementation of the law; (iii) verify fulfillment of initial professional development requirements and conduct the CPA examinations that must be passed to receive the CPA qualification and be granted an audit license; (iv) keep a record of licensed practicing and non-practicing auditors; (v) levy disciplinary penalties on auditors who violate regulations; and (vi) may set continuing professional development requirements.

    As mentioned above, auditors must be members of the national professional accountancy organization—PACPA—and therefore, must adhere to its rules and regulations. In accordance with Article 25 of the Auditing Profession Law No. 9 of 2004, PACPA has the authority to: (i) maintain an audit license registry; (ii) investigate and discipline members for non-compliance with applicable rules, regulations, the code of ethics, practicing without a license, and breaches of professional conduct subject to the final approval by the BPA if the sanction is suspension or expulsion; and (ii) establish and operate a quality assurance review system. Additionally, PACPA sets continuing professional development requirements for its members.

    Auditors of regulated entities, which include financial institutions, insurance companies, and listed companies, are subject to additional regulation. The Palestinian Capital Market Authority (PCMA), the Palestinian Monetary Authority (PMA), and the Palestinian Stock Exchange regulations include stipulations on possible enforcement actions as well as the approval, appointment, and dismissal of auditors, who must be CPAs registered with PACPA. In addition, the PMA and PCMA Codes of Corporate Governance specify audit partner (or staff) rotation every five years for the audit of banks, listed companies, and insurance companies.

  • Audit Oversight Arrangements

    There are no independent audit oversight arrangements in Palestine. Auditors are regulated by two bodies: the Board of Professional Auditing (BPA) and the Palestinian Association of Certified Public Accountants (PACPA). To practice auditing in the jurisdiction, individuals must be qualified as a Certified Public Accountant (CPA), obtain a license from the BPA, and then become a member of PACPA. Please refer to the Regulation section for further details.

  • Professional Accountancy Organizations

    Palestinian Association of Certified Public Accountants (PACPA)

    The PACPA was established in 1995 under a license (No. 5026) from the Ministry of Interior and membership is mandatory for practicing Certified Public Accountants that are licensed auditors and for audit firms. Other segments of the profession may choose to voluntarily join PACPA and be subject to its rules and regulations.

    In accordance with Article 25 of the Auditing Profession Law No. 9 of 2004, PACPA has the authority to: (i) maintain an audit license registry; (ii) investigate and discipline members for non-compliance with applicable rules, regulations, the code of ethics, practicing without a license, and breaches of professional conduct subject to the final approval by the BPA if the sanction is suspension or expulsion; and (ii) establish and operate a quality assurance review system.

    In addition to being a Member of IFAC, PACPA is a Member of the Arab Federation of Accountants and Auditors and the Mediterranean Federation of Certified Accountants.

 

Adoption of International Standards

  • Quality Assurance

    The Palestinian Association of Certified Public Accountants (PACPA) is responsible for the implementation of a quality assurance (QA) review system in accordance with Auditing Profession Law No. 9 of 2004 and PACPA’s bylaws. PACPA reports that it developed a mandatory QA review system that fulfills SMO 1 requirements for all licensed auditors with assistance from a World Bank grant and the provision of technical support from an international expert.

    PACPA reports that the QA system has become fully operational in 2020, where more than 20 reviews were conducted for audit firms and individual practitioners. In 2022, PACPA conducted reviews for 24 individual practitioners and 4 audit firms on a risk-based approach and completed stage 2 of implementation (beginning of 2023) resulting in alignment with ISQM 1 and ISQM 2.

    Selections are conducted by the Quality Assurance committee on a risk-basis every 3 years for audit firms, and every 6 years for individual practitioners.

    Current Status: Adopted

  • International Education Standards

    Auditing Profession Law No. 9 of 2004 stipulates initial professional development (IPD) requirements for Certified Public Accountants (CPAs). To receive the CPA designation and offer auditing services, individuals are required to obtain a university degree in accounting or related discipline; complete at least five years of practical experience in auditing; and successfully pass an examination. For other segments of the profession, such as bookkeepers, the Palestinian Association of Certified Public Accountants (PACPA) requires them to complete a university degree in accounting or related discipline. They are not required to pass any qualification examination to apply for membership at PACPA as Associate members.

    The Ministry of Education and Higher Education is responsible for the accreditation and assessment of the university degree programs while the Board of Professional Auditing (BPA) is responsible for the verification of a candidates’ fulfillment of all IPD requirements. The BPA is also required to conduct professional examinations and has developed an examination curriculum. The BPA also adopted the IES 8 requirements for auditors.

    PACPA has established CPD requirements for its members, in line with 2019 IES, which include all auditors in the jurisdiction. Other segments of the profession, such as bookkeepers, may also voluntarily join PACPA and then must comply with its CPD requirements. As of the date of the assessment, PACPA members are required to attend a minimum of 90 cumulative training hours every three years. PACPA reports that its Continuing Education Committee monitors CPD fulfillment and does not renew licenses for those who are in non-compliance with the requirements. PACPA states that its Continuing Education Committee meets regularly to update its working procedures and strengthen its CPD program.

    In 2022, PACPA participated in the Middle East North Africa (MENA) IES project led by IFAC / IPAE which included a gap analysis against 2019 IES requirements and confirmed full alignment with the requirements at the jurisdiction level.

    Current Status: Adopted

  • International Standards on Auditing

    The Companies Law No. 12 of 1964 outlines mandatory audit requirements for entities in Palestine. The Board of Professional Auditing’s (BPA) approved amendments on January 27, 2019, which require adoption of ISA as issued by IAASB.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    The Companies Law No. 12 of 1964 outlines ethical requirements in Palestine. The Board of Professional Auditing’s (BPA) approved amendments on January 27, 2019, which require adoption of the International Code of Ethics as issued by IESBA.

    The Palestinian Association of Certified Public Accountants (PACPA) amended its own bylaws to require members’ adherence with the International Code of Ethics as issued by IESBA. The association’s membership is mandatory for all auditors in the jurisdiction and includes other segments of the profession, such as bookkeepers, that voluntarily decide to join.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    The Palestinian Ministry of Finance is responsible for issuing public sector accounting policies, which are implemented by the Palestinian National Authority.

    According to the IFAC/CIPFA International Public Sector Financial Accountability Index 2020, government entities are transitioning from cash-basis IPSAS to accrual-basis IPSAS. By 2030, national standards will be on a partial accrual basis (IPSAS modified for local context).

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Palestinian Association of Certified Public Accountants (PACPA) has the authority to operate an investigative and disciplinary (I&D) system to ensure its members comply with applicable rules, regulations, the code of ethics, and standards of professional conduct, in accordance with Auditing Profession Law No. 9 of 2004. In 2022, PACPA updated its self-assessment against SMO 6 requirements and reports that it operates an I&D system that incorporates all the requirements of SMO 6.

    PACPA is authorized to levy sanctions on all members for non-compliance. The institute is not allowed to expel or suspend members for non-compliance but may make recommendations to do so to the Board of Professional Auditing (BPA), which licenses individuals to practice auditing.

    The Auditing Profession Law No. 9 of 2004 grants authority to the BPA to carry out disciplinary procedures, which PACPA confirmed are operational and in line with SMO 6 requirements.

    Current Status: Adopted

  • International Financial Reporting Standards

    In accordance with the Securities Law No. 12 of 2004 and its amendments, entities subject to the regulations of the Palestinian Monetary Authority (PMA) and Palestinian Capital Markets Authority are required to follow IFRS and make their financial statements available to the public. These entities include banks and other financial institutions, insurance companies, and listed companies.

    For all other private companies, the Companies Law No. 12 of 1964 stipulates financial statements be prepared in accordance with “internationally accepted standards.” PMA drafted amendments to the Companies Law clearly specifying the use of IFRS. The amendments were approved on January 27, 2019, requiring the adoption of IFRS and IFRS for SMEs.

    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: 04/2023
We welcome feedback. Please email membership@ifac.org