| Extent of IFRS application | Status | Additional Information |
|---|---|---|
| IFRS Accounting Standards are required for domestic public companies | Required for banks only. | |
| IFRS Accounting Standards are permitted but not required for domestic public companies | Permitted for all other companies. | |
| IFRS Accounting Standards are required or permitted for listings by foreign companies | Permitted. | |
| The IFRS for SMEs Accounting Standard is required or permitted | No. National accounting standards are used. | |
| The IFRS for SMEs Accounting Standard is under consideration | No. |
Profile last updated: 11 December 2020
RELEVANT JURISDICTIONAL AUTHORITY
Iraqi Union of Accountants and Auditors (IUAA).
Iraqi Association of Certified Accountants (IACA).
Iraqi Board of Accounting and Auditing Standards (IBAAS).
The IUAA is the professional accountancy body in Iraq.
The IUAA and the IACA are involved in the implementation of IFRS standards and in supporting and promoting adoption of IFRS Standards in Iraq.
The IBAAS is a professional body established by the office of the President in 1988 to provide the government with advice on financial services and to set National Accounting Standards (NAS).
COMMITMENT TO GLOBAL FINANCIAL REPORTING STANDARDS
Yes.
Yes for banks
Under the Iraqi Banking Law (2004), the general concept of applying ‘international accounting standards’ in banking institutions is mentioned (Article 42), but the adoption of IFRS Standards as the sole basis of accounting is not specifically required by this law. However, although it does not spell out the use of IFRS Standards, sub-section 1.c of Article 42 of the Iraqi Banking Law specifies that the principles and basis of accounting to be used in the preparation of financial statements must be in compliance with any special requirements stipulated by the Central Bank of Iraq (CBI). To this end, in 2016, the CBI issued a special instruction to banking institutions in Iraq mandating the use of IFRS Standards from 2016 as the form of ‘international accounting standards’ to be used by the Iraqi banking sector. Furthermore, in 2019, the CBI updated its 2016 requirement to apply IFRS Standards by requiring banks to adopt and comply with IFRS 9. In March 2020, the CBI issued an amended instruction comprising guidance on application of IFRS 9, stating that, ‘The Bank should calculate the impact of ECL allowance as at 1 January 2020 and provide an option to allocate the effect over 5 years starting from 2020’. Moreover, banks cannot distribute any dividends from 2019 unless they have deducted the 2020 share from ECL allowance (1/5 of the total effect of ECL allowance).
In 2004, the Iraqi Company Law (Number 21, 1997, phase 133) was amended and referenced the general concept of applying ‘international accounting standards’ in joint stock companies and private companies in Iraq. However, IFRS Standards are not specifically named in law. This has resulted in confusion regarding the basis of accounting and the legal requirement for adoption and implementation of IFRS Standards in Iraq. In practice, many Iraqi companies apply the standards promulgated by the Iraqi Board of Accounting and Auditing Standards (IBAAS). The IBAAS is a professional body established by the office of the President in 1988 to provide the government with advice on financial services and to set National Accounting Standards (NAS) and auditing standards. The IBAAS was the first semi-private accounting standard-setting body in Iraq. The NAS were initially modelled on International Accounting Standards (IAS Standards) and have sought to follow international standard-setting. However, there are significant differences between the NAS issued by the IBAAS and IFRS Standards.
EXTENT OF IFRS APPLICATION
For DOMESTIC companies whose debt or equity securities trade in a public market in the jurisdiction:
Permitted.
IFRS Standards are permitted as according to the Company Law and the Banking Law (2004), they are acceptable ‘international accounting standards’. Only banks are required to apply IFRS Standards as their basis of accounting as per the CBI special instruction of 2016 and amendments to this instruction of 2019 and 2020 (see above).
Permitted.
For FOREIGN companies whose debt or equity securities trade in a public market in the jurisdiction:
Permitted.
IFRS Standards are permitted as according to the Company Law and the Banking Law (2004), they are acceptable ‘international accounting standards.’ Only banks are required to apply IFRS Standards as their basis of accounting as per the CBI special instruction of 2016 and amendments to this instruction of 2019 and 2020 (see above).
IFRS ENDORSEMENT
Varies.
For banking institutions, it will state ‘in accordance with IFRS Standards’, as required by the CBI special instructions. For companies that choose voluntary adoption it will also state ‘in accordance with IFRS Standards’; however, for other companies it will state ‘in accordance with National Accounting Standards’.
Yes for banks.
Under the Iraqi Banking Law (2004), the general concept of applying ‘international accounting standards’ in banking institutions is mentioned (Article 42), but the adoption of IFRS Standards as the sole basis of accounting is not specifically required by this law. However, although it does not spell out the use of IFRS Standards, sub-section 1.c of Article 42 of the Iraqi Banking Law specifies that the principles and basis of accounting to be used in the preparation of financial statements must be in compliance with any special requirements stipulated by the Central Bank of Iraq (CBI). To this end, in 2016, the CBI issued a special instruction to banking institutions in Iraq mandating the use of IFRS Standards from 2016 as the form of ‘international accounting standards’ to be used by the Iraqi banking sector. Furthermore, in 2019, the CBI updated its 2016 requirement to apply IFRS Standards by requiring banks to adopt and comply with IFRS 9. In March 2020, the CBI issued an amended instruction comprising guidance on application of IFRS 9, stating that, ‘The Bank should calculate the impact of ECL allowance as at 1 January 2020 and provide an option to allocate the effect over 5 years starting from 2020’. Moreover, banks cannot distribute any dividends from 2019 unless they have deducted the 2020 share from ECL allowance (1/5 of the total effect of ECL allowance).
No for other companies.
In 2004, the Iraqi Company Law (Number 21, 1997, phase 133) was amended and referenced the general concept of applying ‘international accounting standards’ in joint stock companies and private companies in Iraq. However, IFRS Standards are not specifically named in law. This has resulted in confusion regarding the basis of accounting and the legal requirement for adoption and implementation of IFRS Standards in Iraq. In practice, many Iraqi companies apply the standards promulgated by the Iraqi Board of Accounting and Auditing Standards (IBAAS). The IBAAS is a professional body established by the office of the President in 1988 to provide the government with advice on financial services and to set National Accounting Standards (NAS) and auditing standards. The IBAAS was the first semi-private accounting standard-setting body in Iraq. The NAS were initially modelled on International Accounting Standards (IAS Standards) and have sought to follow international standard-setting. However, there are significant differences between the NAS issued by the IBAAS and IFRS Standards.
See above. IFRS Standards to date have been legally required by the Central Bank of Iraq through sub-section 1.c of Article 42 and the issuance of special instructions to apply IFRS Standards from 2016, with the addition of IFRS 9 from 2019.
