The Islamic Republic of Iran Audit Organization (IRIAO) sets the National Accounting Standards (NASs) in accordance with IFRSs (formerly known as the International Accounting Standards (IASs)), issued by the International Accounting Standards Board (IASB). IFRSs are being constantly revised to keep up with changes in global financial practices and trends. Consequently, to maintain the level of compliance, the IRIAO has also been introducing new projects for incorporating revisions into NASs. According to IRIAO website, as of August 2007, amendments of NASs aimed at harmonization with international standards were in process. On its website, in a chart comparing NASs and IFRSs, the IRIAO accounted for 9 NASs which made "minor departures" from the revised IASs, and 10 IFRSs that had not been adopted as of August 2007.

General Overview

The Commercial Code of 1932 requires financial statements of listed and private companies to be prepared in accordance with the National Accounting Standards (NASs) issued by the Islamic Republic of Iran Audit Organization (IRIAO).The Iran Daily newspaper report of October 2005 noted that, "[i]n the last two decades, the Audit Organization has taken various measures to enhance the accounting profession in Iran and harmonize it with global practices by translation of International Accounting Standards (IASs), preparation and publication of a number of text books complying with developed countries' accounting and auditing standards, issuing sets of accounting and auditing manuals for special topics and accounting and auditing guidelines, which are published at large." In a May 2007 query on self-assessment prepared for the International Federation of Accountants (IFAC), the Iranian Institute of Certified Accountants (ICA) noted that the IRIAO had established convergence of private sector accounting standards with IFRSs and other IASB pronouncements as a formal objective.

According to the IRIAO, NASs are based on the International Financial Reporting Standards (IFRSs), formerly known as the International Accounting Standards (IASs), issued by the International Accounting Standards Board (IASB). The Iran Daily reports that in 1999 a comprehensive set of accounting guidelines was issued for a two-year trial period. Review of comments and studies on accounting standards and supervision during this trial period led to the issuance of 22 accounting standards based on IASs effective from March 2001. A year later two more standards were adopted. IFRSs are being constantly reviewed and revised to keep up with changes in global financial practices and trends. Consequently, to maintain the level of compliance, the IRIAO has also been introducing new projects for incorporating revisions into NASs. As indicated on the IRIAO website, as of August 2007, amendments of NASs aimed at harmonization with international standards were in process. Seven other such projects were also in process, a few specifically addressed aspects of IFRS 4, IFRS 6, as well as IAS 16, IAS 32, IAS 36, and IAS 39. In a chart on comparison of NASs with IFRSs, the IRIAO accounted for 9 NASs which according to the website made "minor departures" from IASs and 10 IFRSs that had not been adopted at all.

According to the Iran Daily report of 2005, in 1983, the Iranian government ratified an act to merge three audit companies (that were created after the Islamic revolution of 1979 to examine and audit the newly nationalized enterprises) - as one audit company: the IRAIO. The same report noted that the Audit Organization's by-laws were approved by the Parliament in 1987 and the organization was established as a legal entity, with financial independence. It was affiliated to the Ministry of Economic Affairs and Finance (MEFA). The IAIRO's by-laws were further revised and approved by the Council of Ministers in 2003 to comply with Article 4 of the Third Economic, Social and Cultural Development Plan and the organization's legal status changed to State-Owned Limited Company.

In consultation with the Iranian Association of Certified Public Accountants (IACPA) and other regulatory bodies, the IRIAO issues standards and guidelines on accounting, auditing, code of professional ethics and also code of ethics for personnel in accordance with Islamic rule. As per the IRIAO website, the main objectives of the Audit Organization are: "(1) to provide government with basic needs in the field of auditing and specialized financial services for state owned and government supervised entities; (2) to set Accounting and Auditing Standards and Professional Ethics in compliance with Islamic Rules as well; and (3) research in scientific and practical methods of accounting to enhance accountancy compatible with country's needs."

The ICA is a full member of the International Federation of Accountants (IFAC) and the IACPA is an associate member of the IFAC (IFAC website).

The Principles

IFRS 1: First-time Adoption of International Financial Reporting Standards (effective 2006)

II

According to the comparison between NASs and IASs available on the IRIAO website, IFRS 1 has not been adopted in Iran. No further information as to Iran's compliance with IFRS 1 is publicly available.

IFRS 2: Share-based Payment (effective 2005)

II

According to the comparison between NASs and IASs available on the IRIAO website, IFRS 2 has not been adopted in Iran. No further information as to Iran's compliance with IFRS 2 is publicly available.

IFRS 3: Business Combinations (effective 2004)

II

According to NAS 19, the standard has been effective for all financial statements for the periods beginning on or after 20/3/2001, and, at the time of issuance, covered the requirements of IAS 22 Business Combinations. However, IFRS 3 superseded IAS 22 in 2004 and there is insufficient information publicly available as to Iran's compliance with this principle.

IFRS 4: Insurance Contracts (effective 2006)

II

According to the IRIAO website, as of August 2007, the project on amendment of accounting for life insurance activities was in process. However, there is insufficient information publicly available as to Iran's compliance with this principle.

IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective 2005)

II

According to the comparison between NASs and IASs available on the IRIAO website, IFRS 5 has not been adopted. No further information is publicly available as to Iran's compliance with this principle.

IFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

II

According to the IRIAO website, as of August 2007, the project on standards for accounting for oil and gas was in process. However, no further information is publicly available as to Iran's compliance with this principle.

IFRS 7: Financial Instruments: Disclosures (effective 2007)

II

According to the comparison between NASs and IASs available on the IRIAO website, IFRS 7 has not been adopted. No further information is publicly available as to Iran's compliance with this principle.

IAS 1: Presentation of Financial Statements (effective 2007)

II

As indicated in NAS 1 Presentation of Financial Statements, this standard has been operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 1. NAS 14 Presentation of Current Assets and Current Liabilities has also been operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001). According to NAS 14, at the time of issuance, execution of this standard covered the requirements of IAS 1. However, the IASB revised IAS 1 in 2003 and there is no further information publicly available as to Iran's compliance with IAS 1.

IAS 2: Inventories (effective 2005)

II

As indicated in NAS 8 Accounting for inventories, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements for IAS 2. However, the IASB revised IAS 2 in 2003 and there is no further publicly available information as to Iran's compliance with IAS 2.

IAS 7: Cash Flow Statements (effective 1994)

II

As indicated in NAS 2 Cash Flow Statements, this standard became operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 7. However, differences still existed.

IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

II

As indicated in NAS 6 Reporting Financial Performance, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements for IAS 8. However, the IASB revised this standard in 2003 and there is no further information as to Iran's compliance with IAS 8.

IAS 10: Events after the Reporting Period (effective 2005)

II

As indicated in NAS 5 Accounting for Events after the balance sheet date, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements for IAS 10. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 10.

IAS 11: Construction Contracts (effective 1995)

II

As indicated in NAS 9 Accounting for Long-term Contracts, this standard became operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 11.

IAS 12: Income Taxes (effective 2001)

II

According to the comparison between NASs and IASs available on the IRIAO website, IAS 12 has not been adopted. No further information is publicly available as to Iran's compliance with IAS 12.

IAS 14: Segment Reporting (effective 1998)

II

As indicated in NAS 25 Segment Reporting, this standard became operative for all financial statements covering periods beginning on or after 1/1/1381 (20/3/2002), and, at the time of issuance, covered the requirements of IAS 14. However, differences still existed.

IAS 16: Property, Plant and Equipment (effective 2005)

II

As indicated in NAS 11 Accounting for Tangible fixed assets, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 16. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 16.

IAS 17: Leases (effective 2005)

II

As indicated in NAS 21 Accounting for Leases, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 17. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 17.

IAS 18: Revenue (effective 1995)

EN

As indicated in NAS 3 Revenue, this standard became operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 18

IAS 19: Employee Benefits (effective 2006)

II

According to the comparison between NASs and IASs available on the IRIAO website, IAS 19 has not been adopted. No further information is publicly available as to Iran's compliance with IAS 19.

IAS 20: Accounting for Government Grants and Disclosure of Government Assistance (effective 1984)

EN

As indicated in NAS 10 Accounting for government grants, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements for IAS 20.

IAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

II

As indicated in NAS 16 Foreign Currency Translation, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 21. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 21.

IAS 23: Borrowing Costs (effective 1995)

EN

As indicated in NAS 13 Accounting for Borrowing Costs, this standard became operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 23.

IAS 24: Related Party Disclosures (effective 2005)

II

As indicated in NAS 12 Related Party Disclosures, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and at the time of issuance, covered the requirements of IAS 24. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 24.

IAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

EN

As indicated in NAS 27 Retirement Benefit Plans, this standard became operative for all financial statements covering periods beginning on or after 1/1/1384 (20/3/2005), and, at the time of issuance, covered the requirements of IAS 26.

IAS 27: Consolidated and Separate Financial Statements (effective 2005)

II

As indicated in NAS 18 Consolidated Financial Statements and Accounting for Investments in Subsidiaries, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements for IAS 27 with a few exceptions. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 27. The main difference between NAS 18 and IAS 27 was in the requirement relating to the accounting treatment of the debit balance of the minority interests account.

IAS 28: Investments in Associates (effective 2005)

II

As indicated in NAS 20 Accounting for Investments in Associates, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and at the time of issuance, differed in some aspects from IAS 28. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 28.

IAS 29: Financial Reporting in Hyperinflationary Economies (effective 1990)

II

According to the comparison between NASs and IASs available on the IRIAO website, IAS 29 has not been adopted. No further information is publicly available as to Iran's compliance with this principle.

IAS 31: Interests in Joint Ventures (effective 2005)

II

As indicated in NAS 23 Accounting for Joint Ventures, this standard has been operative for all financial statements covering period beginning on or after 1/1/1381 (20/3/2002), and at the time of issuance, covered the requirements for IAS 31. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 31.

IAS 32: Financial Instruments: Disclosure and Presentation (effective 2005)

II

According to the comparison between NASs and IASs available on the IRIAO website, IAS 32 has not been adopted. However, a project on accounting standards on financial instruments was in process. No further information is publicly available as to Iran's compliance with this principle.

IAS 33: Earnings per Share (effective 2005)

II

According to the comparison between NASs and IASs available on the IRIAO website, IAS 33 has not been adopted. No further information is publicly available as to Iran's compliance with this principle.

IAS 34: Interim Financial Reporting (effective 1999)

EN

As indicated in NAS 22 Interim Financial Reporting, NAS 22 became operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 34.

IAS 36: Impairment of Assets (effective 2004)

II

According to the comparison between NASs and IASs available on the IRIAO website, IAS 36 has not been adopted. No further information is publicly available as to Iran's compliance with this principle.

IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

EN

As indicated in NAS 4 Accounting for Contingencies, this standard became operative for all financial statements covering periods beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements of IAS 37.

IAS 38: Intangible Assets (effective 2004)

II

As indicated in NAS 17 Accounting for Intangible Assets, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements for IAS 38. However, the IASB revised this standard in 2003 and there is no further information publicly available as to Iran's compliance with IAS 38.

IAS 39: Financial Instruments: Recognition and Measurement (effective 2006)

II

According to the comparison between NASs and IASs available on the IRIAO website, the project on accounting standards on financial instruments was in process. However, there is no further information publicly available as to Iran's compliance with IAS 39.

IAS 40: Investment Property (effective 2005)

II

As indicated in NAS 15 Accounting for Investments, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and, at the time of issuance, covered the requirements for IAS 25 (later withdrawn by the IASB). There is no further information publicly available as to Iran's compliance with this standard.

IAS 41: Agriculture (effective 2003)

II

As indicated in NAS 26 Agriculture, this standard has been operative for all financial statements covering period beginning on or after 1/1/1380 (20/3/2001), and at the time of issuance, covered the requirements for IAS 41. However, differences still existed. There is no further information publicly available as to Iran's compliance with this standard.