Browse Profiles > Jordan > International Financial Reporting Standards
  Score Rank
Standards Compliance Index 27.50 out of 100 58
Business Indicator Index 9.15 out of 12 35
Jordan

International Financial Reporting Standards

Summary
In its 2004 assessment of accounting and auditing practices in Jordan, the World Bank said that Jordanian authorities expressed their intention to bring accounting standards in line with International Financial Reporting Standards (IFRSs) and have achieved significant results; however, major challenges remained. There is no legally established accounting and auditing standard setting body in Jordan and unregulated entities are not required to follow any specific accounting standards. For regulated entities, accounting and auditing requirements are set by the respective regulator - Jordan Securities Commission (JSC), Central Bank of Jordan (CBJ), and the Insurance Commission (IC) - which mandate the use of IFRSs. The lack of guidance on the implementation of IFRSs results in divergent actual practices as preparers of financial statements and auditors interpret the standards based on their understanding of the standards. In the case of the JSC, the applicable laws and directives state that if IFRSs contradict national legislation, the latter shall supersede. The World Bank also noted that the function of enforcing compliance with accounting requirements is not well coordinated between the regulatory bodies and recommended to focus on strengthening enforcement mechanisms to ensure compliance with the established accounting requirements.

    General Overview

    In its 2004 assessment of accounting and auditing practices in Jordan, the World Bank said that Jordanian authorities expressed their intention to bring accounting standards in line with International Financial Reporting Standards (IFRSs) and have achieved significant results; however, major challenges remained. It was recommended to focus on strengthening enforcement mechanisms to ensure compliance with the established accounting requirements. Overall, the World Bank noted that to fully implement IFRSs "a culture shift is required to reduce the influence of tax accounting on general-purpose financial statements" (WB 2004, p.1).
    The World Bank pointed out that at the time of the assessment there was "no legally established accounting and auditing standard setting body in Jordan" (2002, p. 8), and unregulated entities are not required to follow any specific accounting standards. For regulated entities, accounting and auditing requirements are set by the respective regulators - the Jordan Securities Commission (JSC), the Central Bank of Jordan (CBJ), and the Insurance Commission (IC) - which mandate the use of IFRSs. The lack of guidance on the implementation of IFRSs results in divergent actual practices as prepares of financial statements and auditors interpret the standards based on their understanding of the standards. The World Bank's 2004 ROSC also noted that in the case of the JSC, the applicable laws and directives state that if IFRSs contradict national legislation, the latter shall supersede.
    Under the Companies Law 22/1997, all public shareholding companies, general partnerships, limited partnerships, limited liability companies, private shareholding companies, and foreign companies must prepare annual audited financial statements which must be presented in accordance with "internationally recognized accounting and auditing standards" (WB 2004, p. 4).. Reporting requirements for companies regulated by the JSC are stipulated in the Jordanian Securities Commission Law 23/1997 and the Instructions for Disclosure, Accounting and Auditing Standards of Issuing Companies of 2004. The Banking Law 28/2000 requires that the financial statements of banks in Jordan should be prepared in accordance with the instructions of the CBJ which, in their turn, require application of IFRSs. The IC, established under the Insurance Regulatory Act 33 in 1999, regulates financial reporting requirements of insurance companies in Jordan. The IC issued instructions that regulate financial reporting and the implementation of the IAS/IFRS in the insurance sector (WB 2004).
    The World Bank's 2004 report on corporate governance also pointed out that the function of enforcing compliance with accounting requirements is not well coordinated between the regulatory bodies. The JSC reviews financial statements of listed companies, however the review focuses more on the form of the accounting requirements rather than on the substance. In addition to the "weak methodology" (p. 9), sanctions that the JSC imposes on the companies need to be more effective. The CBJ in ensuring compliance with applicable reporting requirements relies mostly on auditors. Under Article 61 of the Banking Law, the CBJ prepares a list of approved auditors. Failure of an auditor to report to the supervisor violations can result in his delisting. The IC's role in ensuring compliance with accounting and reporting requirements is similar to that of the CBJ.
    The Jordan Association of Certified Public Accountants and the Arab Society of Certified Accountants are members of the International Federation of Accountants (IFAC). (IFAC website)


    The Principles

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IFRS 2: Share-based Payment (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IFRS 3: Business Combinations (effective 2004)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IFRS 4: Insurance Contracts (effective 2006)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IFRS 7: Financial Instruments: Disclosures (effective 2007)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 1: Presentation of Financial Statements (effective 2007)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 2: Inventories (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 7: Cash Flow Statements (effective 1994)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 11: Construction Contracts (effective 1995)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 12: Income Taxes (effective 2001)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 14: Segment Reporting (effective 1998)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 17: Leases (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 18: Revenue (effective 1995)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 19: Employee Benefits (effective 2006)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 23: Borrowing Costs (effective 1995)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 24: Related Party Disclosures (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 28: Investments in Associates (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 31: Interests in Joint Ventures (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 33: Earnings per Share (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 34: Interim Financial Reporting (effective 1999)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 36: Impairment of Assets (effective 2004)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 38: Intangible Assets (effective 2004)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 40: Investment Property (effective 2005)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

    IAS 41: Agriculture (effective 2003)

    There is insufficient publicly available information as to Jordan's compliance with this principle.

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    Sources of Assessment

    Jordanian Association of Certified Public Accountants, "Response to the IFAC Part 2, SMO Self-Assessment Questionnaire," Self-assessment prepared as a part of the International Federation of Accountants' (IFAC) Member Body Compliance Program, December 2006. Available form International Federation of Accountants website. Accessed on June 8, 2007. (JACPA 2006)

    World Bank, "Hashemite Kingdom of Jordan: Report on the Observance of Standards and Codes: Accounting and Auditing," June 10, 2004. Available from World Bank website. Accessed on May 21, 2007. (WB 2004)

    Relevant Organizations

    Amman Stock Exchange (ASE)

    Arab Society of Certified Accountants (ASCA)

    Central Bank of Jordan (CBJ)

    Insurance Commission (IC)

    Jordanian Association of Certified Public Accountants (JACPA)

    Jordan Securities Commission (JSC)

    Ministry of Finance (MoF)

    Ministry of Industry and Trade (MIT)



    Relevant Legislation/Regulation

    Companies Law No. 22, 1997

    Securities Law No. 76, 2002

    Amman Stock Exchange By Law, 2004

    Jordanian Securities Commission Law No. 23/1997, 1997

    JSC Instructions for Disclosure, Accounting and Auditing Standards of Issuing Companies, 2004

    Disclosure and Accounting and Auditing Standards and the Conditions to be Fulfilled in Auditors of the Entities Subject to the Commission's Monitoring Instructions No. (1) for the Year 1998, 1998

    Insurance Regulatory Act No. 33, 1999

    Regulations of the Insurance Commission

    Banking Law No. 28, 2000



    Supplementary Sources

    Deloitte & Touche Tohmatsu IAS Plus website. Accessed on May 21, 2007. (Deloitte IAS Plus website)

    International Federation of Accountants website. Accessed on May 21, 2007. (IFAC website)
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