Browse Profiles > Jordan > International Standards on Auditing
  Score Rank
Standards Compliance Index 27.50 out of 100 60
Business Indicator Index 9.15 out of 12 34
Jordan

International Standards on Auditing

Summary
According to the World Bank's 2004 assessment of accounting and auditing practices in Jordan, the Jordanian authorities expressed their intention to bring auditing standards in line with International Standards on Auditing (ISAs) and have achieved significant results. Although application of ISAs is required for all listed companies, and many audit firms claim to be using ISAs, the applicable auditing standards are not specified. In 2003, a new Accountancy Profession Law 73/2003 established the High Council for Accounting and Auditing, which is responsible for the oversight of auditing profession and for approval of accounting and auditing standards. However, the World Bank noted that the Act fails to address a number of important issues, including auditor independence and enforcement mechanisms for compliance with applicable auditing standards and the code of ethics. Overall, the World Bank concluded that inadequate coordination between the regulatory bodies in regards of enforcement, the lack of sufficient knowledge of ISAs and availability of translations of ISAs result in partial compliance with existing auditing requirements. It was recommended to focus on strengthening enforcement mechanisms to improve the quality of information provided in the financial statements.

    General Overview

    In its 2004 assessment of accounting and auditing practices in Jordan, the World Bank concluded that Jordanian authorities expressed their intention to bring auditing standards in line with International Standards on Auditing (ISAs) and have achieved significant results; however, the lack of sufficient knowledge of ISAs and availability of translations of ISAs result in partial compliance with auditing requirements. 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... [and] the absence of any local requirement on applicable auditing standards and of an auditor's code of ethics has contributed to divergent audit practices" (p. 8). Only audits of listed companies are required to be conducted in accordance with ISAs.
    Under 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, according to the World Bank 2004 assessment, must be presented in accordance with "internationally recognized accounting and auditing standards" (p. 4). Reporting requirements for companies regulated by the JSC are stipulated in Jordanian Securities Commission Law 23/1997 and the Instructions for Disclosure, Accounting and Auditing Standards of Issuing Companies of 2004. Article 61 of Banking Law 28/2000 requires that auditors of banks should be pre-approved by the CBJ. The IC, established under the Insurance Regulatory Act 33 in 1999, regulates financial reporting requirements of insurance companies in Jordan. The IC requires the companies operating in the insurance sector to submit annual audited financial statements.
    The World Bank's 2004 assessment pointed out that the function of enforcing compliance with reporting 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 than on the substance. In addition to what the World Bank terms "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. Failure of an auditor to report violations to the supervisor 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 World Bank assessment recommended a focus on strengthening enforcement mechanisms to improve the quality of information provided in the financial statements.
    In 2003, a new Accountancy Profession Law 73/2003 established the High Council for Accounting and Auditing headed by the Minister of Industry and Trade (MIT), as well as an improved Jordanian Association of Certified Public Accountants (JACPA). The High Council is responsible for the oversight of auditing profession and for approval of accounting and auditing standards. The Council is not responsible for monitoring compliance with the accounting and auditing standards. The World Bank's 2004 assessment noted that the Act fails to address a number of important issues, including auditors independence and enforcement mechanisms for compliance with applicable auditing standards and the code of ethics.
    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

    ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

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

    ISA 210 Terms of Audit Engagements (effective 2006)

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

    ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

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

    ISA 230R Documentation (effective 2006)

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

    ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

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

    ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

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

    ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

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

    ISA 300 Planning an Audit of Financial Statements (effective 2004)

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

    ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

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

    ISA 320 Audit Materiality (effective 2004)

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

    ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

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

    ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

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

    ISA 500 Audit Evidence (effective 2004)

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

    ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

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

    ISA 505 External Confirmations (effective 2004)

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

    ISA 510 Initial Engagements — Opening Balances (effective 2004)

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

    ISA 520 Analytical Procedures (effective 2004)

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

    ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

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

    ISA 540 Audit of Accounting Estimates (effective 2004)

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

    ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

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

    ISA 550 Related Parties (effective 2004)

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

    ISA 560 Subsequent Events (effective 2006)

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

    ISA 570 Going Concern (effective 2004)

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

    ISA 580 Management Representations (effective 2004)

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

    ISA 600 Using the Work of Another Auditor (effective)

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

    ISA 610 Considering the Work of Internal Auditing (effective 2004)

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

    ISA 620 Using the Work of an Expert (effective 2005)

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

    ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

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

    ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

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

    ISA 710 Comparatives (effective 2004)

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

    ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

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

    ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

    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 July 9, 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 July 9, 2007. (WB 2004)

    Relevant Organizations

    Amman Stock Exchange (ASE)

    Arab Society of Certified Accountants (ASCA)

    Central Bank of Jordan (CBJ)

    Insurance Commission (IC)

    Jordan Securities Commission (JSC)

    Jordanian Association of Certified Public Accountants (JACPA)

    Ministry of Finance (MoF)

    Ministry of Industry and Trade (MIT)



    Relevant Legislation/Regulation

    Companies Law No. 22, 1997

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

    JSC 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, 1998

    Securities Law, No. 76, 2002

    Amman Stock Exchange By Law, 2004

    Insurance Regulatory Act, No. 33, 1999

    Regulations of the Insurance Commission

    Banking Law, No. 28, 2000



    Supplementary Sources

    Abdel-Qader, W., "An Evaluation of the International Auditing Standards and Their Applications to the Audit of Listed Corporations in Jordan," 2002. Available from University of Western Sydney website. Accessed on July 9, 2007. (Abdel-Qader 2002)

    Jordanian Association of Certified Public Accountants, "Assessment of the Regulatory and Standard-Setting Framework," Self-assessment prepared as a part of the International Federation of Accountants (IFAC) Member Body Compliance Program, January 2006. Available from International Federation of Accountants website. Accessed on July 9, 2007. (JACPA 2006)

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