Financial Reporting Framework in Iraq
Listed Companies
The Iraq Interim Law on Securities Markets (adopted 18 April 2004) requires IFRSs for all companies listed on the Iraq Stock Exchange as follows:
6) A Company with a class of securities admitted to trading on the Exchange pursuant to Section 3(5) shall be required to comply with the following requirements in order for such securities to continue to be admitted to trading from the opening of the Exchange onward. - The Company shall file with the Exchange and the Commission and make publicly available not later than 60 days after the close of each of the first three quarters of the Company's fiscal year unaudited, quarterly financial reports that include summary balance sheets as of the close of the quarter and the most recent fiscal year and comparative quarterly and year-to-date summary statements of income and cash flow through the close of the quarter and for the comparable prior year periods. The quarterly reports shall be prepared in accordance with such requirements as to form, content and applicable accounting standards, and accompanied by such management assurances and explanations, as the Exchange and the Commission may require by rule. For the purposes of this Law, the first unaudited quarterly financial report will be due 60 days following the close of the second quarter of 2004 (on or before August 31, 2004).
- The Company shall file with the Exchange and the Commission and make publicly available not later than 150 days after the close of the Company's fiscal year, financial statements that shall include a balance sheet as of the close of the fiscal year and statements of income, cash flow and changes in ownership equity for the fiscal year.
- Commencing with the annual report for the Company's 2004 fiscal year, the financial statements shall be presented on a comparative basis with financial statements for the preceding fiscal year pursuant to the following guidelines
- The financial statements included in the annual report shall be audited in accordance with international auditing standards by an independent auditor duly licensed in Iraq and shall be presented in accordance with international accounting standards to the extent permissible under the standards in force in Iraq.
- The financial statements shall be accompanied by a signed copy of the independent auditor's audit report indicating that they have been audited in accordance with international auditing standards to the extent permissible under the standards in force in Iraq and that they represent a true and fair view of the Company's financial results....
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Banks
The Banking Law was issued 7 June 2004. It is administered by the Central Bank of Iraq. The law brings Iraq's legal framework for banking in line with international standards, and seeks to promote confidence in the banking system by establishing a safe, sound, competitive and accessible banking system. Here is an excerpt from the Iraqi Banking Law:
Article 42 Principles for accounting and preparation of financial statements
1. Banks shall: - maintain proper books and records required for orderly operations in accordance with the provisions set out in Article 38;
- apply accountancy rules and systems in conformity with international accounting standards (IAS), including the use of full accrual accounting on a daily basis, and in compliance with any special requirements stipulated by the CBI in this regard; and
- prepare its financial statements comprising the balance sheet, profit and loss account, cash flow statement and statement of changes in the bank's capital account in an adequate manner that reflects the reality of the financial positions of the bank and its branches. The financial statements shall be prepared in accordance with international accounting standards (IAS) and in compliance with any special requirements stipulated by the CBI in this regard. The financial statements shall give a true and fair view of the state of affairs of the bank and shall include a statement on the bank's internal control systems.
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