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Browse Profiles > Morocco > International Standards on Auditing

	Score	Rank
Standards Compliance Index	45.83 out of 100	39
Business Indicator Index	6.90 out of 12	52

Morocco

International Standards on Auditing

Summary

Intent Declared

In 2002, the World Bank conducted an assessment of accounting and auditing frameworks in Morocco in order to evaluate their strengths and weaknesses and propose an action plan to improve existing practices. International Standards on Auditing (ISAs) were used as a benchmark for the evaluation of Moroccan auditing requirements. The World Bank concluded that Moroccan auditing standards, promulgated by the Certified Public Accountants Association (OEC) in 1998, are "largely consistent" with ISAs existing at the time of issuance of the Moroccan standards. However, they fail to incorporate certain ISA requirements, are less detailed, and do not cover all essential auditing topics. Moreover, the World Bank observed that the majority of chartered accountants do not follow existing Moroccan standards because of the lack of quality assurance mechanisms, regular professional training, and implementation guidelines. The World Bank recommended, among other things, full adoption of ISAs, complemented by standards specific for Morocco. On July 27, 2005 an EU-Morocco Action Plan was adopted pursuant to the EU Neighborhood Policy as a means to deepen the economic ties, which included gradual adoption of ISAs. In 2006, a subsequent European Commission Progress Report found that there had been little progress achieved in regards to building a modern legal and regulatory framework for auditing that would comport with EU Company Law. In a 2007 self-assessment prepared for the International Federation of Accountants, the OEC pointed out that although convergence of Moroccan auditing standards with ISAs has not been implemented, adoption of ISAs has been established as an objective and is expected to be implemented in the near future. A 2008 African Development Bank Appraisal Report noted that efforts had been made towards the preparation of an audit manual that complies with international auditing standards, although no further details were provided.

General Overview

From April to July 2002, at the request of the Moroccan authorities, the World Bank conducted a review of accounting and auditing practices in Morocco in order to evaluate the weaknesses and strengths of the accounting and auditing requirements, and to review the reporting requirements against actual practices. International Financial Reporting Standards (IFRSs) and International Standards on Auditing (ISAs) were used as the benchmarks for assessing national standards. The Report on the Observance of Standards and Codes (ROSC), published in July 2002 as a result of the assessment, contained a suggested reform agenda and a detailed action plan to improve the accounting and auditing framework in Morocco. According to the World Bank 2002 ROSC, auditing standards promulgated in 1998 by the Certified Public Accountants Association (OEC), which is listed as a member on the International Federation of Accountants' website, are "largely consistent" with ISAs existing at the time of issuance of the Moroccan standards. However, they fail to incorporate certain ISA requirements, are less detailed, and do not cover all essential auditing topics. Further, since the 2002 ROSC the International Auditing Assurances Board had revised ISAs. As far as the enforcement of the existing auditing requirements is concerned, the World Bank concluded, the majority of chartered accountants do not follow existing Moroccan standards because they lack mechanisms for quality assurance, systematic professional training, and implementation guidelines.

The World Bank commended the existing legal and regulatory framework in Morocco, which has significantly improved with the adoption of the Law on Corporations. It was noted that Morocco has "a strict legal and regulatory framework to ensure compliance" (p. 10). However, the report noted that certain problems still remain. In order to improve the legal and regulatory framework for auditing, the World Bank recommended that the existing Law on Corporations and other regulations be amended to introduce rules on incompatible activities and consolidated threshold. Furthermore, the Institute of Chartered Accountants should obtain additional resources to ensure compliance of its members with the auditing requirements. Audit requirements for banks are more advanced than the requirements for other financial companies because of inconsistencies between the Law on Corporation and the Law on Credit Institutions which, according to the World Bank, should be eliminated.

On July 27, 2005 an EU-Morocco Action Plan was adopted pursuant to the EU Neighborhood Policy as a means to deepen the economic ties, which included gradual adoption of ISAs. In 2006, a subsequent European Commission Progress Report detailing the developments since the action plan had been adopted found that there had been little achieved in regards to building a modern legal and regulatory framework for auditing that would comport with EU Company Law. In a 2007 self-assessment prepared for the International Federation of Accountants, the OEC pointed out that although convergence of Moroccan auditing standards with ISAs has not been implemented, adoption of ISAs has been established as an objective and is expected to be implemented in the near future. Further, the OEC reported that auditing standards for listed entities and non-listed entities in Morocco are the same. A 2008 African Development Bank Appraisal Report noted that efforts had been made towards the preparation of an audit manual that complies with international auditing standards, though it did not provide further detail.

The Principles

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