Overview of Accounting and Auditing in Jordan
In the Middle East, the Hashemite Kingdom of Jordan is bordered to the north by Syria, to the east by Iraq, to the south and east by Saudi Arabia, and to the west by Israel and the West Bank. With a population of almost 10 million, it covers a total surface of 89,342 square kilometres. The nation's capital is Amman. The profession of accounting and auditing is one of the most active and booming industries in Jordan. The Jordan Association of Certified Public Accountants (JACPA), which is in charge of standard-setting and overseeing the licensing of accountants and auditors, has established the rules under which this sector is governed. Jordan's accounting and auditing industry is essential to fostering the nation's economic climate. The International Standards on Auditing (ISAs), which are extensively used in numerous countries worldwide, are the auditing standards used in Jordan.
Accounting Standards in Jordan
Before 1997, Jordan lacked any formally recognized organisations in charge of establishing standards for accounting and auditing. Instead, with little input from the business sector, the government, more notably the Ministry of Industry and Trade, set the rules controlling accounting practices. International Accounting Standards adoption was encouraged by the Jordanian Association of Certified Public Accountants (JACPA) in 1990. It wasn't a necessity under the law at the time, though.
Due to the 1997 enactment of the Companies Law 22/1997, certain categories of Jordanian companies are required to prepare audited financial statements annually. Public shareholding corporations, limited liability companies, general partnerships, limited partnerships, private shareholding companies, and foreign businesses operating in Jordan are all covered by this requirement. All companies incorporated under the Companies Law must keep accurate accounting records and submit yearly audited financial statements per internationally recognized accounting and auditing principles.
Each company in Jordan is required to keep a set of records, which includes an account book, a stock inventory, and a register for company communication. These records must be written in Arabic or English and kept in domestic storage. The 42/1987 statute allowed for the creation of the Jordan Association of Certified Public Accountants (JACPA) in 1988 as a separate financial and administrative organization. It is authorised to function in compliance with all applicable laws and has the power to own tangible and intangible assets in order to accomplish its goals and execute its purpose.
Auditing Standards in Jordan
The legal framework of a country has an impact on how auditors are regulated there. The laws of Jordan, like those in other nations that use the code law system, define minimum standards and are frequently intricate and procedural in character. The 1997 Company Law serves as the main regulatory foundation for auditors.
When employed by a company, the auditor acts as an independent contractor and takes on responsibilities outside the scope of a traditional employee relationship. The auditor represents many stakeholders, including the shareholders of the company, and is tasked with defending their interests. The auditor must also evaluate the internal financial controls of the firm to make sure they are appropriate for the operation and will safeguard its assets.
Objectives of Audit
- Evaluate the veracity and correctness of financial records and statements.
- Assess if the relevant laws, rules, and accounting standards are being followed. Ensure the ownership and existence of assets and obligations.
- Determine possible hazards and internal control vulnerabilities and deal with them.
- Assure all interested parties that financial reporting is honest and transparent.
- Make suggestions for enhancing operational effectiveness and financial management.
Types of audits
- External Audit
An external audit is a neutral examination of a company's financial documents, reports, and accounting procedures carried out by a certified public accounting (CPA) firm or outside auditing company. An external audit's primary goal is to offer an objective evaluation of the authenticity, accuracy, and fairness of the company's financial data. This audit guarantees that the financial statements reflect the company's financial status fairly and accurately and have been produced in line with the relevant accounting rules. In order to establish trust in the company's financial reporting and to find any potential errors or anomalies, external audits are often directed by law or stakeholders.
- Internal Audit
A company's internal audit unit is in charge of assessing and enhancing the efficiency of its internal control systems, risk management, and governance procedures. Internal audits are carried out by the internal auditors who work within the organization. Their responsibility is to evaluate and analyze the business's operations, operations, and procedures in order to find opportunities for improvement. Internal audits are essential in assisting management in upholding openness, adhering to rules and laws, and improving overall organizational performance and efficiency.
- Statutory Audit
A company's financial records and statements must be audited as part of a statutory audit, which is carried out in accordance with the rules and regulations of the country in which the company conducts business. Government agencies frequently need these audits to make sure that businesses are keeping correct financial records, abiding by accounting principles, and paying their taxes. A statutory audit's goal is to reassure the public, stakeholders, and the government that the firm's financial data is accurate and compliant with generally accepted accounting standards.
- Investigative Audit
The purpose of an investigative audit, often called a forensic audit, is to look into particular charges of fraud, embezzlement, misconduct, or other financial irregularities inside an organization. The primary goal of this audit is to locate and gather information about the alleged problems so that it may be utilized as evidence in court or for internal disciplinary measures. To find the truth behind financial irregularities, investigative auditors use specialized expertise in forensic accounting and investigation methods.
Services Offered by Enterslice
In order to assist businesses with their accounting and financial reporting needs, ensure compliance with legislation, and improve financial performance, Enterslice offers a wide range of services. Included in these services are:
- Accounting and Reporting Services: Assisting in setting up efficient frameworks for accounting and reporting, emphasising encouraging transparency and well-informed financial decision-making.
- Financial Reporting and Auditing: Conducting in-depth audits of financial accounts to confirm correctness and adherence to accounting rules, providing insightful information that may be used to improve financial performance.
- Accounting Advisory: Accounting advisory services include managing regulatory changes, implementing new accounting standards, and providing advice on complex accounting issues.
- Monitoring Audit Services: Analyzing internal controls and legal compliance, pinpointing problem areas, and offering suggestions for increasing effectiveness.
- Compliance with Reporting Standards: Ensuring conformance with International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) for reporting purposes.
- Global Reporting: Assisting multinational corporations with meeting their obligations under various national laws, particularly those relating to consolidations, intercompany transactions, and international reporting requirements.
- Regulation Compliance: Providing knowledgeable guidance and help to clients as they navigate challenging regulatory regimes while conforming to relevant accounting and financial regulations.