Auditing and Accounting Requirments:
Accounting and auditing
requirements are incorporated in the Code of Commerce and in the Charts of
Accountants. The company‚Äôs financial year is normally 12 months but may be
extended or shortened as is often the case during the first financial year. The
closing date is set in the company's Articles of Association. Businesses can
keep their records in Arabic, French or English. However, reporting must be
done in Arabic, English and French and financial statements must be in Lebanese
pounds. Although the holding and offshore companies can keep the records in a
foreign currency but they should submit their report in the Lebanese pounds.
Most accounting matters were codified by the General Accounting Plan published
through decree No. 4665 dated 26 December 1981.
REQUIRED BOOKS AND
The following accounting records should be kept:
- "General Journal" where daily entries are to be recorded. The
recording could be done on a monthly aggregate basis provided that permission
is obtained from the Finance Department concerned and that all supporting
documents and vouchers relating to the monthly transactions are kept for audit
- "General Ledger".
- "Commitments Book" in
which the obligations received, given or exchanged, are to be recorded.
- "Inventory Book" where inventory items, balance sheet and
profit and loss captions are to be recorded.
- Shares listing book (for SAL companies) The books mentioned in
(a), (c) and (d) above are statutory books. All pages of these books should
bear the seal of the Commercial Court or a Notary Public as the case may be.
SOURCES OF ACCOUNTING
Except where excluded by
law, the principle of prudence should be observed.
In accordance with Decree
No. 1/6258, dated 21 August 1996, International Accounting Standards were
applying to companies quoted on the stock exchange, then to banks and insurance
companies and finally by large companies followed by all others.
AND PRACTICES FUNDAMENTAL CONCEPTS
Accounting records should be kept on the historical cost
convention basis, except in the case of revaluation in accordance with the
The accounting records should be kept on the accrual basis.
Revenue and expenditure relating to a specific financial year should be
recognized in that year.
Consistency in accounting principles, presentations
and classifications should be observed. Any changes thereto should be for a
better presentation of the financial position and should be noted in the
financial statements along with the related effect on the financial and tax
positions. back to top
Financial statements should
be disclosed on an on-going concern basis. If another basis has been used, the
methods and the effect thereof on the financial position should be clarified in
the notes to the financial statements.
The financial statements should reflect
the comparative figures of the preceding year.
Accounting records should be
kept on the double entry book keeping system. They should be supported by documentary
evidence, be recorded in chronological order and be drawn up in a manner to
allow quick extraction of financial information required by General Accounting
Principles. back to top
ANNUAL AUDIT AND
Audited financial statements together with the auditor's report,
the directors or managers' report, and the directors' special reports
commenting on existing or planned agreements between the company and its
directors, must be submitted annually to the annual general assembly of the
shareholders or partners.
The audited balance sheet, names of the members of
the board of directors, managers, statutory auditors and court auditor are
required by law to be published in the Official Gazette, a business publication
and a daily local newspaper, within two months after the date of the annual
Tax return declaration must be submitted annually to the
Income Tax Department within five months after the end of the fiscal year.
(Three months in the case of sole proprietors or partnerships).
financial statements must also be submitted within eight months after the end
of the fiscal year (six months in case of partnerships).
Banks are closely
monitored by the Central Bank of Lebanon and the Banking Control Commission; as
such, both institutions must receive a copy of all audited financial
statements, including the short form report (opinion), a special report
concerning advances to directors and major shareholders and a special report
commenting on existing or planned agreements between the bank and its
directors. All of the aforementioned reports are submitted annually by the
auditors of the bank to the shareholders.
The Central Bank of Lebanon also
receives annually from the auditors a copy of the detailed audit report (long
form report), a letter regarding the various observations and recommendations
in respect of the audit (management letter).
The financial statements should
comprise the following:
- Balance Sheet
- Profit and Loss account (statements
of income and retained earnings)
- Statement of changes in financial position
d. Notes to the financial statements. back to top
Law No. 364 of 1 August
1994 governs the accounting profession in Lebanon. The Syndicate of Licensed
Accountants (Lebanese Association of Certified Public Accountants (LACPA) is
responsible for registering accountants and issuing practicing certificates.
qualify as a Certified Public Accountant, a person must hold a practicing Certificate
awarded by the above mentioned Syndicate, In order to audit & issue the
auditors report for the companies that are registered in Lebanon.