Iranian accounting profession has been developing as rapidly as the
profession in Western countries in recent years. Industry figure
Gholamhossein Davani speaks with Carolyn Canham about the state of
the industry, its global successes and ambitions for the

The relationship between Iran and the West has produced news
headlines for decades. The most contentious recent issues have been
the republic’s nuclear programme and election results disputed
loudly both at home and abroad. But in the face of high-level
political wrangling, Iran’s accounting profession is moving ever
more closely in step with the rest of the world.

The Iranian
Accounting Association (IAA) is holding Iran’s second international
accounting conference in December, following a successful inaugural
event in 2008.

board member Gholamhossein Davani says the issues on the conference
agenda are similar to those reverberating around the rest of the
world. Specific areas to be covered include accounting education,
international accounting standards, corporate governance, corporate
social responsibility and capital markets development.

education is one area where Iran has particularly close
international ties. Davani lists at least three Iranian accounting
professors teaching in the US and the UK, including University of
Memphis professor Zabihollah Rezaee, who is expected to appear at
the upcoming conference.

The IIA is one
of three professional accounting bodies in Iran. The oldest is the
Iranian Institute of Certified Accountants (IICA), which was
established in 1972 by a group of Iranians who were members of UK
accounting institutes. The IICA is member of the International
Federation of Accountants (IFAC).

The second is
the official Iranian Association of Certified Public Accountants
(IACPA), which was established by the government in 1999 and is an
associate member of IFAC. The third is the IAA, which Davani
compares with the American Accounting Association in its role of
promoting excellence in accounting education, research and

currently has about 1,600 members. As of January 2008, it listed
173 registered member firms.

estimates there are about 45 active audit firms and the fee income
of the largest in 2008 was about $1.5 million. This minute size
reflects a profession that is heavily government-controlled and in
need of development.

Of the world’s
10 largest accounting networks, just four have member or
correspondent firms listed on their global websites. None of the
Big Four do.

Davani is
managing partner of Dayarayan Auditing & Financial Services, an
RSM International correspondent firm, which Davani says has been
the top ranking firm in terms of fee income twice in the past five

Davani explains
that prior to the Islamic Revolution in 1979, all the large
international organisations were represented in Iran. But following
the revolution, many private enterprises were confiscated or came
under direct government supervision. Subsequently, three audit
organisations were formed within the public sector to audit and
performing statutory services for these newly state-owned

A 1983 Act of
Parliament merged the three organisations and an earlier government
audit organisation to form the Audit Organization.

Today, the
Audit Organization is a financially independent legal entity
affiliated with the Ministry of Economic Affairs and Finance.
Davani says its revenue forms about 50 percent of the Iranian audit
market’s total revenue, which in 2008 was about $100

Davani says
audit fees in Iran are very low and the market needs support to
help it develop.

auditors have demonstrated, through the development of audit and
consulting practices and tax services lines, that they will
continue to invest in new service capabilities when they see
demand,” Davani says.

However, he
warns if audit policy does not change in line with wider
privatisation processes the nation will find it hard to compete

“Demand for
certified public accountants in Iran is progressive and the future
outlook for auditing and professional services depends on opening
the market to foreigners and international accounting firms,”
Davani says, adding there are many opportunities for the local
profession to partner with foreign investors to help build the
Iranian economy.

He estimates
the Iranian audit market has the potential to be worth more than
$200 million.

The Audit
Organization is also the official standard setter, authorising the
audit and accounting standards that the profession must follow.
Davani says accounting standards are about 95 percent in line with

One critically
important role for the audit and accounting profession moving
forward is fostering accountability, transparency and
responsibility. Davani says accountability in Iran is unfortunately
weak as 90 percent of the economy is in the hands of

“I believe all
governments try to run away from accountability and transparency,
especially when they are not accountable.

“However, I
think under-developed countries must support accounting and
auditing to fight with corruption and develop transparency to
stabilise accountable and responsibility,” he says.