On 13 July 2014 the amended Law on Accounting (No. 47/NA, 2013) came into force. The new law prescribes accounting formalities for international legal entities. Passed by the National Assembly on 26 December 2013, the new law replaces the former Law on Accounting (No. 01/NA, 2 July 2007).
Improvement of Accounting Standards
The purpose of the Amended Law on Accounting is to improve the current accounting system in the Lao PDR and is part of a mandatory legislative reform process in preparation for the establishment of the ASEAN Economic Community (“AEC”) by 2015. Therefore, the new law aims to reform Lao Accounting Standards (“LAS”) so that they are aligned with International Accounting Standards (“IAS”) and International Finance Reporting Standards (“IFRS”). The former Law on Accounting only provided that the LAS should be in compliance with the IFLR and IAS. From now on, the Amended Law on Accounting permits entities in the Lao PDR to use IFRS in preparing and maintaining their accounting records. Previously, private entities doing business internationally had to use two types of accounting standards i.e. the LAS and IFRS.
Confirmation of the Use of Foreign and Lao Language and Currency in Accounting Reports
The previous Law on Accounting provided that accounting entries, books of accounts and financial statements must be prepared in Lao language and in Lao Kip unless governmental authorizations permitted otherwise. The Amended Law on Accounting affirms this provision, however an exception may be provided by the Ministry of Finance or the Bank of Lao PDR for the banking sector. In the event that financial reports are provided in a foreign language and currency, they must be coupled with a Lao Language and Lao Kip equivalent.