Accounting and Auditing Report on the Observance of Standards and Codes in Tajikistan released
15 June 2010, Dushanbe
The Ministry of Finance and the World Bank Centre for Financial Reporting Reform hosted a conference on 15 June 2010 in Dushanbe to present the findings of the Accounting and Auditing Report on the Observance of Standards and Codes (A&A ROSC), which had recently been completed by the World Bank. The conference highlighted the opportunities for Tajikistan to enhance its corporate financial reporting regulations and practices and, as a result, to improve the ability of companies in Tajikistan to access external finance. The conference was attended by senior officials from the Government and the National Bank of Tajikistan; international experts from the World Bank; as well as private and financial sector companies, the accounting and auditing profession, and academia.
“On behalf of the Ministry of Finance, I would like to express our gratitude to the World Bank CFRR team of experts involved, during 2008-2009, in the preparation of this report, for their effort related to the analysis of various accounting and audit issues and also for their professional recommendations aimed at improving the quality of financial reporting in the Republic of Tajikistan”, said Mr.Radjabov Deputy Minister of Finance.
“Corporate Financial Reporting Reform is one of the top priorities of the G20 - the group of countries that produces 75 per cent of the world output and that was constituted to address the consequences of the financial crisis…. the breach of trust that characterizes the financial crisis can only be addressed by better financial information from economic agents so they can trust each other again” explained Pascal Frerejacque, Senior Operations Officer at the World Bank.
“The enhancement of accounting and auditing practices is not the responsibility of the government alone. It is the shared responsibility of all those who have a stake in corporate financial reporting: the government, prudential supervisors, the accounting and auditing profession, universities and the users of financial statements” said Andrei Busuioc, Financial Management Specialist at the World Bank Centre for Financial Reporting Reform.
“Reforms in the area of corporate financial reporting will contribute to better access to finance. As the Chief Financial Officer of one of the major European banks said: “If there is no transparency, there is no trust; if there is no trust there is no credit; if there is no credit there is no investment; and if there is no investment there is no growth, so financial reporting is an essential building block for financial intermediation, foreign investment, and sustainable economic development” concluded Zainiddin Karaev, Operations Officer of the World Bank.
The report focuses on the strengths and weaknesses of the elements of the financial reporting, accounting and auditing environment that influence the quality of corporate financial reporting, and includes a review of both statutory requirements and actual practices.
It finds that the use of International Financial Reporting Standards as issued by the International Accounting Standards Board should be limited to public-interest entities, mainly banks, insurance companies and the largest state-owned enterprises. The Tajik authorities should simplify the system for smaller enterprises in order to ease the burden on them.
The increase in the capacity of the auditing profession should be directed to enterprises which need their services, mainly public-interest entities. The number of accounting and auditing professionals with sufficient knowledge of international financial reporting and auditing standards is still low and the education and professional training effort to increase their number should be dramatically strengthened. A reporting mechanism from auditors to the Ministry of Finance is in place but quality assurance of the work of auditors should be developed. Financial statements are not publicly available, limiting the use which can be made of them.
The A&A ROSC report contains recommendations related to the statutory framework, financial reporting and accounting standards, auditing standards, monitoring and enforcement, the profession and ethics, and education and training. The recommendations aim to assist in enhancing the financial reporting process in accordance with international experience and good practice, taking account of local circumstances. This is only a first step; the major challenge is to transform such recommendations into real and effective reforms that will help to enhance the quality of corporate financial reporting so that Tajikistan has a financial reporting platform which is conducive to sustainable growth in the corporate sector, thus improving the economic situation for all Tajik citizens.
The report was prepared on the basis of the findings from a diagnostic review carried out in Tajikistan by the CFRR in December 2008 and finalized with the Tajik authorities through December 2009. The review was conducted through a participatory process involving various stakeholders in cooperation with the Ministry of Finance.