The workshop highlighted the opportunities for Turkmenistan to enhance the monitoring of economically important enterprises using improved financial reporting regulations and practices. This would help to ease the private sector's access to external finance and so contribute to economic growth. The conference was attended by senior government officials, officials from the National Bank of Turkmenistan and the Hydrocarbon Agency; experts from the World Bank; as well as members of the accounting and auditing professions and academia.
The Ministry of Finance expressed its appreciation to the experts from the World Bank who had prepared the report for their analysis of various accounting and audit issues and for their recommendations for improving the quality of financial reporting in Turkmenistan.
"The reform of corporate financial reporting is a precondition for sustainable growth, through improved monitoring and management of state owned enterprises, and enhanced growth of the private sector," said Pascal Frèrejacque, Senior Operations Officer at the World Bank's Centre for Financial Reporting Reform (CFRR) in Vienna. "It is not only a priority for Turkmenistan, but is also one of the top priorities of the G20 -- the group of countries that accounts for 75 percent of world output that was set up to address the consequences of the financial crisis. The breach of trust that characterizes the financial crisis can only be addressed by providing better financial information to economic agents so they can trust each other again."
"The enhancement of accounting and auditing practices is the shared responsibility of all stakeholders of corporate financial reporting: governments, financial sector supervisors, the accounting and auditing profession, universities and the users of financial statements," added Andrei Busuioc, Financial Management Specialist at the CFRR.
The report focuses on the strengths and opportunities for enhancement of the financial reporting framework and other aspects of the accounting and auditing environment that influence the quality of corporate financial reporting. It includes a review of both statutory requirements and actual practice.
The report recommends that Turkmenistan consider developing a three-tier financial reporting framework. In the recommended structure public-interest entities, mainly banks, insurance companies and the largest state-owned enterprises, would apply International Financial Reporting Standards (IFRS); small and medium-sized enterprises (SMEs) would use national accounting standards; and the very smallest ("micro") enterprises would only need to comply with national tax rules.
The demand for accounting and auditing professionals knowledgeable in international financial reporting and auditing standards will grow substantially in the next few years and, therefore, education and professional training efforts should be increased. However, the resulting increase in capacity of the auditing profession should be directed to enterprises that need their services, mainly public-interest entities, and statutory audit requirements should take account of the level of public interest in conducting an audit.
The A&A ROSC report contains recommendations related to the statutory framework, financial reporting and accounting standards, auditing standards, systems of monitoring and enforcement, professional standards and ethics, and education and training. The recommendations aim to enhance the financial reporting process in accordance with international experience and good practice, while taking account of Turkmenistan's specific circumstances.
The report was prepared on the basis of a study carried out in Turkmenistan by a team from the World Bank in 2009 and finalized with the Turkmen authorities in June 2010. The review was conducted through a participatory process involving a range of stakeholders in cooperation with the Ministry of Finance.