Dushanbe, June 15, 2010 - The Ministry of Finance and the World Bank hosted today a conference to present the findings of the recently completed World Bank Accounting and Auditing Report on the Observance of Standards and Codes (A&A ROSC). The conference highlighted the opportunities for Tajikistan to enhance corporate financial reporting regulations and practices and consequently enhance access to finance. The conference was attended by senior Government and National Bank of Tajikistan officials; 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 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 to improve 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 makes 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 on 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 in not the responsibility of the government only. It is the shared responsibility of all stakeholders of 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.
“Reforms in the areas of corporate financial reporting will contribute to better access to finance,” as said by the Chief Financial Officer of one of the major European banks. “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, Country Officer of the World Bank.
The report focuses on the strengths and weaknesses 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 practice.
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, to ease the burden on them.
The increase in capacity of the auditing profession should be directed to enterprises that need their services, mainly public-interest entities. The number of accounting and auditing professionals knowledgeable in international financial reporting and auditing standards is still low and education and professional training effort 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 and deliver for Tajikistan a financial reporting platform conducive to sustainable corporate sector growth, 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 a team from the World Bank 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.