2002年-世界发展银行全球_Egypt_Arab_Republic___Accounting_and_Auditing_18页_408kb

Summary of the Report on the Observance of Standards and Codes (ROSC) - Egypt, Arab Republic

Core Content

This report, prepared by the World Bank in 2002, evaluates the state of accounting and auditing standards and practices in Egypt. It is part of a joint initiative with the International Monetary Fund (IMF) to assess compliance with international standards. The report identifies both progress made and significant gaps in the institutional and professional frameworks that support high-quality financial reporting.

Main Views

• Progress in Standards Alignment: Egypt has made notable strides in aligning corporate financial reporting with International Accounting Standards (IAS) and has drafted a new Accounting Practice Law that has not yet been ratified. This law aims to introduce professional qualification exams, enhance auditor independence, and create a council for accounting and auditing coordination.

• Existing Legal Framework: The current Accounting Practice Law 133/1951 is outdated and lacks mechanisms for ensuring auditor independence and continuing professional education. The new law, if implemented, could address these issues.

• Compliance and Enforcement: There is a lack of effective enforcement mechanisms to ensure compliance with accounting and auditing standards. The legal framework is vague regarding civil or criminal liabilities for misleading financial information, and sanctions for noncompliance are not well-defined or enforced.

• Capital Market Requirements: Listed companies are required to follow Egyptian Accounting Standards, and the new Listing Rules introduced in 2002 impose administrative penalties for noncompliance, including fines and potential delisting. However, these rules are not consistently enforced.

• Banking Sector: The Central Bank of Egypt requires banks to follow its accounting guidelines, but lacks a mechanism to verify compliance with general-purpose financial reporting standards. It does not impose effective sanctions on non-compliant auditors.

• Professional Bodies: The Egyptian Society of Accountants and Auditors (the Society) plays a key role in setting standards but lacks a disciplinary committee and does not enforce continuing professional education. This leads to a lack of awareness among auditors about international best practices.

• Education and Training: Public university accounting programs are criticized for outdated curricula, insufficient teaching staff, and lack of international standards. Private universities offer better-quality programs, but their high tuition fees limit access to the broader population. The Society has initiated training programs for candidates, but these are limited to a few elite members.

• Auditor Independence and Liability: Auditors are not required to pass qualifying exams for registration, and audit firms are not liable for errors made by individual partners. This creates a risk of compromised audit quality.

Key Information

I. Institutional Framework

• Accounting Practice Law: A new law has been drafted for about five years, but not yet ratified. It includes provisions for professional qualification exams, audit firm recognition, and a council for coordination.

• Company Law 159/1981: Requires all companies to prepare audited financial statements. Listed companies must file with the Capital Market Authority and publish financial statements in newspapers.

• Capital Market Law 95/1992: Mandates the use of Egyptian Accounting Standards for listed companies. In the absence of such standards, IAS apply.

• Banking Law: Requires banks to follow Central Bank of Egypt guidelines and Egyptian Accounting Standards. Two licensed auditors must audit bank financial statements, and individual auditors are restricted to signing reports for only two banks per year.

• Central Auditing Organization (CAO): Oversees audits of state-owned enterprises and government entities. It has made progress in harmonizing public sector standards with international ones but needs strengthening.

II. Professional Education and Training

• Public Universities: Lack modern curricula, sufficient teaching staff, and appropriate learning materials. This results in poor understanding of international standards among graduates.

• Private Universities: Offer better-quality programs but are inaccessible to most due to high tuition fees. Graduates are often employed by multinational organizations rather than in the public sector.

• Apprenticeship Requirements: The current system does not ensure adequate practical training. Trainees are registered based on employer letters, without verification of actual audit experience.

• Continuing Professional Education (CPE): Not required for licensed auditors or Society members. International best practices suggest at least 30 hours of CPE annually.

III. Standard Setting

• Standard Development Process: Egyptian accounting and auditing standards are developed by the profession, discussed by a ministerial committee, and issued via ministerial decrees.

• Egyptian Standards on Auditing (ESAs): Only cover reporting issues and not the broader International Standards on Auditing (ISA). The preface to ESAs states that ISA should be followed in their absence.

IV. Compliance and Enforcement

• Lack of Effective Enforcement: No clear sanctions or penalties for non-compliance with accounting and auditing standards. The Capital Market Authority and Stock Exchange have limited power to enforce compliance.

• Regulatory Limitations: The Capital Market Authority reviews financial statements but focuses on timely filing rather than substantive compliance. The Stock Exchange has no authority to regulate financial reporting.

• Need for Institutional Oversight: The report recommends establishing an accounting and auditing oversight body to monitor auditors' activities and ensure compliance with high-quality financial reporting standards.

Policy Recommendations

• Legislative Reform: Issue a modern legislative framework that includes an appropriate regulatory framework for auditors, continuing professional education requirements, and a mechanism for enforcing compliance with accounting and auditing standards.

• Professional Development: Upgrade professional education and training programs, particularly in public universities, to include international standards and practices.

• Auditor Qualification and Independence: Implement a qualifying examination for auditor licensing and ensure auditors' independence through effective dispute resolution mechanisms.

• Institutional Strengthening: Establish an independent oversight body to monitor the quality of financial reporting and enforce compliance with standards.

• Enhanced Enforcement: Develop a comprehensive action plan for accountancy reform and ensure that all stakeholders, including the Ministry of Finance, the Capital Market Authority, and the Central Bank of Egypt, have clear roles and responsibilities in enforcing standards.

• Ethical Standards: Develop and enforce a modern code of ethics for auditors and accountants in line with international best practices, such as the IFAC Code of Ethics for Professional Accountants.