2008年-世界发展银行全球_Bulgaria___Accounting_and_Auditing_30页_882kb

Summary of the REPORT ON THE OBSERVANCE OF STANDARDS AND CODES (ROSC) - Bulgaria

Core Content

This report evaluates the current state of accounting and auditing practices in Bulgaria, focusing on the alignment with International Financial Reporting Standards (IFRS), International Standards on Auditing (ISA), and EU regulations. It serves as an update to the 2002 A&A ROSC and highlights progress and remaining challenges in the sector.

Main Points

1. Regulatory Framework

• Statutory Basis: Bulgaria's legal framework for financial reporting, accounting, and auditing is based on the acquis communautaire (EU law) since its accession to the EU in 2007.
• Accounting Standards:
  • Large enterprises (those exceeding certain thresholds) must prepare financial statements in accordance with Endorsed IFRS.
  • Smaller entities can use either Endorsed IFRS or NFRSSME (National Financial Reporting Standards for Small and Medium-Sized Enterprises).
  • Governmental organizations use Bulgarian National Accounting Standards for the Public Sector, based on IPSAS (International Public Sector Accounting Standards).
• Auditing Standards:
  • All enterprises that issue public securities, banks, insurance and investment companies, and companies for additional social security must have their financial statements audited in accordance with ISA.
  • Compliance with these standards is required for entities meeting specific size criteria.

2. Progress on Previous Recommendations

3. Institutional Capacity

• Accounting Profession: Fragmented, with four different professional associations, resulting in low institutional capacity. No quality assurance, investigation, or discipline mechanisms are in place for accountants and financial statement preparers.
• Auditing Profession: Better organized with a single association (ICPAB) responsible for managing access, training, ethics, and quality control. However, membership is stagnant, and there are deficiencies in training, quality assurance, and public oversight.

4. Education and Training

• Professional education and training in international accounting and auditing standards require significant improvement.
• The need for training extends to universities, professional bodies, and government officials, including tax inspectors and financial supervisors.
• Training programs have been initiated for grandfathered auditors and for the Financial Supervision Commission, but they are not yet fully effective.

5. Financial Reporting Quality

• Financial statements are severely non-compliant with both Endorsed IFRS and NFRSSME.
• Auditing practices also show deficiencies, necessitating stronger enforcement and oversight.

6. Policy Recommendations

• Strengthen the monitoring, supervisory, and disciplinary regimes to ensure effective compliance with accounting and auditing standards.
• Improve professional education and training to align with international standards.
• Establish an oversight body to review and enforce accounting and auditing regulations.
• Ensure strict enforcement of the requirement to publish financial statements in the form they were audited.
• Implement severe penalties for erroneous and misleading annual reports.
• Enhance public oversight and quality assurance mechanisms for auditors.

7. Economic Context

• Bulgaria has a population of about 7.7 million, with 1.4 million in Sofia.
• The economy has grown steadily at 5%–6% annually from 2000 to 2007, driven by macroeconomic stability and increased foreign investment.
• FDI has exceeded 14% of GDP since 2004, with a significant portion in non-manufacturing sectors like real estate and construction.
• The banking sector has improved significantly due to stronger supervision and prudential rules, with a minimum capital adequacy ratio of 12% (well above the international standard of 8%).
• The insurance market is still underdeveloped but growing rapidly, with foreign ownership increasing in recent years.

8. Stock Market Development

• As of December 2007, there were 530 listed companies with a total market capitalization of EUR 14.8 billion.
• The market capitalization to GDP ratio increased from 4% in 2002 to 41% in 2007.
• Several IPOs and privatization efforts have taken place, contributing to the growth of the stock market.

Key Information

• The report was prepared by a World Bank team in June 2008, led by Luc Cardinal.
• Bulgaria has made significant progress in aligning its accounting and auditing framework with EU standards.
• Despite these improvements, many policy recommendations remain unimplemented or only partially implemented.
• Quality assurance, training, enforcement, and public oversight are critical for the future of the accounting and auditing profession in Bulgaria.
• The financial reporting environment needs further strengthening to ensure transparency and compliance with international standards.