2007年-世界发展银行全球_Georgia___Accounting_and_Auditing_33页_521kb

Summary of the REPORT ON THE OBSERVANCE OF STANDARDS AND CODES (ROSC) in Georgia

Core Content

The ROSC report on Georgia (2007) evaluates the current state of accounting, financial reporting, and auditing practices in Georgia, focusing on the need for reform to align with international standards and enhance the quality of financial information. The report is based on a diagnostic review conducted in February 2006 and draws on international experience, particularly from EU Member States, to make policy recommendations. The goal is to foster a transparent and reliable financial reporting environment, which will support sustainable private and financial sector growth and increase Georgia's access to global financial markets.

Main Viewpoints

• Accounting and Audit Reforms: Georgia has made progress in reforming its accounting and audit framework, but challenges remain in both the standards gap and compliance gap.
• Financial Sector Development: The financial sector, particularly the banking and insurance sectors, is growing but still underdeveloped due to limited local funding and access to foreign capital.
• Legal and Regulatory Framework: The current statutory framework is inconsistent and lacks effective enforcement mechanisms, which undermines the reliability of financial reporting.
• Professional Capacity: The accounting and auditing profession in Georgia is represented by the Georgian Federation of Professional Accountants and Auditors (GFPAA), but it lacks the capacity and resources to fully support the profession and ensure compliance with international standards.
• Education and Training: There is a significant need to improve the education and training of financial statement preparers, including chief accountants, to enhance understanding and application of IFRS and ISA.

Key Information

I. Institutional Framework

• Georgia's legal framework for accounting and financial reporting includes the Law on Entrepreneurs and the Accounting Law (1999).
• The Law on Entrepreneurs outlines simplified financial reporting requirements for small enterprises (those with fewer than 20 employees and annual turnover below GEL 500,000).
• Joint Stock Companies (JSCs) and Limited Liability Companies (LLCs) are the primary types of commercial enterprises, with JSCs generally required to have more complex financial reporting and governance structures.
• The Accounting Law and its supplements (Regulation No. 9 and Regulation No. 11) create a standards gap, as the IFRS version in Georgia is outdated compared to full IFRS.

II. Accounting Standards

• Standards Gap: There is a gap between the legal IFRS and full IFRS due to outdated translations and the lack of a comprehensive adoption process.
• Compliance Gap: Compliance with IFRS is generally low, especially in the non-banking sector, due to a lack of understanding and training.
• Recommendations:
  • Define companies required to use IFRS as public interest entities (PIEs).
  • Enhance the translation process for IFRS to ensure timely and accurate updates.
  • Improve the education and training of financial statement preparers.
  • Revisit the relationship between IFRS and prudential reporting requirements in the financial sector.

III. Auditing Standards

• Standards Gap: Small and manageable, due to delays in translating ISA.
• Compliance Gap: Significant, with compliance with ISA limited to a few leading audit firms.
• Recommendations:
  • Develop a Georgian language ISA-compliant audit methodology and manual.
  • Enhance the translation process for ISA.
  • Implement external quality assurance monitoring for auditors.
  • Establish an effective investigation and disciplinary system for auditors.
  • Ensure that the draft Law on Accounting and Audit is consistent with new regulations.

IV. Monitoring and Enforcement

• Regulatory bodies such as the National Bank of Georgia (NBG), National Securities Commission (NSC), and State Insurance Supervision Service (SISSG) have authority but lack the capacity and expertise to enforce compliance effectively.
• Recommendations:
  • Increase resources and expertise for regulatory authorities.
  • Ensure qualified audit opinions lead to investigations by relevant regulators.
  • Review and amend existing regulations to align with the draft Law.

V. The Accounting and Auditing Profession

• The GFPAA is the dominant professional organization, but it represents only about 10% of all accountants in Georgia.
• The GFPAA offers a Georgian language qualification based on the UK ACCA syllabus, but it takes up to seven years to complete.
• Recommendations:
  • Require professional organizations to register auditors in accordance with IFAC guidelines.
  • Establish a publicly available electronic list of certified auditors and audit firms.
  • Enhance training and qualifications to improve the skills and knowledge of accountants.
  • Coordinate with Georgian universities to align syllabuses and allow exemptions for relevant study.

VI. Education and Training

• The GFPAA is the main provider of accounting education in Georgia.
• The education and training system needs improvement to address the compliance gap.
• Recommendations:
  • Encourage retraining of financial statement preparers.
  • Enforce directors' responsibility for financial statements.
  • Provide affordable and accessible training for accountants in the private sector.
  • Improve the quality of the Georgian language ACCA qualification to match the international standard.

Policy Recommendations

1. Define PIEs: Companies using IFRS should be classified as public interest entities.
2. Enhance Standards and Compliance: Update and translate IFRS and ISA to ensure they are current and accessible.
3. Improve Education and Training: Develop and implement training programs to improve understanding and application of standards.
4. Strengthen Professional Oversight: Establish a professional organization that is a full member of IFAC and ensures quality control and registration of auditors.
5. Increase Regulatory Capacity: Provide resources and training to regulatory bodies to ensure effective monitoring and enforcement.
6. Promote Transparency: Ensure audited financial statements are publicly available in a timely manner.
7. Implement Quality Assurance: Introduce external quality assurance for auditors and a disciplinary system to maintain audit standards.
8. Coordinate with International Bodies: Align with international good practices and draw on EU experience in regulatory and professional development.

Conclusion

The ROSC report emphasizes the need for reforms in accounting and audit standards to enhance the quality of financial reporting in Georgia. These reforms will not only improve transparency and accountability but also support private and financial sector development and access to global markets. The success of these reforms depends on the cooperation of stakeholders, including the Government, regulators, and the accountancy profession, and the championing of reforms by senior officials.