2006年-世界发展银行全球_Sierra_Leone___Accounting_and_Auditing_26页_439kb

Summary of the Report on the Observance of Standards and Codes (ROSC) in Sierra Leone: Accounting and Auditing

Core Content

This report assesses the current state of accounting and auditing practices in Sierra Leone in relation to International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA). It highlights the need for improving institutional capacity and regulatory frameworks to support high-quality financial reporting, which is essential for economic development and investment climate improvement.

Main Objectives

The report aims to:

• Analyze the compliance of accounting and auditing standards in Sierra Leone with international standards;
• Assess the strengths and weaknesses of the institutional framework that supports financial reporting;
• Provide policy recommendations for strengthening the corporate financial reporting regime in the country.

Key Findings

Accounting Standards

• There is no legal mandate for most corporate entities to follow IFRS or ISA, except for banks and similar financial institutions.
• The Companies Act (Cap 249) does not specify any particular accounting standards, but requires the preparation, presentation, and publication of financial statements.
• The format for financial statements and disclosures needs updating to align with international best practices.
• There is a lack of technical capacity in the Registrar General's Office to monitor and enforce accounting and auditing standards.
• Financial statements are often influenced by taxation rules rather than IFRS, leading to inconsistencies in financial reporting.
• Consolidated financial statements are not required by law, despite IFRS mandates, resulting in incomplete financial performance portrayals.

Auditing Standards

• The Auditor General oversees audits of state-owned enterprises (SOE), but lacks the technical capacity to ensure compliance with ISA.
• The Institute of Chartered Accountants of Sierra Leone (ICASL) does not enforce professional standards effectively and lacks a mechanism to monitor ethical compliance.
• Auditors are not required to follow a minimum fee schedule, leading to low audit fees and potential issues with audit quality.
• The audit market is dominated by large international firms, with limited audit coverage for small and medium enterprises (SMEs).
• There is a perception that auditors' involvement in tax advocacy threatens their independence.

Institutional Framework

Statutory Framework

• The Companies Act (Cap 249) is outdated and requires revision to incorporate updated financial reporting and auditing provisions.
• The Act mandates the preparation of financial statements but does not specify standards, leading to compliance gaps.
• The Bank of Sierra Leone (BOSL) mandates the application of IFRS for banks and non-bank financial institutions, but the prescribed formats are not fully aligned with IFRS.
• The Insurance Commission oversees financial reporting in the insurance sector but does not require the application of IFRS.

Professional Framework

• The ICASL is the self-regulatory body for accountants and auditors in Sierra Leone and is a member of IFAC and ABWA.
• The ICASL has 91 members, of which about 20% are in public practice.
• The ICASL Council governs the organization and is responsible for setting policies, training, and discipline.
• The lack of adequate technical resources and professional indemnity insurance hampers the effectiveness of the profession.
• Many auditors lack formal training and are not adequately prepared to apply IFRS and ISA in practice.

Policy Recommendations

The report recommends the following actions to improve the accounting and auditing environment in Sierra Leone:

• Improve Regulatory Capacity: Enhance the technical capabilities of regulators to ensure better monitoring and enforcement of accounting and auditing standards.
• Upgrade Accountancy Education and Training: Focus on practical application of IFRS and ISA in professional education.
• Issue Implementation Guidance: Develop and disseminate guidance to help entities understand and apply international standards.
• Establish Independent Oversight: Create a system for independent oversight of the auditing profession to ensure compliance with ISA.
• Simplify Reporting Requirements: Develop simplified financial reporting requirements for SMEs to improve accessibility and compliance.
• Revise Licensing Procedures: Improve the licensing process for professional accountants and auditors to ensure quality and integrity.
• Collaborate with International Bodies: Work with regional and international professional associations to enhance recognition and standards.
• Enhance Continuing Professional Development (CPD): Improve CPD programs to ensure ongoing compliance with professional standards and ethics.

These recommendations are intended to support the development of a comprehensive Country Action Plan to strengthen the institutional framework and improve the quality of corporate financial reporting in Sierra Leone.