2014年-世界发展银行全球_Latvia___Report_on_the_Observance_of_Standards_and_Codes_on_Accounting_and_Auditing_67页_1mb

Summary of Latvia's Accounting and Auditing Practices (ROSC A&A 2014)

Core Content

This report, prepared by the World Bank in collaboration with the IMF, evaluates the current state of accounting and auditing practices in Latvia. It is part of the Reports on the Observance of Standards and Codes (ROSC) initiative and serves as an update to the 2005 assessment. The report highlights both the progress made and the challenges that remain in aligning Latvia's financial reporting and audit framework with EU requirements.

Main Viewpoints

1. Country Context and Corporate Sector

• Latvia, a small country in the Baltic region, regained independence in 1991 and joined the EU in 2004.
• The economy is dominated by the services sector, with financial services, transport, and communications contributing over 75% of GDP.
• Latvia has made significant strides in aligning its legal and institutional framework with EU standards, especially in the area of corporate financial reporting and auditing.

2. Institutional Framework

• The legal and institutional framework for accounting and auditing in Latvia is aligned with the EU acquis communautaire, particularly the Fourth and Seventh EU Company Law Directives.
• The Law on Sworn Auditors is based on the EU Statutory Audit Directive and requires auditors to apply International Standards on Auditing (ISA).
• The Ministry of Finance (MoF) oversees the quality assurance (QA) system for audits, which includes a monitored peer review system managed by the Latvian Association of Sworn Auditors (LASA).

3. Accounting Standards

• Latvia has abolished its previous accounting standards (LAS) and is now aligned with International Financial Reporting Standards (IFRS).
• The use of the Member State option in the IAS Regulation allows Latvia to extend IFRS requirements to legal-entity financial statements and other entities, such as banks and insurance companies.
• However, the accounting standards for non-public interest entities (non-PIEs) are not comprehensive enough, with some topics missing or lacking sufficient guidance.

4. Auditing Standards

• Auditing in Latvia is governed by ISA, which are translated and published by LASA.
• The implementation of ISA is challenging for small and medium-sized audit practices due to limited resources and technical expertise.
• The QA system for audits, particularly for PIEs, needs to be strengthened to be risk-based and more independent from the auditing profession.

5. Perception of Financial Reporting Quality

• Financial statements of banks and insurance companies are of high quality, while those of other companies show inconsistency.
• The electronic filing system does not allow full access to audited financial statements and audit reports, limiting transparency.

6. Areas for Consideration

• Aligning the statutory framework with the 2013 EU Accounting Directive and the 2014 amended Statutory Audit Directive and Audit Regulation.
• Enhancing the independence and capacity of the audit oversight system.
• Improving the risk-based approach of the QA system for PIEs.
• Making accounting standards for non-PIEs more comprehensive.
• Upgrading the electronic filing system to allow public access to full financial statements and audit reports.
• Strengthening the Financial and Capital Market Commission (FCMC) in monitoring and enforcing financial reporting requirements for listed companies.
• Establishing a mentor approval mechanism and verifying continuing professional development (CPD) hours.
• Implementing a centralized audit software project to support smaller audit practices.
• Encouraging demand for high-quality financial reporting and improving the qualifications of professional accounting organizations (PAOs).

Key Information

• Currency: Euro (EUR)
• Exchange Rate (as of September 12, 2014): 1 EUR = 1.29552 USD
• Population: Approximately 2.03 million
• GDP per capita (USD): 14,120
• EU Membership: Latvia joined the EU on May 1, 2004
• ROSC A&A: This is the second such report for Latvia, with the first published in 2005.
• ROSC Team: The report was prepared through a participatory process involving in-country authorities and stakeholders.
• Funding: Supported by the Swiss Enlargement Contribution and conducted by the World Bank's Centre for Financial Reporting Reform (CFRR).
• ROSC Purpose: To assess progress made over the past nine years and support Latvia's continued alignment with EU requirements, as well as foster the development of its private sector.

Annexes

• Annex 1: Status of Implementation of the 2005 A&A ROSC Policy Recommendations.
• Annex 2: Aligning Latvian Accounting Legislation to New Accounting Directive Requirements.
• Annex 3: Aligning Latvian Auditing Legislation to New EU Regulatory Framework on Statutory Audit.

Conclusion

While Latvia has made notable progress in aligning its financial reporting and auditing practices with EU standards, several challenges remain. These include the need for more comprehensive accounting standards, stronger enforcement mechanisms, and improved transparency in financial reporting. The report recommends a range of actions to enhance the quality of financial reporting and ensure continued alignment with EU requirements.