2009年-世界发展银行全球_Bhutan_-_Report_on_the_Observance_of_Standards_and_Codes___Accounting_and_Auditing_44页_2mb

Bhutan Report on Observance of Standards and Codes (ROSC): Accounting & Auditing Summary

Core Content

This report, titled Bhutan Report on Observance of Standards and Codes (ROSC): Accounting & Auditing, was prepared by the World Bank in May 2009. It assesses Bhutan's accounting and auditing practices in relation to International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA), with the aim of improving financial reporting quality and aligning with international standards.

Main Points

1. Economic Context

• Bhutan has experienced rapid economic growth, with real GDP growing at an average of over 9% during the Ninth Plan period (2002–2006), exceeding the targeted growth rate of 8.2%.
• The economy is still largely dominated by the state, with a significant number of companies directly or indirectly owned by the Royal Government of Bhutan (RGoB).
• The government is pursuing a Gross National Happiness (GNH) policy, which emphasizes spiritual, cultural, and environmental development alongside economic growth.

2. Accounting & Auditing Framework

• Companies Act 2000 provides the legal framework for all companies in Bhutan.
• The Royal Audit Authority (RAA) is responsible for regulating auditors, but it lacks the capacity and mandate to effectively enforce standards.
• The Royal Securities Exchange of Bhutan (RSEB) is the sole stock exchange, with limited trading activity and no index.
• Druk Holding and Investments Limited (DHI) was established in 2008 to manage government-owned and controlled companies, aiming to enhance performance and shareholder returns.

3. Accounting Standards

• Bhutan currently lacks a well-defined accounting profession and proper education and training mechanisms.
• There is no formal adoption of IFRS, and the preparation of financial statements is not standardized or complete.
• The Royal Monetary Authority (RMA) has not established any accounting standards, leading to inconsistencies in financial reporting.

4. Auditing Standards

• The statutory auditor in Bhutan has a broad and onerous scope, including certification of financial statements, proprietary audit, performance audit, and compliance audit.
• Auditors are expected to provide subjective reports on various operational areas, which may compromise their independence and objectivity.
• Audit committees are required for financial institutions, but not for all corporate entities.

5. Compliance and Awareness

• There is a lack of awareness and compliance with international accounting and auditing standards.
• The private sector's contribution to economic growth is limited, and the country heavily relies on Indian accountants for corporate financial reporting and auditing.

Key Recommendations

• Establish an Accounting and Auditing Oversight Board (AASB) to:

  • Set, monitor, and enforce accounting and auditing standards.
  • Regulate auditors.
  • Conduct practice reviews of auditors for public interest entities.
  • Administer disciplinary actions in case of misconduct.
  • Review published financial statements for compliance with standards.

• Adopt IFRS for all listed companies and public interest entities, with a transition period of 4–5 years to allow for the development of necessary skills and resources.

• Implement IFRS for Private Entities for all other private entities, including medium and small enterprises, to meet the financial reporting needs of external users.

• Develop implementation guidelines to ensure standardized application of these standards.

• Improve professional education and training to strengthen the local accounting and auditing profession.

Institutional Framework

• Registered Entities:
  • 114 registered companies (106 active), including 59 private, 32 public, and 15 government companies.
  • 11,442 retail, wholesale, or micro trade registration certificates issued in 2007, up from 9,455 in 2006.
• RSEB:
  • Operates as a not-for-profit entity and is the sole stock exchange.
  • Limited trading activity, with no index and only equity shares and corporate bonds listed.
• Financial Institutions:
  • Two banks, one finance company, and one insurance company.
  • The banking sector's operating income accounts for 3.5% of GDP, while the insurance sector accounts for 0.3%.

Conclusion

The report highlights the need for a comprehensive reform of Bhutan's accounting and auditing standards and practices to align with international norms. It emphasizes the importance of professional development, standardization, and the establishment of an independent oversight body to ensure compliance and improve the quality of financial reporting in the country.

Key Information

• Currency Unit: Ngultrum (Nu.)
• Exchange Rate: US$1 ≈ Nu. 47.22
• Fiscal Year: July 1 – June 30
• ROSC-A&A Team: Pazhayannur K. Subramanian, Manoj Jain, Manvinder Mamak (Task Leader)
• Supporting Institutions: RGoB, RAA, RSEB, RMA, ICAI, DHI, etc.
• ROSC-A&A Objective: Improve financial reporting quality and attract foreign capital through transparency and accountability.