2007年-世界发展银行全球_Malawi___Accounting_and_Auditing_29页_489kb

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

Executive Summary

The Report on the Observance of Standards and Codes (ROSC) in Malawi evaluates the current state of accounting and auditing standards and practices in the corporate sector. The report is part of a joint initiative by the World Bank and IMF aimed at strengthening financial systems through compliance with international standards.

Malawi's long-term vision, as outlined in the Malawi Growth and Development Strategy (MGDS), is to transform the country from a consumption-based to a production-based economy. This requires improving corporate financial transparency to attract both local and foreign investments.

The Society of Accountants in Malawi (SOCAM) has adopted International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA) for corporate financial accounting and auditing. However, there are significant compliance gaps due to the absence of comprehensive implementation guidance and the onerous nature of IFRS for SMEs.

The corporate financial reporting regime in Malawi is weakened by several factors, including out-of-date requirements in the Companies Act, lack of an effective oversight institution, poor technical and resource capacity of regulators, weaknesses in professional education and training, and inadequate technical capacity of SOCAM to function as an effective accountability body.

The report recommends several policy actions, including:

• Reviewing the Companies Act to ensure it provides up-to-date financial reporting requirements and flexibility for updates.
• Reorganizing the Malawi Accountants Board (MAB) into an effective independent oversight institution.
• Implementing simplified financial reporting requirements for SMEs while requiring public interest entities to apply IFRS.
• Enhancing the technical capacity of SOCAM to support international standards.
• Supporting education and training institutions such as the Department of Accountancy and Malawi College of Accountancy with resources and faculty development.

A Country Action Plan (CAP) will be developed and implemented based on these recommendations, following a final consultation workshop in Blantyre in June 2007.

Key Findings and Challenges

1. Accounting Standards

• SOCAM has adopted IFRS and ISA for corporate financial reporting.
• The Companies Act does not mandate the use of IFRS or GAAP, but requires financial statements to show a true and fair view.
• IFRS is not suitable for SMEs due to its complexity and cost.
• The Companies Act lacks up-to-date guidance on financial statement presentation, including the absence of a requirement for cash flow statements and statement of changes in equity.
• The Registrar of Companies struggles with capacity constraints, leading to incomplete or delayed filings of financial statements.
• The Public Accountants and Auditors Act sets registration requirements for accountants, including age, residency, and qualifications.
• The Malawi Accountants Board (MAB) is not effectively regulating the profession due to lack of professional officers and dominance of practicing members on the board.

2. Auditing Standards

• The Companies Act requires audited accounts and sets legal provisions for auditor responsibilities.
• Auditors are expected to act faithfully, diligently, and skillfully, with no legal exemption from these duties.
• There is no coordination between the Registrar and the Reserve Bank of Malawi to ensure consistency in financial reporting.
• The Malawi Stock Exchange (MSE) requires listed companies to prepare IFRS-compliant financial statements and audited reports, but there is no legal requirement for IFRS in the Capital Market Development Act.
• The draft Financial Services Bill (2007) is expected to bring micro finance institutions, pension funds, and co-operatives into the regulated sector, but it does not require IFRS application for these entities.

Policy Recommendations

• Update the Companies Act to reflect modern financial reporting standards and provide flexibility for future updates.
• Strengthen the regulatory functions of the Malawi Accountants Board (MAB) by reorganizing it into an independent oversight institution.
• Require public interest entities to apply IFRS, while SMEs should be allowed to use simplified financial reporting requirements.
• Enhance the technical capacity of SOCAM to support international standards and serve as a professional accountability body.
• Support education and training institutions with teaching materials and faculty development to improve the quality of graduates and research in the profession.

Institutional Framework

• The Public Accountants and Auditors Act establishes SOCAM and MAB as key regulatory bodies.
• The Malawi Accountants Board is composed of nine members, with four appointed by the Ministry of Finance and five by SOCAM, giving SOCAM de facto control over MAB.
• The Capital Market Development Act allows the Reserve Bank of Malawi (RBM) to regulate capital markets, but does not require IFRS for listed companies.
• The Banking Act and Insurance Act do not mandate IFRS for banks and insurance companies, but require their auditors to follow ISA.
• The Taxation Act does not require IFRS compliance, but audited accounts are preferred by the Malawi Revenue Authority for tax purposes.

Conclusion

The ROSC report highlights the need for legal and institutional reforms to improve the quality and transparency of financial reporting in Malawi. While SOCAM has taken steps toward adopting international standards, the lack of support mechanisms, inadequate capacity, and outdated legislation continue to hinder effective implementation. The report calls for a comprehensive Country Action Plan to address these issues and align Malawi's financial reporting practices with international best practices.