2017年-世界发展银行全球_Pakistan_Report_on_the_Observance_of_Standards_and_Codes___Accounting_and_Auditing_60页_4mb

Summary of ROSC A&A Report on Pakistan (January 2017)

Core Content

The Report on the Observance of Standards and Codes (ROSC A&A) is a comprehensive assessment of financial reporting and auditing practices in Pakistan's corporate sector. Conducted by the World Bank in 2017, this report is an update to the 2005 assessment and is aligned with Pakistan's Vision 2025, which aims to elevate the country from a lower-middle-income to an upper-middle-income status. The report evaluates the progress made in implementing international accounting and auditing standards, analyzes the institutional framework, and outlines key areas for improvement to support financial and economic stability.

Main Objectives

The report focuses on three main pillars:

1. Analysis of A&A standards in relation to international benchmarks.
2. Institutional framework for corporate financial reporting and auditing, including capacity and monitoring.
3. Observed reporting practices and perceptions, with an emphasis on improving transparency and accountability.

Key Findings and Recommendations

A. A&A Standards

• IFRS and ISA alignment: Pakistan has made progress in aligning with International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA). However, some sectors like banking and power still lack full compliance.
• IFRS for SMEs: IFRS for SMEs was adopted for medium-sized unlisted entities in 2015, and simplified national reporting standards (AFRS) were introduced for smaller entities in 2007.
• Need for further alignment: The adoption of IFRS for SMEs and AFRS will improve foreign direct investment (FDI) and reduce investment costs for foreign investors.

B. Institutional Framework

• Independent Audit Oversight Board (AOB): Established in 2016, the AOB is responsible for overseeing the quality assurance activities of auditors of public interest companies. It is aligned with international best practices and will be affiliated with the International Forum of Independent Audit Regulators (IFIAR).
• Professional accounting organizations: ICAP and ICMAP are the main standard-setters in Pakistan. They have made strides in strengthening institutional capacity and aligning with IFAC standards.
• Public financial management (PFM): The Pakistan Institute of Public Finance Accountants (PIPFA), formed in 1993, provides mid-tier accounting services. The report recommends developing a defined charter and business model for PFM to leverage existing infrastructure effectively.

C. Observed Reporting Practices and Perceptions

• Corporate governance: The Code of Corporate Governance is now embedded in listing regulations. Over 90% of listed companies disclose compliance statements, which are annually reviewed by auditors.
• State-owned enterprises (SOEs): Most SOEs do not follow a defined financial reporting framework, making it difficult to provide relevant information to decision-makers. The report emphasizes the need for improved transparency and accountability in SOEs.
• SME sector: The SME sector is a key driver of GDP growth, job creation, and export services. The adoption of the Companies Bill, 2017 has reduced the audit burden on small entities and encourages the documentation of the informal economy.

D. Measures for Improvement

• Capital market performance: Establishing an independent AOB and improving compliance with IFRS will enhance investor confidence and attract FDI.
• SOE governance: Enhancing transparency and accountability in SOEs is essential for reducing fiscal drain and improving public sector performance.
• SME sector development: The Companies Bill, 2017, has removed audit requirements for small companies with paid-up capital less than PKR 1 million, reducing compliance costs. The report also recommends training and capacity-building for small audit and accountancy firms.
• Inclusive and indigenous growth: A gender action plan is needed to increase the number of female accountants, currently at 9%, compared to 30% in Sri Lanka and 22% in India.
• Knowledge economy: Developing standard operating procedures and a code of conduct will enable Pakistan to become a competitive provider of accounting shared services. Collaboration between local and international accounting bodies is recommended.
• Third-party assurance: Introducing third-party assurance requirements for service organizations, such as payroll processing and cloud computing, will improve performance and user satisfaction.

Progress on ROSC 2005 Recommendations

• Simplified financial reporting for SMEs: IFRS for SMEs adopted for medium entities, AFRS introduced for smaller ones.
• Professional accounting organizations capacity: ICAP has made progress toward full compliance with IFAC SMOs, while ICMAP has strengthened its technical capabilities through collaboration with CIMA.
• Curriculum and education: ICAP and ICMAP have aligned their professional curricula with IFAC education standards and introduced CPD programs for existing members.
• Independent oversight: AOB was established in 2016 to oversee quality assurance in public interest entities.
• Regulator capacity: SECP and SBP have increased staff with relevant expertise in financial reporting and auditing.
• Monitoring and enforcement: Strengthened M&E processes with the development of methodologies and inspection manuals.

Key Areas for Consideration

• A&A standards: Develop a roadmap for full IFRS compliance, approve ISA 700R and 701, and introduce ISAE 3402 for service organizations.
• Institutional framework: Increase consultation with local industry, develop a standard-setting committee with AGP, and enhance the capacity of AOB and QAB.
• Reporting practices: Develop a national accreditation body, strengthen training for public and mid-tier technicians, and improve the timeliness and accessibility of SOE financial statements.

Conclusion

The report underscores the importance of aligning Pakistan's financial reporting and auditing practices with international standards to support economic growth, transparency, and accountability. It also highlights the need for continued collaboration between the government, professional accounting bodies, and international organizations to achieve Vision 2025 goals. The findings will contribute to the development of a national action plan, with the World Bank and other development partners ready to provide support.