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Reports on the Observance of Standards and Codes (ROSC)
John HegartyManager, Financial Management
Jon HooperFinancial Management SpecialistEurope and Central Asia Region
Azerbaijan
THE WORLD BANK
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Background:
The Need for a Strengthened International Financial Architecture1990s – Emerging Market Crises and contagion effects
East Asia (Thailand)
Philippines
Malaysia
Hong Kong
Indonesia
Taiwan
South Korea
ROSC - Azerbaijan
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Background:
The Need for a Strengthened International Financial Architecture
Shift from reactive crisis resolution
Pre-emptive crisis prevention
ROSC - Azerbaijan
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Background:
Origins of the ROSC program
The G-22 Reports: focus on crisis prevention
- Transparency and Accountability (Led to ROSC program)
- Strengthening National Financial Systems
- Government guarantees to the private sector
ROSC - Azerbaijan
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The ROSC program: Comprises 12 Fundamental Standards
Securities Regulation
Banking Supervision
Accounting & Auditing
Corporate Governance
Insurance Supervision
Insolvency & Creditor Rights
ROSC - Azerbaijan
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Importance of High Quality Accounting and Auditing
Accounting and
Auditing
Development of Capital Markets
Job Creation
Financial Stability
Private Sector Growth
Financial Sector Development
Improved Access to Credit
Financial Information
ECONOMIC GROWTH
ROSC - Azerbaijan
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A&A ROSC: Assessing the Quality of the A&A Framework
Economic Context
Legal & Institutional Framework
Accounting in Practice
Auditing in Practice
RecommendationsFINDINGS
Factu
al A
ssessm
en
t
Perc
ep
tion
s
ROSC - Azerbaijan
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Azerbaijan ROSC A&A: Key Findings
- Access to credit, particularly for SMEs
- Development of capital markets
- Development of the private sector
- Implementation of international best practice regulation
Promote: Avoid:
ROSC - Azerbaijan
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A&A ROSC: Assessing the Quality of the A&A Framework
Benchmarks:
International Financial Reporting Standards
International Standardson Auditing
Acquis communautaire
Good international practice
ROSC - Azerbaijan
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A&A ROSC: Global Coverage
Latin America and the Caribbean
Europe and Central Asia
Middle East and North Africa
Africa
South Asia
East Asia
ROSC - Azerbaijan
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A&A ROSC: in Europe and Central Asia
ROSC - Azerbaijan
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ROSC is a the first step in the process of reform
Statutory Framework
Monitoring & Enforcement
Education & Training
Accounting Profession &
Ethics
Accounting Standards
Auditing Standards
ROSC - Azerbaijan
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All supporting pillars need to be strengthened
Statutory Framework
Monitoring & Enforcement
Education & Training
Accounting Profession &
Ethics
Accounting Standards
Auditing Standards
ROSC - Azerbaijan
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Azerbaijan ROSC A&A: Key Findings
- Azerbaijan’s increasing global integration and access to global financial markets makes increased transparency essential
- Significant recent progress, in particular, the new Law on Accounting of 2004
- Implementation of Law on Accounting poses very significant challenges
- Fragmented regulation and enforcement of accounting regulations must be harmonized
- Statutory framework for audit is outdated and inconsistent
- Major need for re-tooling, education and training of accountants and auditors
ROSC - Azerbaijan
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Azerbaijan ROSC A&A: Key Recommendations
- Measures to assist the implementation of Law on Accounting including:
- embedding IFRS in Public Interest Entities
- permanent resource to translate IFRS, develop National Accounting Standards and support both
- Transition training program for IFRS and NAS
- Harmonization program of fragmented regulation and enforcement of accounting regulations
- Introduction of a new, coherent, Law on Audit; reform and development of Chamber of Auditors
- Major program of re-tooling, education and training of accountants and auditors
ROSC - Azerbaijan
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Implementing the ROSC Recommendations
National Steering
Committee, led by MoF
IAIS
IFAC
IASB
Basel Committee
European Commission &Committees
World Bank
ROSC - Azerbaijan
DevelopmentPartners
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Azerbaijan ROSC A&A: Implementation
- Ministry of Finance and World Bank initiative, the Corporate and Public Sector Accountability Project (CAPSAP)
- Will include 3 main components:
- Corporate sector accounting reform, including embedding IFRS in Public Interest Entities, assisting the introduction of a new Law on Audit; reform and development of Chamber of Auditors
- Public sector accounting reform (separate to this report)
- Azerbaijan Center for Professional Accounting Training, Education and Research (ACPATER), a permanent resource to translate IFRS, develop National Accounting Standards, support a transition training program for IFRS and NAS and support a major program of re-tooling accountants, auditors and accounting education and training providers
ROSC - Azerbaijan