World Bank urges liberalisation of accounting and auditing sector

A New World Bank report has urged the government to finalise the statutory framework of the accounting and auditing sector and relax restrictions on foreign accountants and auditors to practice in the country.

The Report on the Observance of Standards and Codes – Accounting and Auditing, released on June 16, noted that Myanmar’s revisions to its statutory institutional framework for financial reporting will improve alignment with international good practice. It said that good progress had been made with amendments to the statutory framework but the amendments have yet to be finalised.

The “Reports on the Observance of Standards and Codes” (ROSC) are a joint World Bank and International Monetary Fund (IMF) initiative that helps member countries strengthen their financial systems by improving compliance with internationally recognised standards and codes. Ultimately, the ROSC aims to enhance countries’ resilience to shocks and to support their risk assessment and investment decisions through the preparation in 12 key areas.

This report focuses on accounting and auditing standards and practices in public interest entities, as well as the institutional framework which underpins the corporate financial reporting system in Myanmar. It argued that a fundamental foundation for any market-based economy is high quality financial reporting and auditing practices.

“This plays a vital role in promoting improved transparency and accountability thereby ensuring a level playing field and promoting investor confidence,” it stated.

It also urges the enactment of the Myanmar Companies Law, the finalisation of the rules and regulations for the implementation of the Securities Exchange Law and Financial Institutions Law and the establishment of a differential reporting framework to be completed “as soon as possible”.

Abdoulaye Seck, World Bank country manager, said that international investors could expect to see higher quality financial statements from domestic companies as Myanmar standards for financial reporting and auditing merges with international standards.

“This convergence is a key element of improving transparency and accountability.

“It will directly contribute to the successful achievement of the government’s objectives for development of an integrated capital market and a modern financial sector,” he said.

The Report on the Observance of Standards and Codes – Accounting and Auditing has made several recommendations to improve the accounting and auditing infrastructure.

Apart from the legislative framework, it recommended granting Myanmar Institute of Certified Public Accountants (MICPA) independence from Myanmar Accountancy Council (MAC), the regulatory licensing body for the accountancy profession.

“The MICPA will need to operate as an independent PAO [Myanmar’s Professional Accountancy Organisation] and be able to advocate in the public interest on behalf of the accounting profession,” it noted.

It also advocated liberalisation of the profession for foreign practitioners to take part.

“Myanmar is experiencing rapid economic growth and this is likely to result in a significant increase in the demand for accountants and auditors with internationally recognised qualifications.

“It is therefore worth considering an easing of the current restrictions on the ability of foreign accountants and auditors to practice in Myanmar as this would be a key means of meeting the increased demand,” it said.

Other areas include placing the transition process to full compliance with the International Financial Reporting Standards (IFRS) as a medium to long-term agenda for the profession, and implementing appropriate monitoring and compliance arrangements.

In addition, the report called for the implementation of a competency-based framework for accounting education and to upgrade university accounting and finance degree programs.

Union Auditor-General U Maw Than, said that the report will present Myanmar as a credible investment destination to investors.

“Recommendations therein are welcome although other views and opinions exist, some actions undertaken are in process and others will be enacted as circumstances permit,” he said.

Roberto Tarallo, manager of operations in financial management at World Bank, added that the recommendations could be used to help prepare a “country action plan”, which would strengthen the institutional framework for accounting and auditing.

“Accounting and auditing reforms are a medium-term reform agenda.

“Implementing these recommendations should be collaborative process among the government, sector regulatory agencies, the accountancy profession, and international development partners,” he explained.

U Wan Tin, chair of Myanmar Institute of Certified Public Accountants noted that the implementation of the recommendations would create a more favourable economic climate for foreign investment in the country.

“I have no doubt in mind that if the recommendations of the World Bank ROSC report could be fully implemented with the technical and financial assistance of development partners and stakeholders involved in this project, it would go a long way towards improving the financial reporting of corporate bodies in Myanmar in line with the international standards in terms of transparency and accountability,” he said.

Source : Myanmar Times

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