A report (called the Observance of Standards and Codes or ROSC) from the World Bank and International Money Fund (IMF) has just been released.
Among its findings were that the revisions the government has made to its statutory institutional framework for accounting and financial reporting will align the country much more with international good practice. It praised the ‘good progress’ that has been made with the suggested amendments to the framework, but notes that these changes are yet to be finalised.
About the ROSC
The joint initiative between the IMF and the World Bank aims to help member companies improve their financial systems by complying with international standards and codes. The idea is to cushion the countries from financial shocks and support their investment decisions.
The report focuses on auditing and accounting standards within public interest entities, as well as the wider institutional framework underpinning the financial system in Myanmar.
A fundamental foundation for the corporate financial structure is necessary for any economy, according to the report, as it promotes confidence from investors and ensures transparency and accountability.
Government urged to finalise law
A major outcome from the report is that the World Bank believes that the government should enact the Myanmar Companies Law (this is the final version of the regulations for the Financial Institutions Law and the Securities Exchange Law) as soon as possible.
Abdoulaye Seck, World Bank country manager, said that the convergence of Myanmar’s financial auditing and reporting with international standards is “…a key element of improving transparency and accountability.”
He went on to say: “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.”
Recommendations to improve infrastructure
Several recommendations were made in the report to improve the auditing and accounting infrastructure. In addition, it recommended granting independence from the Myanmar Accountancy Council (MAC) for the Myanmar Institute of Certified Public Accountants (MICPA).
It specifies that the MICPA should operate as an independent professional accountancy organisation so that it can effectively advocate on the public’s behalf.
Open up to foreign practitioners
Due to Myanmar’s rapid economic expansion, it’s likely that there will be an increase in the demand for auditors and accountants who hold internationally recognised qualifications. The report’s findings suggest that the government should liberalise the profession so that practitioners from overseas can work in Myanmar.
At the moment, there are restrictions in place prohibiting foreign accountants and auditors to practice in Myanmar, meaning there is no way to meet the likely future demand.
Reaching full compliance
Other suggestions include putting the transition to full compliance with the International Financial Reporting Standards (IFRS) as a medium-term goal for the profession. It was also suggested that a formal framework based on competency should be put in place for accounting studies, along with an upgrade of finance and accounting degrees at university.
Roberto Tarallo is manager of operations in financial management at the World Bank. He hopes that the recommendations are used to form an action plan to strengthen the financial and accounting systems of the country. He said: “Implementing these recommendations should be collaborative process among the government, sector regulatory agencies, the accountancy profession, and international development partners.”