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New World Bank Report Points To Major Developments In Georgia’s Accounting And Auditing Environment

The World Bank Centre for Financial Reporting Reform (CFRR) launched today an updated assessment of the “health” of corporate reporting systems in Georgia.

The officials of the Ministry of Finance, representatives of the National Bank of Georgia, Georgian Federation of Professional Accountants and Auditors, International Federation of Accountants (IFAC), International Accounting Standards Board (IASB) accountants, representatives of Georgian academia and business leaders took part in the event.

Good financial reporting promotes investment, develops capital markets, helps businesses access credit and can improve tax compliance. Strong systems of audit, quality assurance and oversight help ensure financial stability and avoid economic shocks. In 2007, the CFRR made an initial assessment of the accounting and auditing environment in Georgia which revealed some weaknesses and inconsistencies and made a number of recommendations and suggestions to improve the country’s business environment and investment climate. The updated report launched today assesses the progress since then.

The participants of the dissemination event welcomed the report’s findings of improvements in the accounting and auditing profession, the adoption of an effective new legal framework, and obvious commitment of all those involved in implementing Georgia’s strategic plan to improve the local business climate and work towards harmonization with the European Union (EU). It was acknowledged that there is a need for further work in this direction.

In focussed and engaged discussions, participants assessed the future strategy and priorities. The new legislation needs to be fully implemented and gaps and inconsistencies eliminated. Improving the governance of state owned enterprises is important. The availability of accurate and timely information is key for the Government’s decision making and monitoring. It was noted that more work could be done to further help Small and Medium-Sized Enterprises. There was an agreement on the need to simplify the existing financial reporting requirements and to promote the benefits of good bookkeeping to small businesses, enabling greater access to loans and investment based on business cash flows and less on collateral.

“Improvement of the auditing and financial accounting and reporting is one of the key priority areas for the Government of Georgia. The concept aiming at fulfillment of the contractual obligations of the Association Agreement and harmonization of the Georgian legislation with that of the EU has already been prepared by the interagency group working on the mentioned reform,” said Giorgi Tabuashvili, First Deputy Minister of Finance. “We appreciate the support provided by the Centre for Financial Reporting Reform under the World Bank, which has prepared a special report and recommendations. We hope that the open discussion during today’s workshop, and planning of the future strategies will help respective experts, government officials and business representatives to develop the united approach, which will ultimately be reflected in the law amendment package.”

“The vision of the World Bank is to reduce extreme poverty and to boost shared prosperity. Effective Accounting and Auditing practices are contributors to these twin goals. The World Bank’s Governance Global Practice puts all efforts toward building economies that are citizen centric, and our roles as accountants and auditors is important in producing reliable information and ensuring that the rights of citizens for getting accurate and timely information are secured,” said Samia Msadek, World Bank Governance Global Practice Director. “With Georgia signing the Association Agreement with the EU last year, all stakeholders involved in financial reporting agenda should use this unique opportunity and position the country,  where transparency helps local businesses to go beyond border, and external investors to arrive and become part of the local business environment.”

Reports on the Observance of Standards and Codes on Accounting and Auditing (A&A ROSC), compiled by the World Bank Centre for Financial Reporting Reform, analyze the comparability of national accounting and auditing standards with international standards, determine compliance with national standards, and assess the institutional framework supporting financial reporting. They are designed to assist in developing and implementing a country action plan for improving institutional capacity with a view to strengthening the country’s corporate financial reporting regime.