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Outcomes from the thirtieth ISAR session

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11 Nov 2013

The thirtieth session of the United Nations Conference on Trade and Development (UNCTAD) Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) has held in Geneva on 6-8 November 2013. The meeting focused on the role sound corporate reporting infrastructure plays in promoting investment, financial stability and development. The main agenda items were country feedback on the 'Accounting Development Tool' being developed by ISAR, human resources development challenges in achieving high quality corporate reporting, and a review of good practices in sustainability reporting.

Over the past four years, ISAR has been developing and refining the 'Accounting Development Tool' (ADT), which allows member States to conduct assessments of their accounting infrastructures to identify gaps and determine priorities. The ADT is built on four pillars: a legal and regulatory pillar, an institutional pillar, a human capacity pillar and a capacity-building process pillar. At this meeting, a number of countries provided feedback on their experience with the ADT, including Russia, Ukraine, Ecuador and the Netherlands. The papers available on the UNCTAD website provide a good background on the process of developing corporate reporting in these countries.

A paper prepared by the UNCTAD secretariat provides a summary of the human resource development challenges that arise in high-quality corporate reporting. The paper notes trends such as adoption and implementation of international standards and codes, increasing regional and international cooperation among regulators, and the emergence of education initiatives before outlining some of the key challenges, including:

  • Meeting the need for qualified human resources. Highly qualified human resources are a key component towards a successful implementation of international standards and codes, requiring a high level of human capacity that can be developed through education, training and experience. There is a shortage of accountants in developing countries which do not have full capacity to train qualified professional accountants, and not enough incentives for qualified accountants to remain in their country of origin
  • Strengthening professional accounting organisations (PAOs). Whilst the International Federation of Accountants (IFAC) supports capacity building and monitoring the development of PAOs through its various initiatives, in many countries PAOs are not operating at full capacity due to a lack of financial and/or human resources. Furthermore, some PAOs suffer from low sustainability and fail to operate as independent entities, and in some regions PAOs are fractured, disorganised and underfunded
  • Improving education and training. Although the International Accounting Education Standards Board (IAESB) has been developing International Education Standards (IESs), they are restricted to areas of education that fall under the responsibility of the accountancy profession, and so exclude universities. The path for becoming a professional accountant or auditor differs depending upon the system in place in each country, and there are several players participating in the education and training of professional accountants. Other issues including the ageing of the general academic population, difficulties in filling vacancies in universities, a lack of English language proficiency among academics and students, and a lack of sufficient coverage of ethics in accounting education programmes were also noted.
  • Promoting continuing professional development (CPD). CPD is identified as one of the least developed areas and PAOs in developing countries often do not have operating capacity or the legal force to ensure their members fulfil requirements. Further challenges including around costs and location were also noted.
  • Improving public-sector accounting and education. Only a few PAOs have created committees that issue recommendations and interact with the government to improve accountability, for example by implementing International Public Sector Accounting Standards (IPSAS). A key issue is a lack of training, and a shortage of professional accountants.

Discussion at the ISAR session noted that developing countries often lack sufficiently robust accounting infrastructures to enable them to apply international standards, but that such standards are frequently necessary to ensure confidence from potential foreign investors. Jurisdictions reported an immediate effect on comparability and transparency from the adoption of International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISAs). The importance of reliable financial reporting to public sector governance was also noted.

A further background paper prepared for the meeting focused on best practice guidance for policy makers and stock exchanges on sustainability reporting initiatives. This paper outlines a number of elements to consider when developing or improving sustainability reporting initiatives, such as which institution (e.g. a regulator or stock exchange) is best positioned to introduce such an initiative, scoping issues (both which entities and the subject matter to be covered), whether the disclosure model should be voluntary or mandatory, and design and implementation issues.

The ISAR session noted that the implementation of sustainability reporting initiatives is closely linked to the Sustainable Development Goals which will be adopted after 2015, and will require substantial contributions from entities to make them a reality. The session received presentations from the Global Reporting Initiative (GRI), Johannesburg Stock Exchange (South Africa) and BM&F Bovespa (Brazil), among others.

A number of other topics were also discussed, including on corporate governance issues and updates on international auditing and assurance standards. 

On the day before the start of the ISAR sessions, an 'Accounting for SMEs Forum', jointly organised by UNCTAD and the IFRS Foundation, was also held, and saw discussion on lessons learned in implementing the IFRS for SMEs, possible changes to the IFRS for SMEs, and related capacity-building needs for small and medium-sized entities.

Click to access the following on the UNCTAD website:

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