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UNCTAD report on human capacity development in accounting and corporate reporting

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23 May 2014

The United Nations Conference on Trade and Development (UNCTAD) has publicly released 'International Accounting and Reporting Issues - 2013 Review'. The document provides a review of trends, recent developments and challenges, as well as country case studies, on human capacity development in the areas of accounting and corporate reporting.

The release of the report follows papers and discussions considered at the thirtieth session of the UNCTAD Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) which has held in Geneva on 6-8 November 2013 and also focused on the human resource development challenges that arise in high-quality corporate reporting. The report builds on the ISAR discussion and also includes the outcomes of country case studies conducted by the UNCTAD secretariat studies in Chile, Denmark, Malaysia, the Russian Federation and the United Republic of Tanzania.

The report considers the benefits and human resource development challenges of globally recognised corporate reporting standards, including International Financial Reporting Standards (IFRS), International Standards on Auditing (ISAs) and various codes on environmental, social and corporate governance such as the Global Reporting Initiative (GRI) 'G4' guidelines and earlier ISAR guidance. It provides the following introduction:

There are a number of human capacity related challenges that countries face when implementing corporate reporting standards and codes developed at a global level. These challenges occur to a varying extent in all countries regardless of their level of economic development. Reorientation of existing national education systems to integrate globally developed standards and codes could take a considerable amount of time – in some cases an entire generation. Transition to a new accounting framework is challenging and a critical integral component of managing such a transition period is developing the necessary competencies in relation to implementation of the global standards. Thus, developing human resources capacity for corporate reporting in a sustainable manner requires regulatory and institutional support as well as reliable sources of funding.

The report includes many observations and recommendations, including the following:

  • The benefits of global corporate reporting standards can only be realised if they are properly implemented, which in turn depends on properly trained human resources developed through education, training and experience
  • There is an increasing need for the harmonisation of internationally accepted qualifications for accountants and auditors, through the International Education Standards (IESs) published by the International Accounting Education Standards Board (IAESB) and programmes such as the IFRS Foundation education initiative and various regional programmes
  • The development of professional accounting organisations (POAs) operating at full capacity is critical to train qualified professional accountants, with problems cited including a lack of capacity and shortage of accountants, excessive numbers of professional associations in some countries, regulatory framework hurdles, and a need to constantly update programmes in light of rapid and continuous changes in international standards - regional collaboration is seen a critical response in addressing these areas
  • High-quality education relies on courses taught by qualified professors in the context of an increasingly complex content of teaching materials, growing numbers of accountants to train, language barriers and lack of English proficiency, an ageing academic population in some countries, and a lack of coordination and harmonisation of curricula
  • Challenges are often more difficult in the public sector than the private sector, with low adherence to relevant IFAC Statements of Membership Obligations (SMOs) by many professional organisations, low adoption of International Public Sector Accounting Standards (IPSAS) worldwide, and more severe shortages of professional accountants
  • The case studies provide various indications that efforts towards full convergence with IFRSs have been hampered by insufficient knowledge of international standards and difficulties in adjusting the national system of accounting to adapt international standards. Language barriers and the need for collaboration with universities to introduce international accounting aspects into curricula were also evident.

The full report is available on the UNCTAD website.

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