Identifier
Created
Classification
Origin
08ASHGABAT534
2008-04-29 05:01:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:  

TURKMENISTAN SIGNALS DESIRE TO MATCH OTHER CENTRAL ASIAN

Tags:  PGOV PREL EAID TX 
pdf how-to read a cable
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RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #0534/01 1200501
ZNR UUUUU ZZH
R 290501Z APR 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 0696
INFO RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUETIAA/NSA FORT MEADE MD
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC
UNCLAS SECTION 01 OF 02 ASHGABAT 000534 

SIPDIS

SIPDIS

SENSITIVE

STATE FOR SCA/CEN, EUR/ACE, EEB
AID/W FOR EE/EA

E.O. 12958: N/A
TAGS: PGOV PREL EAID TX
SUBJECT: TURKMENISTAN SIGNALS DESIRE TO MATCH OTHER CENTRAL ASIAN
COUNTRIES IN ACCOUNTING REFORM


UNCLAS SECTION 01 OF 02 ASHGABAT 000534

SIPDIS

SIPDIS

SENSITIVE

STATE FOR SCA/CEN, EUR/ACE, EEB
AID/W FOR EE/EA

E.O. 12958: N/A
TAGS: PGOV PREL EAID TX
SUBJECT: TURKMENISTAN SIGNALS DESIRE TO MATCH OTHER CENTRAL ASIAN
COUNTRIES IN ACCOUNTING REFORM



1. (U) Sensitive but unclassified. Not for public Internet.


2. (U) SUMMARY: In response to a presentation by USAID on April 22,
the Deputy Chairwoman of the Supreme Council on Science and
Technology (SCST) voiced support for offical approval for the
USAID-developed accounting training and professional certification
program in Turkmenistan. Official approval of the program would
pave the way for expanded opportunities for capacity-building
activities required to support implementation of International
Financial Reporting Standards (IFRS),including banking sector
accounting reform, public sector accounting reform, accounting and
auditing education system reform. Approval would also enable
private-sector training providers to make greater contributions to
building these essential skills. Given the enormity of the
proposed reforms, the Deputy Chairwoman requested continued USAID
support in banking sector accounting reform and in accounting and
auditing education system reform, which would complement proposed
European Union assistance in public sector accounting reform. Once
official approval of the program is conferred, USAID expects to
receive increased government pressure for additional support.
Despite this opportunity, USAID will only be able to provide token
support given current budget realities ($200,000 in FY08). END
SUMMARY.

REFORMS ARE CORNERSTONE FOR INVESTMENT AND TRANSPARENCY


3. (U) The United States has consistently stressed the importance
of accounting reform as a fundamental step to creating a market
economy capable of attracting investment and preventing a wide range
of economic ills, such as corruption, tax fraud, and money
laundering. Most of the countries in Central Asia have long
recognized the benefit of having financial reporting based on
international standards and of having well-trained, competent
accountants and auditors to apply those standards objectively.


4. (U) Although it formally announced its intentions to introduce
International Financial Reporting Standards (IFRS) by adopting a Law
on Accounting in 2003, Turkmenistan has yet to make significant

strides toward this goal. Not only has the government not taken
basic steps to prepare for implementing the law, it has not even
begun to build the capacity required to implement IFRS.

TURKMENISTAN LAGS FAR BEHIND


5. (U) Under the centrally-planned Soviet economy, only bookkeepers
existed in enterprises, since there was virtually no scope for
financial analysis at the enterprise level. Therefore, to promote
financial management, transparency, accountability, and professional
values, USAID began supporting in 2001 the Russian-language
Certified Accounting Practitioner (CAP)/Certified International
Professional Accountant (CIPA) program in nine countries of the
former Soviet Union, including Kazakhstan, Kyrgyzstan, Uzbekistan,
Tajikistan, Turkmenistan, Ukraine, Russia, Belarus, and Moldova.
Due to its international foundations and focus on the highest world
standards, CIPA has gained substantial recognition region-wide.


6. (U) To-date, 6,750 individuals in Central Asia have earned the
entry level CAP designation, and 119 are qualified for CIPA.
Kazakhstan leads the region with 4,228 CAP qualified professional
accountants, while Turkmenistan has only 132 CAP-qualified
accountants. Uzbekistan leads the region in the more advanced
CIPA-level certification, with 45 candidates for certification,
while Turkmenistan has no CIPA-qualified accountants. The current
level of accountants with such training is insignificant relative to
its population of approximately five million citizens.
International experts estimate that Turkmenistan needs at least
5,000 certified accountants to support a reformed market economy.


7. (U) Another USAID capacity-building goal is the integration of
CAP/CIPA courses into the curricula of higher education institutions
(HEIs). CAP courses have been introduced into 46 universities
across four countries of Central Asia through the training of 276
university professors. In Turkmenistan, no universities have
adopted the CAP courses into the curriculum although plans for a new
university curriculum are reportedly under development.


8. (U) USAID has also had significant success in working with

ASHGABAT 00000534 002 OF 002


Central Asian government officials to build CIPA program
requirements into the government's regulation of the auditing
industry (specifically, in governments' licensing of auditors).
Here, too, the process has not yet started in Turkmenistan.

RENEWED INTEREST IN IFRS = TIPPING POINT?


9. (U) Recent public statements by President Berdimuhamedov have
stressed the importance of International Financial Reporting
Standards for attracting investments and developing Turkmenistan's
economy. Moreover, the government has announced its intention to
privatize public sector enterprises and promote private enterprise
development. In an April 22 meeting with the Supreme Council on
Science and Technology (SCST),a key decision maker emphasized that
an IFRS system of accounting is both necessary and achievable.


10. (U) In response to a USAID presentation on the program and
following discussion of how USAID might support the introduction of
International Financial Reporting Standards, Supreme Council on
Science and Technology Deputy Chairwoman Akjeren Allanurova voiced
support for official approval of the CAP/CIPA program in
Turkmenistan. Recognizing the enormity of the proposed reforms --
and the opportunity for Turkmenistan to build upon lessons learned
across the region -- the Deputy Chairwoman requested continued USAID
support for banking sector accounting reform and accounting and
auditing education system reform. As a next step, USAID agreed to
submit via official channels the CAP/CIPA education materials and
support a training session on the CAP/CIPA course materials for
higher education instructors that are involved in revising the
university curriculum. Allanurova indicated that with their
support, it was possible that the courses could be included in the
new curriculum for higher education institutions that will go into
effect this fall.


11. (SBU) COMMENT: Although CAP and CIPA courses are currently
available for banking sector staff and interested private citizens
on a limited basis, official approval of the program would pave the
way for wider capacity-building activities required to support
International Financial Reporting Standards implementation,
including banking sector accounting reform, public sector accounting
reform, accounting and auditing education system reform. Approval
would also expand opportunities for private-sector training
providers to contribute to building these essential skills.


12. (SBU) COMMENT CONTINUED: EU-TACIS proposed support for public
sector accounting reform in conjunction with the Ministry of
Finance. Once official approval of the CAP/CIPA program is
conferred by the Supreme Council on Science and Technology, USAID
expects to receive increased pressure from the Turkmenistan
government for support. Despite the new opportunity to build upon
previous regional activities in this area, USAID will only be able
to provide token support ($200,000 in FY08) under current budget
realities. Although current FY09 projections are more favorable
for the Economic Growth portfolio, the potential demand for
technical support for introducing international standards promoting
investment and transparency appears to outstrip even these higher
funding levels. Additional resources for International Financial
Reporting Standards introduction would help build much-needed
capacity in the education sector. Building this capacity is a
long-term project that will require sustained USG engagement - in
coordination with like-minded donors such as the European Union --
for years to come. END COMMENT.

CURRAN