INTERNATIONAL FINANCIAL REPORTING STANDARDS' CONFERENCE

UNCLAS SECTION 01 OF 02 ASHGABAT 000564

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: INTERNATIONAL FINANCIAL REPORTING STANDARDS' CONFERENCE
HIGHLIGHTS NEED FOR EDUCATION

REF: ASHGABAT 0534


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


2. (SBU) SUMMARY: On April 29, USAID organized a conference on the
Introduction of International Financial Reporting Standards (IFRS)
in Turkmenistan as part of its cooperative agreement with the United
Nations Development Program (UNDP) and the Central Bank of
Turkmenistan (CBT). Government officials from parliament, Ministry
of Finance, Ministry of the Economy and Development, the chief
accountants of the state banks of Turkmenistan, the Supreme Control
Chamber, and the banking schools participated in this event, which
focused on the issues of transferring to International Financial
Reporting Standards and best practices from countries applying the
international standards and was the first of its kind in
Turkmenistan. Recognizing education as a critical precursor to a
successful transition, the speakers highlighted the importance of
accounting education at universities, the need for continuing
professional education, and the value of independent professional
certification programs, like the USAID-developed Certified
Accounting Practitioner (CAP) and Certified International
Professional Accountant (CIPA) degrees. Turkmenistan lags far
behind other Central Asian countries in building the professional
accounting capacity necessary to support the desired increases in
foreign investment and needs to invest heavily in accounting
education before a successful transition to international standards
can be implemented. The conference was a positive step in raising
this key issue before a variety of stakeholders. END SUMMARY

CONFERENCE BROUGHT LEADING INTERNATIONAL EXPERTS TO ASHGABAT


3. (U) Within the framework of its memorandum of understanding with
the UNDP, USAID's A/CIPA project organized a conference on April 29
dedicated to the introduction of the International Financial
Reporting Standards (IFRS) into the accounting system of
Turkmenistan. The conference was chaired by the Deputy Chairman of
the Central Bank of Turkmenistan, due to its joint program with the
UNDP on introducing International Financial Reporting Standards in
Turkmenistan. The conference hosted experts from the International
Accounting Standards Committee Foundation (UK),
PricewaterhouseCoopers (Russia),Kazakhstan's National Bank, the
University of the West of Scotland (UK),and the Kazakhstan
Institute of Management, Economic and Strategic Research (KIMEP).


4. (U) In addition to providing an overview of the importance of
International Financial Reporting Standards as a fundamental
building block for diversified and sustained economic growth,
presenters focused on the importance of professional development of
accountants and auditors. To ensure sustainability of these
efforts, universities and other higher education institutes can play
an important role in preparing qualified accountants and auditors
from the start. Courses that prepare students to sit for the
initial level certification exams have already been introduced into
46 universities across four countries of Central Asia, but not in
Turkmenistan (reftel).

TURKMENISTAN LAGS FAR BEHIND


5. (U) Recent public statements by the President of Turkmenistan
have stressed the importance of transitioning to International
Financial Reporting Standards in order to increase foreign
investment. For example, on September 6, 2007, in a Cabinet of
Ministers meeting, President Berdimuhamedov said, "A very important
task is laying ahead of us in connection with transition to the
international standards of financial reporting. This will bring
transparency in conducting financial transactions, and it will
improve investment opportunities for foreign investors."


6. (SBU) Current and previous USAID accounting reform projects in
Turkmenistan have contributed greatly to the foundation of training
materials, training courses and the CAP/CIPA certification programs

ASHGABAT 00000564 002 OF 002


in Turkmenistan, but there remains a significant unfilled demand for
accountants and auditors. Students who come out of the university
system are not prepared for International Financial Reporting
Standards-based accounting and rely on additional accounting courses
offered through the local training providers to gain this knowledge.
Furthermore, there is almost a complete lack of highly trained
professors currently capable of leading higher level accounting
courses in Turkmenistan. As a result, trainers must be brought in
from neighboring countries to assist the local training providers in
order to build their capacity.


7. (U) With USAID's support, a recently established working group
is endeavoring to identify the challenges in the education/training
sphere and specific reforms necessary to expand appropriate
education opportunities. Currently, courses on International
Financial Reporting Standards accounting are not taught in the
official educational system of Turkmenistan but are available
through local training partners of the Accounting/Certified
International Professional Accounting (A/CIPA) project sponsored by
USAID. To date, over 4,000 participants from private companies and
state banks have attended training seminars, and as of today, more
than 130 accountants are qualified to receive CAP certificates in
Turkmenistan. This compares to over 4,200 CAP-qualified
professional accountants in Kazakhstan, and represents a small
fraction of the amount that independent experts estimate are
necessary to supply a reformed market in Turkmenistan.


8. (SBU) COMMENT: Today, there appears to be an opportunity in
Turkmenistan to jump-start accounting reforms. President
Berdiumhamedov's broad call for the introduction of "international
standards" in a variety of areas, coupled with specific call for
International Financial Reporting Standards transition, has resulted
in a change in mindsets among key decision-makers that an
International Financial Reporting Standards system of accounting is
both necessary and achievable. The question of "whether or not to
transition to International Financial Reporting Standards" appears
to have changed to one of "when will this transition take place?"


9. (SBU) COMMENT CONTINUED: That said, once adopted, standards need
to be implemented. To accomplish that, many more trained
specialists than currently exist will be needed at all levels of
government and industry. The process of developing and adopting
International Financial Reporting Standards-based curricula in the
various Universities, technical colleges and private sector training
providers is at an elementary level. To address this, Turkmenistan
needs knowledgeable persons who can develop Turkmen-language
materials in addition to Russian language materials and can continue
to revise and publish new materials as standards change. With a
renewed interest in transitioning to an IFRS based accounting
system, there is an opportunity to adopt and implement IFRS based
training in the higher education system. Turkmenistan's challenge
will be to find the time and funding for the instructors to expand
their knowledge in this sphere and then to expedite training before
the decree to transition to International Financial Reporting
Standards is issued. END COMMENT.

CURRAN