Accounting: a key development challenge

UNCLAS GENEVA 000363 SIPDIS DEPT for IO/EDA for MCC E.O. 12958: N/A TAGS: ECON EAID EINV EFIN UNCTAD SUBJECT: Accounting: a key development challenge ¶1. SUMMARY: The Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) builds developing countries' capacities to keep accounts (book keeping) and comply with internationally accepted accounting standards. ISAR has produced useful simplified accounting guidelines for developing countries, but lacks the resources to successfully disseminate the guidelines and implement training programs on the guidelines. During an April 21 lunch at the US Mission, ISAR experts pitched their capacity-building programs to donors and explained the urgent need for more accounting professionals in developing countries to attract investment and improve governance. END SUMMARY. ISAR -------------- ¶2. In an April 21 lunch meeting hosted by the US Mission, Anthony Miller and Yoseph Asmelash, from the ISAR Secretariat, explained the work of ISAR to the JUSCANZ group (Japan, US, Switzerland, Canada, Australia, Norway, New Zealand, Turkey and Israel). ISAR has been operating as an UNCTAD working group for 25 years and built a network of over 1,000 accounting experts worldwide, about 200-300 of whom regularly participate in ISAR's two annual meetings. ISAR's purpose is to help developing countries understand and comply with internationally accepted accounting standards and to build their capacity in the accounting profession. ¶3. ISAR's Miller identified a lack of accountants in LDCs and developing countries as a major obstacle to growth. He said accountants are the backbone of any economy. Accountants are essential to good governance and economic growth since they have the skills to maintain transparent records of expenditures and income - records which are essential for bank loan applications, development grants, tax filings and so forth. However, many developing countries lack accountants. For example, the UK has one accountant for every 293 people, while Bangladesh has one accountant for every 195,000 people. The entire country of Mali (population 12 million) has three chartered accountants. Miller stated that accounting can be a key development facilitator by promoting investor confidence, strengthening small enterprises, improving the management of capital, helping public revenues, and enhancing economic stability. UNCTAD is doing research to establish comparable country data showing the number of accountants in each country. Such data does 
not exist, nor is there an internationally accepted definition of an accountant, so the aforementioned statistics are anecdotal. Capacity building -------------- ¶4. ISAR's Miller stated that there is an urgent need to increase accounting capacity in developing countries so they can implement International Financial Reporting Standards (IFRS),perform accounting for small to medium enterprises (SMEs),and produce non-financial reporting. ISAR has several project proposals to meet these objectives, but lacks funding. ¶5. Miller explained that over three years of work, ISAR members have simplified the internationally accepted accounting standards down to 18 pages of guidelines that can be used by any individual or small business seeking to create transparent accounts. These guidelines were produced through pro-bono work of ISAR members and approved by the ISAR membership. They fill a gap, since no other international body addresses the specific needs of developing countries for simple accounting guidelines. UNCTAD would like to provide "train-the-trainer" courses through its EMPRETEC network (business centers in 26 countries - primarily Africa, Latin America and the Middle East) to kick-start building the accounting profession, and accounting by SME's in developing countries. UNCTAD is seeking donor funding for this project. Following are links to the EMPRETEC network: www.unctadxi.org/templates/Startpage____7428. aspx to the ISAR homepage: http://www.unctad.org/Templates/StartPage.asp ? intItemID=2531&lang=1 and to the specific accounting guidelines for microenterprises developed by ISAR: http://www.unctad.org/en/docs/c2isard50_en.pd f COMMENT -------------- ¶6. Mission officers put ISAR's Miller in contact with the Secretariat for the Enhanced Integrated Framework for LDCs, to explore whether ISAR training programs could be funded via Aid for Trade or built into other trade-related development programs, since maintenance of transparent accounts is essential to any development project. ¶7. The ISAR Working Group is one of the best attended of UNCTAD's many expert groups, with excellent representation from developing countries. The Group has reached a point where it is ready to promote more practical training and has usable guidelines to disseminate. UNCTAD's proposal to use its EMPRETEC network as a forum for dissemination and training on the accounting guidelines is a good one, as it embodies synergies between different UNCTAD branches and is a comparatively low cost and high impact way of outreach. USAID may find this activity of interest as part of its broader trade capacity building program. STORELLA#