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#