Professional accountancy organisations (PAOs) around the world have the potential to make a significant contribution on national economic and social development in developing countries, but many struggle to fulfill their functions and fall short of realising their full potential, according to a new report.
The Global Development Report, an initiative of IFAC (International Federation of Accountants) together with the donor community and a number of financial institutions to improve the quality of public and private sector accountancy in emerging nations, shows that recent efforts have 'greatly progressed' PAO capacity building but says that much more remains to be done.
Among the report's 10 key findings is the need to look at PAO development comprehensively; the need to support countries in developing accounting and auditing legislation that embodies international standards; the requirement to monitor and support 'fragile' states; help for PAOs in building an a coherent operating model and good governance; and the need to increase PAOs's ability to provide quality education, training and certification.
In addition, the report says PAOs should aim to build a broader membership base, and in particular make more efforts to include the public sector as well as strengthening regional organisations. It identifies mentoring programmes which encourage the sharing of information and expertise between PAOs as important in helping to build capacity.
The report looks at how successfully PAOs are being established in different regions and at the factors which influence this. For example, it says the lack of formal PAOS in Africa is linked to the nature of ongoing conflict, as in the Democratic Republic of Congo); recent emergence from conflict and consequential efforts to rebuild and re-establish the profession (Libya); and/ or ongoing social or economic challenges facing the country (South Sudan).
Successful post-conflict PAO development in the region (Liberia, Rwanda, and Sierra Leone) may be attributed in part to the strong leadership demonstrated by partner-country stakeholders in directing, guiding, and strengthening these organisations, as well as the timing and availability of donor support to enhance local-led efforts.
In other regions, notably Asia-Pacific, there is evidence of considerable disparities in the level of development of PAOs. For example, countries such as Afghanistan, Lao People's Democratic Republic, and some of the pacific islands maintain very low or no PAO development activity, while Australia, India, New Zealand, Republic of Korea, and Singapore have a high level of development.
According to the report, in many transitional economies the government, usually the Ministry of Finance, maintains a strong role in the regulation of the accountancy profession and relinquishing power to the private sector, or non-governmental entities, is an emerging practice.
