Expert Opinion on Financial Reporting Methodologies
12 Jun 2017 by Valeria Getman
Valeria Getman, Executive Director of the public association “The Union of accountants and auditors”, auditor, CIPA
UNDP: What is your background and what is your mission to Turkmenistan aims to achieve?
Ms Getman: I am a specialist in the field of accounting and audit. For the last 17 years, I work in the professional association of accountants, which is an associated member of the International Federation of Accountants. Since its foundation in 1999, we actively cooperate with lawmakers of Kyrgyzstan on reforming of the accosting system in the country.
My mission in Turkmenistan is about improving of the accounting system. We are working on developing of the documents which will support accountants in preparing of the financial reporting in line with the National standards of financial reporting. These documents will also be useful for the staff of overseeing agencies.
UNDP: What are financial reporting methodologies? Are there any global standards? Are there an ideal methodology?
Ms Getman: Introduction of the National standards of financial reporting is quite a complicated process. Usually, it requires developing several documents containing guidelines with explanation the required standards and recommendations, as well as how to adhere to them. Those documents will be developed by the UNDP project in Turkmenistan.
We foresee development of the three guiding documents:
1. Double-entry accounting guidelines;
2. Guidelines for preparation of financial statements according to the NFRS for commercial enterprises;
3. Tax verification guidelines to link tax accounting and financial reporting.
There are global standards which are called International standards of financial reporting. It is a long and complicated document and unfortunately, not all of the standards are applicable in post-Soviet countries. National standards of financial reporting are based on international and represent a version adopted to the local conditions of the countries.
It would be great to have an ideal methodology, but unfortunately, one cannot make one.
UNDP: Can you please describe the importance of the national financial reporting standards and national accountants’ certification system. Is there a universal practice?
Ms Getman: We all acknowledge how important it is to strengthen the economy of the country. This is a purposeful process which requires managerial decision making. To make those decisions, one needs reliable and relevant information. National standards of financial reporting allow forming reliable and relevant information regarding financial state, results of activities and changes in financial condition of the entities, which then enables users of the financial reporting to make informed decisions.
The formation of a reliable financial reporting is impossible without qualified accountant. In many countries of the world there are systems for assessing the qualifications of an accountant. Having received the qualification, the accountant must support it. Requirements for the qualification of a specialist and support of such qualification are determined by the state or professional organizations of accountants.
UNDP: What would be your recommendation on improving the current accounting system in Turkmenistan?
Ms Getman: It is early to provide recommendations yet, as we have just started the project and assessment. However, this question shall become part of the next interview in the later stage of the project.