Directions of financial reporting quality improvement

1. Directions of financial reporting quality improvement Danil Prokopovich FCCA, CGA, CIPA, auditor, Chairman of the Committee on international reporting standards of the IPAR, Member of the National accounting standard board of the NOFA Foundation

2. Directions • Building financial reporting infrastructure at a country level. • Application of IFRSs at company level. • Role of professional accountant and professional bodies.

3. Integration of IFRS reporting into legal system • The definition used in IFRS are economic, not legal. • Allow parallel system of accounting definition, without convergence with legal system of a country. • Use of IFRS reports for actions that are relevant in law: • dividends payments, • court decisions, • bankruptcy, etc.

4. Increased understanding from business • Understanding of purpose of financial statements. • Understanding the benefits of IFRS financial statements. • Integration in management and decision-making process. • Use of structured deals. • Understanding the ”Substance over form” concept. • Building of internal controls and acceptance of responsibility.

5. Direction at a company level • Convergence with other economic information within a company. • Effective and efficient system of economic information flows. • Adopt opting the IFRSs for national accounting. • Develop the personnel (recruiting, training).

6. Role of professional accountant • Learn: • to make estimates and judgments, • to analyze the substance of transactions. • to apply “materiality” and “costs-benefits” concepts, • to prepare financial statements on a timely basis. • Ensure consistency of information and methods. • Maintain high adherence to professional ethics. • Continue professional development.

7. Controlling infrastructure • Implementation of internal controls. • Faithfull audit infrastructure. • including: relevant auditing standards, quality control, certification of auditors, etc. • Additional governmental control (for companies of a public interest).

8. Role of professional bodies • Encourage high professionalism of members: • support constant development and learning, adherence to ethics, etc. • Provide methodological support. • Make studies on current and perspective issues. • Participate in or initiate public discussions. • Distribute the best practices. • Interacts with regulators, investors, public.

9. Questions, comments, opinions?