2004年-世界发展银行全球_Dominican_Republic___Accounting_and_Auditing_37页_1012kb

Summary of the Dominican Republic ROSC Accounting & Auditing Report

Core Content

This report, titled Report on the Observance of Standards and Codes (ROSC) Dominican Republic, evaluates the accounting, financial reporting, and auditing practices in the corporate sector of the Dominican Republic (DR) against the benchmarks of International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA). The objective is to support the Government in improving financial transparency and strengthening private sector practices, which are critical for enhancing the investment climate, competitiveness, and regional economic integration.

Main Findings

• The DR officially adopted IAS (now IFRS) in 1999, which was a positive step toward improving financial reporting.
• ISA were also adopted by the accounting profession at the same time.
• Compliance with these standards is generally low, especially among small and medium enterprises (SMEs), and the legal framework is outdated and insufficient.
• There is a lack of publicly available audited financial statements, which hinders access to medium-to-long-term financing and reduces investor confidence.
• The accounting profession is divided into two organizations: ICPARD (mandatory) and CODOCON (voluntary), which have not cooperated effectively.
• The current regulatory system for auditors is inadequate, with insufficient academic requirements, professional exams, and continuing education.
• Comisarios (shareholder-appointed auditors) have overlapping and ambiguous responsibilities with external auditors, leading to redundancy.
• A high number of qualified audit reports and non-disclosure of IFRS departures indicate inadequate compliance with accounting standards.
• Corporate governance mechanisms, such as audit committees, are not legally mandated and are rare in the DR.
• The banking crisis of 2003, particularly the collapse of Baninter, exposed weaknesses in financial reporting and supervision, leading to a loss of confidence and economic downturn.
• The DR's securities market is underdeveloped, with limited long-term capital provision and a lack of transparency.
• The recent introduction of a private pension system depends on financial transparency from corporate entities.
• The DR faces a significant budget deficit, and improved accounting and auditing practices are essential for reducing tax evasion and managing public finances effectively.
• State-owned enterprises (SOEs) need better financial management and auditing to prevent losses and support the government's reform agenda.

Key Recommendations

The report provides a series of recommendations aimed at improving the accounting and auditing environment in the DR. These are categorized into three types: legislative amendments, policy changes, and capacity-building initiatives.

A) Legislative Amendments

1. Amend the Code of Commerce to reduce the regulatory burden on SMEs regarding the presentation of audited financial statements.
2. Require enterprises to file annual audited financial statements with a public registry.
3. Establish an oversight body for the audit profession with responsibilities including standard-setting for both accounting and auditing.
4. Introduce a professional certification system for statutory auditors.
5. Clarify the role of comisarios in the statutes to eliminate redundancy with external auditors.
6. Require external auditors to be invited to annual general meetings (AGMs) of public-interest entities.

B) Policy Recommendations

7. Design regulations for specified corporate entities to file financial statements with the public registry and define the functioning of the registry and its responsibilities.
8. Amend regulations on external audits to delegate oversight and monitoring to the Audit Oversight Board (AOB).
9. Conduct a survey on the impact of harmonizing regulatory accounting principles for banks, insurance companies, and pension funds with IFRS.
10. Establish training programs for regulators on accounting, auditing, and financial reporting requirements.

C) Capacity Building and Other Interventions

11. Develop manuals and training courses for personnel at the financial statements registry and for the oversight board.
12. Develop training material on the strengthened code of ethics for professional accountants and regulators.
13. Conduct train-the-trainers sessions for professors in accounting and auditing.
14. Enhance the professional examination and continuing education system for auditors.

Conclusion

The DR has made progress in adopting international accounting and auditing standards, but the implementation remains weak. There is a need for comprehensive reforms, including legislative changes, stronger regulatory oversight, and improved institutional capacity. These measures are crucial for enhancing financial transparency, improving corporate governance, and supporting the country's economic development and integration goals.