The Afghan parliament will pass soon an accountancy law commissioned by the World Bank (WB), which aims at filling the regulatory vacuum left by successive civil wars and international conflicts.
Professionals practising in Afghanistan told The Accountant that the law could be a tipping point for the reconstruction of the country’s financial services infrastructure and for the Afghan accountancy industry which lacks all sort of regulatory oversight.
"Afghanistan is on the brink of establishing its own professional accountancy body which will enable the accountancy profession to flourish in the region," Baker Tilly Mehmood Idrees Qamar managing partner Mehmood Razzak said.
Razzak added that the accountancy law is expected to be passed shortly and would contribute to the development of a professional business culture in Afghanistan.
"[It] will enforce the regulation in the accountancy market, creating opportunities for local and expat professionals, and for international accountancy firms too," he said.
The draft law, seen by The Accountant, was written by Rod Monger, who is a professor at the American University of Afghanistan, as part of a project financed by the WB.
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Monger told The Accountant that different countries’ regulations were taken as models, to come up with a modern law that adapts the most suitable solutions to the Afghan context.
"It requires using international standards at every level," Monger said. "The law is conformed to meet the membership obligations of IFAC. It’s a sort of a plug and play approach."
The law also sets up the education and experience required to become a qualified accountant.
Under its legal provisions, the UK-based Association of Chartered Certified Accountants (ACCA) clearly gets the upper hand in the Afghan market.
"ACCA is written into the law. It says you have to pass all ACCA papers to become a licensed accountant," Monger said.
In January a delegation of the Afghan Ministry of Finance came to London to sign a Memorandum of Understanding with ACCA aimed at assisting with the implementation of the law, which includes the creation of a national professional body.
ACCA will play a part in implementing the Afghan accountancy law, according to Monger.
"As we would say in the US, the devil is the details. You can put something on paper and it doesn’t mean anything on paper if it can’t be appropriately implemented," he said.
Afghanistan Ministry of Finance representative Naim Sadat told The Accountant during his visit to London: "The regulator is a government organisation to be called the Afghanistan Accountancy Board. That’s different from any private professional association. So it would be regulated by the government."
Grant Thornton Afghanistan vice-president Saqib Rehman Qureshi said this raises two concerns with regard to the implementation of the law.
First, he said, the Ministry of Finance would want to take the control of the situation, placing the institute and regulator under its structure. "It’s a bit of a concern in what direction they will go," he said.
The second concern is related to the requirement of being ACCA-qualified in order to become an accountant.
"The ACCA is a foreign qualification not specifically designed for Afghanistan. I’m of the view that the future Afghanistan Accountancy Board should have its own standards, because it’s a primitive economy," Qureshi said.
Qureshi suggested a gradual approach: "There’s no stock exchange or capital markets. So initially you would go over the simple accounting standards and once the economy is more developed you can have more complex standards such as IAS 22 [for business combinations], derivatives, financial instruments, etc."
Read the full The Accountant’s Afghanistan country survey here: