KARACHI (May 02 2005): The Federal Minister for Privatisation and Investment, Dr Abdul Hafeez Shaikh, has said that to achieve sustainable economic growth in any country, there must be sound and reliable financial and audit systems. This he stated in his massage which was read out at a seminar on 'Globalisation: the Challenging Role of Accounting and Auditing', organised by the School of Business Studies (SBS) at a local club on Saturday.
The minister had to address the seminar as chief guest but due to arrival of Japanese Prime Minister in Islamabad he could not attend the seminar and sent a message, which was read out by Muhammad Afzal Munif.
The minister said that to obtain market confidence, these systems should be characterised by high quality, transport financial reporting, based on a robust set of internationally accepted standards; codes of conduct for all participants in the financial reporting process with ongoing monitoring of compliance; good governance policies; regulatory structures that result in high quality performance of all those involved in financial reporting, and comply with audit rules and regulations.
He said that for the developing countries, to be more fully integrated into the global financial and economic system, ways must be found to reduce risks and uncertainty and to assure investors that their investments in the country are what they appear to be. As an International Monetary Fund briefing pointed out, this is also needed for investment among industrial countries where legal and institutional frameworks do differ from one country to another. Having adequate common standards across countries can provide international investors with needed assurance, he added.
He said that the role of the accounting profession is to provide quality data, but there must also be a demand for this quality data from governments, fund providers, credit and ratings agencies, development banks and other involved in the development process. Partnerships between funding recipients and donors can also improve the demand and quality of the data provided. A commitment to good governance and strong development policies is essential for any successful development strategy.
However, he said, there must also be recognition and acceptance of the role the accounting and audit profession plays and the necessary legislative framework and authority for the profession around the world. Without this authority, there may be no demand for work of the profession or, worse, the information prepared may have no legitimacy.
He said that keeping in view the global changes, the Government of Pakistan launched a project for improvement of financial reporting and auditing practices in the government sector, in collaboration with the World Bank and the International Development Association, to meet the challenges of global requirements, which the new accounting system has based on international standards.
This system has brought multidimensional reforms involving multiple stakeholders and re-engineering of business processes which have been in vogue for over a hundred years in the Government of Pakistan, he said, and added that one of the important segments of this system is development of a core accounting and budgeting system.
This revised accounting and financial reporting model is an integrated financial management systems (IFMS) that makes use of a state-of-the-art information technology to generate timely, reliable and relevant information for budgetary management, financial control, cash forecasting & trend analysis, fiscal administration and debt management, he said.
The minister said that the federal and provincial governments through the use of this system would be positioned to make informal decisions to optionally use public funds and better manage government finances.
Hafeez said that to meet the growing requirements of globalisation, the changing role of accounting and auditing profession, the new accounting model includes development of modern financial auditing techniques based on international best practices and adoption of international auditing standards developed by 'Intosai'.
Institutionalisation of training in the department after assessing its training needs better management of the HRM through revision of procedures, development of a Strategic Information Management System and initialisation of HR MIS. A change in management component has been visualised to ensure that all changes are managed in a systematic way, he added.
He said that the system aims to bring about unprecedented institutional changes in a continuously changing domestic and international scenario. The new financial reporting and auditing system is envisaged to adopt and implement best business practices, modernise government audit procedures, adopt internationally accepted accounting and auditing standards, improve financial accounting and budgeting systems, go for tighter internal controls and build staff capacity/capabilities.
The minister expressed hope that globalisation would plays an important role in the changing scenario of the accounting and audit systems. “It is pertinent to say that education of accounting and audit is most essential to track the business record within stipulated business regulations,” he said. He advised to excel skills in both fields, which would help in preparing for leading place in the business society and would also provide an opportunity to contribute to the country.
Musharraf Zaman Khan, Executive Director, SBS, said: “In this fast changing world, we have to rapidly adopt new technologies and techniques to fulfil the need of the customers. We also have to make conscientious efforts to project a professional image, both at individual and national levels.”
He said: “We need to remember at all times that our customers are sitting far away in other countries, connected with us through satellite or fibre optics and they are banking on us to deliver quality result. We can't let them (and Pakistan) down.”.
Yaseen Lakhani, Chairman, Karachi Stock Exchange, Danishmand, Dean/Director, Institute of Business Administration, Masuod Ali Naqvi, Arif Masood Mirza, Shahzad Chamdia, Najamul Islam and Ebrahim Sidat also spoke on the occasion, while a large number of professionals, bankers, businessmen, intellectuals and students attended the seminar.
