. Focus of A&A Assessments
Assessments of A&A standards address financial reporting by public interest entities, which are defined as such because of their business, size, and number of employees or because their corporate status is such that they have a wide range of stakeholders. Public interest entities include credit institutions, insurance companies, investment firms, pension funds, and listed companies. The assessments cover the following four areas:
• Institutional Framework—The ROSC A&A focuses on the current state of the institutional framework and, accordingly, provides policy recommendations for strengthening it. The goal is to enable the framework to promote high-quality A&A practices. The framework assessment includes (a) the laws and regulations12 (quality of the design of the framework), (b) the history and current state of the A&A profession, (c) the strengths and weaknesses of accounting education and training, (d) the A&A standard-setting process, and (e) the arrangements for ensuring compliance with A&A requirements (enforcement mechanisms).
• Comparability of National and International Standards—One key benefit of conformity of any country’s A&A standards to IFRS and ISA is the promotion of sound financial reporting that facilitates cross-border usage. Generally, the standards and regulations of different countries have reached various levels of conformity. The methodology for this examination, which helps to identify gaps, is based on IFRS and ISA.
• Compliance with National Standards—Enforcement of the standards is a key underpinning of a sound financial reporting environment. Efficient and effective
enforcement is also important because corporate stakeholders depend on access to high-quality financial information.
• Action Plan—To strengthen the corporate financial reporting regime, the ROSC’s A&A module identifies areas for improvement. Those findings serve as the basis for working with policy makers and other stakeholders to develop an action plan to improve A&A practices.