THE CURRENT CHALLENGES IN THE REGULATORY SYSTEM OF ACCOUNTING AND AUDITING ACTIVITIES IN GEORGIA

Abstract

  Accounting and auditing are essential elements of con- temporary economic relations. Their importance and the need for their development are constantly growing. Such rel- evance of the issue has paved the way for our interest in this subject, and accordingly, the purpose, objectives, subject, methods and the informational basis of research have been determined.
  The purpose of research is to identify the areas where improvements  could  be  made  in  accounting and  auditing regulation for private sector enterprises in Georgia, based on international experience, the country’s international commitments and the characteristic features of   economic development.
  The analysis of the legislative frameworks in force, es- tablished practice and international experience allows us for defining the major aspects of the regulatory improvement of accounting and auditing activities, as well as for developing measures that must be undertaken in the separate important areas. In particular:

• To determine an optimal model of accounting;
• To identify of levels of accounting records maintenance;
• More effective use of resources of the International Federation of Accountants (IFA) and other international organizations at the national level;
• Accelerating research on developing the accounting and auditing field;
• Setting up effective regulatory and/or self-regulatory body of the field of accounting and auditing;
• Establishing the auditing quality control system;
• Ensuring  compliance  with  international  standard requirements for financial accounting.
• Introduction of the continuous education system;
• Improvement of the regulatory legal framework.

  Studies conducted allow us for compiling the regulating algorithm consisting of three main components:  training  and  certification; methodical  and  methodological support; and supervision.
  Training and certification. Training (including  continuous training), in compliance with programms accredited by the Servce, should be provided by professional organizations; certification should be independently provided by the National Assessment and Examination Center on the basis of passing the professional examination, in compliance with the examination program accredited by the Service.
  Studies conducted clearly demonstrate a low level of compliance with professional standard requirements and practice in Georgia that is mostly due to the lack of appropriate methodologies, methodical guidelines, supporting manuals and legal acts. A high level of this correlation has also been confirmed using the examples of many other countries. In the component, we should highlight the preparation of these materials on the one hand, and on the other hand, transfering them directly to the consumer. We believe that the preparation of materials should be provided by the Service for Accounting, Reporting and Auditing Supervision in close cooperation with international and local professional organizations and academic staff; these materials should be transferred to representatives of the profession/practioners by professional organizations.
  This is a key component of the algorithm, which should ensure the effective functioning of the remaining components. It should become a guarantor of compliance with  the requirements of national legislation, international standards and other regulating documents and the minimum requirements of the quality of services provided. Based on the conducted studies, it may be stated unequivocally that the only optimal option in modern conditions for our coun- try is the existence of a state supervisory body in the field of accounting and auditing. Furthermore, for this stage, the functioning of the Service for Accounting, Reporting and Auditing Supervision within the Ministry of Finance is not a bad decision, although in order to increase the effectiveness of activities, it is necessary to implement gradual transforma- tion of the Service in accordance with the model we have propose.