It is imperative to well establish an accounting system for measuring costs, earnings, profits and taxes in a bid to serve the need of economic growth on both the corporate and national levels.
An efficient accounting system is highly required on the microeconomic and macroeconomic levels in Egypt.
The accounting standards are the core of governance, disclosure and transparency for all corporations. A well-designed accounting system will boost the nation’s efforts to achieve financial inclusion in the long run.
Governance, in general, applies to all microeconomic and macroeconomic aspects. For corporate businesses, it is a key factor for booming in the long term. For national economies, it guarantees a sustained, prolonged economic growth.
The accounting profession in Egypt is governed by the Egyptian Society of Accountants and Auditors (ESAA). Moreover, the country’s auditing standards are based on international standards on auditing (ISAs).
The body, which was founded in 1946, comprises chartered accountants and is responsible for developing educational and professional standards. The ESAA is a member of the International Federation of Accountants.
Why, when and how?
British economist Paul Pacter defined accounting standards as a recognized set of standards for the preparation of financial statements by business entities, identifying items that should be considered assets, liabilities, income and expense.
Good accounting standards pave the way for well-established accountability, financially measuring everything in a country. Basically, all enterprises should provide a full set of financial statements that report the financial position and results of operations.
The objective is to measure a firm’s comprehensive income, which is defined as “the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources”, according to accounting principles.
Moreover, the local banks are obliged to evaluate their internal audit systems every five years, according to regulations of the Central Bank of Egypt (CBE).
The measure is aimed at boosting governance and confidence in the local banking sector.
The local lenders should notify the central bank of the agency which will be commissioned with the evaluation prior to the process, and send a copy of the report.
For better governance
Governance is a magical wand that could turn a poor country into a rich one through socioeconomic development. Governance is the core of the nation’s Sustainable Development Strategy for 2030.
The whole concept of governance is based on transparency and openness for combating graft and laying the foundation for economic development nationwide.
Governance is simply defined as the sum of decision-making structures and principal guidelines for shaping the process of policy-making in ways that support sustainable development. The scope of governance covers a wide range of issues such as the environment, natural resources, labor, legislation and education.
The concept, in general, applies to all microeconomic and macroeconomic aspects. For corporate businesses, it is a key factor for growth in the long term. For national economies, it guarantees sustained, prolonged economic development.
Transparency and a good record of governance will pave the way for local and foreign investors.
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