Financial Reporting Requirements in Afghanistan: A Focus on Global Standards

The Central Bank of Afghanistan has made a significant commitment to enforcing International Financial Reporting Standards (IFRS) for all financial reports submitted by banks and other financial institutions. This move reflects the country’s efforts to align its financial reporting requirements with international best practices.

Adoption of IFRS Standards

According to Article 54 of the Corporations and Limited Liability Companies Law, all companies in Afghanistan are required to prepare their financial statements in accordance with IFRS standards. The law also mandates that these statements include a balance sheet and profit and loss statement for the fiscal year, which must comply with applicable accounting standards set forth by the International Accounting Standards Board.

Banking Requirements

The Law of Banking requires banks to follow accounting standards prescribed by regulation of the Central Bank, including the use of IFRS standards. This means that all financial institutions in Afghanistan are subject to the same global financial reporting standards, ensuring consistency and transparency in their financial reporting.

Progress Towards Adoption

Despite the absence of a formal stock exchange in Afghanistan, the country has made significant progress towards adopting international financial reporting standards. The adoption of IFRS standards for all companies, except micro-sized ones, demonstrates the country’s commitment to moving towards a single set of high-quality global accounting standards.

Translation and Implementation

Although there is currently no formal process for endorsing new or amended IFRS standards, the Central Bank has recognized the need to translate IFRS standards into Dari, one of the two official languages of Afghanistan. However, this translation process is currently not applicable due to the lack of an existing stock exchange in the country.

Conclusion

In summary, the financial reporting requirements in Afghanistan are centered around global financial reporting standards, with a focus on adopting International Financial Reporting Standards (IFRS) for all companies, except micro-sized ones. This move reflects the country’s commitment to aligning its financial reporting requirements with international best practices and ensuring consistency and transparency in financial reporting.

Key Points

• The Central Bank of Afghanistan has committed to enforcing IFRS standards for all financial reports submitted by banks and other financial institutions.
• All companies in Afghanistan are required to prepare their financial statements in accordance with IFRS standards.
• Banks are subject to the same global financial reporting standards, ensuring consistency and transparency in their financial reporting.
• The country has made significant progress towards adopting international financial reporting standards.