Financial Crime World

Mozambique Takes Steps towards Improving Financial Reporting Framework

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Maputo, Mozambique - The financial reporting framework in Mozambique has made significant progress, with the country taking steps to adopt International Financial Reporting Standards (IFRS).

Background

The financial reporting framework in Mozambique is established under the Commercial Code 2005 and Decree 70/2009. According to a recent assessment by the Ordem dos Contabilistas e Auditores de Moçambique (OCAM), the regulatory body responsible for accounting and auditing standards in Mozambique, the country’s financial reporting framework has made significant progress.

Accounting System for Large- and Medium-sized Companies

Decree 70/2009 revised the General Chart of Accounts to establish an accounting system based on IFRS. The Accounting System for the Business Sector (SCE) comprises a Chart of Accounts for Large- and Medium-sized Companies (PGC-NIRF), which is based on IFRS as published in November 2008, with certain standards omitted.

Definition of Large Companies

Large companies are defined as those with a turnover or net asset exceeding 1,275 million Mozambican Meticals (MZN) or more than 500 employees. Public companies and companies with a majority of public equity are also considered large companies.

Simplified Chart of Accounts for Small and other Companies

In addition to the PGC-NIRF, a simplified Chart of Accounts for Small and other Companies (PGC-PE) was introduced in 2011 for small businesses with a total income and gains under 500 million MZN or less than 250 employees.

Challenges and Opportunities

While Mozambique has made significant progress towards improving its financial reporting framework, there is still room for improvement. The regulatory body responsible for reviewing, adjusting, interpreting, and updating the SCE has not yet been created, despite being stipulated by Decree 70/2009.

OCAM has taken steps to address this issue by drafting a proposal outlining how an independent standard-setting committee would function and be financed with the support of OCAM. The association has also signed agreements with relevant stakeholders to be part of the standard-setting committee, pending approval by the Ministry of Finance.

Tribunal System for Resolving Disputes

In addition to improving its financial reporting framework, Mozambique has also established a tribunal system for resolving disputes related to accounting and auditing standards. The OCAM reports that its system is operational, with an administrative court in place for members to appeal decisions made by the association.

Key Features of the Tribunal System

  • An administrative court in place for members to appeal decisions made by the association.
  • Ensures that any disputes or complaints are resolved in a fair and transparent manner.

Conclusion

Mozambique has made significant progress towards improving its financial reporting framework, adopting International Financial Reporting Standards (IFRS) and establishing a tribunal system for resolving disputes related to accounting and auditing standards. While there is still room for improvement, particularly with regards to the creation of an independent standard-setting committee, the country’s efforts demonstrate a commitment to transparency and accountability in financial reporting.