Sector regulators raise the standard of accounting and auditing in Myanmar

 

Having been under UK rule in the 19th century and the first half of the 20th century, Myanmar has traditionally practised the same accounting and audit principles as the UK and India. While the accounting profession in Myanmar has a long history, its development has been impacted by many years of isolation. The country gained independence in 1948 following the Second World War, and employed parliamentary democracy until the military administration came to power in March 1962.

This period was characterised by nationalisation and the creation of a vast network of state-owned enterprises (SOEs), in which accrual accounting was the norm. SOEs accounting practices were established and administered by registered accountants, a profession similar to chartered accountants in the UK. Certified public accountants (CPAs) now operate according to the Myanmar Accountancy Council (MAC) Law.

Opening Up

In 1988 the military administration opened the door to private sector involvement and foreign investment in certain sectors of the economy. In this context, higher standards of private sector accounting and auditing emerged, with the use of generally accepted accounting principles and generally accepted auditing standards becoming more widespread. By 2010 the military administration had established a limited version of presidential democracy through a general election and, alongside increased private sector activity, the MAC introduced the 2009 version of International Financial Reporting Standards (IFRS) and the IFRS for small and medium-sized enterprises (SMEs), which are largely still used.

The MAC is the licensing and regulatory body for the sector, and the Myanmar Institute of Certified Public Accountants (MICPA) is the country’s professional accountancy organisation. There is a large amount of collaboration between the two authorities, although the MICPA is now recognised as an independent national accounting body becoming a member of the International Federation of Accountants soon.

Further Improvement

In an effort to raise standards, in 2018 the MAC issued notifications requiring that public interest enterprises (PIEs) introduce and practice an updated version of IFRS and IFRS for SMEs by FY 2022/23, with earlier adoption encouraged. For the implementation of the updated version of IFRS, all PIEs are expected to go through the process of first-time adoption of IFRS rules, with profit and losses backdated two years and balance sheets backdated three years. However, some multinational corporations based in Myanmar are already internationally compliant and practising the latest versions of IFRS.

Concerning the audit space, Myanmar has adopted auditing guidelines based on the 2009 version of the International Standards on Auditing Measurement System Analysis. In December 2015 the MAC issued a notification declaring that the registration of audit firms is allowed for sole proprietorship (firms owned by one individual) and for partnerships and corporate entities with shareholders, although only for CPAs. In addition, audit services are permitted only for CPAs registered with the MAC. The MAC has issued a notification for the adoption of International Standards on Auditing, International Standards on Quality Control, International Standards on Review Engagements, International Standards on Assurance Engagements and International Standards on Related Services effective from FY 2022/23, with earlier adoption permitted.

In Myanmar two of the world’s Big Four accountancy firms are allowed to perform audit activities. These are EY, through their local member firm UTW (Myanmar), and Deloitte, through Myanmar Vigour. As the country’s PIEs and multinationals continues to grow, it is strongly recommended that regulators increase the number of international audit firms permitted to operate in Myanmar.

OBG would like to thank EY Myanmar for its contribution to THE REPORT Myanmar 2020

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The Report: Myanmar 2020

Accountancy & Tax chapter from The Report: Myanmar 2020

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