The accounting industry is bracing for its new role as accountants are increasingly seen as an important part of the anti-corruption efforts in the private sector of Azerbaijan.
Over the past decades the state’s limited oversight role in the economy took the form of tax legislation enforcement, leaving much room for self-regulation. This approach was later tainted by the surge of corrupt behavior, which prompted the government to probe a new proactive role.
In addition to a set of comprehensive and multifaceted reforms, the Azerbaijani government launched its plans of expanding installation of the International Financial Reporting Standards (IFRS) and introducing the accreditation, certification and roosters of chartered accountants and firms. State oversight of accountancy will be through reviewing of the accounting arrangements in the course of financial control and tax audits and penalizing for violations.
According to the UNCAC, enhancing the accounting and auditing standards in the private sector should be coupled with civil, administrative or criminal penalties. In its latest 2009 report on Azerbaijan, the Council of Europe anti-corruption watchdog GRECO pointed at several outstanding issues in this field. As of today, accounting violations, such as the failure to comply with the rules for storing documents, correct reflection of indices, etc., entail limited and a low range of administrative penalties, with little room for differentiating between the types of behavior varying in gravity.
Despite the lack of specific accounting criminal offenses, the authorities are prosecuting accountants for corruption offenses, doubling the number of prosecutions since the previous year. However, the outright incrimination of the accounting offenses would send a clear and unambiguous message to the industry in tune with the new policy.
With accounting standards gaining momentum, expectations toward accountants have increased dramatically, to that of an impartial anti-corruption watchdogs in the private sector.
However, in order to galvanize accountants in their new roles, administrative measures and disciplining might not be enough. Transparency and accountability should also be supported through instilling integrity. Professor Howard Whitton mentions promotion of ethical values and integrity by strengthening the ethical competence and mechanisms to support “professional ethics,” such as proper institutionalization of the compliance measures, the introduction of the code of behavior, coupled with the adequate training and education, in relation to implementing effective ethics standards in the public sector. The state could also take a similar role by supporting and streamlining the parallel efforts of stakeholders.
While the global debate about the anti-corruption role of accountants increases, Azerbaijan finds itself in tune with the reforming trends. The steady course towards regulation and disciplining among accountants may contribute to the launching of the qualitatively new, responsible, and effective industry to move past an accounting system that has already proved to be ineffective and corruption-blind.