This Report on the Observance ofStandards and Codes (ROSC) provides an assessment of thestrengths and weaknesses of the existing financial reportinginfrastructure that underpins financial accounting andauditing practices in Cape Verde. The assessment focuses onsix pillars of financial reporting infrastructure: statutoryframework, professional education and training, accountancyprofession, accounting standards, auditing standards, andmonitoring and enforcement of the applicable standards. Themain purpose of this assessment is to assist the developmentand implementation of a country action plan forstrengthening institutional capacity with attendant effectson enhancing corporate financial reporting in Cape Verde.The findings reveal that Cape Verde has recognized theimportance of a strong corporate financial reportingarchitecture. In terms of accounting and auditing standards,Cape Verde adapted International Financial ReportingStandards (IFRS) for the private companies and fully adoptedIFRS for banking and insurance institutions sector. However,there is no tradition of financial analysis in the country(except within the financial institutions when issuingcredit) and no credit-rating agencies. The banks do not relyon corporate financial statements; generally, the lendersmanage credit risks using collaterals. The Bank of CapeVerde mandated IFRS for banks and insurance companies in2008. In addition, the capacity of regulators would be builtto cope with the demands of IFRS-compliant financialreporting. The central bank would include in its scope theregulation of micro-finance institutions, which arecurrently unregulated. In order to improve the legalframework of corporate financial reporting, there is need toenact a Financial Reporting Act with focus on all regulatoryaspects of accounting and auditing.
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