This report, on the strengths andweaknesses of Slovakia's institutional arrangements forthe observance of the International Accounting Standards(IASs), and International Standards on Auditing (ISAs), isbased on a self-assessment of accounting and auditingpractices in the country. The self-assessment exercise wasconducted under the management of a National SteeringCommittee, consisting of representatives from government andprivate sectors, assisted by Bank staff. Slovakia'slegislative requirements on accounting and corporatefinancial reporting seem to be geared toward satisfying theinformation needs of the tax authorities only; other users,including investors and creditors, have difficulty in makingmeaningful use of the financial statements formarket-oriented decision making. There is a large gapbetween Slovak accounting requirements, and the IASs.Although listed companies are required to prepare financialstatements in accordance with the IASs, in addition tostatutory annual financial statements, there is no mechanismto monitor and enforce this requirement. In the auditingarea, too, a number of problems indicate the need for awell-organized reform program: auditors' failure tocomply with internationally comparable independence, andethical requirements, inadequate capacity of the SlovakChamber of Auditors (SKAu) to properly regulate theprofession, shortcomings in educational and trainingarrangements with regard to the practical application ofhigh-quality accounting and auditing standards andrequirements, and, absence of effective mechanisms forenforcing established rules and regulations. The NationalSteering Committee in a joint meeting with Bank Staff agreedwith various policy recommendations that will form the basisfor designing, and implementing a Country Action Plan toaddress the issues concerning accountancy development, andobservance of international accounting and auditingstandards in Slovakia.
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