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Ethiopia - ECX board to endorse auditors directive
By Muluken Yewondwossen
The external auditors directive for the Ethiopian Commodity Exchange Authority (ECEA) is expected to be issued next week.
The directive will establish external auditors who will inspect the financial statement of companies that are members of the new ECX trading system.
A source at ECEA told Capital the registration will start in January next year.
"We have set aside the next six months for the grounding of those auditors that need to complete conditions based on the directive," a source said.
The authority held a discussion with stakeholders on the draft of the directive in mid April. At a day long discussion several arguments were raised by auditors. Some of the arguments, such as the division of auditors as category A, B and C, which here include in the draft directive were opposed by the stakeholders as unsuitable given current conditions. The guidance that the auditing work should follow the International Financial Reporting Standard (IFRS) was the other article that raised a challenge from the auditors due to the fear it will make the auditing business expensive. They said that the directive may discourage small companies from auditing their finances.
A source also disclosed that the directive was revised after discussion. According to the sector experts, the directive does include modern international auditing practices, but some of it is not necessary for the country in the current business climate.
IFRS was endorsed in 2001 by the International Accounting Standards Board to improve the transparency of accounting, complement company financial information and ensure that investors receive more accurate and consistent reports. Most of the directive has been copied from this standard.
ECEA is an authorised entity to proclaim directives related to the exchange market and it controls the whole exchange system.
In the country, about sixty external auditor companies are registered and active in the sector. Any auditing organisations that have not registered by ECEA criteria do not have a legal framework to audit companies that are members at the exchange.
The new coffee, grain, pulse and oil seed trading system officially started its operation in March 2008. According to the authority source, the first auditing report will be in 1.5 years' time according to the schedule.
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