Arman Vatyan: the audit system in Armenia is not a full-fledged and reliable source of financial information for the investor

ArmInfo. There is a lack of confidence in Armenian business from outside investors. The Senior Financial Management Specialist of the World Bank (WB) Arman Vatyan expressed this opinion in a conversation with journalists on March 5 at the margins of the working conference "Improving the quality of auditing by ensuring quality control of audit activities."

As he said, traditionally in the world the fierce struggle for attraction of investments is conducted. At this historical stage, this struggle has intensified in connection with which countries are making maximum efforts in this direction, and investors are looking to where more accessible and reliable financial information is provided. The available financial information on business in Armenia, according to the expert, does not meet the requirements of an international investor for today.

The new model of presentation of accounting (financial) reporting, designed by joint efforts of the Government of Armenia and the World Bank, as noted by Vatyan, is based on the best world experience and brought into line with the EU directives. The idea of public control over the whole process at various levels, through the creation of the Chamber of Accountants and Auditors, which will be under the control of the Council of Public Control, is put at the forefront. The Chamber, in turn, will regulate the activity of all market players, and will be responsible for the quality of the audit provided. The expert urged not to forget that the auditor is a person or a structure that is responsible for the reliability of financial information and the company. Therefore, giving an opinion on the financial statements of the organization, it is important to ensure its one hundred percent reliability. "The audit system currently in place in Armenia is not a full-fledged and reliable source of financial information that can be relied on entirely, which is noted by numerous investors," he said.

Thus, it turns out that an external investor does not have access to reliable information to invest in areas of interest. On the other hand, local business is denied access to external financial sources. Studying the prospects of attracting investments, WB specialists came to the conclusion that this aspect is one of the most important factors for increasing Armenia's investment attractiveness.

In addition, according to the expert, the lack of reliable financial information on the company's activities, among other things, influences the formation of the shadow business, creates a favorable ground for shadow, since there is no distinction between the shadow and non-shadow business-all work in the same plane. The new rules restrict the scope of such activities of "shadow business", especially when they realize that the new orders open up access to finance for them, and to remain in the shadow means to rely only on very limited investments of business owners.

Lack of sufficient level of trust in business due to a lack of reliable financial information is also noted in the domestic investor, who avoid investments in local companies and start their own business. "Accordingly, the limited resources that the business has - banks, financial institutions, they are again tied up on a pledge and can not provide the flexibility and accessibility to finance that we expect," he explained.

To date, the expert has refrained to say to what extent the legislative initiative will help attract investment.  However, referring to the Georgian experience, Arman Vatyan noted the reasonableness of these reforms.  Having started much later than Armenia, he noted, neighboring Georgia implemented the system before us.  Most of the system Georgia borrowed from the model that Armenia had originally developed and had not yet managed to implement. "The logic is simple" want to attract investment in the country - to provide confidence in business, "concluded the representative of the World Bank.