Evolution of Mongolian Accounting
From International Business Wiki
Mongolia was under Chinese rule until they fought for their independence in 1921. It wasn’t until 1922 that Mongolia first incorporated an accounting infrastructure, and like the Soviets, adopted communism. Due to their close proximity, among other things, they shadowed the Soviets closely. In fact, the Uniform Accounting System used by Mongolia at the time was directly taken from the Soviets.
Communism thrived well into the 1930s and used central planning as a focal point of communism which promoted standardization, uniformity and keeping statistics. Their rules and record keeping were so good there was no need for accounting. When it came time to beginning using accounting principles though, it wasn't very hard for the Mongolians to adapt as the Soviets had taught them well, laying a strong foundation. Mongolian businesses started using accrual method accounting and double entry bookkeeping. They also had to begin to learn how to train people to be employed in elemental accounting positions as the Mongolian economy began to prosper. The stronger accounting infrastructure proved to be helpful in changing Mongolia into more of a market economy.
The Mongolians had a very close relationship with the Soviets for well into the late 1980s. It was then that Mongolia started moving away from communism and move more toward a socialist economy; a time of greater cultural and religious freedom, free multiparty elections and a new constitution.
In 1993 the Mongolian Ministry of Law and Finance (MOFE) passed the Accounting Law 1993, stating businesses must start using balance sheets and maintain accounting records in both the private and public sectors. MOFE had to approve all financial statements and it required that accounting standards follow International Accounting Standards.
Later that year the National Association of Certified Public Accountants (CPA) was established and the inaugural CPA exam was given in July 1993. It was criticized at first for it's weak standards, but in 1997, laws stiffened with the Auditing Law 1997 which called for a 3-stage exam but no continuing education needed. This helped propel Mongolia into developing more accounting policies that were more based on International Accounting Standards.
Today in Mongolia, accountants are not in short supply, but corruption is rampant. In order to protect itself against accounting fraud, the USAID Office of Inspector General provided fraud awareness and audit briefings with hopes of curtailing some of the corruption.
[edit] See also
- Implementing International Accounting Standards in Mongolia
- Mongolian Measures against Government Corruption and Bribery
[edit] References
- Narayan, Francis B. (2000). Executive Summary. In the Financial Management and Governance Issues in Mongolia. Retrieved March13, 2008 from http://stone.undp.org/undpweb/eo/evalnet/eval-net/document/ADB%20Mongolia.pdf
