Govt amends SOEs policy to align financial reporting with global standards

Profit by Pakistan Today reported that the federal government has revised its 2023 policy for state-owned enterprises so they follow a financial reporting framework based on IFRS. The Finance Division issued the notification on October 2, after the government approved the changes on September 30. For the purposes of the amendment, IFRS covers every reporting standard the SECP issues periodically, using its powers under Section 225 of the Companies Act, 2017.

Entities regulated by the State Bank of Pakistan form an exception. For them, the central bank's statutory reporting rules, including circulars and directives issued under the Banking Companies Ordinance, 1962, will prevail over IFRS where the two are inconsistent. Exemptions and modifications that the SECP grants will also extend to SOEs registered under the Companies Act, although this is subject to the central bank carve-out. The amendment further directs the Finance Division to draft a detailed financial management framework for statutory SOEs, consulting the Auditor General of Pakistan.

Every SOE must set up internal audit arrangements under Sections 19 and 20 of the 2023 Act, with further details in Annexure 6. The changes therefore draw a line between SOEs governed by the Companies Act and entities also regulated by the SBP. The notification does not name any listed company.