IIEffective Insolvency and Creditor Rights Systems
Writing for the Organization for Economic Cooperation and Development, Elena Mireya observes that although at present Jordan lacks much by way of a formal insolvency regime, it has initiated a public-private sector review of existing insolvency legislation in order to develop a more sound legislative framework. This could even entail the drafting of a unitary insolvency law. She notes that the present laws place secured creditors at a disadvantage, and adds that Jordan has no specialized insolvency courts or judges. The Ministry of Justice does offer training courses, some of which address insolvency issues, but these are not established in any systematic way. Further, the current law provides only for liquidation, and makes no formal provision for restructuring or rescue. While the Ministry of Industry and Trade is attempting to promote a restructuring alternative, it has met with little cooperation from the banking industry. Despite this information, there is insufficient publicly available information that directly addresses Jordan's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.
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IDInternational Financial Reporting Standards
In its 2004 assessment of accounting and auditing practices in Jordan, the World Bank noted that Jordanian authorities expressed their intention to bring accounting standards in to line with International Financial Reporting Standards (IFRSs) and have achieved significant results. However, major challenges remained. For instance, there is no legally established accounting and auditing standard setting body in Jordan and unregulated entities are not required to follow any specific accounting standards. For regulated entities, accounting and auditing requirements are set by the respective regulator - Jordan Securities Commission (JSC), Central Bank of Jordan, and the Insurance Commission - which mandate the use of IFRSs. However, the lack of guidance on the implementation of IFRSs results in divergent practices as preparers of financial statements and auditors interpret the standards based on their understanding of the standards. Also, in the case of the JSC, the applicable laws and directives state that if IFRSs contradict national legislation, the latter shall supersede. The World Bank noted that enforcement of compliance with accounting requirements is not well coordinated between the regulatory bodies and recommended focusing on strengthening enforcement mechanisms to ensure compliance with the established requirements.
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ENPrinciples of Corporate Governance
According to a 2004 World Bank assessment of Jordanian corporate governance practices, Jordan has made much progress in the regulatory environment since the 1990s. Particularly, with the creation of the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE), the Securities Depository Center and the subsequent amendment of the Securities Law of 2002. In general, the assessment found relatively good disclosure practices but indicated that the development of modern board practices is at an early stage. The report also identified a number of areas where basic shareholder rights could be improved. Despite these weaknesses the assessment of the individual Organization for Economic Cooperation and Development (OECD) Principles of corporate governance found a satisfactory level of compliance. The World Bank's key recommendations included developing a Code of Corporate Governance, strengthening enforcement of disclosure provisions and the revision of Company Law in order to bring the policy framework in line with the OECD Principles. A 2007 JSC Annual Report notes that a draft corporate governance code for shareholding companies listed on the ASE has been introduced. In addition to the OECD principles and the recommendations submitted to the JSC by the World Bank, the draft code was prepared based mainly on the Securities Law, related regulations, and the Companies Law.
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IDInternational Standards on Auditing
According to the World Bank's 2004 assessment of accounting and auditing practices in Jordan, the Jordanian authorities expressed their intention to bring auditing standards in line with International Standards on Auditing (ISAs) and have achieved significant results. Although application of ISAs is required for all listed companies, and many audit firms claim to be using ISAs, the applicable auditing standards are not specified. A 2006 self-assessment by the Jordan Association of Certified Public Accountants claims that all new pronouncements issued by the International Auditing and Assurance Standards Board are applicable in Jordan, however, there is no further information on exactly which version of ISAs are applied and what type of companies are required to use ISAs. In 2003, a new Accountancy Profession Law 73/2003 established the High Council for Accounting and Auditing, which is responsible for the oversight of the auditing profession and for approval of accounting and auditing standards. However, the World Bank noted that the Act fails to address a number of important issues, including auditor independence and enforcement mechanisms for compliance with applicable auditing standards and the code of ethics. Overall, the World Bank pointed out that inadequate coordination between the regulatory bodies with regard to enforcement, the lack of sufficient knowledge of ISAs and availability of translations of ISAs result in partial compliance with existing auditing requirements. It was, therefore, recommended to focus on strengthening enforcement mechanisms to improve the quality of information provided in financial statements.
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IDAnti-Money Laundering/Combating Terrorist Financing Standard
According to the IMF's 2004 Article IV Consultation report, once the draft law on anti-money laundering (AML) is passed by Jordan, the country will be brought into full compliance with international standards. On May 2007, Jordan's Parliament endorsed this law on anti-money laundering. However, due to the relative newness of the law, there is little information publicly available addressing its comprehensiveness. A 2008 report by the U.S. Department of State (DoS) notes that Jordan enacted the AML law in 2007, and that the law criminalizes money laundering and stipulates as a criminal offense any crime stated in international agreements endorsed by Jordan. Revisions made to the Penal Code in 2001 criminalizes terrorist activities, specifically the financing of terrorist organizations. However, the 2008 U.S. DoS report points out that the government of Jordan still faces significant challenges and is still in the process of determining which law enforcement agency will be responsible for the conduct of financial investigations relating to AML/combating the financing of terrorism (CFT) activities. The AML law established the Anti-Money Laundering Unit as the designated Jordanian Financial Intelligence Unit and also provides the framework for freezing and seizing of funds related to money laundering. With regard to international treaties, the 2008 U.S. DoS report notes that Jordan has signed but has yet to ratify the UN Convention against Transnational Organized Crime. Despite the 2007 AML Law and remarks in the 2004 IMF report noting that the enactment of the law would in effect bring Jordan into full compliance with international standards, there has been no comprehensive assessment since the passing of the law on Jordan's compliance with the Financial Action Task Force's forty recommendations and nine special recommendations.
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IDCore Principles for Systemically Important Payment Systems
Jordan's payment system generally follows international standards and codes with regards to its regulatory and supervisory framework according to information provided by the IMF in its 2004 Article IV report. According to a 2005 report by the Independent Evaluation Office (IEO) of the IMF, the IMF did conduct a Financial System Stability Assessment (FSSA) of Jordan, but the Jordanian authorities declined to publish it. Based on information provided in this 2005 IEO report, the FSSA indicated that the Jordanian payment system is a well-functioning and advanced system exhibiting a high level of compliance with international best practices. Beside this statement, however, there is no further information assessing Jordan's payment system against the Committee on Payments and Settlement Systems' (CPSS) Core Principles for Systemically Important Payment Systems (CPSIPS). Nor is there any information provided by the Jordanian authorities as to the systemically important payment systems operating in the country or their compliance with the principles. The 2005 IEO report's statement alone does not provide satisfactory grounds for assigning a compliance level for Jordan for this standard. However, information provided on the Central Bank of Jordan (CBJ) website indicates that Jordan's Real Time Gross Settlement System (RTGS), RTGS-JO, is based on the recommendations set forth by the Committee on Payments and Settlement Systems (CPSS). In light of this declaration by the CBJ and the 2004 and 2005 reports by the IMF, there is enough evidence suggesting that the Jordanian authorities are committed to advancing the country's payment system in line with the CPSS' CPSIPS.
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