Welcome to the Autumn Issue of the CFRR Newsletter

This issue highlights the CFRR’s current and planned activities, as well as publications and updates to our website. As always we welcome your feedback and look forward to continued co-operation in the months ahead.


Financial Reporting and the EU Acquis Communautaire

The EU acquis communautaire – the shared body of laws and regulations that apply in the European Union – plays an increasing role in influencing financial reporting in EU member states and also in those countries that are negotiating to join the EU or hope to become more closely integrated with the EU. The CFRR has prepared an updated edition of its guide to Corporate Sector Accounting and Auditing in the Acquis Communautaire, which provides a broad overview of the provisions of the EU acquis in relation to financial reporting and the statutory audit.

The guide starts by summarizing the evolution of the EU from its origins to the present. It then describes how the Single Market Program (the "1992" program) led to the introduction of a common financial reporting framework across the EU. It also provides a description of the current state of European legislation and regulations across all the main areas of corporate financial reporting from the core of the guide. The guide concludes by reviewing the most pressing accounting and auditing issues that are currently facing the EU.

Dissemination of the results of the A&A ROSC for
Bosnia and Herzegovina, Sarajevo, June 2011

Dissemination of the A&A ROSC for Bosnia and Herzehovina, Sarajevo, June 2011

Dissemination of the A&A ROSC for Bosnia and Herzehovina, Sarajevo, June 2011

Staff from the CFRR spoke at a workshop in Sarajevo to disseminate the main findings of the latest Accounting and Auditing Report on the Observance of Standards and Codes (A&A ROSC) for Bosnia and Herzegovina.

The report finds that Bosnia and Herzegovina has made good progress, at both State- and Entity-levels, in aligning the laws governing financial reporting with the provisions of the acquis communautaire in this area. As a potential candidate for EU accession, Bosnia and Herzegovina needs to transpose EU laws into its domestic law. Several challenges still need to be addressed. In particular, further work is needed to implement an effective accounting framework that is relevant to the needs of small- and medium-sized enterprises (SMEs) and also to develop a system of quality assurance and public oversight for external audits.

The State- and Entity-levels ministers of finance welcomed the report and its recommendations and reiterated their commitment to pursuing the reforms needed for Bosnia and Herzegovina to meet the obligations of the EU acquis in financial reporting.

Kazakhstan: report on financial reporting for SMEs

As part of the Joint Economic Research Program (JERP) financed by the Kazakhstan government and the World Bank, the CFRR is implementing a project to investigate the potential for Kazakhstan to adopt the IFRS for SMEs reporting standard. In January 2011, the CFRR, together with the IFRS Foundation, delivered a three day workshop on the IFRS for SMEs in Astana. The CFRR then hosted a policy workshop on the perspectives for adopting IFRS for SMEs in Kazakhstan. In June, it delivered a report "Financial Reporting by Small and Medium Enterprises in Kazakhstan: Current Status and Policy Options", which the Kazakh government is currently considering.

The government and other stakeholders have already requested that the project be extended into a second phase which will be implemented in 2011-12. The main focus of this new phase of the project will be building local capacity in the new standard by organizing "Train-the-Trainer" workshops, as well as investigating the tax implications of adopting the IFRS for SMEs in Kazakhstan.

REPARIS Accounting Education Community of Practice workshop,
Vienna, 14-15 June 2011

Liam Coughlan speaking at the EduCop Workshop, Vienna, June 2011

Liam Coughlan speaking at the EduCoP Workshop, Vienna, June 2011

The latest workshop of the Accounting Education Community of Practice (EduCoP) focused on providing practical tools and guidance for those teaching accountancy and auditing in the countries taking part in the REPARIS program. The workshop provided a range of materials, with a particular focus on the challenges of teaching principles-based subjects, such as financial reporting (based on IFRS) and auditing (based on ISA). In a session designed to equip professors and tutors with broader answers to "why study accounting", presentations and discussion took place on the capacity needs for public sector financial management, the experience of the Irish Accounting and Auditing Supervisory Board in monitoring the quality of IFRS application and alternative approaches to setting the financial reporting standards for enterprises. The concluding presentations looked at how these practices varied within the region, and discussed whether integrated or separate approaches to financial reporting and accounting for tax purposes were more prevalent.

Training on tax and accounting in the Czech Republic, June 2011

As part of the FRTAP program for the Czech Republic, the CFRR organized a training course in June 2011 for selected experts dealing with IFRS and taxation issues in the Czech Ministry of Finance. The course outlined the relationship between taxation and accounting, with a particular focus on how figures presented in corporate financial accounts prepared under IFRS relate to the concepts in Czech tax legislation. Course attendees were satisfied with the content of the course and the CFRR is preparing a second round of training courses.

New on the CFRR website:
Accounting for insurance undertakings and the regulation of insurance

The Topics section of the CFRR website brings together materials from a wide range of sources to give brief introductions to a range of current issues in financial reporting. The most recent additions to this section cover the accounting treatment of insurance undertakings and the special regulatory regime which oversees the insurance sector in the EU. Both these areas are currently evolving rapidly, with the IASB drawing up new accounting rules for insurance undertakings (the IFRS 4 Phase II project) and the EU drawing up new prudential rules for insurance firms (the Solvency II project).

Upcoming Events

REPARIS training of trainers on IFRS for SMEs,
Sarajevo, 18-20 October 2011

In response to the need for strengthened financial reporting education, the CFRR, in conjunction with the IFRS Foundation, is organizing a three-day intensive "Train-the-Trainers" course on the IFRS for SMEs in Sarajevo on 18-20 October, 2011.

This reporting standard was designed for countries seeking a financial reporting requirement for non-public interest companies that is less complex and burdensome than full IFRS. Some REPARIS countries, including Bosnia and Herzegovina and Macedonia, have already adopted the IFRS for SMEs and others are considering doing so. Even in countries which do not adopt the standard, the course provides a valuable addition to the teaching resources of universities and the profession as it provides an essential introduction to the practical application of principles-based accounting. It therefore represents a stepping stone towards full IFRS for those who learning financial reporting. Attendance at the course is by invitation only but the CFRR will be publishing a full summary of the event, including most of the supporting educational material on its website.

The CFRR website already has a range of material on accounting for SMEs and the IFRS for SMEs.

REPARIS annual workshop for Senior Officials,
Vienna, 10-11 November 2011

Policy makers and heads of the corporate financial reporting/auditing departments within Ministries of Finance from the eight countries of the REPARIS region will gather in Vienna on 10-11 November for the 2011 Senior Officials Workshop. As well as reviewing the progress of the REPARIS program, the senior officials will have an opportunity to meet with leading global and European stakeholders in financial reporting and audit regulation and to learn about the policy implications of proposed developments.

REPARIS workshop on audit education,
Vienna, December 2011

The final REPARIS workshop of 2011 will focus on audit education, and will take place in December 2011 in Vienna. This event, which will combine the resources of the Accounting Education and Audit and Oversight Communities of Practice, seeks to equip stakeholders in auditing with tools and approaches to continue the effective transposition and implementation of the statutory audit directive. It will also update participants on the developing European and global initiatives in the area of audit regulation in response to the financial crisis.

Conference on the roles of the audit committee and external
auditors, Warsaw, 14 December 2011

Swiss Contribution

As part of the FRTAP program, the CFRR is organizing a conference on audit quality, with a particular focus on the role of the audit committee and how the relationship between auditors and the audit committee can be used to improve corporate governance and the reliability of financial reporting. The conference, which is being organized jointly with Poland’s Audit Oversight Commission, will be held on 14 December in Warsaw.

Supporting the implementation of continuing professional
development for accountants in the Western Balkans

In the last few months CFRR staff attended and gave presentations at the annual Continuing Professional Development (CPD) meetings of the Association of Accountants and Auditors of Republika Srpska (AAA, Bosnia & Herzegovina); the Institute of Authorized Chartered Auditors of Albania (IEKA), and the Institute of Certified Auditors of the Republic of Macedonia (ICARM). The Centre will also be represented at the joint congress of the Institute of Certified Accountants of Montenegro (ICAM), the Serbian Association of Accountants and Auditors and the University of Podgorica to be held in Budva on 20-22 October 2011.

News from the European Commission

The European Commission published its annual assessment of progress of potential new EU member states in implementing the acquis communautaire on 12 October. These reports are of particular interest to our counterparts in the REPARIS countries.

In the next couple of months, the European Commission is planning to publish its proposed revisions to the Accounting Directive and also its proposals for the regulation of auditors and statutory audits. These follow the Commission's "green paper" on auditing published in October 2010, a consultation with stakeholders and a European conference on accounting and auditing in February 2011. Although the European financial press has recently carried reports based on "leaked" versions of the Commission's proposals, until the full measures are published it will not be possible to gain a full picture of the Commission's views. The CFRR will provide a summary of the Commission's proposals, focusing on the most relevant aspects for our partner countries.

Focus on

FRTAP Poland

Improving the capacity of Polish institutions in corporate financial reporting

Swiss Contribution

The FRTAP program, funded by the Swiss Contribution to the Enlargement of the EU, aims to improve the capacity of the main institutions involved in corporate financial reporting in several of the countries of central and eastern Europe that joined the EU in 2004 and 2007. The Polish component, launched in December 2009 and running to December 2015, is the largest of the national FRTAP programs with a total budget of CHF 10 million.

The Polish program contains measures to improve the ability of accountants to prepare financial reports under International Financial Reporting Standards (IFRS) and of auditors to carry out statutory audits under International Standards on Auditing (ISA). The CFRR organized an international conference on IFRS in Warsaw in June 2011 and the first courses on IFRS and ISA have already been held under the program. These activities are being developed further and, in addition, the CFRR will begin work in the next few months to help local professional bodies to improve the provision of Continuing Professional Development (CPD).

In the area of audit regulation, the program includes assistance for the Public Audit Oversight Commission and the National Chamber of Auditors (KIBR) in designing and operating effective systems for the public oversight of audit and for quality assurance of auditors. The program funds study tours and training for audit inspectors and is supporting the creation of a national register of auditors. The forthcoming audit conference in Warsaw also forms part of the program.

In addition, the Polish FRTAP includes a range of activities to improve the capacity of local policy-makers and financial regulators to use the information in financial reports to carry out their activities. These include training courses for tax officials on IFRS, more targeted courses for financial regulators, focused particularly on the application of IFRS to the banking and insurance sectors, specialized English language training for policy-makers, a study of the local market for the provision of accounting and audit services, and a study to clarify and enhance the relationship between financial and tax reporting in Poland.

In order to monitor how well the program is meeting its objectives, an updated Report on the Observance of Standards and Codes in Accounting and Auditing (A&A ROSC) for Poland will be prepared in 2012. A second update of the A&A ROSC will be prepared in 2015, when the Polish program is due to be concluded.

Let us know what you think

We plan to send out the next edition of the Newsletter at the end of the year. In the meantime, we would be very interested to receive your views on the Newsletter and how you think it could be improved. Please send all your comments and suggestions to cfrr@worldbank.org.

Funding for REPARIS is provided by

					Development Cooperation Ministry of Finance, Austria SECO Switzerland Ministry of Finance, Luxemburg
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