Welcome to the CFRR’s second Newsletter of 2012!

The Centre’s main focus of activity in the last few months has been preparing the third REPARIS Ministerial Conference. This will be held on 31 May in Vienna and will be complemented by three linked events on specific aspects of financial reporting reform immediately before and after the conference. In addition to organizing a range of activities under its current programs – REPARIS and FRTAP –the CFRR has been working intensively on drawing up proposals for a successor for the REPARIS program, which is currently due to finish in late 2013. This Newsletter reports on all these developments and also looks forward to some of the other events that are coming up later in 2012.

Highlights of recent CFRR events

Building effective audit education and regulation

Joint EduCoP/CFR CoP workshop, 7-8 February 2012, Vienna

Joint EduCoP/CFR CoP workshop,
7-8 February 2012, Vienna

As part of the REPARIS program, the CFRR organized a two-day workshop on audit education and regulation in Vienna on 7-8 February 2012. The workshop reviewed recent international developments in the regulation of auditing, including the European Commission’s proposals for legal changes in the EU. Participants also discussed the progress made by each REPARIS country in implementing the provisions of the EU acquis in auditing and reviewed the different approaches in the EU and the region to the public oversight of auditing and to sanctions and discipline for auditors. They looked in more detail at the system of quality assurance for auditing in FYR Macedonia (see below) and Serbia’s plans to introduce a QA system. Participants also discussed the varying extent of auditing courses in universities in the REPARIS countries, the practicalities of delivering training courses for existing audit professionals on International Standards in Auditing (ISA) and the implications of IFAC’s current review of accounting education standards (IES) for audit education in the REPARIS countries.

A full summary of the event, including all the presentations, is available on the CFRR website.

Keeping prudential regulators up to date with the latest developments in bank regulation and financial reporting

In cooperation with the Croatian National Bank, the CFRR held a two-day workshop under the REPARIS program for officials from central banks and bank regulators in Zagreb on 17-18 April 2012. The workshop discussed the European Commission’s proposed Capital Requirements Directive (CRD IV), which will implement the Basel III rules in the EU, and the latest developments in the IASB’s project to update the international financial reporting standard for financial instruments (IFRS 9). The workshop also reviewed the differences between IFRS 9 and the existing reporting standard for financial instruments (IAS 39) and how bank reporting and loan loss provisioning were currently treated in the REPARIS countries. In addition, the Austrian financial markets regulator (FMA) described how it used accounting information in its work, while the Croatian National Bank and the Central Bank of Moldova outlined their experiences in implementing the EBA’s FINREP system for bank financial reporting. Drawing on experience from Moldova, participants also discussed how bank supervisors could use XBRL (Extensible Business Reporting Language) for analyzing financial information from banks.

A full summary of the workshop is on the CFRR website.

Helping Kazakhstan define a suitable accounting framework for growing SMEs

Workshop on IFRS for SMEs, 13-15 March 2012, Astana

Workshop on IFRS for SMEs,
13-15 March 2012, Astana

From 13-15 March, the CFRR and the IFRS Foundation held the third in a series of workshops in Astana on the IFRS for SMEs reporting standard. The IFRS for SMEs is a simplified version of full International Financial Reporting Standards (IFRS) and is especially suited for medium-sized firms that seek to grow quickly. The workshop, held as part of the Joint Economic Research Program (JERP) brought together accounting specialists, university teachers and policy-makers from Kazakhstan with the aim of giving them more information about the IFRS for SMEs that they could then pass on to their colleagues and students. The workshop was also attended by accounting experts from Tajikistan, Turkmenistan and Uzbekistan, which are also considering whether to adopt the IFRS for SMEs.

A full summary of the event, including detailed presentations on the main elements of the IFRS for SMEs in both English and Russian, is available on the CFRR website.

Spreading the word on accounting education: Moldova in-country event

Roundtable on accounting curricula and workshop on building effective regulation in corporate financial reporting, 3-5 April 2012, Chisinau

Roundtable on accounting curricula and workshop on building effective regulation in corporate financial reporting,
3-5 April 2012, Chisinau

One key element of the CFRR’s approach to supporting the reform process is ensuring that the insights gained in its regional events, which can only involve a limited number of participants, are passed on to as many stakeholders in each partner country as possible. As part of this process, the CFRR, jointly with the Accounting Faculty in the Academy of Economic Studies of Moldova (ASEM), organized a roundtable event on accounting education in Chisinau on 3-5 April to disseminate the results of recent regional events organized by the REPARIS Accounting Education Community of Practice (EduCoP). In particular, the workshop discussed how to make courses offered by ASEM more comparable with foreign professional requirements and also how the university sector, the profession and the audit regulator could work together to establish more relevant programs of accounting and auditing education.

A full summary of the event is on the CFRR website.

Helping Slovenian auditors carry out audits in line with international standards

Swiss Contribution

As part of the FRTAP program, the CFRR has been working with the Slovenian Institute of Auditors (SIA) to facilitate the acquisition of a specialised audit software system to support the SIA's members in carrying out audits in compliance with International Standards on Auditing (ISA). After studying the options, the SIA decided to work with the Norwegian Institute of Public Accountants to prepare a Slovene language version of the Descartes audit software system. This system is developed and supported by the Norwegian Institute in cooperation with Bouvet ASA and is widely used by small and medium-sized audit practices in Norway. A high percentage of the Slovenian audit profession has acquired a license for the software and, as a result of FRTAP support for preparation of the Slovene language version, will benefit from a reduced annual license fee during the first two years of implementation. The SIA and the audit oversight body will use the Descartes system to enhance their audit quality assurance inspection process.

Country highlights

Georgia: government is planning major financial reporting reforms

In Georgia, a new accounting and auditing law has been submitted to parliament for review. More broadly, the government feels that much of the financial reporting system will need to be updated if the government’s economic reform program, which includes the introduction of private pension funds investing members’ contributions on the capital markets, is to succeed. Another government priority is to reduce the barriers that currently restrict the flow of finance to SMEs and it hopes that improved financial reporting for such firms, perhaps involving the IFRS for SMEs, could play an important role in this. In addition, the government is planning to set up an “Alternative tax audit” scheme, which would give statutory auditors a role in checking the compliance of local companies with national tax requirements.

The CFRR is currently drawing up proposals with its partners for providing technical assistance to the Georgian authorities in implementing these reform proposals.

FYR Macedonia: improving quality assurance in auditing

Setting up reliable systems to monitor the quality of auditors’ work is a key requirement of the EU’s Statutory Audit Directive and is therefore one of the key objectives of the REPARIS program. Macedonia has made significant progress in this area: the members of the new public oversight body, independent of the profession, were appointed in January 2012 and the Institute of Certified Auditors of the Republic of Macedonia (ICARM, the local audit professional body) was now well into the second round of quality assurance (QA) reviews of the work of auditors in Macedonia. As a result of these reviews ICARM made several recommendations to auditing firms in areas where performance could be improved, including the application of ISA and the need for stronger internal controls.

For further details, see the updated presentation from Branka Stojanovska of ICARM describing its approach to implementing a QA system.

Latest developments at the Centre

REPARIS program makes further progress in 2011

The REPARIS program completed its third year of activity in 2011. Participating countries are making clear progress towards the objective of implementing effective systems of corporate financial reporting that are aligned with the EU acquis communautaire. Recent examples of progress towards this objective include:

  • New laws on financial reporting and auditing have been implemented in Moldova, while Serbia has drafted updated laws on accounting and auditing;
  • Croatia’s quality assurance (QA) scheme for audit work was recognized by the European Commission as being equivalent to those in EU member states, while QA schemes for audit have been established in Macedonia and Serbia.

The REPARIS progress report for 2011 describes the activities carried out under the program in 2011, summarizes the progress made and describes how the lessons learned in implementing the program have influenced the activities planned under REPARIS for 2012.

EU-REPARIS: A successor program to REPARIS

The current REPARIS program is due to run until late 2013 but the participating countries have expressed strong support for a follow-up program that would allow support for their programs of financial reporting reform to continue beyond this date. Over the last few months, the CFRR has been drawing up proposals for a successor program to REPARIS. The CFRR is currently discussing the details and funding of the proposed successor program, EU-REPARIS, with the European Commission, potential participants in the program and other partners with the aim of launching the new program in late 2013 or early 2014.

World Bank expands its activities in Vienna

The World Bank is strengthening its presence in Austria. The existing staff of the Bank’s private-sector lending arm, the International Financial Corporation (IFC), have moved to the same building as the CFRR. In addition, the Bank has established a new centre of specialist technical expertise in financial services, the Financial Sector Advisory Centre (FinSAC), in Vienna. FinSAC provides technical assistance on the regulation and supervision of the financial sector to central banks and financial regulators in Europe and Central Asia. The global policy response to the financial crisis, including the Basel III measures to make banks more secure, and the particular challenges posed by the integration of financial markets in Europe make FinSAC’s work directly relevant to many important policy issues. FinSAC and the CFRR are based in neighboring offices and will be working closely together, especially on the contributions of accounting and auditing to the work of prudential regulators.

New faces at the CFRR

The Centre has recently welcomed two new members of staff, Mr Akram El Shorbagi and Mr Bernhard Lindner.

Akram El Shorbagi

Akram El Shorbagi

Akram has joined the CFRR on a short-term assignment from the World Bank’s office in Cairo. He is a US Certified Public Accountant and holds bachelor's degrees in Accounting and Business Administration from Egypt. During his time at the Centre, Akram will work on updating the accounting and auditing report on the observance of standards and codes (A&A ROSC) for Kosovo and on developing and delivering a training course on International Standards on Auditing (ISA) for client countries.

Bernhard Lindner

Bernhard Lindner

Bernhard is working for the Centre on a one-year secondment from the Austrian Economic Chamber (WKO). He holds a Master's degree in international development from the University of Vienna. At the CFRR, Bernhard's priorities include preparing a publication on accounting and auditing regulation in Austria, helping the Centre to deepen its relations with the Austrian business and financial community, and carrying out a survey on corporate financial reporting in SMEs in Austria.


Upcoming Events

Enhancing competitiveness and financial stability on the road to Europe:
REPARIS Ministerial Conference and linked events

On May 31, ministers and senior officials from the countries participating in the REPARIS as well as senior policy-makers from the World Bank, the European Commission and global standard setters will gather in Vienna for the second REPARIS Ministerial Conference. They will discuss the progress made in the reform of financial reporting in their countries since the launch of the REPARIS program in 2009 and will identify priority areas for the remainder of the program.

In addition, the CFRR is organizing three additional events before and after the Ministerial Conference, focusing on the use of financial reporting by financial regulators, the development of professional accountancy organizations (jointly with IFAC) and a workshop on corporate financial reporting.

The conference brochure and details of how to register to attend the conference are on the CFRR website.

Training on IFRS for banking supervisors in Serbia, 18-19 June, Belgrade

As part of the World Bank’s Balkan Technical Assistance Facility, the CFRR is organizing a workshop for bank supervisors in Serbia on using information published in bank financial statements under IFRS for banking supervision purposes, recent developments in bank regulation and new financial reporting standards for banks. The workshop will be held in Belgrade on 18-19 June.

Workshop on the role of professional accounting organizations, 21-22 June, Chisinau

The CFRR will be participating in the sixth annual “cross-border meeting” organized by the Moldovan Association of Professional Accountants and Auditors (ACAP). The topic of this year’s event is “The role and responsibilities of the professional associations in regulating the accounting profession”. For further information about the event please contact ACAP directly (info@acap.md).

Let us know what you think

We plan to send out the next edition of the Newsletter in a few months' time. 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.

Partners of the CFRR

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