From Diagnostic to Reform Washington DC – April 4, 2006 David Nagy Financial Management Consultant Europe and Central Asia Region THE WORLD BANK

East Asia (Thailand) Background: Philippines Malaysia Hong Kong Need for a Strengthened International Architecture Background: 1990s – Emerging Market Crises and contagion effects East Asia (Thailand) Philippines Malaysia Hong Kong Indonesia Taiwan South Korea

The Financial Sector Assessment Program—FSAP FSAP and ROSC Background: The G-7, World Bank, IMF: focus on crisis prevention The Financial Sector Assessment Program—FSAP The Reports on the Observance of Standards and Codes—ROSCs

Aim of the A&A ROSC Objectives: Avoid: Origins of the ROSC Program Aim of the A&A ROSC Objectives: Avoid: help policy makers to establish a corporate financial reporting environment conducive to sustainable economic growth and private sector development - provide more and better information to markets so that they can price risks more appropriately

The Role of the World Bank Background: The role of the World Bank: Fight against poverty! No reliable financial statements = no efficiency = no economic growth = no reduction in poverty.

Assessing the Quality of the A&A Framework Benchmarks for Accounting and Auditing ROSC Assessing the Quality of the A&A Framework International Financial Reporting Standards International Standards on Auditing Acquis communautaire Good international practice

The ROSC program: Comprises 12 Fundamental Standards Insolvency & Creditor Rights Corporate Governance Insurance Supervision Banking Supervision Securities Regulation Accounting & Auditing

ROSC is a the first step in the process of reform Financial Reporting Infrastructure (1/2) ROSC is a the first step in the process of reform Accounting Standards Statutory Framework Monitoring & Enforcement Education & Training Accounting Profession & Ethics Auditing Standards

All supporting pillars need to be strengthened Financial Reporting Infrastructure (2/2) All supporting pillars need to be strengthened Accounting Standards Statutory Framework Monitoring & Enforcement Education & Training Accounting Profession & Ethics Auditing Standards

A&A ROSC Global Coverage of ROSC Europe and Central Asia East Asia Middle East and North Africa South Asia Latin America and the Caribbean Africa

Global Coverage of ROSC Source: World Development Indicators Database, World Bank

A&A ROSC in Europe and Central Asia Region Source: World Development Indicators Database, World Bank

From Diagnostic to Reform Country Action Plan Country Strategy and Action Plans (CAPs) The World Bank assisted steering committees in Bulgaria, Romania, Macedonia, and Bosnia and Herzegovina to draft their CAPs. Support implementation and funding the CAPs - mobilizing financial support from Bank and development partners. Road to Europe – Program of Accounting Reform and Institutional Strengthening (REPARIS)

From Diagnostic to Reform The Lessons Learned From Diagnostic to Reform Seven points for success: Country ownership Involvement of all interested parties Realistic timetable Prioritize Discussions with counterparts in neighboring countries and EU member states Cooperation with European and international institutions Address both statutory and institutional issues. The improved statutory framework must be implemented and enforced.

Regional Program Road to Europe: Program of Accounting Reform and Institutional Strengthening

REPARIS Vienna events Vienna events On March 14, 15 and 16, 2006, the World Bank, in collaboration with the European Commission and support from the Austrian Development Cooperation, held a two-day series of workshops and a ministerial conference at the Hofburg Palace in Vienna. 65 speakers 335 participants Training workshops Sharing experience of EU Member States

REPARIS secretariat REPARIS secretariat Academic Education IFRS Courses Tools to enhance statutory audit quality Coordination of enforcement activities Twinning and secondment Facilitation of information exchange and cooperation, Etc. The REPARIS secretariat will oversee the following activities:

Thank you for your attention! Contact: dnagy@worldbank.org Thank you for your attention! For more information, please visit: The Reports on the Observance of Standards and Codes (ROSCs) www.worldbank.org/ifa/rosc.html The Road to Europe: Program of Accounting Reform and Institutional Strengthening (REPARIS) www.worldbank.org/reparis The Advanced Program in Accounting and Auditing Regulation www.worldbank.org/eca/aa