1. Reports on the Observance of Standards and Codes (ROSC) Frédéric Gielen Lead Financial Management Specialist Europe and Central Asia Region SERBIA THE WORLD BANK

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

3. Background: The Need for a Strengthened International Financial Architecture Shift from ex-post crisis resolution Ex-ante crisis prevention ROSC - SERBIA

4. Background: Origins of the ROSC program The G-22 Reports: focus on crisis prevention - Transparency and Accountability (Led to ROSC program) - Strengthening National Financial Systems - Government guarantees to the private sector ROSC - SERBIA

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

6. Importance of High Quality Accounting and Auditing Accounting and Auditing Development of Capital Markets Job Creation Financial Stability Private Sector Growth Financial Sector Development Improved Access to Credit Financial Information ECONOMIC GROWTH ROSC - SERBIA

7. A&A ROSC: Assessing the Quality of the A&A Framework Economic Context Legal & Institutional Framework Accounting in Practice Auditing in Practice Recommendations FINDINGS Factual Assessment Perceptions ROSC - SERBIA

8. A&A ROSC: Assessing the Quality of the A&A Framework Benchmarks: International Financial Reporting Standards International Standards on Auditing Acquis communautaireGood international practice ROSC - SERBIA

9. A&A ROSC: Global Coverage Latin America and the Caribbean Europe and Central Asia Middle East and North Africa Africa South Asia East Asia ROSC - SERBIA

10. A&A ROSC: in Europe and Central Asia (August 5, 2005) ROSC - SERBIA

11. The Case of Serbia: Economic Goals - Access to credit, particulary for SMEs - Development of capital markets - Development of the private sector - European Union Integration Promote: Avoid: ROSC - SERBIA

12. How can A&A help? Accounting and Auditing Development of Capital Markets Job Creation Financial Stability Private Sector Growth Financial Sector Development Improved Access to Credit ECONOMIC GROWTH ROSC - SERBIA

13. ROSC is a the first step in the process of reform Statutory Framework Monitoring & Enforcement Education & Training Accounting Profession & Ethics Accounting Standards Auditing Standards ROSC - SERBIA

14. All supporting pillars need to be strengthened Statutory Framework Monitoring & Enforcement Education & Training Accounting Profession & Ethics Accounting Standards Auditing Standards ROSC - SERBIA

15. A&A ROSC Findings Standards claim compliance with IFRS but actually diverge in some instances IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Accounting Standards

16. A&A ROSC Findings Inappropriate scope of application of IFRS IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Statutory Framework

17. A&A ROSC Findings New Law on Business Companies IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Statutory Framework

18. A&A ROSC Findings Lack of consolidated accounts IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Statutory Framework

19. A&A ROSC Findings Underpinning of the audit profession yet to be established IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Statutory Framework

20. A&A ROSC Findings No requirement for audit practice quality review IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Monitoring and Enforcement

21. A&A ROSC Findings No effective accounting standard enforcement mechanisms IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Monitoring and Enforcement

22. A&A ROSC Findings No professional qualification that can lead to auditor status IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Education and Training

23. A&A ROSC Findings Supportive of IFAC Statements of Membership Obligations (SMOs) IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Accounting Profession and Ethics

24. A&A ROSC Findings Use of International Standards on Auditing and the IFAC Code of Ethics IFRS ISA Acquis Communautaire Good International Practice (+) (-) ROSC - SERBIA Auditing Standards

25. ROSC Recommendations: Promoting Confidence in Serbian Markets Statutory Framework Accounting and Auditing Standards Academic and Professional Education Monitoring & Enforcement ROSC - SERBIA

26. Statutory Framework Sound framework conducive to reliable financial reporting -Phased-in transposition of acquis communautaire -Statutory audit requirements -Improve financial transparency requirements ROSC - SERBIA

27. Accounting and Auditing Standards Robust and internationally accepted accounting and auditing standards -Application of IFRS by public interest entities but not SMEs -Adopt current ISA in their entirety ROSC - SERBIA

28. Academic and Professional Education Underpins de facto compliance with legal and regulatory requirements -Enhance academic education -Implement professional examination -Implement and monitor CPD requirements ROSC - SERBIA

29. Monitoring and Enforcement Essential to guarantee the quality of financial information -Establish a well governed audit profession, incl. quality assurance and public oversight -Establish institutionalized financial information mechanisms ROSC - SERBIA

30. Implementing the ROSC Recommendations National Steering Committee IAIS IFAC IASB Development Partners Basel Committee European Commission & Committees World Bank ROSC - SERBIA