1. EU-REPARIS Under the Enterprise Development and Innovation Facility
Current engagement with Western Balkan countries through REPARIS
CFR: what it is and why it is important
REPARIS: what do we do
Relevance to SMEs
Progress to date
Proposed new EU-REPARIS: demand and need for it
World Bank CFRR: role and added value
Henri Fortin, Head, World Bank CFRR
Multi-beneficiary Private Sector Programming Working Group
10th SEEIC Meeting - RCC - Sarajevo, 25 April 2012

2. Present briefly EU-REPARIS to Private Sector Programming Working Group
Objectives
Present briefly EU-REPARIS to Private Sector Programming Working Group
Answer questions from the WG
The European Union’s Regional IPA Programme for the Western Balkans
Accounting Reform and Institutional Strengthening for SME Development
in the Western Balkans
EU-REPARIS
Under the Enterprise Development & Innovation Facility
Project concept (revised April 2012)
Prepared by the World Bank
Centre for Financial Reporting Reform

3. Benefits of financial reporting for SMEs
“No transparency, no trust
no trust, no credit
no credit, no investment
no investment, no growth”
Martin Gruell, CFO Raiffeisen International
REPARIS Ministerial Conference, Vienna, 2006
A modern financial reporting system helps create a business climate that supports sustainable growth and can lower the barriers facing high-potential SMEs
Key for SMEs seeking venture capital investors
Contributes to higher credibility vis-à-vis lenders and enhanced credit quality of SMEs
A core element of the modern language of business
Simple systems with clear relationship to tax reporting help reduce the burden of tax compliance on local SMEs

4. EU-REPARIS and SMEs
Adapting country systems to provide tailored solutions to SMEs
Building countrywide capacity for accounting & tax professional services to SMEs
Equipping SME with skills to translate business ideas into fundable, sustainable proposals
Pilot project on SME financial reporting in the context of loan applications
Bankability and investability 
Cost of doing business 

5. EU-REPARIS within EDIF
Fully-aligned objectives: improving access to finance and the business environment for high-potential SMEs
Activities could be expanded to include TA in related areas (e.g., corporate governance)
Closely integrated through
Technical advice to other EDIF components/activities on issues involving financial reporting and auditing
Implementation alignment and synergies
Close coordination with and regular reporting to EDIF partners
Agreed-upon arrangements at EDIF level will be strictly applied
Vienna facilities available for EDIF regional meetings
Shared or consolidated networks of participating-country experts/officials

6. Attachment: Presentation to RCI Steering Committee on EU-REPARIS 13 December 2011, RCC Sarajevo

7. Current program for W. Balkan countries
Western Balkan countries: EU enlargement countries
Implementing the acquis communautaire in the area of corporate financial reporting
Since 2008: “REPARIS” program to support Accounting Reform and Institutional Strengthening in W. Balkans
Regional activities and in-country engagement
Significant results to date
Increased country ownership and commitment for reform
Enhanced capacity
Laws being drafted, institutions established / strengthened
Transposition and implementation are happening
REPARIS program (funded by Austria, Lux. and Switzerland) comes to an end in 2013
Presentation to
RCI SC on 13/12/11

8. Financial Reporting: What and Why
Corporate Financial Reporting: essential to competitiveness and sustainable economic development
No numbers – no knowledge: numbers tell the story of what happened and what is planned, for all enterprises
Same number system is needed to compare one company with another and one year with the next
A financial reporting system is needed to set clear requirements on reporting by enterprises
Institutional arrangements for auditors and accountants to ensure quality/integrity of audit and accounting services to enterprises
Standards ensure that the same transactions accounted for using the same approach
EU standards provide a common approach for single market and single economic space
Presentation to
RCI SC on 13/12/11

9. Benefits of sound corporate financial reporting
Growth and employment generation
Improved public administration
Financial stability and development
Investors
Banks
Statistics office
Financial sector
regulators
Tax authorities
Public at large
Reliable, transparent and comparable accounting and financial reporting
While avoiding undue costs
Presentation to
RCI SC on 13/12/11

10. CFR and Small and medium enterprises
Ensure that the country systems provide tailored solutions for SMEs and small and medium accounting/audit practices
Avoiding a one-size-fits-all approach
CFR not only about large corporations and fin. institutions
EU focus on simplification and “think small first”
Training of trainers on relevant standards
Building countrywide capacity to provide SMEs with professional services in accounting and tax returns
Equipping SME with skills to help them translate business ideas into fundable, sustainable proposals
Increased bankability / ability to secure capital funding from private investors, donors, etc.
Reduced cost of doing business
Presentation to
RCI SC on 13/12/11

11. EU-REPARIS: Objectives
Support participating countries in
Efforts toward completion of acquis transposition
Developing capacity to implement the acquis and thus achieve quality financial reporting and audit practice
Practitioners’ capacity to apply EU standards
Regulators’ capacity to enforcement / supervise
Policymakers’ capacity to adapt the country system to evolving EU framework
Financial reporting literacy among the business community
Support the process by which EU monitor progress in implementation of the acquis
Presentation to
RCI SC on 13/12/11

12. EU-REPARIS: Focus areas
Help countries develop a record of successful implementation of the acquis
Policy advice and technical support in partnership with
Commission / DG Internal Market and Services and
Other institutions of the EU (EFRAG, EBA, etc.)
Draw on the experience of countries that have already completed the process (existing member states, Croatia and other participating countries)
Build on the work completed and achievements of current REPARIS program, ensuring the reform effort is sustained
Presentation to
RCI SC on 13/12/11

13. EU-REPARIS: Overall approach
Presentation to
RCI SC on 13/12/11
EU acquis communautaire
International standards, other good practices
Effective, sustainable implementation
Peer learning and tailored support
Helping participating countries gain a better understanding of the EU acquis and facilitating the partnerships and dialogue with peer institutions within the EU and globally required to underpin sustainability
Enabling the identification, development and replication of a common approach to resolving shared reform challenges
Assist the participating countries in implementing reforms successfully.
Knowledge sharing
Lessons from successful implementation
in participating countries

14. Role of World Bank-CFRR
World Bank committed to supporting enlargement countries
CFRR was set up to provide specific expertise in corporate financial reporting
Other programs implemented by CFRR support the ongoing efforts in W. Balkans
Financial Reform Technical Assistance Program for member states that joined the EU in 2004 – knowledge cascade opportunity
ROSC program
CFRR management and administration capacity
Expertise in implementing reform to align financial reporting systems with the acquis
Close relations with relevant institutions of the EU and international organizations
Presentation to
RCI SC on 13/12/11

15. Concluding thoughts Well-functioning financial reporting systems:
key to competitive market economies
Support free movement of capital, single economic space and EU integration
W. Balkan countries have started the process to implement the CFR elements of the acquis, with some successes to date
More needs to be done – reform effort needs to be sustained
CFRR: strategic partner of W. Balkan countries and EC
Proposed EU-REPARIS:
Draws and builds on existing program
Increased focus on implementation
Flexible and targeted to produce tangible benefits for each country and W. Balkans as a whole
Presentation to
RCI SC on 13/12/11
END