Stronger SMEs for Shared Prosperity – Developing Sustainable Financial Reporting Frameworks in Europe and Central Asia

A Ministerial Conference hosted in Vienna, Austria by the World Bank Centre for Financial Reporting Reform (CFRR) on 3 June addressed the importance of effective financial reporting frameworks especially in relation to improving the business environment for SMEs. More than 220 participants from 31 countries, including Ministers of Finance from Serbia, Albania and Moldova, and other senior representatives of governments; banking; business; accountants; auditors; regulators; standard setters; and academics; took part.

The conference discussed progress in the implementation of sound systems of financial reporting, crucial to providing confidence in economies and encouraging investment, in CFRR partner countries in Europe and Central Asia. CFRR programs such as REPARIS and STAREP had contributed to significant improvements in many countries and the collaboration continues.  

A particular focus of this conference was the recognition that small- and medium-enterprises (SMEs) must be at the heart of policy making.  Laura Tuck, World Bank Vice President for Europe and Central Asia, underscored their importance for creating jobs, and enabling people in all social groups to increase their incomes. “Developing environments in which business, especially SMEs, can flourish, is an important element in achieving shared prosperity. Governments need to find the right balance between effective, but not unduly burdensome or restrictive, regulation of business activities” she said.  Christian Weinberger, Senior Advisor within the European Commission agreed, “SMEs are drivers of economic growth and innovation, which is why the EU had introduced its ‘Think Small First’ principle,” he explained.

Conference participants discussed developing sustainable reporting systems for SMEs. It would be important for all the different groups present to work together to develop supportive ecosystems that were engaged with, and responsive to, SME needs. Much of this work was already underway.  Lazar Krstic, Serbian Minister of Finance, explained how Serbia had overhauled its legal framework relating to accountancy and auditing, including introducing International Financial Reporting Standards (IFRS) for SMEs, which sought to reduce the reporting burden on smaller companies, and developing simplified requirements for the smallest, micro-enterprises.  And others were actively seeking to implement change, “SMEs are the main engine of the Albanian economy” said Shkelqim Cani, Albanian Minister of Finance, “simplifying reporting requirements, while seeking to introduce EU and other international good practice, is a priority for us.”   Moldova too was “registering increased progress” in this area reported Anatol Arapu, Minister of Finance of Republic of Moldova, who continued “SMEs’ role in the economy of our small country is very important. We are strongly committed to ‘Think Small First’ by developing and implementing appropriate incentives for small business in line with EU requirements.”