The Role of Financial Reporting in the Policy Response to the Financial Crisis
The international financial crisis has had a serious impact on the countries of the Europe and Central Asia region. Growth is slower, unemployment is higher, public debt has soared, and trust in the stability of banks has been eroded. In response to these challenges, the World Bank’s strategy for the region has focused on three main pillars: improvements in competitiveness to deliver an early return to economic growth; reforms in the social sector to ensure that growth is inclusive; and action on climate change to ensure that growth is sustainable.
The three pillars are linked by a cross-cutting theme of improving governance, as it has become increasingly clear that good public and corporate governance are important to long-term economic growth.
Transparent reporting within the corporate sector plays a key role in promoting good corporate governance and in this way in supporting a sustained economic recovery. The rapid spread of the financial crisis demonstrated how interdependent national economies have become, making it particularly important that this corporate transparency extend across national borders. Shared frameworks for financial reporting, such as those embodied in International Financial Reporting Standards (IFRS), the international framework for corporate accounting adopted by more than 100 countries worldwide, play a crucial role.
The Road to Europe: Program of Accounting Reform and Institutional Strengthening (REPARIS)
REPARIS is a joint partnership program of the EU, the World Bank and several donor countries.
Supported with technical assistance from the World Bank, the REPARIS program has been used to build the kind of broad stakeholder support – both public and private – that is vital for the successful implementation of financial reporting reforms.
The emphasis on peer learning, through such tools as Communities of Practice, helps promote the effective implementation of reforms. In-country engagement is also critical to ensure that changes are implemented on the ground.
REPARIS has already proved successful in promoting regional cooperation and bringing national laws and regulations nearer to EU standards. Priorities going forward include achieving greater alignment with the EU acquis, implementing effective procedures for the institutional oversight of auditors, and strengthening systems of professional education.