View all ROSC Accounting and Auditing Assessments.
There is widespread recognition that implementation of robust standards not only helps financial stability, but also contributes to the economic functioning and efficiency of a country’s institutions that underpin the market economic system. Ultimately, such standards enhance countries’ resilience to shocks and support better risk assessment and investment decisions.
In most partner countries, the private sector is the primary engine of growth and job creation. To fund productive investment it needs capital and credit. In turn, capital and credit require investors’ or lenders’ trust in the financial situation of companies, and therefore, transparent, high-quality and comparable financial reporting.
As part of the Reports on the Observance of Standards and Codes (ROSC), the Accounting and Auditing (A&A) module covers the two globally accepted standards: the International Financial Reporting Standards (IFRS) and the International Standards on Auditing (ISA).
Purpose of a ROSC A&A assessment
The ROSC A&A Diagnostic Tool, first developed in 2001 and recently revised, is designed to allow task teams to assess corporate sector accounting and auditing practices in a manner that is consistent and comprehensive. The Tool comprises the following three modules:
Module A: Accounting and Auditing Standards. Module A is designed to help teams to compare (i) national financial reporting standards with IFRS and (ii) national auditing standards with ISA. The analysis seeks to capture significant differences, if any, in order to give readers of the ROSC A&A report a clear sense of where key areas of divergence lie, and to provide country counterparts with concrete suggestions for improving national standards and aligning them with IFRS/ISA.
A.1 Financial Reporting Standards Analysis
A.2 Auditing Standards Analysis
Module B: Institutional Framework for Corporate Financial Reporting. Module B comprises nine sections which assess the robustness a country’s institutional framework for corporate financial reporting and audit, by reference to internationally-recognized benchmarks and good practice.
B.1 Commercial Enterprises (including SMEs)
B.2 Listed Companies
B.3 Financial Sector: banking
B.4 Financial Sector: insurance
B.5 Accountancy Profession
B.6 Accountancy Education
B.7 Audit Regulation, Quality Assurance, and Public Oversight
B.8 Accounting Standard-Setting
B.9 Auditing Standard-Setting
Module C: Observed Reporting Practices and Perceptions. The objectives of Module C are twofold: (i) to corroborate the findings from the assessments of Modules A and B with reference to financial statements issued and reports from the regulators in the jurisdiction; and (ii) to gauge the demand for, and assess perceptions on quality of, financial information by users of financial statements (e.g., credit risk analysts, investment managers, and financial analysts).
The ROSC A&A program is led by teams of the Governance Global Practice, within the Equitable Growth, Finance, and Institutions Vice Presidency (EFI) of the World Bank Group.
ROSC assessments of A&A practices are conducted in partner countries, either as part of a World Bank-IMF Financial Sector Assessment Program (FSAP) mission, in combination with other Bank Advisory Service and Analytics (ASA) projects, or as standalone exercises.
Financial Sector Assessment Program – Technical Notes