A few weeks ago, The Economist published an article on economic governance that discussed the importance of public sector accounting. It recognized the importance of maintaining existing public-sector assets and investment in new ones. These assets, according to an IMF study, account for a significant portion of GDP. But, the article asserts, filling potholes and repairing bridges are not as politically appealing as flashy new infrastructure, and few economies engage in robust public-sector accounting that demonstrates the net worth of these assets.
Maybe if governments and citizens understood the value of their public assets, they’d be inclined to invest in their maintenance – avoiding waste and even catastrophic accidents when poor infrastructure fails?
At the World Bank, we believe that capable institutions are fundamental to development. Countries with strong institutions prosper by creating an enabling environment for the private sector to thrive and create jobs, and thereby reduce poverty and earn the confidence of their citizens. That enabling environment includes the financial reporting framework, including the capacity to provide financial information based on international standards, the implementation and enforcement of robust legal frameworks, public oversight for effective audit control, and the ability to train and improve the skills of accountants/auditors and regulators.
Contracts become easier to negotiate, and access to financial markets is improved. And frankly, investors and lenders demand it.
The World Bank’s Centre for Financial Reporting Reform (CFRR) in Vienna, Austria, was established in 2007 with that very mandate – to promote enhanced availability, reliability and transparency of financial information.
By helping developing countries in Europe and Central Asia to build strong accounting, financial reporting and auditing practices, CFRR promotes and contributes to sustainable private sector-led growth, enhanced corporate governance, and accountability in both the private and public sectors.
CFFR has worked in over 30 countries, supporting reforms and improvements in accounting, financial reporting and auditing practices. In several countries in the Western Balkans and Eastern Europe, we have supported reform of legal frameworks to adopt EU norms and international best practices. We are also supporting the implementation of the new legal frameworks and the creations of the requisite institutional capacity.
Through a “train the trainer” approach, we have worked with government officials and accounting professionals across Europe and Central Asia to help them fulfill their mandate to adopt and implement rigorous qualifications, professional development and ethical standards.
An important part of what we do through the CFRR is sharing good practices and promoting knowledge dissemination across our partner countries. To build momentum and promote shared commitment to reform at the highest levels, we regularly convene finance ministers and their staff, senior policymakers, and executives from professional organizations and standard-setting bodies.
This week, we are again convening these key players through our Ministerial Conference in Vienna, to focus on the importance of high-quality financial information for building stronger and more integrated markets.
We’re grateful for the ongoing support we receive from the Austrian Finance Ministry, the Austrian Development Agency, the European Union, the Swiss Confederation and our industry partners. Creating better business environments in emerging economies is fundamental to the growth and prosperity of both developing and developed economies.