PREVIEW
Corporate governance and financial reporting (CGFR) are essential elements of a well-functioning market economy. Strong reporting, controls, auditing and corporate governance reduce investment and lending risks, creating the conditions for sustainable and equitable private sector-led growth. State-owned enterprises (SOEs) play a key role in many countries. By adopting transparent and modern governance, countries can improve their service delivery performance and reduce the tax burden that state-owned enterprises impose on national budgets. The CGFR Global Solutions Group (GSG) brings together the knowledge and expertise of the World Bank Group (WBG) in these key policy areas to ensure that project teams and clients have access to relevant global best practices and tools effective for the design and implementation of projects.
GOALS
Our aim is to support GBM teams and clients in two key policy areas:
a) Build effective corporate financial reporting and auditing systems
Transparent financial reporting and effective auditing practices are essential to protect the interests of investors, creditors, employees, public authorities and other stakeholders and enable them to make informed decisions. They are essential to the integrity of financial markets, help to develop access to finance for local businesses (particularly SMEs) and contribute to a better business climate, thus promoting the integration of local businesses into the economy worldwide. They also contribute to financial stability by supporting a reliable information infrastructure for banks and other lenders. The quality of companies’ financial reporting and auditing practices depends primarily on the strength of the institutional environment that supports them. This includes legal requirements, education systems, professional accounting bodies, monitoring and enforcement mechanisms, financial information dissemination infrastructure and the demand for quality financial information.
b) Improve the governance of public enterprises
In many partner countries, the public enterprise sector provides essential goods and services to citizens and local businesses and is an important source of employment as well as productive investment (or GDP). When SOEs have weak accountability, poor controls, ineffective boards and inadequate governance, they tend to perform poorly in providing goods and services to citizens, creating space for cronyism political and corruption, and can constitute a serious fiscal risk for the country. Improving the governance of public enterprises is a complex process that involves a multi-pronged approach to strengthening transparency and controls; promote active and effective boards of directors; and strengthen the state’s capacity to act as a responsible owner, monitor of fiscal performance and risks, and play other key roles (see below).
A multidisciplinary group
The GSG combines the experience and skills of specialists in financial management, corporate reporting, public sector reform, public procurement and fiscal risks. Our aim is to bring together all of the Bank’s global experience in business management and infrastructure (including public companies) to provide a source of relevant knowledge, advice, tools and training for teams and customers.
Our support takes the form of:
a) Just-in-time support, policy advice and capacity building to clients or country/project teams;
b) Global knowledge activities and learning programs for clients and staff; And
c) Train staff to use diagnostic tools and resolve complex governance issues.
PROGRAMMING EXAMPLES
Regional programs supporting the development of financial reporting frameworks
The WBG helps partner countries establish corporate financial information systems through a range of regional programs that offer knowledge and engagement services; exchanges between peers and communities of practice; political advice; and technical assistance for the implementation of reforms. Regional commitments include EU-REPARIS for six Western Balkan countries wishing to join the European Union; Connect voices from the MENA region; the Organization for the Harmonization of Company Law in 17 French-speaking African Countries (OHADA); and CReCER, a flagship learning initiative for Latin America and the Caribbean. Our GSG supports and seeks to create synergies and cross-fertilization between these initiatives.
Results-Driven Accounting Development (ADR)
ADR is a commitment led by the Bank to the accounting profession around the world that strengthens their contribution to the economic development of their countries. There is enormous diversity in the skills, training and roles of accountants. ADR encourages talent development, leverages technology, improves public/private exchanges, and supports reform in these cross-cutting issues. An ADR event in 2014 brought together 200 accounting executives from 60 countries. Regional activities include cooperation with the Pan African Federation of Accountants (PAFA) and the Financial Reporting for Economic Development (FRED) initiative in Asia.
Promoting modern governance of public companies Uzbekistan
Uzbekistan has tapped the Bank’s expertise to help strengthen its institutional capacity in public enterprise governance and private sector participation. From 2016, an integrated approach combining policy advice and technical support will aim to build on the reform momentum. Activities include the establishment of a center of excellence on corporate governance, the development of a clear policy framework for the governance of public enterprises and the identification of factors to be taken into account at the institutional, state and entities.
