Swiss-Polish Cooperation Program Financial Reporting Technical Assistance Project

Swiss-Polish Cooperation Program Financial Reporting Technical Assistance Project David Cairns and John Hegarty World Bank Centre for Financial Reporting Reform Warsaw, 11 December 2009

Swiss-Polish Financial Reporting Technical Assistance Project Presentation Outline » The World Bank’s Centre for Financial Reporting Reform » The regional program for new EU Member States » The project for Poland

Swiss-Polish Financial Reporting Technical Assistance Project Centre for Financial Reporting Reform » World Bank’s Europe and Central Asia (ECA) Region » Responsible for all of ECA’s corporate sector financial reporting activities » Supports similar activities in other regions » Mix of skills and experience: » » financial reporting regulation and practice in-depth knowledge of the acquis communautaire knowledge management and distance learning drawing on a network of skills

Swiss-Polish Financial Reporting Technical Assistance Project Regional program for new Member States » High quality financial reporting an essential underpinning for cohesion and competitiveness in the Single Market » Extensive legal and regulatory reform already undertaken as part of the EU accession process, to comply with the relevant acquis » Further strengthening of institutional and human capacity required for effective implementation and enforcement » The acquis is a moving target, tight deadlines » Financing gap

Swiss-Polish Financial Reporting Technical Assistance Project Regional program for new Member States » Implementation agreements with Member States which draw on Swiss Enlargement Contribution funding » Activities at both national and regional level » Complement interventions at Member State level with joint activities to develop common responses to common challenges, exploit synergies » Reinforce, not replace Member State involvement in EU-level discussions and activities » Facilitate speedy replication of good practices developed elsewhere » Flexible programmatic approach » General framework » Annual work programs

Swiss-Polish Financial Reporting Technical Assistance Project Key features of the program » Member State ownership and leadership » Comprehensive multi-year program, rather than fragmented individual projects » Beyond compliance to cohesion, competitiveness » Robust results framework, monitoring, evaluation » Integration of policy development, program design and implementation, financing, and accountability to the Member States » A program for partnership, not projects » Program management from WB Office Vienna

Swiss-Polish Financial Reporting Technical Assistance Project European Commissioner Mc. Creevy We very much welcome the contribution of the World Bank to promote the use of international standards on auditing in the Member States that joined the European Union after 2004. The work of the World Bank greatly contributes to the effective implementation and enforcement of the EU acquis, in particular with respect to public oversight and external quality assurance systems.

Swiss-Polish Financial Reporting Technical Assistance Project The simple logic “No transparency, no trust; no trust, no credit; no credit, no investment; no investment, no growth! So there is a simple logic: financial reporting is an essential building block for financial intermediation, foreign investment, and sustainable economic development. ”

Swiss-Polish Financial Reporting Technical Assistance Project Financial reporting A fundamental foundation Insolvency & Creditor Rights Corporate Governance Insurance Supervision Banking Supervision Securities Regulation Accounting & Auditing

Swiss-Polish Financial Reporting Technical Assistance Project Importance of high quality financial reporting ECONOMIC GROWTH Development of Capital Markets Job Creation Private Sector Growth Accounting and Auditing Improved Access to Credit Financial Sector Development Financial Information Financial Stability

Swiss-Polish Financial Reporting Technical Assistance Project The project for Poland » Implementing: » a public oversight system for statutory auditors » a quality assurance system for statutory auditors » Introducing clarified International Standards on Auditing (ISA) » Building capacity for International Financial Reporting Standards (IFRS) » Resolving the relationship between financial reporting and tax accounting » Continuing education for professional accountants » English language training

Swiss-Polish Financial Reporting Technical Assistance Project … it’s not just about IFRSs and ISAs … Accounting Standards Statutory & Governance Framework Monitoring & Education & Enforcement Training Accounting Profession & Ethics Auditing Standards

Swiss-Polish Financial Reporting Technical Assistance Project … but about strengthening all the pillars … Accounting Standards Statutory & Governance Framework Monitoring & Education & Enforcement Training Accounting Profession & Ethics Auditing Standards

Swiss-Polish Financial Reporting Technical Assistance Project … a broad vision of financial reporting … » High quality financial statements that meet the needs of: » » » current and potential investors other providers of finance tax authorities other regulatory and supervisory authorities those responsible for national statistics and macro-economic data

Swiss-Polish Financial Reporting Technical Assistance Project … built on a single foundation … Financial reports for taxation purposes Financial reports for prudential regulation Financial reports to lending banks Financial reports to capital markets Financial reports as the basis for national statistics q. Accounting

Swiss-Polish Financial Reporting Technical Assistance Project … and linking the needs of different users Investors and creditors in capital markets Lending banks Tax authorities Financial statements National statisticians Prudential regulators Public interest

Swiss-Polish Financial Reporting Technical Assistance Project Delivering the project for Poland » Regional communities of practice » sharing experiences » learning from experts from the European Commission and around Europe (and elsewhere) » exploring common needs » shared research on shared issues » identifying potential synergies » seeking common solutions

Swiss-Polish Financial Reporting Technical Assistance Project Delivering the project for Poland » High quality and practical in-country training based on national needs assessments » » clarified ISAs IFRS for SMEs IFRS for regulators » Development by international experts » Delivery by international and national experts in local languages

Swiss-Polish Financial Reporting Technical Assistance Project Delivering the project for Poland » Practical and high quality tools » » IT systems and methodologies for public oversight manuals and methodologies for quality assurance audit software based on clarified ISAs an e-learning platform for continuing education

www. worldbank. org/cfrr

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Implementing a public oversight system for statutory auditors Purpose of the component Support the implementation of an effective system of public oversight of statutory auditors that complies with the Eighth Company Law Directive in a manner that is cost effective and reflects the characteristics and needs of participating Member States. Target Group Members and staff of the public oversight body as well as inspectors undertaking the external quality assurance reviews. Activity 2009/10 2011 2012 and beyond Institutional needs assessment Audit oversight workshop Support to the administrative capacity Public register of auditors International conference on public oversight Regional community of practice In-country training for members and staff of the public oversight body

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Implementing a quality assurance system for statutory auditors Purpose of the component Promote improvements in audit quality through implementation of an enhanced and sustainable system of external quality assurance that will deliver high quality inspections consistent with the requirements of the Eighth Directive. Target Group Members and staff of the public oversight body; inspectors undertaking the external quality assurance reviews; and individual auditors and audit firms. Activity 2009/10 2011 2012 and beyond Institutional needs assessment Audit quality assurance workshop ISQC 1 manual National outreach program Support to the administrative capacity Regional community of practice In-country training for quality assurance personnel

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Adoption and implementation of ISA Purpose of the component 1. Achieve among statutory auditors and audit firms a broadly based and in-depth understanding of International Standards on Auditing (ISA) and their application in practice; 2. Achieve a similar level of understanding among external quality assurance “inspectors”; and 3. Achieve a high level of understanding of ISA among members of the public oversight body and relevant staff members at the Ministry of Finance. Target Group Members and staff of the public oversight body; Ministry of Finance; and members, staff and trainers of the auditors’ professional association. Activity 2009/10 2011 2012 and beyond Regional community of practice on the adoption and implementation of ISA National needs assessment National delivery of ISA training

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Enhancing the relationship between financial and tax accounting Purpose of the component Assist policymakers in reviewing and optimizing the existing tax accounting system; enhance the capacity of tax authorities in implementing reforms resulting form policy choices. Target Group Ministry of Finance, tax authorities, and accounting standard setting body. Activity 2009/10 2011 2012 and beyond International conference International training In-depth study of the advantages and disadvantages of the existing relationships between financial and tax accounting systems Assessment of in-country training needs and design of the training program In-country training for tax inspectors and tax policy makers

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Institutional capacity building regarding financial reporting Purpose of the component Enhance capacity to participate in policymaking regarding IFRS at the European level and enforce IFRS in a number of stakeholder groups (see Target Group). Target Group Ministry of Finance, financial and capital market supervisory authorities, public oversight body, accountants’ and auditors’ professional associations, etc. Activity 2009/10 2011 2012 and beyond Regional community of practice on the application and enforcement of IFRS in the financial sector Foundation IFRS course National needs assessment National IFRS training course delivery

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Continuing education for accounting professionals Purpose of the component 1. Facilitate the delivery of high-quality continuing education to members of the accountants’ and auditors’ professional associations; and 2. Monitor compliance with continuing education requirements. Target Group Accountants’ and auditors’ professional associations. Activity 2009/10 Agreement on To. R for the development of the technical specifications of the elearning platform Consultations on findings of the review of the curriculum and authorization procedures, finalization of the report, and agreement to relevant changes Procurement for the e-learning platform, award of the contract, development of the platform 2012 and beyond Agreement on To. R for the review of the curriculum and authorization procedures for the continuing education programs 2011 Further activities’ specifics will be defined in the annual work programs

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Specialized English language and communications training Purpose of the component Provide participants the opportunity to attend foundation and specialized English language training, as well as training in communications, presentations, and negotiations skills. Target Group Ministry of Finance, public oversight body, accountants’ and auditors’ professional associations Activity 2009/10 Assessment of training needs Delivery of the training course 2012 and beyond Finalization of course design 2011

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Regulatory framework Purpose of the component Support policymakers in the area of accounting and auditing. It involves (i) researching financial reporting issues to feed into policymaking activities with a view to identify areas where better regulation and/or enforcement would contribute to a better business environment and (ii) providing hands-on technical assistance. Target Group Project stakeholders, SECO, all participating countries, European Commission, etc. Activity 2009/10 Report 1 – Design and methodology for preparing an annual overview of the accountancy market 2012 and beyond Training covering legal drafting techniques 2011 Report 2 – Specifics will be defined in the annual work programs Report 3 – Specifics will be defined in the annual work programs Report 4 – Specifics will be defined in the annual work programs

Swiss-Polish Financial Reporting Technical Assistance Project Thematic work programs Monitoring and evaluation Purpose of the component Monitor and evaluate the effectiveness of the program Target Group Project stakeholders, SECO, all participating countries, European Commission, etc. Activity Ongoing monitoring and evaluation system measuring implementation progress Accounting and Auditing ROSC 2009/10 2011 2012 and beyond