Note: the texts under all the headings, with the exception of 'Results achieved', describe the situation before the start of the project.
Financial Reporting Project
Despite major reforms by the New EU Member States to their legal and regulatory frameworks governing corporate sector accounting and auditing, there is a substantial unfinished institutional development agenda in the field of financial reporting. The Financial Reporting Technical Assistance Program provides support to five national administrations (in Latvia as well as in the Czech Republic, Estonia, Poland, Slovenia) which face capacity constraints and challenges in fully implementing – both in law and in practice – the very demanding obligations imposed by the rapidly-evolving acquis communautaire in this field.
Promoting economic growth and improving working conditions
Regulation of the financial sector
- Better decision-making and enhanced financial transparency and governance of the corporate sector
- Strengthened financial sector stability, as financial institutions and institutional investors gain access to more relevant, complete and reliable financial information
- Improved tax collections
- Financial sector
- Corporate sector
- 82 IFRS seminar days to 240 participants have been delivered.
- 33 ISA seminar days to 360 participants have been delivered.
- 5 public oversight study visits have been organized.
- Thanks to the trainings and study visits, authorities and associations have acquired expertise in the area of international standards for financial reporting and auditing.
- A comprehensive study on the relations between tax accounting and financial reporting has been carried out.
- The "World Bank Report on the Observance of Standards and Codes on Accounting and Auditing" has been published. It states that the financial reporting and audit legislation in Latvia is consistent with the requirements of the EU acquis communautaire currently in force. However, it needs to be updated to comply with recent changes.
- World Bank - International Bank for Reconstruction and Development
- Latvian Ministry of Finance
Preparing for their accession to the EU in 2004, the new EU Member States undertook major reforms to their legal and regulatory frameworks governing corporate sector financial reporting. However, less emphasis was placed on the creation and/or strengthening of the institutional and human capacity required to ensure effective implementation and enforcement of the acquis in practice, and it is now evident that there is a substantial unfinished institutional development agenda in the field of financial reporting.
The World Bank’s Center for Financial Reporting Reform will provide technical assistance and training to a number of Latvian key stakeholders. A strong focus will be put on audit public oversight and quality assurance in order to meet the requirements of the acquis communautaire and attain an enhanced quality and reliability of the auditing process and financial statements of Latvian private sector enterprises.
|Directorate/federal office responsible||
Swiss Contribution to the enlarged EU
Latvian Ministry of Finance and Center for Financial Reporting Reform (CFRR)
|Budget||Current phase Swiss budget CHF 1’533’827 Swiss disbursement to date CHF 1’399’377|
Phase 1 01.09.2009 - 13.06.2017 (Completed)
Transparent financial reporting in five new EU member states
In the wake of both globalisation and a number of significant financial reporting scandals, the EU has agreed upon uniform requirements in accounting and corporate audits for its member states. Its aim is to create better conditions for the development of the private sector through increased quality, transparency and comparability of financial reporting. Switzerland is supporting Estonia, Latvia, Poland, Slovenia and the Czech Republic in the implementation of these EU regulations with a total of just under CHF 17 million.
Exchange promotes solutions to common challenges
One focal point of the programme is the development of specialist knowledge. For example, courses on International Standards on Auditing (ISA) und International Financial Reporting Standards (IFRS) were offered for authorities and industry associations. In Estonia and Latvia, these international standards are also being translated into the national language.
The five partner countries being supported all have different starting situations, but in terms of fulfilling EU financial reporting laws they face similar challenges. For this reason, the exchange of knowledge and experience is being promoted at regional seminars – a measure that also saves programme costs.
Preventing corporate and financial offences
The programme especially helps ensure both a competitive market in auditing and the high quality of auditing services. In concrete terms, public supervision of auditors is to be strengthened in all five countries and a quality assurance system to be developed. Independent, high-quality audits inhibit the falsification of corporate accounts and thus also help prevent balance sheet fraud and the economic instability that accompanies it.
In addition, courses and seminars will be held for the tax authorities in Latvia, Poland and the Czech Republic. They will focus on the question of how improved quality and transparency in accounting can be used to prevent tax evasion.
Transparent, high-quality and reliable accounting is also a pre-condition of investment: the use of international accounting standards makes companies more comparable and, in turn, simplifies decisions for international investors who are considering whether to invest in a certain company. Credible auditors are just as important: investors must be able to trust the statements in a company's annual accounts.