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Enhance Corporate Financial Reporting

By Lynn Jackson,2014-05-16 04:17
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Enhance Corporate Financial Reporting

    Enhance Corporate Financial Reporting

    Haneen Sayyed

    The World Bank Representative

Excellencies, ladies and gentlemen. It is a great pleasure to be here today.

Joseph Stiglitz, Noble Prize Winner, once said “Capitalism - and the modern corporation

    - could not have arisen without a reliable accounting industry able to provide a

    reasonably accurate picture of a company’s net worth and profits.”

High quality financial reporting not only improves financial transparency and

    accountability, but also plays a crucial role in ensuring good governance and

    underpinning the growth of market economic system;

The importance of growth in commerce and industry for bolstering market economic

    system and reducing poverty cannot be overstated. Poor people benefit from expanded

    business activities in various ways including having access to newly created employment

    opportunities.

Worldwide experience during the last twenty-five years has demonstrated that the

    development of business enterprises on the basis of market economic principles is critical

    to the sustainable economic development needed to reduce poverty. This experience has

    inspired various multilateral and bilateral institutions and mainly the World Bank to

    adopt a new strategy to refocus and energize their work for strengthening member

    country’s market economic system in general, and financial and private sector

    development in particular.

The soundness of financial reporting and the degree of financial transparency of the

    corporate sector in a country depends on the strength of accounting and auditing practices.

    From this perspective, accountancy development is an important ingredient of economic

    development.

Accounting, auditing and financial reporting play a crucial role in providing necessary

    information for effective economic management at both micro and macro levels; from

    this perspective there is a linkage between accountancy development and economic

    development.

Accounting information feed into the decision process of key players in the economy and

    thus facilitates a smooth running of business and national affairs geared towards

    advancement in socio-economic living conditions.

To achieve sustainable economic growth in any economy, there must be a stable financial

    system. Weaknesses in domestic regimes for accounting and auditing undermine

    financial stability, financial intermediation and the investment climate, and thus impede

    economic growth and poverty alleviation. Strengthening such regimes has a positive

    development impact, and therefore in the recent years the Bank has been a vocal advocate

as-well-as active partner for accountancy development and reform in its member

    countries.

High quality financial reporting contributes to:

    - Strengthening the financial discipline of Government Business

    Enterprises.

    - Improving the assessment and collection of taxes on corporate profits.

    - Developing active capital markets which is an important engine of

    economic growth in developing countries.

    - Facilitating Banking supervision which is essential for preserving

    financial stability.

    - Increasing foreign investmentforeign direct investment as-well-as

    foreign portfolio investment which makes important contributions to

    the process of economic development and poverty eradication.

    - Fighting money laundering. Money laundering can have devastating

    impacts, particularly on emerging financial markets and developing

    economies, thus undermining financial stability worldwide.

Over the long run, this translates into long-term prosperity and the improvement of living

    standards for the population.

On a global level, the World Bank plays a leading role in assisting and advising countries

    on accounting and audit regulation. The World Bank is not just a lending bank, but also a

    knowledge Bank, and we are in the privileged position of being able to draw on the

    extensive knowledge of colleagues who have experience from around the world. For the

    accounting and auditing profession the Bank Accounting and Auditing ROSC initiative

    has been the catalysts towards better financial reporting in a number of countries.

For Lebanon the ROSC report has identified that the Government made efforts to align

    corporate financial reporting requirements with International Accounting Standards (IAS).

    However, despite the overall commendable progress in implementing international

    standards, there are still compliance gaps of varying degrees in both accounting and

    auditing practices. There is less gap in listed companies and banks; a greater gap appears

    in other companies with determinants based on size and who is performing the audit.

The World Bank stands ready to continue working with country authorities, standard-

    setters, regulators, private sector stakeholders, and the relevant international

    organizations to better support Lebanon and other developing countries in enhancing

    their corporate financial reporting.

Thank You,

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