Moldova Builds Capacity to Align with EU Corporate Financial Reporting Standards
The government of Moldova has been pursuing reforms to strengthen corporate financial reporting (CFR) since the mid-1990s, but by mid 2009 the system still had shortcomings. The GOM did not have a clear understanding of key sections of the Country Action Plan (CAP) for reforming corporate financial reporting that the World Bank had helped create.
To learn how to advance the capacity of key ministries, officials, staff, and accounting professionals to drive reforms in corporate financial reporting and auditing, the Moldovan government sought the World Bank’s help in organizing a knowledge exchange. In response, the Bank’s South-South Facility funded an exchange with Estonia, Croatia, Slovenia, the Czech Republic, and Slovakia---countries that had all undergone similar financial reporting reforms.
“Our experts shared Croatia’s experiences with adopting the EU’s acquis communautaire1 into our national legal framework and offered advice on how to implement the reforms that Moldova needs to make to achieve the same,” said Iva Dodig, Liaison Officer in the Financial Reporting Unit of Croatia’s Ministry of Finance.
The exchange enhanced the capacity of officials, civil servants, regulators, and key representatives from relevant professional organizations to reform key aspects of Moldova’s corporate financial reporting systems and institutions. The Moldovan participants increased their knowledge of EU requirements and the main challenges to meeting these requirements. Moldova began making plans to review the laws governing corporate financial reporting, and to prepare a gap analysis as the first step in further aligning the Moldovan legislation with the EU acquis communautaire. The government also planned to create a Financial Reporting Standards Board to develop and interpret Moldovan accounting standards in accordance with the principles of International Financial Reporting Standards (IFRS) and EU requirements.
Beneficiaries / Participants
Moldova started reforming its corporate financial reporting systems in 1996-97 to align them with the EU reporting requirements. As part of its Country National Development Strategy, between 2008 and 2011 the government of Moldova (GOM) implemented a Country Action Plan (CAP) to reform the institutional framework for financial reporting and to improve Moldova’s business and investment environment.
Although corporate auditing and reporting managers acquired new skills during implementation of the CAP, Moldova’s institutional reporting framework still required adjustments. Moldova needed to upgrade processes for setting accounting standards; reporting content for small and medium enterprises (SMEs); overseeing public auditing; enforcing reporting; and improving the operation of the public registry of financial statements.
The Moldovan government sought the World Bank’s help in organizing a knowledge exchange with relevant countries. Since the request aligned with its Country Partnership Strategy (CPS) for Moldova, the Bank drew on its South-South Facility to fund a knowledge exchange with Estonia, Croatia, Slovenia, the Czech Republic, and Slovakia---countries that had all undergone similar financial reporting reforms. Moldova’s Deputy Minister of Finance, other Ministry of Finance (MOF) staff involved in public auditing, and related agencies and professional organizations visited their peers in the knowledge-providing countries to learn how to further advance reforms in corporate financial reporting and auditing.
To a certain extent, the peer-to-peer learning approach helped the Moldovan civil servants, regulators, and the representatives of the accountancy profession to increase their understanding of the EU acquis communautaire and the main challenges of applying it in corporate financial reporting.
This exchange also enhanced the capacity of the civil servants, regulators, and representatives to implement reforms and helped foster a vision for reforming corporate financial reporting in line with good international practices and EU requirements.