Differentiated financial reporting requirements: From setting requirements to practical implementation

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2 Differentiated financial reporting requirements: From setting requirements to practical implementation March 2016, Warsaw, Poland The Strengthening Auditing and Reporting in the countries of the Eastern Partnership (STAREP) program has been working with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine since October STAREP supports a regional Community of Practice (A&ACoP) to address shared challenges in corporate financial reporting and audit reform. The program also provides relevant knowledge and technical advice for the transposition of the accounting and auditing elements of the acquis communautaire especially the 2013 accounting directive and the recently revised directive on statutory audits. Financial reporting regulation is one of the mechanisms used to promote the operation of securities markets. An entity with a credible policy of high quality financial information is expected to enjoy higher share prices and a lower cost of capital. This is because high quality disclosures to financial statements reduce investors concerns about inside information. Standard setters, regulators, and policy-makers all have a vital interest in the effect of financial reporting on the economy. This interest is due to the economic consequences associated with financial information. Financial information influences investors behavior with respect to portfolio selection, which in turn affects security prices and, therefore, the terms on which a firm obtains additional financing. Association Agreements with the EU, signed in 2014 by three STAREP countries, namely Georgia, Moldova and Ukraine, require that they align their legislation in the field of corporate financial reporting with the EU acquis communautaire. Governments of Armenia, Azerbaijan and Belarus are committed to improving the national law and aligning it with good European and international practices. Thus, an important part of the accounting reform, common to all STAREP countries is the adoption of accounting standards that will suit the needs of both the users and the preparers of financial statements. With regard to financial reporting requirements for various types of entities, this A&ACoP seeks to guide STAREP countries on how their governments can best implement reporting requirements that are most appropriate for their respective countries. The workshop will also guide participants in ensuring that these requirements are in line with the relevant part of the EU acquis communautaire and, in particular, with the new so-called accounting directive (2013/34/EC) 1. The workshop will provide representatives of participating countries (A&ACoP members) with legal and practical insights into transposing EU accounting requirements into local legislation. Participants will have the opportunity to learn from Poland, the United Kingdom and Norway experience in transposing differentiated financial reporting requirements. Norway s experience in the content and development of accounting standards will be also discussed. The workshop will explore how the P a g e

3 financial reporting requirements for not-for-profit organizations, which are outside the scope of the EU Accounting Directive, could be improved in line with good international practices. Each country s delegation will present its national plans and concepts in the field of corporate financial reporting and receive immediate feedback from A&A CoP members and invited experts. 2 P a g e

4 Agenda Thursday, 17 March Day 1 08:30 Registration and Welcome Coffee 09:00 Welcome Remarks Joanna Dadacz Director, Accounting and Auditing Department, Ministry of Finance, Poland Marina Wes Country Manager for Poland, the World Bank 09:30 POLAND s experience in transposing the corporate financial reporting requirements from the EU acquis communautaire Agnieszka Stachniak Deputy Director, Accounting and Auditing Department, Ministry of Finance, Poland Joanna Guzowska Chief specialist, Accounting and Auditing Department, Ministry of Finance, Poland Małgorzata Szewc Chief specialist, Accounting and Auditing Department, Ministry of Finance, Poland Andrei Busuioc This session will discuss the Polish experience of transposing the corporate financial reporting requirements from the EU acquis communautaire, including previous, so-called 4 th and 7 th directives and more recent revised accounting directive (2013/34/EC). In particular, the speakers will refer to the Polish experience in establishing accounting and financial reporting regime for micro and small entities, taking into account the entities categorization according to article 3 of the 2013/34/EC Directive. They will also brief the audience on the scope of the consolidated financial statements and reports in Poland, including applicable accounting standards, and existing challenges in transposing non-financial reporting. 11:00 Coffee Break 11:30 Reforming financial reporting regulation in UKRAINE Representatives of the Ukrainian delegation Natalie Manuilova Ukraine s Association Agreement with the EU, signed in 2014, requires the country to align its legislation with the EU acquis communautaire. The delegation from Ukraine will share their views on how to transpose the main provisions of the Accounting Directive into the national law. The community will then discuss the planned changes and offer feedback to their Ukrainian colleagues. 3 P a g e

5 12:30 Lunch 13:30 Reforming financial reporting regulation in GEORGIA Representatives of the Georgian delegation Galina Alagardova Georgia signed an Association Agreement with the EU in 2014 which requires the alignment of the country s legislation with the EU acquis communautaire. The delegation from Georgia will share with the community their plans on how to improve the accounting legislation, based on the 2015 A&AROSC findings and recommendations. Participants and experts will be invited to discuss and offer feedback to their Georgian colleagues. 14:30 Coffee Break 15:00 Experience of Norway and the United Kingdom in transposing the accounting directive, including use of IFRS for SMEs Harald Brandsås Secretary of the Norwegian Accounting Standards Board Jonathan Hooper Consultant, CFRR Facilitators: Natalie Manuilova Andrei Busuioc An important part of the accounting reform, common to all STAREP countries is adoption of accounting standards that will suit the needs of both, users and prepares of financial statements. During this session the A&ACoP members will have an opportunity to learn from experience of Norway and the United Kingdom in the field of accounting directive transposition and setting accounting standards. The speakers will talk about the approach these countries used to transpose financial reporting requirements from the accounting directive in their national law, outlining differentiated requirements for various types of entities and accounting standards required for such entities. In addition, the speaker from Norway will outline the main functions and responsibilities of Norwegian Accounting Standards Board 2 (NASB) including the composition of the board and the source of funding, and how IFRS for SMEs are used in setting national standards. 17:00 End of Day 1 17:30 Group Dinner (details will be announced) P a g e

6 Friday, 18 March Day 2 08:30 Morning coffee 09:00 Financial reporting requirements for not-for-profit organizations (NPOs) Richard Martin Head of Corporate Reporting, ACCA Jonathan Hooper Consultant, CFRR While Non-for-Profit Organizations (NPOs) play an important role in many of STAREP countries, these organizations are outside the scope of the accounting directive. The aim of this session is to familiarize the A&ACoP members with financial reporting requirements for NPOs in accordance with the Companion Guide for not-for-profits to the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) 3. NPOs have a different operating model and objectives from profit-orientated entities, and the proposed guide is intended to act as a companion to the IFRS for SMEs while taking this into account. Thus, the A&ACoP members will have the opportunity to learn how the financial reporting requirements for NPOs could be improved in line with good international practices. 10:30 Coffee Break 11:00 Reforming financial reporting regulation in MOLDOVA Representatives of the Moldovan delegation Andrei Busuioc Moldova s Association Agreement with the EU, signed in 2014, similarly requires the alignment of legislation with the EU acquis communautaire. Recently, the Ministry of Finance drafted the concept on key policy areas for new accounting and auditing legislation. The delegation from Moldova will outline the key aspects of the concept in the area of accounting. They will also ask for the community s feedback and invite participants to discuss their plans. 12:00 Lunch P a g e

7 13:00 Establishing appropriate financial reporting requirements in BELARUS Representatives of the Belarusian delegation Natalie Manuilova During this session the participants from Belarus will brief the community on their efforts to improve the national law in the field of corporate financial reporting. They will also highlight the questions to which the delegation is seeking feedback from the community. 14:00 Establishing appropriate financial reporting requirements in AZERBAIJAN Representatives of the Azerbaijan delegation Piotr Pyziak Extended Term Consultant, CFRR During this session the participants from Azerbaijan will update the community on their recent efforts to improve the national law in the field of corporate financial reporting. They will also seek feedback from the community on a range of questions. 15:00 Coffee Break 15:30 Establishing appropriate financial reporting requirements in ARMENIA Representatives of the Armenian delegation Galina Alagardova During this session the participants from Armenia will update the community on their recent efforts to align the legislation in the field of corporate financial reporting to the EU acquis communautaire. The delegation will highlight issues on which they would welcome feedback and invite the community to discuss these. 16:30 Summary of the Workshop, Next Steps and Closing remarks A&ACOP team This session will draw together the key takeaways for the community and the team. It will also invite feedback on the workshop against the stated objectives to help shape the agenda for the next workshop. 17:00 End of the Workshop 6 P a g e

Bios of the Speakers Joanna Dadacz Director, Accounting and Auditing Department, Ministry of Finance of Poland Ms. Dadacz is a graduate of Warsaw School of Economics, Domestic Commerce Department.

Chair of Accounting Standards Committee, member of Audit Oversight Commission, member of National Chamber of Statutory Auditors, statuto ry auditor, tax advisor.

auditors, in 2000-2014 chair of the examinations committee for certified accountant applicants.

8 Bios of the Speakers Joanna Dadacz Director, Accounting and Auditing Department, Ministry of Finance of Poland Ms. Dadacz is a graduate of Warsaw School of Economics, Domestic Commerce Department. Director of Accounting and Auditing Department at the Ministry of Finance. Chair of Accounting Standards Committee, member of Audit Oversight Commission, member of National Chamber of Statutory Auditors, statuto ry auditor, tax advisor. In , member of Examinations Committee for statutory auditors, in member of State Examinations Committee for tax advisors, in member of Examinations Committee for auditors, in chair of the examinations committee for certified accountant applicants. Lecturer at postgraduate MA studies of the Center for Territorial Self-Government and Local Development of Warsaw University, teaching basic accounting class, as well as at Post-graduate Studies of Accounting and Auditing at Warsaw University, topics Accounting law and Financial auditing and external audit. Author of numerous articles and comments in scope of accounting and auditing. Marina Wes Country Manager for Poland, the World Bank Marina Wes is the Country Manager for the World Bank program in Poland, based in Warsaw. She received an MPhil from Trinity College, Cambridge University, and took a PhD for research in economics at the London School of Economics in 1996.Ms. Wes was a research associate at the London School of Economics from , before joining the University of Amsterdam as an Assistant Professor in International Finance in She subsequently worked as a principal economist at the European Bank for Reconstruction and Development, before joining the World Bank Group in At the World Bank she has worked across a range of issues in important emerging markets and she was based in Turkey, India and Serbia prior to her current assignment in Warsaw. She has published on a broad range of economic issues and she co-authored a number of publications, including Turkey s Transitions: Integration, Inclusion, Institutions (2014) and India: Sustaining Reform, Reducing Poverty (2009). She is married and has two children. Agnieszka Stachniak Deputy Director in the Accounting and Auditing Department, Ministry of Finance of Poland Ms. Stachniak is responsible, among other things, for international cooperation in scope of accounting and auditing, also on EU level. She is a graduate of the National School of Public Administration. She is a statutory auditor and a member of Accounting Standards Committee. 7 P a g e

Joanna Guzowska Chief specialist in the Accounting and Auditing Department, Ministry of Finance of Poland Chief specialist in the Accounting and Auditing Department of the Ministry of Finance,

Most recently she has participated in the process of adopting Directive 2013/34/EU as well as adopting the revised EU law on audit. She is a graduate of the Warsaw School of Economics.

9 Joanna Guzowska Chief specialist in the Accounting and Auditing Department, Ministry of Finance of Poland Chief specialist in the Accounting and Auditing Department of the Ministry of Finance, heading the unit responsible for international cooperation. In particular she represents Poland in the legislative process at the EU level in areas of accounting and auditing. Most recently she has participated in the process of adopting Directive 2013/34/EU as well as adopting the revised EU law on audit. She is a graduate of the Warsaw School of Economics. Małgorzata Szewc Chief specialist, Accounting and Auditing Department, Ministry of Finance, Poland Chief specialist in the Accounting and Auditing Department of the Ministry of Finance, responsible for international cooperation in accounting. In particular she represents Poland in the ARC meetings and in the legislative process at the EU level concerning accounting. Most recently she has participated in the process of adopting Directive 2014/95/EU as well as of transposing it into the Polish law. She is a graduate of the Jagiellonian University (in German Philology) and of the National School of Public Administration in Warsaw. She has completed postgraduate studies in Accounting and public finance, and in European Administration. Harald Brandsås Secretary of the Norwegian Accounting Standards Board and Technical Director of the Norwegian Institute of Public Accountants Mr. Brandsås has served as member of various national committees appointed by the Government. He has also been member on various groups in Fédération des Experts-comptables Européens (FEE), European Commission, European Financial Reporting Advisory Group (EFRAG), International Federation of Accountants (IFAC), International Public Sector Accounting Standards Board (IPSASB) and the predecessor of IASB International Accounting Standards Committee. Richard Martin Head of Corporate Reporting at Association of Chartered Certified Accountants (ACCA) Mr. Martin is responsible for monitoring developments in Financial reporting particularly IFRS, Integrated and narrative reporting, analysing the impact of changes and developing ACCA's policy on these issues. He is Chairman of the Accounting Expert Group at EFAA the European Federation of Accountants and Auditors for SMEs. He is a member of the Accounting Working Party of the Federation of European Accountants (FEE) and of FEE s Corporate Reporting Policy Group. He was a member of the Expert Group on the evaluation of the IAS Regulation for the European Commission in P a g e

10 For the ISAR group at UNCTAD he is a member of the Consultative Group on Reporting and Sustainable Development. He was a member of the working party which developed the accounting guidance for SMEs (SMEGA) and has contributed to their workshops on IFRS implementation. 9 P a g e

29-30 September 2015, Ministry of Finance, Vienna

29-30 September 2015, Ministry of Finance, Vienna For the third consecutive year, the World Bank Centre for Financial Reporting Reform (CFRR) and the IFRS Foundation will hold a two-day workshop in Vienna