Bosnia & Herzegovina - Bosnia and Herzegovina - Corporate Financial Reporting

Anti-Corruption in Transition 3: Who is Succeeding...and Why?

December 2007
On Wednesday, December 12, 2007, the Ministry of Finance and Treasury, BH Central Bank, and the World Bank hosted a donor coordination conference in Sarajevo to present the Strategy and Action Plan for enhancing corporate financial reporting in Bosnia and Herzegovina (BH) to the donor community. The BH Strategy and Action Plan was prepared by the BH Steering Committee with the assistance of World Bank experts. Subsequently, the Strategy and Action Plan was approved by the BH Council of Ministers earlier this year. "We look forward to assist Bosnia and Herzegovina in enhancing corporate financial reporting in the context of the new Country Partnership Strategy and its broader EU integration objectives," said Mr. Marco Mantovanelli, World Bank’s Country Manager for Bosnia and Herzegovina.

"This Action Plan demonstrates that Bosnia and Herzegovina should take further steps in order to achieve its goal of a sound corporate financial reporting framework," explained Mr. Kemal Kozaric, BH Central Bank Governor. The BH reform plan is built on a robust World Bank diagnostic assessment, the Accounting and Auditing Report on the Observance of Standards and Codes (A&A ROSC), which has benchmarked the corporate financial reporting in BH against the relevant EU body of law (company law, financial reporting, auditing, financial markets), International Financial Reporting Standards (IFRS), and International Standards on Auditing (ISA). "Based on the successful experience of other countries in the region, the BH Strategy and Action Plan set forth a series of specific actions aimed at bridging gaps and creating a robust financial reporting infrastructure,“ explained Mr. David Nagy, a World Bank Corporate Financial Reporting Specialist.

The new World Bank office in Vienna which hosts the Centre for Financial Reporting Reform will support the reform process during its next stages. "Transparent corporate financial reporting is crucial for maintaining trust in the proper functioning of the BH economy, whilst mitigating major financial risks and company scandals," said Mr. Erik van der Plaats, Sr. Financial Management Specialist in the World Bank. In this context, Mr. Ranko Sakota, Deputy Minister of Finance and Treasury, concluded that "...further support from the World Bank and other donors would be needed in implementing the Strategy and Action Plan on Corporate Financial Reporting into practice ."

Introduction

This strategy and action plan is about better corporate financial reporting, i.e. a vehicle to achieve a number of economic "goods". It is about achieving economic growth and EU integration through the adoption and implementation of the relevant portions of the acquis communautaire and other relevant benchmarks. This will result in an environment where users can place reliance on corporate financial reporting for their respective needs.

GAP Analysis

The purpose of this chapter is to undertake a gap analysis to identify the actions that are required to achieve the benchmarks identified in previous chapter. The Steering Committee (SC) carried out a review of the existing situation through a series of interviews and meetings with key stakeholders toproduce a summary of the progress made in the implementation of the recommendations of the ROSC and of the outstanding problems and issues that still need to be addressed.

Detailed Actions

The SC during its development of the strategy and plan identified the key actions under the statutory and institutional framework. Each of the actions represents an area in which the objectives identified will lead to an improved framework for accounting and auditing in Bosnia Herzegovina and ultimately enhance the quality and reliability of corporate financial reporting. For each individual action, the objective is identified, the activities involved in this action are outlined, and the planned outcome is identified. Each action is designated as a statutory (S) or an institutional action (I). This denotes whether the action required is an action to align or amend the legislative or regulatory framework (statutory action) or an action that is about improving compliance with and enforcement of the statutory framework (institutional action).

Key Pillars of the Strategy and Action Plan

The Steering Committee during its consultations identified the key pillars under which the Action Plan will be implemented.

Timing of the Strategy and Action Plan

During the identification of the activities to be delivered in the strategy and action plan the delivery timelines were also considered. The Steering Committee has identified the key dates for each of the individual actions under the key pillars of the plan.

Planned Implementation of the Strategy and Action Plan

The strategy and action plan will be formally presented to the State and Entity Ministries of Finance. Subject to sufficient funding and full acceptance of the strategy and action plan by the State and Entity Ministries of Finance, a project board will be formed to implement the plan.

Bosnia and Herzegovina - Corporate Financial Reporting