Moldova gains valuable financial reporting reform insights from Croatian exchange sponsored by the World Bank
A high-level delegation of representatives from the financial and accounting community of the Republic of Moldova recently visited their counterparts in the Republic of Croatia to seek information and guidance for reforming their financial reporting structure and systems. The initiative was hailed by all parties to have been an “extremely useful success.”
The Croatian Ministry of Finance hosted the Moldovan group as part of the World Bank’s Corporate Financial Reporting Exchange Program, funded by the South-South Experience Exchange Trust Fund (SEETF). The program also links directly to the activities led by the World Bank’s Vienna Centre for Financial Reporting Reform (CFRR) under the Regional Road to Europe Program of Accounting Reform and Institutional Strengthening (REPARIS).
The discussions were “interesting and informative, and helped us fill in certain knowledge gaps in several important areas of financial reporting,” said Victor Barbaneagra, Moldova’s Deputy Minister of Finance.
For their part, Croatian officials were pleased to share their knowledge in certain fundamental areas that will help Moldova in its goal to join the European Union (EU).
“During the two-day visit,” said Iva Dodig, liaison officer in the Financial Reporting Unit of Croatia’s Ministry of Finance, “our experts shared Croatia’s experiences with adopting the EU’s acquis communautaire into our national legal framework and offered advice on how to implement the reforms Moldova needs to make to do the same.”
Moldova is currently working on doing whatever is necessary to join the EU. To that end, it has developed a three-year Country Action Plan aimed at strengthening its corporate financial reporting. This plan, said Barbaneagra, “is a complex activity that will require significant commitment from many different stakeholders, including government agencies, regulators and, especially, the accounting and auditing profession.”
While the country has some basic knowledge about modern, EU-compliant financial reporting, Barbaneagra added, “there is still a knowledge gap on how the system should operate in practice, particularly in key areas such as accounting standard setting, content of financial reporting standards for small and medium enterprises (SMEs), the auditing public oversight system, regulatory enforcement of financial reporting requirements and, not least important, the functioning of the public registry of financial statements. These are important pillars of sound corporate financial reporting and Moldovan authorities would like to learn from the experiences of other new EU member states.”
Croatia was considered an ideal information exchange partner as it has now fully aligned its accounting and auditing legislation with the EU’s acquis communautaire and recently closed Chapter 6 – Company Law in its accession negotiations. Dodig noted that “this confirms the quality and success of our reforms in the field of financial reporting.”
Moreover, Dodig said, “our efforts in meeting the EU’s criteria in accounting and auditing have resulted in the successful development of a financial reporting framework tailored specifically to the needs of the Croatian economy.”
She added that, on the strength of these successes, Croatia wanted to use REPARIS to offer cooperation to other countries requiring help in similar efforts.
The Moldovan delegation met with representatives of the Croatian Ministry of Finance to learn about the country’s legal accounting framework and how it managed the transposition of the EU accounting and auditing acquis into that framework.
A visit with Croatia’s Accounting Standards Board provided valuable insight on how that body sets national accounting standards. The Moldovan officials were particularly interested in how that board approved the country’s first set of accounting standards for SMEs, and how those standards fit into the recently released international financial reporting standards (IFRS) for SMEs.Equally useful was a meeting with representatives of the Croatian Registry of Annual Financial Statements (FINA), where the Moldovans were shown how the public registry was maintained, as well as the practices and policies ensuring transparency and access to the information in the financial statements filed with the registry. The FINA’s IT system for collecting, processing, filing and publishing financial information was also described as “impressive practical input.”
The two-day exchange ended with a visit to a non-public company, which demonstrated how Croatian SMEs prepare their financial statements according to both national and international financial reporting standards. “We found these practices especially informative,” Barbaneagra said.
In expressing his gratitude to the Croatian Ministry of Finance, he concluded that “our discussions with our Croatian counterparts identified many possible solutions to some of our current issues and provided answers to many of our practical questions.”
Both Dodig and Barbaneagra welcomed the REPARIS and the South South Experience Exchange Trust Fund support, noting it boosts “international cooperation as a way to share best practices across partner countries.”