REPARIS - Macedonia

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

December 2006
On Friday, December 8, 2006, the World Bank secured the significant amount of EUR 4.55 million of grant funding from bilateral donors for the implementation of the actions specified in the Macedonian Country Strategy and Action Plan on Corporate Financial Reporting. The Royal Netherlands Embassy contributed EUR 3.7 million and the Austrian Development Cooperation contributed the remaining EUR 850,000. The World Bank has also solicited funding from other sources and hopes that further contributions will be made in the near future. The Macedonian Action Plan is based on the World Bank’s Report on the Observance of Standards and Codes (ROSC). “We seek to create a high quality corporate financial reporting framework, mitigate the risk of financial crisis, and foster private and financial sector development," explains the World Bank's David Nagy. “…without reliable and high quality financial statements, a market economy cannot work efficiently. If markets cannot work efficiently—of course—there is less or no economic growth, which results in less or no reduction in poverty”.

The strategy was developed by the Macedonian Steering Committee which was established in 2005 and comprised key public and private sector stakeholders with an interest in corporate sector financial reporting. The World Bank supported Macedonian reform in the context of the Road to Europe – Program of Accounting Reform and Institutional Strengthening (REPARIS), as well as assisted the Macedonian Steering Committee in its drafting of the Action Plan, which aims to implement the World Bank’s ROSC recommendations. The Government of the Republic of Macedonia during its session held on August 9, 2006, adopted this Country Strategy and Action Plan. “The implementation of the Action Plan will align the Macedonian financial reporting framework and practices with international standards and practices and the relevant portions of the European Union’s body of law related to corporate financial reporting” says Erik van der Plaats of the Joint World Bank - European Commission Office.

1 & 2. Executive Summary and Introduction

This paper sets forth a Country Strategy and Action Plan to enhance the quality of financial reporting in the fYR Macedonia (Macedonia). This Country Strategy and Action Plan set out a clear program of reforms to enhance Macedonia’s legal framework, institutions, and accounting profession, as well as its accounting, auditing and business culture, to achieve high quality financial reporting.

3. 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 Chapter 2. The National Steering Committee carries out a review of the existing situation through a series of interviews and meetings with key stakeholders to produce 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.

4. Detailed Actions

During its development of the Strategy and Plan the National Steering Committee 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 Macedonia and ultimately enhance the quality and reliability of financial reporting.

5. Key Pillars of the Strategy and Action Plan

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

6. Timing of the Strategy and Action Plan

During the identification of the activities to be delivered in the Country Strategy and Action Plan the delivery timelines were also considered. To meet this objective the National Steering Committee has identified the key dates for each of the individual actions under the key pillars of the plan.

7. Planned Implementation of the Strategy and Action Plan

The NSC has considered the method of approval for the Country Strategy and Action Plan and the role of NSC itself in the implementation phase. The Country Strategy and Action Plan will be formally presented to the Minister of Finance. A project board will be formed to implement the plan subject to sufficient funding and full acceptance of the country strategy and action plan by the Minister of Finance.

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