CReCER - Background

Abstract

The World Bank, the Inter-American Development Bank and Multilateral Investment Fund (IDB/MIF), and the International Federation of Accountants (IFAC) are organizing the first regional conference on accounting and auditing to be held in the Latin America and Caribbean Region (LCR): Accounting and Accountability for Regional Economic Growth (Contabilidad y Responsabilidad para el Crecimiento Económico Regional or CReCER in Spanish).  It is meant to facilitate recognition and to emphasize the importance of financial accountability for economic development in participating countries.  The main purpose of the event is to create greater awareness of the importance of sound accounting and auditing practices for economic development.

Sound Accounting and Auditing Support Economic Development

The international community recognizes that sound accounting and auditing practices are the cornerstone of a well-functioning market economy, as well as of an efficient public sector, thus contributing to equitable and sustainable economic development. In the public sector, sound financial management supports aggregate control, prioritization, accountability and efficiency in the management of public resources and delivery of services, which are critical to the achievement of public policy objectives, including achievement of the Millennium Development Goals.

In the corporate sector, sound accounting and auditing contribute to economic development by:

• Improving the business climate, making it more conducive to domestic and foreign investment;
• Making access to finance easier for local enterprises, especially small and medium ones;
• Furthering the integration of domestic enterprises in the world economy, by aligning their standards and practices with those of the country's main trade and investment partners;
• Reducing the risk of crises in the financial sector and mitigating their consequences; and
• Helping to safeguard pension fund systems, enhancing their ability to invest in a broader range
  of enterprises.

Moreover, increased corporate accountability is an essential component of a country's governance agenda. Indeed, stronger corporate accounting and financial reporting practices make the concealment of illegal transactions more difficult, provide for higher accountability of state-owned enterprises (SOEs) and, since tax obligations are based on accounting records, contribute to improved corporate tax collections.