THE WORLD BANK Lessons Learned in the Translation of International Financial Reporting Standards (IFRS) Frédéric Gielen Lead Financial Management Specialist Europe and Central Asia Region

Background World Bank generally supports the adoption of IFRS by public interest entities (PIEs) in our partner countries, in an effort to promote high quality financial reporting in the corporate sector. ROSC A&A reports: identified translation issues as a potential impediment to the successful implementation of IFRS

Ultimate Goals For IFRS to be fully implemented by PIEs in our partner countries, thus contributing to a high-quality financial reporting environment. For partner countries to have an active role in the standard-setting process, to ensure IFRSs are relevant to their needs.

Objectives of this study To better understand the issues faced by countries in translating IFRS. To identify and disseminate good practices in IFRS translation. To suggest improvements, if any, to the IFRS translation process.

Sources of information Translation Coordinators Translators Review Committee Members Other (ROSC, existing literature, etc.)

Preliminary Findings……

First, some considerations: Mandatory (legal) vs. Voluntary adoption of IFRS Frequency of updates: at regular intervals (i.e., yearly) or as new standards/amendments are issued by IASB Target language: spoken in one country or in several countries (French, Spanish, etc.)

Mandatory vs. voluntary adoption of IFRS Mandatory application of IFRS for some reporting entities - country adopts IFRS as national standards (bare standards published in official gazette) MandatoryVoluntary Voluntary application of IFRS by reporting entities (publication of the “bound volume”)

Preliminary Findings: Good Practices (1) Build a database of terms/expressions (containing source language and target language) to promote consistency in translation within and across standards (ex. TRADOS) Ensure database is consistently updated and harmonized

Preliminary Findings: Good Practices (2) Translation of full bound volume, including implementation guidance, bases for conclusion, illustrative examples, etc. is essential Having only the bare standards in local language is not enough to promote a full understanding of the standards, nor ensure their proper application

Preliminary Findings: Good Practices (3) Translations may be undertaken by professional translators, but these must be reviewed by technical experts Need for standards and supporting documents to be reviewed for substance; review process also promotes consistency in terminology

Preliminary Findings: Areas for improvement (1) Review Committee Difficulty in attracting and retaining reviewers: size of review committees has been dwindling  increased the workload for each reviewer Lack of time to review standards: reviewers are volunteers who need to balance other professional activities with review task

Preliminary Findings: Areas for improvement (2) Standards in English are sometimes unclear (due both the technical as well as stylistic issues) Need for a contact person/group at IASCF/IASB to whom questions regarding the interpretation of standards should be directed.

Preliminary Findings: Areas for improvement (3) Translation of Exposure Drafts and related documentation (bases for conclusion, implementation guidance, etc.) of new standards or amendments generally not carried out Exposure drafts and related documentation need to be translated if all interested parties are to fully participate in the standard- setting process 120 day comment period for Exposure Drafts may not be sufficient to allow for translation

Exposure Drafts: Estimated time for translation & review Example: ED 8: Operating Segments Bare Standard: 7,300 words Basis for Conclusion: 12,900 words Implementation Guidance: 2,000 words Total: 22,200 words Translation: words per day Review: words per hour ED 8 Translation: business days ED8 Review: hours Approximately:

Preliminary Findings: Areas for improvement (4) Other Areas for Improvement Funding: how to fund translations in the absence of external assistance & when sales of bound volumes are not enough? Legal Adoption: errors in translation may result in unintended differences between “gazetted” IFRS and original version, as well as differences between “gazetted” IFRS and translated bound volume.

Research paper will be available for review in June/July We look forward to presenting our final findings at that time. Thank you