1. Overview of the Weaknesses in the Statutory and Institutional Framework for Corporate Financial Reporting and Consequences
Mr. Frédéric Gielen,
Senior Financial Management Specialist, World Bank
REPARIS Conference, Brussels, June 30, 2004

2. South Central and South East Europe
Albania
Bosnia and Herzegovina
Bulgaria
Croatia
Kosovo (UNSCR 1244)
Former Yugoslav Republic of Macedonia
Romania
Serbia and Montenegro
Turkey

3. Financial System Stability
Indonesia
Argentina
Brazil
Thailand
South Korea
Russia
Mexico
Hong Kong

4. Path of financial development
Private Sector Growth
Effective functioning of the market economy requires a supporting infrastructure for information disclosure.
Path of financial development
Productivity
y/l4
y/l3
y/l2
Output Levels
y/l1
Capital Intensity
Source: Based on the econometric findings of Levine, Loayza, and Beck (2000)

5. International Financial Architecture
Codes and Standards
Financial System Stability
Private Sector Growth

6. Reports on the Observance of Standards and Codes
IMF
Data Dissemination
Fiscal Transparency …
IMF and World Bank
Banking Supervision
Securities Market Regulation
World Bank
Corporate Governance
Accounting and Auditing
Insolvency Regimes and Creditor Rights

7. Accounting Scandals
Enron's Planned End (Washington Post)
Symbol of Greed Has Shed Assets,
Hopes to Drop Name and Emerge
(…) If the plan goes forward as expected, only Prisma Energy International Inc., a holding company for nearly two dozen gas and electricity businesses with 4,900 employees located around the globe, would remain. Creditors, who lost about $63 billion, would get back from 17 to 22 cents on the dollar in cash and in Prisma stock.
(…) At one point, Enron employed 32,000 workers in outposts around the globe, rapidly expanding from its home base in Houston to Brazil and India. (…)
WorldCom goes bankrupt (The Guardian)
Telecommunications giant WorldCom has filed for bankruptcy in America's biggest corporate failure.
(…) The bankruptcy would be twice as large as that of energy trader Enron in December, which set a record at the time, and four times as large as that of telecommunications firm Global Crossing in January. In its bankruptcy filing, WorldCom reported more than $107bn (£67.9bn) in assets and debts of $32bn. (…)
How Parmalat Went Sour (Business Week)
Here's the skinny on Europe's enormous financial scandal
In the wake of the financial scandals at Enron, WorldCom (MCWEQ ), and Tyco International (TYC ), European chief executives smugly insisted no such fraud could ever occur in Europe. They spoke too soon. The accounting calamity at Italian dairy-foods giant Parmalat has prosecutors scrambling to find out what happened to $8.5 billion to $12 billion in vanished assets. (…)
Dutch authorities probe Ahold (BBC)
Ahold's AH flagship store is in talks with suppliers about its payments
(…) the probe focused on secret letters relating to Ahold's Swedish joint-venture ICA. The paper reported that Ahold had counted the results in full in its results, but was not entitled to do so because it had only built up a large minority stake in the joint-venture.
(…) In February, Ahold shocked investors after it admitted it had overstated profits at its US Foodservice in 2001 and 2002 by more than $500m (£318m). (…)
“If the confidence of the public in the integrity of accountants’ reports is shaken, their value is gone.”
Mr Arthur Andersen, 1932

8. Four Pillars of Good Corporate Financial Reporting
Accounting
Standards
Accounting
and
Auditing
Practices
Corporate
Financial
Reporting
Legislative
And
Regulatory
Framework
Institutionalized
Enforcement
Mechanisms

9. The ROSC Program in South Central and South East Europe
Assessment Completed
Bulgaria
Croatia
Former Yugoslav Republic of Macedonia
Romania
Assessment in Progress
Bosnia and Herzegovina
Remaining Assessments (to be Completed in 2005 and 2006)
Albania
Kosovo (UNSCR 1244)
Serbia and Montenegro
Turkey

10. A Very Positive Note
Major Steps Forward in the Process of Enhancing the Quality of Corporate Financial Reporting
Challenge that Lies Ahead: Implementation and Enforcement.

11. Weaknesses in the Statutory and Institutional Framework
Shortfalls in the Statutory Framework
Weak Accounting and Auditing Profession
Weak Academic and Professional Education
Lax Accounting and Auditing Standards
Weak Institutionalized Enforcement Capacity (Regulators, Supervisors, Judiciary)

12. A Necessary Reform Agenda

13. A Basic Building Block