World Bank agreement to push IFRS adoption in developing economies
The global accounting standard setter, the IFRS Foundation, has signed a cooperation agreement with the World Bank to support developing economies in their adoption and use of International Financial Reporting Standards (IFRS)
15 May 2017
The agreement, in the form of a memorandum of understanding (MoU), reflects the organisations’ view that the standardisation and accountability provided by IFRS 'plays an essential role in attracting inward investment, boosting economic development and ultimately alleviating poverty'.
The arrangement will meld the IFRS Foundation’s strong technical expertise with the extensive network and international and regional presence of the World Bank to drive IFRS adoption.
The bodies have set a number of priority areas for the next two years, including:
- development of educational programmes (both online and offline) to help build capacity and understanding of IFRS and IFRS for SMEs, and materials to support implementation;
- provide an ‘off-the-shelf’ solution for development projects in individual countries or regions;
- support for professional accountancy organisations and others in their efforts to deliver continuing professional development (CPD) for the application of IFRS standards, including IFRS for SMEs; and
- steps to help developing economies with less advanced standard-setting capabilities to play a more active role in the work of the IFRS Foundation.
Michel Prada, chairman of the IFRS Foundation Trustees, said: ‘In recent years, we have seen a large number of developing economies adopt IFRS standards. Many of these countries need additional support when adopting IFRS or implementing major changes to those standards. Deepening cooperation with the World Bank is an obvious way to achieve this goal.’
Commenting on this agreement, Joaquim Levy, managing director and chief financial officer (CFO) of the World Bank Group, said: ‘Reliable and transparent accounting practices are essential to attracting investment, and by extension, the way in which development institutions and the private sector can work together to support sustainable growth.’
The organisations will set up a coordination group, which will meet on a regular basis, to drive the project. Further discussions between the leadership of the IFRS Foundation and the World Bank will take place in Sao Paulo, coinciding with the November 2017 Trustees meeting in Brazil.
This is an initial two-year deal which will be reviewed no later than May 2019.
The IFRS Foundation and World Bank MoU is available here