Other Financial Accountability Study
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Publication
Strengthening Oversight: Improving the Quality of Statutory Audits in the Philippines
(World Bank, Washington, DC, 2016-05)Since 2003, the Philippines have been striving to implement reforms aimed at improving audit quality. Oversight of the audit profession is a key control over the financial reporting architecture of a country’s private sector. A Quality Assurance Review system over audit practitioners is a subset of oversight which serves as a key monitoring control over the integrity of financial reporting. In keeping with the country’s strategic priority of boosting private sector development by improving the investment climate for firms of all sizes, including greater access to finance, legislation was enacted to support the objective of increasing the integrity of private sector financial reporting through improved audit quality. Accordingly, the Board of Accountancy was mandated with the power to conduct oversight into the quality of audits of financial statements through a review of the quality control measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and practices. . However, the injunction remains in place and, accordingly, implementation of the mandated Quality Assurance Review Program may not move forward. Several concrete steps should be taken in order to effectively move forward with the rollout of a comprehensive system of public oversight including audit quality assurance in the Philippines. These include (1) reforming the legal framework to establish an effective audit oversight system with sufficient legal power and authority (2) rationalizing the statutory audit threshold to minimize the conditions contributing to low quality audits, (3) building support among key stakeholder groups by properly addressing their concerns to the extent possible, (4) ensuring coordination of efforts among regulators to eliminate gaps and overlaps and foster collaboration among the group, and (5) establishing a dedicated Project Management Office to oversee the rollout of a Quality Assurance Review Program over audit practitioners. -
Publication
Diagnostic Review of Consumer Protection and Financial Literacy: Vietnam, Volume 1
(World Bank, Washington, DC, 2015-05)In 2011, only 21.4 percent of Vietnamese adults had an account at a formal financial institution, and only 36.9 percent of all borrowers used a formal lender - both indicators are well below the regional averages in the East Asia and Pacific. The formal financial sector in Vietnam is dominated by banks; however, retail lending is still rather underdeveloped due to often flawed lending practices and low levels of financial literacy among the population. Vietnamese authorities and the civil society have demonstrated a deep commitment to financial consumer protection by continuous dialogue and persistent legislative activities, and yet, much still needs to be achieved. The legal and regulatory framework for consumer protection in the financial sector, and related supervisory arrangements, are at a nascent stage of development. This World Bank’s diagnostic review was conducted in response to a request from the State Bank of the Socialist Republic of Vietnam. The banking, non-bank credit institutions, securities, insurance, and credit reporting sectors were considered as well as financial literacy strategies and programs. The review was conducted by reference to the World Bank`s good practices for financial consumer protection and provides a detailed assessment of the institutional, legal, and regulatory framework for financial consumer protection. Volume I of the review summarizes the key findings and recommendations and volume II provides a detailed comparison with the good practices. -
Publication
Indonesia Diagnostic Review of Consumer Protection and Financial Literacy: Volume 1. Key Findings and Recommendations
(World Bank, Washington, DC, 2014-12)This diagnostic study was undertaken by the World Bank in response to a request from Otoritas Jasa Keuangan (OJK), the Indonesian Financial Services Authority, and Bank Indonesia, the nation’s central bank. Indonesia’s financial sector has a lot of growth potential considering the relatively low volume of domestic credit provided by the private sector - just 43 percent of gross domestic product (GDP) in 2012. To steer the growth to sustainability, the Indonesian authorities have emphasized financial consumer protection in the 5 pillars of Indonesia’s national strategy for financial inclusion. This review aims to assist Indonesia in developing and implementing its national strategy and provides a detailed assessment of the consumer protection framework in six segments of Indonesia’s financial sector: banking, securities, insurance, non-bank credit institutions, private pensions, and credit reporting. This study also informed the design of the World Bank’s support program for Indonesia under the financial inclusion support framework (FISF) initiative. The review addresses the following issues: (1) institutional arrangements, (2) legal and regulatory framework, (3) transparency and disclosure, (4) business practices, (5) complaints handling and dispute resolution mechanisms, and (6) consumer awareness and financial literacy. Volume I summarizes the key findings and recommendations and volume II assesses each financial sector segment with regard to the good practices for financial consumer protection. -
Publication
Republic of the Philippines Diagnostic Review of Consumer Protection in the Banking Sector: Volume 2. Comparison with Good Practices
(World Bank, Washington, DC, 2014-11)The Philippines has made an impressive progress in consumer protection in the banking sector, as shown by the wide range of laws and of regulatory instruments, their active use and enforcement, and by provision of complaint resolution services. The 2013 Global Survey on Financial Consumer Protection indicated that the Philippines compares well with the other economies and yet there is space for further strengthening of the financial consumer protection framework. In order to improve access to financial services, their usage and quality, and further deepen the financial sector, the Philippines has to design and implement a sound financial consumer protection regime with prudential regulation and supervision. This World Bank’s Diagnostic Review was undertaken in response to a request from the Bangko Sentral ng Philipinas (BSP). It provides a detailed assessment of the consumer protection framework in the banking sector, with a particular focus on debit and credit products provided by BSP regulated banks. The review addresses the following areas: 1. Institutional Arrangements, 2. Legal and Regulatory Framework, 3. Transparency and Disclosure, 4. Business Practices, 5. Complaints Handling and Dispute Resolution Mechanisms, and 6. Consumer Awareness and Financial Literacy. Volume I summarizes the key findings and recommendations and Volume II provides comparison with the World Bank`s Good Practices for Financial Consumer Protection. -
Publication
Republic of the Philippines Diagnostic Review of Consumer Protection in the Banking Sector: Volume 1. Key Findings and Recommendations
(Washington, DC: World Bank, 2014-11)The Philippines has made an impressive progress in consumer protection in the banking sector, as shown by the wide range of laws and of regulatory instruments, their active use and enforcement, and by provision of complaint resolution services. The 2013 Global Survey on Financial Consumer Protection indicated that the Philippines compares well with the other economies and yet there is space for further strengthening of the financial consumer protection framework. In order to improve access to financial services, their usage and quality, and further deepen the financial sector, the Philippines has to design and implement a sound financial consumer protection regime with prudential regulation and supervision. This World Bank’s Diagnostic Review was undertaken in response to a request from the Bangko Sentral ng Philipinas (BSP). It provides a detailed assessment of the consumer protection framework in the banking sector, with a particular focus on debit and credit products provided by BSP regulated banks. The review addresses the following areas: 1. Institutional Arrangements, 2. Legal and Regulatory Framework, 3. Transparency and Disclosure, 4. Business Practices, 5. Complaints Handling and Dispute Resolution Mechanisms, and 6. Consumer Awareness and Financial Literacy. Volume I summarizes the key findings and recommendations and Volume II provides comparison with the World Bank`s Good Practices for Financial Consumer Protection. -
Publication
Republic of Kosovo Public Sector Revenues: Tax Policies, Tax Evasion, and Tax Gaps
(Washington, DC, 2014-06)Kosovo has a simple tax system and relatively low tax rates. A risky feature of Kosovo’s tax system is the high dependence on border taxes. In 2012, 71 percent of revenue was collected at the border in the form of trade taxes and value added tax (VAT) on imports. Shifting from border to domestic revenue collection is needed. The simple tax system can make it easier for the tax administration of Kosovo (TAK) to adjust direct taxes while encouraging labor market formality. Low domestic revenue collection suggests the presence of large tax gap - the difference between the amount the TAK should collect and the amount it actually does collect. The wider social and economic consequences of tax evasion are high. Finding ways to raise domestic revenue to compensate for the decline in border revenues is going to require actions on a number of fronts. First, strengthening the TAK’s capacity to increase compliance and reduce tax evasion, through judicial means. Second, reducing the informal economy will bring more firms and employees into tax net. Third, efforts can be made to increase revenues through existing taxes. Finally, policies that boost private sector growth, including an improved business climate, will help increase domestic production and therefore tax revenues. -
Publication
Establishing a Financial Consumer Protection Supervision Department: Key Observations and Lessons Learned in Five Case Study Countries
(World Bank, Washington, DC, 2014-03)This technical note is intended to assist policymakers and regulators seeking to establish a financial consumer protection supervision department (FCPSD) within the main financial regulatory body of a country. Concrete, practical information and lessons are drawn from the experiences of five countries: Armenia, the Czech Republic, Ireland, Peru, and Portugal - all of which have been operating a successful FCPSD for at least five years. The note covers the key aspects of the design process: supervisory agenda, organizational structure, supervisory activities, relationship with prudential supervision, and staffing needs. While there is no unified, orderly approach to establishing an FCPSD, many useful observations can be made from the common obstacles, including a lack of internal support, perceived conflicts of interest with prudential supervision, capacity constraints, and the inherent difficulties of starting up operations for the new (and potentially very broad) topic of financial consumer protection. How an FCPSD is established is highly dependent on country context: legal framework for the financial sector, organization of the main financial regulator, political priorities, current stage of development of financial markets, major consumer protection concerns, and other important factors. A comparative table summarizing the main elements in the establishment of FCPSDs in case study countries can be found in annex A. -
Publication
Fiduciary Systems Assessment : Maharashtra Rural Water Supply and Sanitation Program
(Washington, DC, 2014-02)A fiduciary systems assessment (FSA) was carried out to evaluate the arrangements relevant to the program and to determine whether they provide reasonable assurance that the program funds will be used for their intended purpose. Taking into account the improvements required and the agreement on the actions required to strengthen the systems (which are reflected in the program action plan (PAP), the overall fiduciary framework is considered adequate to support program management and to achieve desired results. Government of Maharashtra (GoM) has a well-developed budgetary framework that ensures allocation of adequate resources to all departments and programs. There is sufficient predictability in the availability of resources; however, to maintain transparency in GoM's financing, an exclusive budget line has been allocated to this program as is usually done by GoM for externally aided projects. Fiduciary arrangements in the sector are guided by several rules and legislations, including the state financial rules, public works department (PWD) manual, store purchase rules, Maharashtra jeevan pradhikaran (MJP) act, Zila Parishad (ZP) account code and the Bombay panchayat rules. The existing governance and accountability arrangements in water supply and sanitation department (WSSD) include the anti-corruption bureau, which enforces the prevention of corruption act, 1988; audits by the comptroller and auditor general (C and AG) of India, the country's premier auditor; right to information (RTI) act 2005; and WSSD's vigilance function and its grievance redress system (E-Pani). -
Publication
Tanzania Diagnostic Review of Consumer Protection and Financial Literacy: Volume 2. Comparison with Good Practices
(World Bank, Washington, DC, 2013-11)In 2011, only 17.3 percemt of adults in Tanzania had an account at a formal financial institution and 56 percemt did not have any access to financial services. Most of the population lives in rural areas with very low incomes and poor infrastructure, and women are especially disadvantaged. Such limited access to formal financial services also inhibits financial literacy – awareness of benefits and risks, and how to take advantage of opportunities. Despite significant challenges, all institutional elements of the formal financial sector in Tanzania are in place, helping its gradual expansion, and in some segments technology is driving rapid growth – particularly in mobile and electronic payments. Still, gaps and weaknesses in financial consumer protection and financial education remain some of the main obstacles to sustainability and greater trust in the financial sector. This Diagnostic Review was requested by the Ministry of Finance of Tanzania in November 2012. It provides a detailed assessment of Tanzania’s institutional, legal and regulatory framework against the World Bank’s Good Practices for Financial Consumer Protection. Three segments of the financial sector have been analyzed: banking, microfinance, and pensions. Insurance and securities segments will be considered at a later stage. Volume I of the Review summarizes the key findings and recommendations and Volume II presents a detailed assessment of each financial segment compared to the Good Practices. -
Publication
Rwanda Diagnostic Review of Consumer Protection and Financial Literacy: Volume 2. Comparison with Good Practices
(World Bank, Washington, DC, 2013-11)Although the Parliament of Rwanda has passed an impressive array of financial sector laws since 2008, the laws relevant to financial consumer protection are very limited and in some cases overlapping. Consumer protection in Rwandan banking, microfinance, and insurance sectors is fragmented because of insufficiently defined roles and responsibilities among institutions and unclear enforcement capacity. While there are some strong provisions in some areas such as electronic money transfer, electronic transmission, credit information, and market conduct regulation in the insurance industry, many other areas are lagging. Rwandan authorities recognize that a sound financial consumer protection framework is fundamental to improving usage and quality of financial services, access to them, and overall deepening of the financial sector. This World Bank diagnostic review was requested by the National Bank of Rwanda (BNR) in November 2012. Modules on banking and microfinance sectors were developed based on publicly available information and data during the World Bank mission in Rwanda, and the review of the insurance sector was conducted through a desk review using the data obtained from BNR data requests and questionnaires, and the analysis is therefore constrained by it. Volume I of the review summarizes its key findings and recommendations, and volume II provides a detailed assessment against the World Bank’s good practices on financial consumer protection.