Other Financial Accountability Study

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  • Publication
    A Toolkit for Corporate Workouts
    (World Bank, Washington, DC, 2022-01) World Bank
    This Toolkit is aimed primarily at policy makers, financial institutions, and enterprises. It examines different types of corporate restructuring procedures on the basis that one size does not fit across all jurisdictions. Recent experience of the operation of corporate restructuring regimes around the world demonstrates that such regimes must appropriately account for domestic considerations, including a jurisdiction’s institutional and regulatory framework. This Toolkit, a revised and updated version of the 2016 publication, incorporates wide-ranging updates that reflects this experience. It describes matters relevant to the adoption of workout frameworks for a broad range of types of corporate restructuring procedures, some of which provide for a role for courts or regulatory authorities. This widened perspective highlights considerations of particular relevance in the context of the COVID-19 pandemic, a crisis that makes restructuring viable businesses especially important.
  • Publication
    Supreme Audit Institutions Independence Index: 2021 Global Synthesis Report
    (World Bank, Washington, DC, 2021-07-20) World Bank
    This report aims to inform and better equip World Bank task teams and development partners to support the strengthening of Supreme Audit Institutions (SAIs) in client countries. It also aims to help focus the ongoing collaboration between the International Organisation of Supreme Audit Institution (INTOSAI) and development agencies to address the intractable SAI independence issue. The report also responds to yearnings of several development partners to better understand the degree of SAI independence in countries and regions.
  • Publication
    Developing Insurance Markets: Motivations and Initiatives to Grow the Institutional Investment Role of Emerging Market Insurers
    (World Bank, Washington, DC, 2021-06) Thorburn, Craig
    This paper develops a theme identified in recent insurance sector development work: that more developed insurance markets are desirable as insurers play a more effective institutional investment role, whether this objective seeks deeper and more liquid bond or capital markets, or to see more investment in long term assets such as infrastructure or in support of climate finance. It explores the perspective of domestic insurers, summarizing positions regarding asset selection and key drivers of current and desired asset structures. The paper draws on interviews in several deep-dive countries supplemented by additional engagement for a more representative global reach. It then discusses a range of solutions that may be considered by policymakers categorized under efforts to: grow the sector so it can play a more substantive role; improve how assets are packaged and made available to insurance companies so they are more investable; review risk-based capital rules to ensure that they encourage and reward the right behavior; and check other regulations do not present unintended barriers. The paper concludes that, although domestic insurers are interested in making investments that meet these goals, they are constrained by barriers that are almost entirely external to their own operations and outside their control. With some adjustment to supply and regulatory settings, insurers should translate their interest into action, increasing their role and improving the contribution to this desirable development outcome. The paper is intended to be particularly relevant for policymakers and practitioners with less experience within insurance company operations who are looking to better understand and respond to insurance decision making.
  • Publication
    The Next Wave of Suptech Innovation: Suptech Solutions for Market Conduct Supervision
    (World Bank, Washington, DC, 2021-03-01) World Bank
    Around the world, financial sector supervisors are experiencing a profound shift to data-driven supervision enabled by the next wave of technology and data solutions. While technology and data are not new to financial oversight, their specific application to financial consumer protection and market conduct supervision has become more widespread and sophisticated in recent years. Expanding on the World Bank’s 2018 note on supervisory technology, or suptech, this technical note catalogues a range of specific solutions that financial authorities are deploying to help increase the efficiency and effectiveness of market conduct supervision. The note identifies four categories of suptech solutions (regulatory reporting, collection and processing of complaints data, non-traditional market monitoring, document and business analysis) and provides concrete examples of 18 different suptech solutions for market conduct supervision, drawing from the experiences of 14 financial sector authorities worldwide. The note also discusses implementation considerations and enablers of successful suptech adoption commonly experienced across countries.
  • Publication
    Developing Insurance Markets: Do Fiscal Incentives Help Long Term Life Insurance Development?
    (World Bank, Washington, DC, 2020-06) Shindo, Tetsutaro; Thorburn, Craig
    Life insurance lags non-life insurance in many nascent markets. In order to develop the life insurance market, insurance companies sometimes present the introduction of tax incentives to stimulate consumers’ willingness to commit to long term savings associated with life insurance. This paper examines whether insurance premiums’ tax deductibility can affect life insurance penetration using regression analysis of a cross-country dataset. To complement the analysis, selected individual countries - Niger, Russia, Paraguay, and Lithuania were reviewed, looking at trends in life insurance penetration and gross domestic product (GDP) per capita in United States dollar (USD) before and after a policy change. The analysis did not conclusively demonstrate that life insurance premium fiscal relief was meaningfully correlated to life insurance penetration. On the other hand, GDP per capita is strongly correlated with life insurance penetration, which is consistent with findings of other studies. The country examples where a tax policy change was introduced in life insurance premium deductibility show mixed results. In Russia and Lithuania, premium deductions appear to have had some effect on life insurance penetration. In Niger and Paraguay, it was harder to see a meaningful impact. The impact of a premium deduction on consumers’ buying behavior appears to be more complex and depends on the country context such as institutional quality and overall financial market capacity. Even if the tax deduction of insurance premiums has some positive effect, it appears that it is not a panacea but just one of a number of factors motivating consumers. If a country is considering introducing a policy which allows the tax deduction of insurance premiums, it is recommended to combine it with other interventions.
  • Publication
    Anticorruption Initiatives: Reaffirming Commitment to a Development Priority
    (World Bank, Washington, DC, 2019-12-20) World Bank Group
    Corruption continues to have a disproportionate impact on the poor and most vulnerable, increasing the cost of, and reducing access to, health, education, justice, electricity and other basic services, thereby exacerbating inequality. It reduces private investment as it increases risks for investors, with consequent effects on growth and jobs. It distorts public spending decisions and weakens the quality of public investments as substandard infrastructure gets built and the regulatory systems for quality control and safety are bypassed. It erodes public trust in governments, undermining their legitimacy and posing a threat to peace and stability. This paper draws on these lessons and proposes a new approach, both in terms of what we work on and how we work, focusing on initiatives to be led by the Bank’s EFI vice presidency to reaffirm the Bank’s commitment to anticorruption. The initiatives refresh approaches that are showing results, scale up those that are emerging and show promise, or experiment and innovate where fresh thinking is needed in our support to client countries to help them control corruption. In this note, corruption is seen as both a symptom of underlying governance challenges and a problem in and of itself. For practical purposes, and to keep the focus on corruption, the initiatives do not expound on the many aspects of governance that influence corruption. The paper also does not focus on efforts to control corruption risk in World Bank operations, but rather focus on the support that the EFI Vice Presidency will provide to countries in their efforts to control corruption.
  • Publication
    Creating Impact: The Promise of Impact Investing
    (International Finance Corporation, Washington, DC, 2019-11-01) International Finance Corporation
    This report takes stock of the market for impact investing and examines the conditions that would allow the market to grow and realize its potential. Historically, there have always been investors who cared about more than just financial returns. Governments and philanthropists, for example, have set up investment vehicles with mandates to promote social and environmental goals. Over the last decade, impact investing has gained prominence as an approach to investment that aims to achieve both financial returns and social or environmental goals.1 This has created a dynamic but somewhat disorganized market of diverse participants, standards, and concepts. Although still small, the market is attracting considerable interest, and it has the potential to increase in scale, and thereby contribute to the achievement of the Sustainable Development Goals (SDGs) and the Paris climate goals.
  • Publication
    Common Core Accounting Syllabus for Universities
    (World Bank, Washington, DC, 2019-09-13) World Bank Group
    Strengthening Auditing and Reporting in the Countries of the Eastern Partnership (STAREP) is a regional program of the Centre for Financial Reporting Reform (CFRR). The program aims to create a transparent policy environment and effective institutional framework for corporate reporting within the countries that make up the European Union’s Eastern Partnership: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. STAREP’s focus is on the improvement of corporate financial reporting frameworks and their effective implementation. As many countries move towards the adoption of international and regional standards in accounting and auditing, there is a need to ensure high quality, relevant education both for those entering the profession and for ongoing professional development throughout their career. The World Bank’s Accounting and Auditing Education Community of Practice (EduCoP) has enabled shared and peer learning, supporting national efforts to develop accounting and auditing education capacity.
  • Publication
    Complaints Handling within Financial Service Providers: Principles, Practices, and Regulatory Approaches
    (World Bank, Washington, DC, 2019-06) World Bank
    Core to an effective financial consumer protection framework is an accessible and efficient recourse mechanism that allows consumers both to know and to assert their rights to have their complaints addressed and resolved in a transparent and just way within a reasonable timeframe. Complaints handling mechanisms are especially important for low-income and vulnerable financial consumers, to whom timely and effective recourse processes can have a decisive influence over their trust in their financial service provider (FSP) and in the financial sector in general. Increased trust contributes to consumers' uptake and sustained usage of financial services and, consequently, their economic livelihoods. Financial consumer complaints handling mechanisms comprise two stages: complaints that are handled by FSPs, generally referred to as internal dispute resolution (IDR); and complaints that, if not satisfactorily resolved, are handled by an alternative, out-of-court process, generally referred to as external dispute resolution (EDR). There are several international sources of principles applicable to complaints handling and resolution processes and procedures to be established by FSPs. Drawing from the World Bank's Good Practices for Financial Consumer Protection, the work of international bodies, such as the Group of Twenty (G20)/Organisation for Economic Co-operation and Development (OECD) Task Force on Financial Consumer Protection, as well as selected country experiences this Technical Note highlights considerations that aim to provide a methodological guidance for regulators and FSPs when developing and implementing IDR frameworks to ensure they are consistent with international good practices. This Technical Note synthesizes concepts, principles, and practices for IDR mechanisms for financial consumers and shares examples of legal and regulatory requirements for FSPs to resolve complaints and to ensure that complaints- related data is collected, analyzed, and shared as appropriate to support improvements in FSP performance, industry market conduct, and market conduct regulation.
  • Publication
    Accountants as Catalysts for Growth in the Western Balkans: Initial Assessment of SME's Financial Management and Financial Governance
    (World Bank, Vienna, 2019-05-08) World Bank Group
    Good financial management and financial governance is not only an imperative for the largest companies; smaller privately-owned businesses dominate economies in the Western Balkans providing most of jobs and contributing most of the value added to the economy, and so it is essential that smaller businesses with high growth potential are not constrained by poor financial management practices. The World Bank’s Center for Financial Reporting Reform (CFRR) has developed a landscape assessment approach” that aims to identify the state of financial management and financial governance practices of Micro, Small and Medium Sized Entities (MSMEs) in the Western Balkans and opportunities for improvement, building on the Report on the Observance of Standards and Codes (ROSCs) performed in the region. The landscape assessment approach has been developed by the CFRR under the Accountants as Catalysts for Growth (A4G) initiative which aims to leverage the accounting profession to support improvements in the management of the financial health of MSMEs. This work compliments the Reports on Observance of Standards and Codes (ROSCs) that have been completed by looking at non-standard aspects of financial management. Preliminary landscape assessments have been performed in Serbia and Albania; however, this work has not yet been formally reported. These preliminary assessments have been performed to test the assessment approach before a broader roll-out under the future EU-REPARIS program work as well as identify the key financial management and financial governance practices of MSMEs that need improvement, based on stakeholder observation, and consider factors that may be giving rise to such practices and possible approaches to address them. Reports for Serbia and Albania will be completed once the assessment is finalized which may include further work in both countries resulting from refinements to the assessment approach. Stakeholder observations obtained from preliminary assessment work were used to identify financial management deficiencies in MSMEs, possible causal factors, and approaches to improvement. Stakeholders identified some fundamental deficiencies in financial management and financial governance of MSMEs in Serbia and Albania that appear to be systemic and may constrain the MSME Sector’s development overall.is important to note that these are not expressed as actionable recommendations; they are offered as key themes that should be discussed by the main stakeholders to coordinate and identify agreed actions with these themes and others. A key issue identified at this initial stage of work is that approaches to address shortcomings in financial management and financial governance of MSMEs are constrained by market conditions and institutional capacity. Future work under the A4G initiative, including completing assessments in all Western Balkans countries, and developing activities to support improvements in MSME financial management and financial governance, will need to take account of the results of this preliminary assessment work.