Improved accounting and auditing standards and better transparency of financial information are the most urgent issues that will need to be addressed for corporate growth to take off in developing countries, according to the World Bank.
As part of its worldwide efforts to strengthen financial controls through the launch of a Global Forum on Corporate Governance in September, the bank – which provides around £12.5bn in loans each year to more than 100 developing countries – has reviewed nine corporate governance self-assessment surveys from developing countries.
The initiative – led by Magdi Iskander, World Bank director for the private-sector development department and Nadereh Chamlou, knowledge management unit manager – will overlap with the work of bank vice-president Jules Muis in building a stronger financial architecture to encourage investment.
Iskander told Accountancy Age: ‘Corporate governance is fundamentally a political process in which the government, the private sector and other stakeholders must join hands to come up with a reform agenda which is tailor-made to the specific needs of the countries and achieves a sustainable culture of enforcement and compliance.’
Muis has been recruiting accountants including John Hegarty, secretary-general of European accounting body FEE, to advise governments on financial matters and is keen to encourage countries to conduct their own assessments of corporate governance.
These assessments will be followed by investor surveys to determine the particular market reforms which are required in individual countries.
Chamlou said initial results showed that accounting and auditing transparency is the area which requires the most urgent review.
However, it is unlikely that any firm action will be taken by the World Bank until the beginning of next year.
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