Joint Communique on Progress Made in Reform Implementation and Continuation of the Strengthening Auditing and Reporting Program in Countries of the Eastern Partnership (STAREP) November 26, 2018 As a side event to the World Bank’s Ministerial Conference taking place on 27 November 2018, the annual Senior Officials Workshop took place to jointly review progress made in the Strengthening Auditing and Reporting Program in Eastern Partnership Countries and discuss priorities going forward. All beneficiary countries were represented including Armenia (Ministry of Finance), Azerbaijan (Ministry of Finance), Belarus (Ministry of Finance), Georgia (Service for Accounting, Reporting and Auditing Supervision), Moldova (Ministry of Finance) and Ukraine (Ministry of Finance). The workshop was organized by the World Bank’s Centre for Financial Reporting Reform which is the implementing agency for STAREP. Program beneficiaries and the World Bank would like to express sincere appreciation to the Austrian Development Agency, the Austrian Ministry of Finance and the European Union for partnering in this important program and making the many achievements and reform efforts possible. By way of reviewing progress, it shall be noted that the program has helped launch and implement critical reform efforts to strengthen the financial reporting frameworks in the beneficiary countries with a view to strengthening the improved financial management practices in the private sector and among state-owned enterprises, enhanced quality of audit and business advice by the accounting profession, and supporting a more conducive business enabling environment and improved access to finance. In particular, reforms have been launched in the following technical areas: » Introduce new accounting and auditing legal frameworks that follow international financial reporting and auditing standards, to achieve approximation of legal norms, standards and institutions to EU requirements and/or international good practice and business friendly regulation; » Establish functional public oversight to ensure a strong and reliable audit function and improved quality of audit services; » Implement up-to-date education systems at the university level as well as through professional development to ensure strong pipeline of financial specialists, accountants and auditors, and sustain their continuous education; » Upgrade the capacity of the profession for better accounting and auditing practices, enhanced support to businesses, and increased availability and quality of financial information for e.g. investors, banks, business partners, financial market regulators, and tax authorities alike; 1 » Strengthen financial sector supervision through understanding and increased use of financial information in financial sector oversight. It shall be particularly noted that the combination of (i) a strong regional aspect of the program facilitating peer exchange, joint-learning, discussion of experiences within communities of practice, regular exposure to international best practice, and (ii) targeted country-level assistance within one program is regarded as instrumental element to the successes achieved. Reform efforts have been successfully completed in several areas. In other areas, reforms have been launched but not yet completed and require additional support and resources (see next page). The program is now in its fifth year; efficient use of project resources will allow for continued assistance until September 2019. With this joint statement, beneficiaries and the World Bank as implementing agency would like to thank Development Partners for their partnership in making the current achievements possible, and in light of the evident funding gap to pursue and finish reform efforts in select areas, to invite them to consider making additional contributions. List of Completed Achievements under STAREP Assistance: - New Accounting and Auditing Legislation adopted in Georgia, Moldova and Ukraine; - New Accounting Law adopted in Belarus and Azerbaijan. Armenia is progressing towards adoption; - International Financial Reporting Standards (IFRS) adopted and required for public interest entities in all countries; - International Standards of Auditing (ISA) and Code of Ethics (IESBA) adopted in all countries except for Belarus that is introducing respective legislation changes in 2019; - Transposition tables completed in Georgia, Moldova and Ukraine; - Public Oversight Institutions established in Georgia and Moldova, in progress in Ukraine; - Eleven universities completed the profiling tool for curriculum updates; - Financial reporting frameworks aligned with EU requirements and good international practice for non-public interest entities and SMEs, including adoption of IFRS for SMEs in Armenia, Azerbaijan and Georgia; - National register of auditors and audit firms established in Georgia, Moldova and Ukraine; - Availability of translated accounting and auditing standards such as IFRS, IFRS for SMEs and ISAs in most of participating countries; - Reconciliation approach to apply prudential filters in place in Armenia, Azerbaijan, Georgia and Ukraine; - Banking regulators regularly review financial statements prepared under IFRS. 2 List of Reform Efforts Launched but in Need of Continued Assistance: - Implementation support of new Accounting and Auditing Legislation in Belarus, Georgia, Moldova and Ukraine; - Implementation support of new Accounting Legislation in Azerbaijan; - Draft and adoption of new Auditing Law in Belarus, Armenia and Azerbaijan, including via support in adoption of ISA and Code of Ethics (IESBA); - Support to full implementation of public oversight function in Georgia, Moldova and Ukraine; - Public Oversight Institutions to be established or strengthened in Armenia, Azerbaijan and Belarus; - Establish national register of auditors and audit firms in Armenia, Azerbaijan and Belarus; - Ensure sustainability of ongoing translation of accounting and auditing standards such as IFRS, IFRS for SMEs and ISAs in all countries; - Update of the curriculum in accounting and audit to leading universities in beneficiary countries; - Support to professional accounting associations and small-and-medium practices to build capacity continuous professional development, in particular in SME advisory; - Support roll out of reconciliation approach to apply prudential filters in financial sector supervision in Moldova and Belarus. SIGNED: Republic of Armenia Deputy Minister of Finance Arman Poghosyan Republic of Azerbaijan Chairman of the Chamber of Auditors Vahid Novruzov 3 Republic of Belarus Deputy Minister of Finance Dmitriy Kiyko Georgia Head of Service for Accounting, Reporting and Auditing Supervision Yuri Dolidze Republic of Moldova General State Secretary of Ministry of Finance Ion Chicu __________________________________ Ukraine Minister of Finance Oksana Markarova 4