INTEGRATED SAFEGUARDS DATA SHEET
IDENTIFICATION / CONCEPT STAGE
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Report No.: ISDSC12340
Date ISDS Prepared/Updated: 02-Mar-2015
I. BASIC INFORMATION
A. Basic Project Data
Country: Serbia Project ID: P154862
Project Name: Technical assistance for reform of financial reporting in Serbia
Team Leader(s): Jarett Decker
Estimated Date 08-Jan-2016
of Approval:
Managing Unit: GGOFR Lending Lending Instrument
Instrument:
Sector(s): Public administration- Financial Sector (20%), SME Finance (10%), General
finance sector (70%)
Theme(s): Corporate governance (10%), International financial standards and systems
(70%), State-owned enterprise restructuring and privatization (20%)
Financing (in USD Million)
Total Project Cost: 3.4 Total Bank Financing: 0
Financing Gap: 0
Financing Source Amount
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REPARIS - Road to Europe Program for ACC 3.4
Environment C - Not Required
Category:
B. Project Development Objective(s)
The Project’s development objective is to establish and implement a sound institutional framework
for corporate financial reporting, drawing on good international practices, and to build capacity for
preparing, teaching, regulating, auditing and using reliable financial reporting.
C. Project Description
A. Concept
This Project will use a multi-pronged strategy to enhance formal laws and standards, knowledge,
institutions, and practices in CFR in Serbia (including reporting for State-owned Enterprises). An
effective approach should support adoption of formal laws, standards, and other rules governing
financial reporting and auditing that are consistent with international good practices; enhance the
education of future accountants and auditors and support the continual upgrading of knowledge and
skills by current practitioners; develop the capacity of regulators, professional bodies, and other
authorities to monitor, use, and improve the quality of financial reporting and auditing; and enhance
the understanding and use of financial reporting in the broader economy and among members of the
public. This Project addresses all of these needs through its component activities.
The Swiss State Secretariat for Economic Affairs (SECO) expressed their interest in financing
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implementation of the Project, focusing on building sound statutory framework, strengthening
institutional capacity of the parties involved, improving monitoring and use of financial information
from SOEs, and enhancing the accountancy education and literacy, including raising public
understanding and awareness of financial reporting. The World Bank Project team has informed all
the key development partners active in the Republic of Serbia about its intention to support
implementation of the Strategy with donor grant funding, thus opening a possibility for mobilization
of additional grant financing for the second, follow-on phase of the Strategy.
The Project is planned to be 60% Recipient-executed and about 40% Bank-executed. In general, the
Bank-executed programs are those perceived to require the closest involvement and most expertise
from the CFRR.
1. Description
To address the current capacity challenges (described in section I.B above) and align the
Project’s design with the Government’s Strategy to enhance and develop financial reporting and
auditing framework, the project activities will comprise five components with the following
implementation arrangements:
- Component 1 [Recipient executed]: Completing and Enhancing the Accounting and
Financial Reporting Framework. Through this Component, (a) analysis will be performed of Serbia’s
existing legislation, bylaws, rulebooks, and charts of accounts governing financial reporting,
including recent changes made to the Law on Accounting, resulting in an assessment of gaps
between Serbian formal laws and standards and good international practices, including the acquis,
and appropriate amendments will be proposed; (b) support will be provided to develop a sustainable
process for translating and adopting IFRS standards; (c) support will be provided to the Ministry of
Finance to enhance its capacity to monitor and regulate corporate financial reporting; (d) a technical
guide will be designed describing approaches and methodologies for conducting policymaking
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activities including for updating concordance tables and maintenance of relevant webpages on the
Ministry of Finance website; (e) training in use and application of IFRS will be provided for financial
reporting practitioners; (f) events and activities will be conducted to promote public understanding
and awareness of the importance and uses of financial reporting.
The Ministry of Finance will be responsible for implantation of this component, with enhanced
implementation support from the World Bank’s Centre for Financial Reporting Reform (CFRR).
This Component will be allocated 32% of the total funding of the Project (Euro 1,090,000).
- Component 2 [Bank executed]: Building an Effective Audit Oversight and Quality
Assurance System: Through this Component, the Project will (a) support development of regulations
and guidance for Serbia’s Public Oversight Board for the auditing profession; (b) help develop the
capacity of POB members and staff to fulfill their functions; (c) support development of regulations,
methodologies, and guidance for audit quality control inspectors; (d) help develop a sustainable
system for translation of International Standards on Auditing (ISAs) and provide training to
practitioners in use of ISAs; (e) conduct activities and events to promote public and business
understanding of the importance and use of external audits.
The Component will be implemented directly by the CFRR specialists and consultants with
involvement of various stakeholders, international and local consultants and professional partners.
This Component will be allocated 15% of the total funding of the Project (Euro 510,000).
- Component 3 [Recipient executed]: Improving Accounting and Auditing Curricula for
University and Professional Education Programs. Through this Component, the Project will support
(a) assessment and possible improvement of the accountancy curriculum in the university sector; (b)
implementation of effective professional education programs through the Chamber of Auditors and
other competent professional accountancy organizations, including pre-qualification education,
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training, examinations, seminar, and workshops; and (c) provision of assessments, toolkits, and other
support for Continuing Professional Development (CPD) programs.
The Ministry of Finance will be responsible for implantation of this component, with enhanced
implementation support from the World Bank’s Center for Financial Reporting Reform (CFRR).
This Component will be allocated about 28% of the total funding of the Project (Euro 950,000).
- Component 4 [Bank executed]: Institutional Strengthening and Monitoring of SOEs.
Through this component, the Project will (a) assess the legal framework and practices for state
monitoring of financial statements from SOEs; (b) develop a methodology and tools for reviewing
the financial reports prepared by SOEs and a dashboard to input and analyze key financial
performance indicators, (c) develop the capacity of Ministry of Finance staff and other authorities
responsible for monitoring financial reporting from SOEs to use the methodology, dashboard, and
guidelines through training courses, study visit(s) to countries with a strong track record in
monitoring SOEs, and /or other appropriate capacity-building activities; (d) develop the capacity of
staff from the Ministry of Finance, the Privatization Agency, and other relevant authorities to analyze
and use financial information from SOEs in fulfilling their functions.
The Component will be implemented directly by the CFRR specialists and consultants with
involvement of various stakeholders, international and local consultants and professional partners.
This Component will be allocated 15% of the total funding of the Project (Euro 510,000).
- Component 5: Enhanced Implementation Support, Project Management, Monitoring and
Evaluation [Bank executed]. This Component will include necessary incremental costs related to
enhanced implementation support to the Ministry of Finance, management of the Project, including
overall reform management and coordination, monitoring of the reform activities supported under the
Project, as well as the Project’s fiduciary activities.
This Component will be allocated 10% of the total funding for the Project (Euro 340,000).
The Project will be structured as part of the REPARIS trust fund, implemented jointly by the Bank
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and the Recipient. The donor grant is yet to be established and documented. SECO expressed their
interest in financing the Project over the estimated time of 30 months, for approximately EURO 3.4
million.
D. Project location and salient physical characteristics relevant to the safeguard
analysis (if known)
E. Borrower’s Institutional Capacity for Safeguard Policies
F. Environmental and Social Safeguards Specialists on the Team
II. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment OP/ No
BP 4.01
Natural Habitats OP/BP 4.04 No
Forests OP/BP 4.36 No
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Pest Management OP 4.09 No
Physical Cultural Resources OP/ No
BP 4.11
Indigenous Peoples OP/BP 4.10 No
Involuntary Resettlement OP/BP No
4.12
Safety of Dams OP/BP 4.37 No
Projects on International No
Waterways OP/BP 7.50
Projects in Disputed Areas OP/BP No
7.60
III. SAFEGUARD PREPARATION PLAN
Appraisal stage ISDS required?: No
IV. APPROVALS
Team Leader(s): Name: Jarett Decker
Approved By:
Safeguards Advisor: Name: Agnes I. Kiss (SA) Date: 09-Mar-2015
Practice Manager/ Name: Henri Fortin (PMGR) Date: 19-Aug-2015
Manager:
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InfoShop and (ii) in country, at publicly accessible locations and in a form and language that are accessible to potentially
affected persons.