The IFRS Foundation has signed a memorandum of understanding with the World Bank to help developing countries use International Financial Reporting Standards.

The two organizations, which have partnered together in the past, believe IFRS promotes greater transparency, accountability and efficiency, allowing emerging economies to attract more foreign investment and spur economic development to alleviate poverty.

IFRS Foundation chairman Michel Prada
IFRS Foundation chairman Michel Prada Lucas Schifres/Bloomberg News

The agreement lays out a number of priorities that the IFRS Foundation, which oversees the International Accounting Standards Board, will cooperate on with the World Bank. That includes developing education programs to build understanding of IFRS and its subset, IFRS for SMEs (for small and midsize enterprises), within individual countries and regions. They also plan to take steps to give developing economies more of a role in the standard-setting work of the IFRS Foundation.

“In recent years, we have seen a large number of developing economies adopt IFRS standards,” said IFRS Foundation chairman Michel Prada in a statement. “However, many of these countries need an additional support when adopting IFRS Standards or implementing major changes to those standards. Deepening cooperation with the World Bank is an obvious way to achieve this goal, and we are grateful to the World Bank for its active support and fully committed to make this joint endeavour a success.”

The IFRS Foundation and the World Bank plan to form a coordination group that will meet regularly, and they also plan to hold a meeting in November when the IFRS Foundation trustees assemble in Sao Paulo, Brazil.

“I am delighted that the World Bank and the IFRS Foundation are working more closely together in establishing consistent financial reporting standards in emerging market and developing economies,” said World Bank Group managing director and CFO Joaquim Levy in a statement. “Reliable and transparent accounting practices are essential to attracting investment, and by extension, the way in which development institutions and the private sector can work together to support sustainable growth.”

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.