Latin American Capital Markets

ACCOUNTING AND AUDITING STANDARDS 235aware that results will not come quickly and that there is a continuous need for oversightin introducing changes and adjustments.These are the hard lessons of recent experiencesin the capital markets in the United States.Just as it is recognized that accounting is a mechanism for the public good offinancial stability, it is also recognized that the effective implementation of accountingand auditing standards provides benefits at more than just the country level. Againstthis background of financial stability as an international or regional public good, theWorld Bank and the Inter-American Development Bank, in the context of their workon financial sector reform, provide advice (in the form of best or good practices) andfinancing to support countries introducing mechanisms, such as accounting and auditingstandards, that favor financial stability and financial sector development.The International Monetary Fund and the World Bank have been conductingReports on the Observance of Standards and Codes (ROSCs) that analyze countrycompliance with selected international standards, including those related to accountingand auditing. The accounting and auditing module of a ROSC assesses the statusof the accounting practices in a given country and prepares a specific report for thegovernment. The report helps to guide policy discussions with the relevant nationalauthorities and is used by rating agencies in their country assessments and by the privatesector for risk analysis. As countries undergo ROSC assessments, the demand forassistance in accounting and auditing standards will increase.The Multilateral Investment Program (MIF) of the Inter-American DevelopmentBank has launched a complementary program as part of its Cluster Action Plan.The program is aimed at supporting the competitiveness of Latin American and Caribbeancountries through the adoption of internationally accepted standards and the provisionof financial support to countries and/or accounting associations that want tomove ahead in the areas of application of the standards, training, and quality control.Projects in the accounting cluster will share the same technical theme and developmentgoals and can be managed and monitored as a group. This will promote the effectiveuse of MIF resources, generating economies of scale and facilitating the sharing of projectinformation and experiences that will yield important lessons. Moreover, theseoperations will provide valuable demonstration effects through the dissemination ofresults from projects that promote the implementation and harmonization of internationalaccounting and auditing standards. In addition, clustering these projects offers ahigh potential for a catalytic impact that will encourage learning and sustainable outcomesacross the region. Finally, MIF financing, coming partly coming from so-called nonborrowingcountries and partly from recipient countries, is particularly appropriate becauseof the nature of the program and the fact that the effective implementation ofCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub