The Reports on the Observance of Standards and Codes Accounting and Auditing (ROSC A&A)

Presented by Riham HUSSEIN
Financial Management Specialist, MENA, The World Bank

The Reports on the Observance of Standards and Codes (ROSC) Initiative is a joint World Bank/IMF program developed in the wake of the financial crises of the late 1990s to strengthen the international financial architecture. The initiative includes 12 modules that focus on standards and codes areas, including accounting and auditing, which are key to a country’s risk assessment and economic framework. The global financial community considers the use of internationally recognized standards and codes necessary to provide a framework to strengthen domestic institutions, identify potential vulnerabilities, and improve transparency. Ultimately the ROSC Initiative aims to enhance countries’ resilience to shocks, support their risk assessment, and strengthen important pillars of the market economic system. It contributes to greater national and international financial stability by reviewing standards and codes in three main categories—policy transparency, financial sector regulation and supervision, and market integrity.

The Report on the Observance of Standards and Codes—Accounting and Auditing (ROSC A&A) aims to assist member countries in strengthening the quality of corporate financial reporting (CFR) through improved accounting and auditing. The program has two objectives:

  • (a)     Compare national accounting and auditing standards and practices against International Financial Reporting Standards (IFRS) and International Standards of Auditing (ISA) and analyze the strengths and weaknesses of the institutions that underpin the development and enforcement of these standards. The ROSC A&A review assesses the infrastructure for CFR, including accounting and auditing requirements and practices, and makes policy recommendations to improve and reform that infrastructure.
  • (b)     Assist the country in developing and implementing a country action plan for improving institutional capacity and strengthening the country’s CFR regime.

The ROSC A&A review, therefore, is concerned with the adoption and implementation of IFRS and ISA, as well as with the legal, organizational, regulatory, and capacity factors that affect implementation. Each report follows a standard structure, concluding with a set of policy recommendations that provide the basis for policy dialogue with the country authorities and other stakeholders, and inform the World Bank and IMF in developing assistance priorities and operations. Since the ROSC A&A reports are generally published, they also inform market participants and other stakeholders of the state of CFR in the country.

The World Bank’s Financial Management (FM) Sector completed 120 ROSC-AA reviews for 100 countries worldwide between 2002 and 2013. In MENA we completed 8 ROSC-AA reports—in Morocco, Egypt, Lebanon, Jordan, Palestinian Territories, Tunisia, Yemen, and Algeria.

In 2011 the World Bank conducted a study, based on the completed ROSC A&A reports and action plans, to assess the lessons learned and future directions of the ROSC A&A. The study concluded that the program has successfully met its objective of providing analysis, information, and knowledge on the institutional framework for and practice of CFR in an expanding number of countries. More specifically, the study highlighted the following:

·         The ROSC A&A program has created substantial knowledge for multiple stakeholders across all Regions regarding CFR, a key element of the financial architecture.

·         The ROSC A&A is a well-established and well-regarded diagnostic and monitoring tool. It provides the framework for consistent, standardized assessment of the accounting and auditing infrastructure, and the reports provide structured recommendations for country action plans.

·         Implementation of the ROSC A&A recommendations is accelerating, within the available resources, reflecting a shift in the balance between diagnosis and implementation, with notable success stories. At the same time, follow-up to the ROSC A&A reviews and the extent to which review recommendations have been implemented have varied across countries.


This summary of the ROSC-AA program is based on the study “ROSC-AA – Lessons Learned and Future Directions” (6/2011)