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    MFI Reporting Standards Adoption Process June 2009

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    The document describes a six-step process for setting and adopting microfinance reporting standards based on the International Accounting Standards Board's process. The six steps are: 1) setting the agenda, 2) project planning, 3) discussion paper, 4) exposure draft, 5) standards publication, and 6) standards adoption. The process is managed by a Secretariat and emphasizes transparency, stakeholder engagement, and consistency to promote adoption of standards.

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    MFI Reporting Standards Adoption Process June 2009

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    FinancialServices
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    The document describes a six-step process for setting and adopting microfinance reporting standards based on the International Accounting Standards Board's process. The six steps are: 1) setting the agenda, 2) project planning, 3) discussion paper, 4) exposure draft, 5) standards publication, and 6) standards adoption. The process is managed by a Secretariat and emphasizes transparency, stakeholder engagement, and consistency to promote adoption of standards.

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    The document describes a six-step process for setting and adopting microfinance reporting standards based on the International Accounting Standards Board's process. The six steps are: 1) setting the agenda, 2) project planning, 3) discussion paper, 4) exposure draft, 5) standards publication, and 6) standards adoption. The process is managed by a Secretariat and emphasizes transparency, stakeholder engagement, and consistency to promote adoption of standards.

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    22 views4 pages

    MFI Reporting Standards Adoption Process June 2009

    Uploaded by

    FinancialServices
    The document describes a six-step process for setting and adopting microfinance reporting standards based on the International Accounting Standards Board's process. The six steps are: 1) setting the agenda, 2) project planning, 3) discussion paper, 4) exposure draft, 5) standards publication, and 6) standards adoption. The process is managed by a Secretariat and emphasizes transparency, stakeholder engagement, and consistency to promote adoption of standards.

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    Financial Services Working Group - Microfinance Reporting Standards Initiative

    MFI Reporting Standards


    Setting & Adoption Process

    The following describes the Reporting Standards Adoption Process for the microfinance
    industry. The process is adapted from the International Accounting Standards Board (IASB),
    based upon the process they currently use, which has been shaped from more than 30 years of
    standards development experience. It also incorporates the successful practices used in
    developing the standards published in the microfinance industry 2005 publication, called the
    Framework1. IASB standard-setting processes are documented in the publications -- “Due
    Process Handbook for the IASB” and the “Who Are We and What Do We Do?” -- both uploaded
    to the FSWG workspace.

    This document is organized into the following sections:


    A. Overall Process
    B. Standards Setting in six Steps

    The Microfinance Reporting Standards Initiative places high value on transparency and public
    inclusion and seeks common ground for standards setting. The objective of the process is to
    find the highest level of agreement of value for the most people and institutions world-wide.
    Review from all stakeholder groups and input from topic experts ensure technical integrity,
    promote brand recognition, build trust and greater participation and adoption, and facilitate
    continued investment.

    The standards-setting and -adoption process is actively managed by a centralized


    administration, called the Secretariat. The Secretariat leads communications, marketing,
    gathering input and feedback, and the coordination of working groups, stakeholder
    representatives and topic experts.

    The procedures are reviewed regularly and updated as needed. At a minimum, the reporting
    standard-setting process is officially reviewed and evaluated on an annual basis through
    stakeholder feedback, assessing challenges in adoption or compliance, and evaluation of the
    sector’s changing information needs. This annual evaluation culminates approximately in
    November of each year.

    1
    Measuring Performance of Microfinance Institutions, A Framework for Reporting, Analysis and Monitoring,
    March 2005.

    MFI Standards Setting and Adoption Process 1|Page


    A. OVERALL PROCESS

    B. STANDARD SETTING IN SIX STEPS

    In general there are six steps in setting reporting standards. They are illustrated above and
    narrated in summary below:

    1) Setting the Agenda. The agenda for reporting standards adoption and new business is
    managed by the Financial Reporting Standards Initiative, a collegial body that represents
    the full range of microfinance stakeholders.2 Agenda items are prioritized based upon their:
    • relevance to users of the information, particularly investors and managers;
    manage
    • stakeholder input;
    • reliability of information in order to reach a universal standard
    standard; and
    • possibility
    ossibility of increasing convergence in the field towards uniform reporting.
    reporting

    2
    The Initiative is currently hosted by SEEP Network. The Secretariat’s is under the umbrella of SEEP’s Financial
    Services Working Group, which provides practitioner input, technical assistance and facilitates broader
    b stakeholder
    engagement. http://seepnetwork.org/Pages/Initiatives/FinancialReportingStandardInitiative.aspx
    ttp://seepnetwork.org/Pages/Initiatives/FinancialReportingStandardInitiative.aspx

    MFI Standards Setting and Adoption Process 2|Page


    2) Project Planning. The Secretariat facilitates project planning, developing a three-year plan
    and updating it on a rolling annual basis. The Secretariat also coordinates other relevant
    programmatic activities, including representation at industry events, communications,
    promotion, meetings, etc. An annual plan is developed each December to address topics of
    work for the following year:
    • research and development;
    • discussion, debate, and/or technical expertise;
    • public consultations;
    • release and dissemination; and
    • education, publication, and promotion of new reporting standards.

    3) Discussion Paper (if necessary). This step is taken only if there is not clarity or uniformity
    for a standard. It provides an initial exploration, as well as a mechanism for public comment
    before an official standard is proposed. A public comment period is officially set for 90
    days. This step is undertaken if funding is available to the discretion of the standards body
    in order to provide:
    • first publication in a new topic;
    • comprehensive overview of an issue; and
    • invite public comment before a formal standard proposal.

    4) Exposure Draft. The proposed new standards are documented in an exposure draft. This
    draft has the suggested new language for standards, as well as rationale, application,
    illustrations, and examples. It is circulated with the explicit purpose of public comment and
    input; a public comment period of 90 days is officially set. All formal comments are
    aggregated into a public document with an official response. The purpose of this step is to:
    • maintain a vehicle for consulting the public;
    • set out a specific proposal;
    • invite comments on a draft standard from various stakeholder groups; and
    • provide a means to seek consensus among various stakeholders.

    5) Standards Publications with Procedures. A review is made of all comments submitted


    through Step 4, above. The Secretariat facilitates the final draft with input from the
    Financial Reporting Standards Initiative, including technical experts if needed and
    practitioners via SEEP’s Financial Services Working Group sub-committee under which this
    initiative is housed. Assent and approval of the final version is made by the Initiative
    stakeholder representatives. The final version includes an adoption of edits, record of the
    public response period and mechanism (if necessary), effective dates, and documented
    procedures.

    MFI Standards Setting and Adoption Process 3|Page


    6) Standards Adoption. Once there is a standards publication, the adoption process begins.
    The Secretariat will assume responsibility for the publication, dissemination, and promotion
    of updated standards. This includes education to inform microfinance stakeholders about
    this new standard and its procedures. It also includes formal presentations, trainings,
    online discussions, public promotion, and so forth. Successful implementation requires
    coordination with numerous industry stakeholders, as well as regular meetings.

    The six-step process allows for gradual advancement of priorities and concepts. In addition,
    there is a regular and consistent procedure for public input. The emphasis is on transparency,
    reliability, full stakeholder engagement, and systematic processes in order to maximize public
    trust, acceptance and adoption. In particular:
    • There is regular and consistent demand/query/request/call for public and stakeholder
    input.
    • Reporting Standards Initiative: the microfinance representative stakeholder body will
    document all meetings, work, proceedings, and make materials available to anyone.
    • Formal comments made in the standards-setting process are all publicly available,
    reviewed by the appropriate working groups, responded to by the body, and – when
    appropriate – adopted into the standards documentation.
    • The work of the Initiative, its working processes, and activities are publicly available.
    • The goal of the process is to maximize public adoption of new standards.

    MFI Standards Setting and Adoption Process 4|Page

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