New Developments in MFI Reporting Standards

This report summarizes the preliminary discussion about reporting standards which sought answers to questions about the way forward for the microfinance industry, stakeholders' engagement, differences between reporting standards, and improving reporting standards.MFIs worldwide do not follow standards, and are only now beginning to use tools like International Financial Reporting Standards (IFRS). Three themes which clearly emerged from the discussions include IFRS implementation, the lack of understanding and insufficient data availability on national accounting standards and IFRS and the need for new financial ratios.The report highlights the need for more dialogue and education to advance financial reporting standards and make use of the new technologies. Participants discussed the following:

• MFIs should adopt or make the transition to IFRS depending on the country;
• Information on the differences between IFRS and GAAP are not widely circulated;
• IFRS makes new demands on MFI record keeping and accounting practices;
• IFRS impacts MFIs in several ways including costlier external audits, greater staff skills, MIS alterations, knowledgeable board members and flexibility.