Size Matters: Financial Reporting by the IMF and World Bank
Working Paper 106
35 Pages Posted: 12 Oct 2016 Last revised: 8 Jun 2017
Date Written: October 9, 2016
Among the largest entities in the world are the World Bank Group and the International Monetary Fund (IMF) Group. From the perspective of researchers in accounting, such size is used as a proxy for political visibility; and often implicit asymmetries of power and information become explicit in such research. This context of political visibility leads to the research question in this study: do the means by which these two entities prepare financial reports compromise accountability through financial results by selective choices of GAAP? This study will offer a detailed analysis of the financial reporting in 2013 by the World Bank and the IMF, including a pro-forma consolidation to understand what might be achieved by consolidation as prescribed in GAAP. Most notable in the financial reporting are (1) a mixed-standard prescription, from standards developed for the corporate sector. (2) A failure to consolidate entities under the in-substance control of the ‘parent’ in the group. There is also some lack of transparency concerning the level of intra-entity transactions. This study demonstrates the implications of political visibility, being a possible driver to minimise apparent size, as reflected in accounting policy choices.
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