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SECTION 1
CHART 1 SECTION 2
Respondents
Respondent Profile Rate
Respondents’ Profile
MFI Practitioner 21%
The sample of respondents had both CHART 2
Network/Association 19% breadth and depth, as 162 people
responded to the survey. The respondents
Geographic Focus
MFI Service Provider 15%
represented a broad cross-section of
Investor or institutions (see chart 1), including Global
13%
Commercial Bank
the leading voices in microfinance. Asia
Researcher/Education 12% Respondents’ positions included manager/
program officer (29 percent), organizational Africa
Consultant 11%
head (22 percent), vice president/director North America
Donor 8% (16 percent), and analyst (9 percent).
South America
Respondents spanned the globe.
Europe
The most common areas of focus
were those identifying their work as 0% 5% 10% 15% 20% 25% 30%
global—28 percent covered more than
one continent; 23 percent, Asia; and
21 percent, Africa (see chart 2).
The SEEP Network • 1875 Connecticut Avenue, NW • Suite 414 • Washington, DC 20009 • USA
2 Phone: +1(202) 464-3771 • Fax: +1(202) 884-8479 • www.seepnetwork.org
Microfinance Industry
Financial Reporting Standards Initiative
SECTION 3
Opinions on Microfinance
Reporting Standards
BOX 1 The respondents were asked questions tools were notably higher than for
about the microfinance industry’s use of respondents as a whole. This reflects an
Rank Order: reporting standards and perceptions of its uneven value placed on standards efforts
Reasons importance. Overall, the data confirmed in the industry, a range of knowledge
for Using that, while the industry’s approach to on the subject, and varied levels of
Reporting Tools reporting standards remains fragmented, adoption. Although not unexpected,
there is a consensus that reporting standards these results confirm that while the
1. Internal Management are important for the industry. And, there microfinance industry is making headway
2. Operational Control was widespread support for more universal in understanding and valuing financial
3. Provide Information to
benchmarks and mechanisms to adopt reporting standards, progress toward
Investors standards. In order to establish effective industry-wide utilization remains uneven.
industry-wide reporting standards, the data The microfinance industry recognizes the
4. Regulatory Compliance suggested that the microfinance industry importance of reporting standards generally,
5. Audit Information must not only focus on a common “vision” and universal standards specifically. There
among major stakeholders regarding what is broad agreement among respondents
6. Industry Comparisons standards should consist of but also focus that reporting standards are either
7. Easier to Understand on building the institution-level capacity “very important” or “important” for the
MFIs necessary to ensure information is effectively industry as a whole (87 percent). They also
8. Normalize Differences disseminated and widely adopted. expressed support for the establishment
Between MFIs Most organizations have reporting of universal standards for the industry,
standards, but the industry’s approach with 81 percent supporting this issue
remains fragmented. The vast majority as “very important” or “important.”
of respondents (76 percent) reported Barriers to establishing standards must be
Survey Fact… that their organization had a specific understood. Respondents were helpful in
tool for financial reporting. However, identifying obstacles that must be overcome.
their motivations for reporting standards The most common reasons cited against
varied. A weighted scoring was made of universal standards were that different
respondents’ priority answers as to why they stakeholders want different information
valued reporting tools, listed in Box 1. (19 percent) and that the diversity of
Among those using reporting tools, the institutions within microfinance makes
87% leading reasons they used such tools were
internal management (40 percent cited
universal standards inappropriate (18
percent). Such observations correctly
this as the top priority; 62 percent as the identify real challenges to both the
first or second priority), and operational development of universal standards and
87% of the microfinance control (20 percent cited this as the top convergence around reporting. Strategies
industry respondents priority; 65 percent chose it as first or to surmount these barriers include dialogue
recognize the importance
of reporting standards second priority). These were followed by and engagement. Initial advancement is
using the tools to provide information possible in areas where there is common
to investors and to ensure regulatory ground, by focusing on best practices and
compliance. Next, respondents cited acknowledging that this is an on-going
the value of standards tools for audit process of continued improvement. It
information and industry comparisons is important to note that the difference
(such as the MIX’s Microbanking Bulletin between the application of specific ratios in
(MBB)). Lower priorities used reporting various reports, where different institutions
tools to make it easier for the financial have the flexibility to use the information
sector to understand microfinance and to they value, and an over-arching process
normalize the differences between MFIs. for industry standards that can interface
Among networks and service providers, with other international guidelines.
use and understanding of standards
The SEEP Network • 1875 Connecticut Avenue, NW • Suite 414 • Washington, DC 20009 • USA
3 Phone: +1(202) 464-3771 • Fax: +1(202) 884-8479 • www.seepnetwork.org
Microfinance Industry
Financial Reporting Standards Initiative
Respondents Our colleagues elaborated upon factors practices, such as different treatments for
Had To Say limiting reporting in the microfinance
industry. The most common responses are
loan loss provision, delinquency, write-
offs, etc. Twelve percent mentioned the
COMMENTS A
identified here, listed in chart 4. Forty- tension between meeting global standards
“There must be a four percent of the respondents cited and domestic regulatory requirements.
thorough discussion lack of universal standards as the primary Meanwhile, 8 percent emphasized
among MFIs, regulator, barrier limiting reporting. Twenty-one the balance needed between financial
investors, donors, and
percent commented on divergent business and social objectives for standards.
auditors on the need of
standard reporting. It CHART 3
may not be possible to
have one set of reporting Key Issues in Reporting for Microfinance to Resolve
globally because
there may be some Universal Standards 44%
local issues, such as
methodology of services, Business Practices 21%
maturity of industry, and
auditing and taxation Tension Between National/Global Standards 12%
The SEEP Network • 1875 Connecticut Avenue, NW • Suite 414 • Washington, DC 20009 • USA
4 Phone: +1(202) 464-3771 • Fax: +1(202) 884-8479 • www.seepnetwork.org
Microfinance Industry
Financial Reporting Standards Initiative
SECTION 4
The SEEP Network • 1875 Connecticut Avenue, NW • Suite 414 • Washington, DC 20009 • USA
5 Phone: +1(202) 464-3771 • Fax: +1(202) 884-8479 • www.seepnetwork.org
Microfinance Industry
Financial Reporting Standards Initiative
SECTION 4, CONTINUED
What Survey COMMENTS D SEE SIDEBAR chart 6). Externally, the International
Accounting Standards Board (IASB)
Respondents The survey data raised both answers and
questions about the committee’s structure
was the single most popular option (26
Had To Say and logistics. Although respondents
percent), followed by establishing an
independent entity (21 percent response).
generally support forming a central
COMMENTS D Housing this initiative within an existing
entity, organizational details must now
“Oversight of reporting MFI institution was the most common
be resolved to move the process forward.
standards requires response at 44 percent. This was split
leverage (e.g., ability
There were multiple suggestions regarding
among the MIX at 18 percent, SEEP at
to assess penalties), where a committee should be housed,
14 percent, and CGAP at 14 percent.
otherwise the with no answer receiving a majority (see
committee is unlikely CHART 6
to gain credibility.”
Where Should the Initiative be Housed?
“There are enough
entities working on IASB
reporting standards.
And, adding another Independent Entity
one dealing with it could
complicate a correct the Mix
use of information.” SEEP Network 44%
CGAP
The Microfinance Industry Financial Reporting Standards Initiative is supported by the SEEP Network. It is currently
housed as a sub-committee of the Financial Services Working Group. Project information is available online at
www.seepnetwork.org and http://communities.seepnetwork.org/edexchange/node/1799. The project facilitator is
Drew Tulchin, Social Enterprise Associates. He can be reached at drew@socialenterprise.net. We welcome input,
comments, opinions, and support to advance this for the benefit of the entire industry. Full data from this survey,
provided in anonymous form, is available on request.
6 The SEEP Network is a membership association of international organizations that support micro- and small enterprise
development programs around the world. SEEP’s mission is to connect microenterprise practitioners in a global
learning community. William Tucker, Executive Director.