Accounting and Reporting Standards for Microfinance Institutions

Publication Date: 1996
Published by: FDC - Foundation for Development Cooperation
Document Type: Book

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Why should microfinance institutions keep accounting and reporting records that meet international standards?

Discusses the rationale for microfinance institutions to keep detailed accounting and reporting records. The aim is to make detailed and transparent financial records the "norm" to conform to international standards and allow prospective donors to evaluate performance of microfinance institutions. Key features of the standards adopted by international donor agencies are outlined in the annex of guiding principles. These identify characteristics donors should seek in selecting institutions to support

The paper states two objectives institutions should follow: expanding outreach to the poor and achieving sustainability and self-sufficiency. Further to these, it stresses:

• data collection on projects that allows prospective donors and commercial lenders to evaluate performance
• reporting information that includes data on the loan portfolio and outreach; interest rate policy; income and expenses; balance sheet information, and analytical performance indicators
• institutions need sound data not only for accountability to donors, but also to access funding from commercial sources like banks, and for good internal management