The Corporate and Public Sector Accountability Project (CAPSAP) was an important component of the World Bank Group's Country Partnership Strategy (CPS) for Azerbaijan. In particular, the first pillar of the CPS aimed at:
- improving the quality and transparency of public sector governance by maintaining a stable macroeconomic framework that makes prudent use of oil revenues;
- improving public expenditure planning and management;
- strengthening financial management and procurement systems;
- establishing proper public sector and corporate governance, accounting and auditing frameworks; and
- creating an administrative and regulatory environment conducive to growth.
CAPSAP focused on improving the capacity, transparency, and accountability of state institutions and public interest entities in order to promote better public and corporate financial management and improved governance. CAPSAP supported the implementation of the Accounting Law enacted in November 2004, which mandates transition to International Financial Reporting Standards (IFRS) for Public Interest Entities (PIEs - those commercial entities where the government of Azerbaijan deems there to be a public interest in their operations), the domestic National Accounting Standards for Commercial Organizations (NASCO) for other commercial entities (non-Public Interest Entities), and International Public Sector Accounting Standards (IPSAS) for budget organizations.
This law represented a major step forward in addressing transparency and accountability in the corporate and public sectors, and its development was supported by the IDA under accounting and auditing Report on the Observance of Standards and Codes (ROSC) technical assistance. Moving forward, the Law on Audit Services, Law on Internal Audit and Law on Public Financial Reporting will also require strengthening, in line with the new Accounting Law. The quality of higher education in accounting and auditing was strengthened by curriculum development and by continuing education for accountancy professionals.
The project was largely financed by the World Bank, and managed by the World Bank's Centre for Financial Reporting Reform (CFRR) in Vienna. The Swiss Secretariat for Economic Affairs contributed to the project's activities to improve public sector financial management.
The project was launched in Baku on 25 February 2009 and was completed in June 2015.
The project had three main components:
- Improving reporting in the corporate sector, including the implementation of IFRS in PIEs and improving the statutory framework and oversight of the audit function.
- Improving public sector accountability, through the introduction and implementation of international public sector accounting standards (IPSAS) and the implementation of a framework for external audit in the public sector through the Chamber of Accounts.
- Strengthening the capacity for accounting, auditing and financial management, through the development of training materials, courses and certification programs and the training of teachers.