About the Award

What is the CGAP Financial Transparency Award?
Why does Financial Transparency Matter?
What are the Award Criteria?
Who is on the Review Panel?
Disclaimer - What the Award Is Not
What are the Award Categories?

What is the CGAP Financial Transparency Award? The annual CGAP Financial Transparency Award is designed to promote greater transparency in annual financial reporting by Microfinance Institutions (MFIs). It promotes adequate disclosure in AUDITED FINANCIAL STATEMENTS, in compliance with international and industry specific disclosure requirements for financial reporting. Specifically, the award promotes good practices in financial reporting by (1) highlighting the primary sources of guidance for good disclosure practices, and, (2) recognizing the MFIs that reach good disclosure standards and by so doing, stimulates improvements in annual financial reporting. All MFIs that embrace good disclosure practices and all participants in this contest collectively promote the visibility of microfinance and the understanding of providers' financial performance. Why does Financial Transparency Matter? Transparency makes it easier for investors to make decisions about capital allocation and to monitor the performance of their investments. It also means MFI managers are better positioned to make good management decisions when their financial reporting is clear and easily understood. Transparency is key to assessing risk and ultimately making microfinance a more professional business. The Financial Transparency Award is part of CGAP's comprehensive strategy to improve transparency on MFI financial performance, which includes also the Information System (IS ) Fund, the Rating Fund and the MIX.

Mr. Ganhuyag Ch. Hutagt, Xac Bank receives the 2005 FTA merit certificate from Princess Maxima, The Netherlands. K-Rep Bank managing director Kimanthi Mutua (right) receives the CGAP Financial Transparency Award from CGAP microfinance specialist Patricia Mwangi, at K-Rep offices in Kawangware, Nairobi. What are the Award Criteria? A team of professional accountants and auditors will review the applicants' financial statements for compliance with International Financial Reporting Standards (IAS 1,30 and 32 Disclosure Requirements) and the revised CGAP Disclosure Guidelines for Financial Reporting by Microfinance Institutions. Click here to see the full list of 40 competition criteria. Award criteria will therefore NOT consider such performance indicators as return on assets, portfolio at risk, or operating efficiency, other than to note that these indicators are present. It will focus on comprehensive disclosure to enhance financial transparency. Selection of awardees will be made on December 19, 2006. Who is on the Review Panel? The 2006 review panel is comprised of a team of independent, highly-qualified, and multi-lingual accounting and auditing experts. The reviewers will utilize a checklist based on relevant International Financial Reporting Standards (IFRS) and industry-specific guidelines to assess each MFI's performance. Each MFI goes through a thorough review by at least three reviewers. Disclaimer - What the Award Is Not The Financial Transparency logo and certificates in no way guarantee the accuracy of the information in MFIs' financial statements, nor do they guarantee the full adoption of sound accounting practices. Only the managers and auditors of the MFI can vouch for these elements. The external review employed by the CGAP Financial Transparency Award relies exclusively on the contents of the audited financial statements. It requires and assesses the comprehensiveness of financial information disclosure. The Financial Transparency award in no way judges the financial performance of an MFI and does not provide any indication on the financial strength of an MFI.

What are the Award Categories? The winning prize will be awarded to all MFIs that fully comply with a checklist of disclosures drawn from IFRS and industry-specific guidelines. Award winners will gain publicity on the CGAP and MIX Market Web sites, and receive a Financial Transparency logo that can be used in publicity materials, an engraved glass trophy (entailing achievement) and a $10,000 cash prize. The number of potential winners in any one year is infinite. The merit award is an encouragement reward for MFIs that have attained 80% or more of the total checklist of disclosures drawn from IFRS and industry-specific guidelines. Merit awardees receive publicity on the CGAP Web site and a framed certificate of merit. A certificate of eligibility is awarded to all other participants who meet the eligibility criteria. Winners and awardees are strongly encouraged to organize their own award ceremonies. Being selected in the CGAP Financial Transparency Award is an excellent opportunity to gain publicity at local, national and often international levels. CGAP actively supports these events by providing a speaker for the ceremony (usually a CGAP donor), and a press release that will be disseminated to local and international members of the microfinance community.