As African professional accountants meet in Kigali, capital of Rwanda, some experts have stated that fraud and corruption that arise from poor financial reporting practices and flawed rules are some of the big problems the industry is facing.
Members disclosed this on Tuesday during the Association of Chartered Certified Accountants (ACCA) Africa Members’ Convention, which brought together nearly 1000 participants from across Africa.
Professional accountants are people who prepare and examine financial records for decision making. Most of them work in the banking industry, investment areas, tax units etc. They are saddled with the responsibilities of suggesting ways to reduce costs, enhance revenues and improve profits.
Yet, experts say, some accountants are still characterised by poor ethics, making it impossible for many entities that rely on them to retain the right business value and meet expected financial results in some cases.
For instance, some accountants in Rwanda have been blamed for approving financial statements without verifying the facts and evidence, which in most cases lead to financial fraud and loss of revenues for public businesses.
“There is fraud, there is corruption. How can professional accountants play a role to address these issues?” Brigitte Nangoyi Muyenga, the finance commissioner for Zambia Revenue Authority, wondered.
Muyenga lamented that most of the controlling officers, those entrusted with overseeing tax collection revenues, most of the times are not appointed on merit, saying that is the basis of fraud that characterize most countries.
Africa currently losses billions of dollars in illicit financial flows. Professional accountants have been blamed for not playing a critical role, just as much as many public organisations that deal with finance matters.
A report of the High-Level Panel on Illicit Financial Flows from Africa commissioned by the African Union (AU) and the Economic Commission for Africa indicated in 2015 that Africa loses $50 billion a year in illicit financial flows.
These flows relate principally to commercial transactions, tax evasion, corruption, and criminal activities like money laundering, among others.
“Until we start recognising who’s supposed to be placed where, then Africa will become a developed continent because we have all the resources,” Muyenga said.
Transfer pricing manipulation is one of the ways experts pointed out through which countries lose huge amount of money yearly.
Transfer pricing occurs when two companies that are part of the same multinational group trade with each other: for Instance, when a Nigerian-based subsidiary of Coca-Cola buys something from a US-based subsidiary of Coca-Cola. When a price for the transaction has been established by both parties, this is transfer pricing.
In itself, this practice is not illegal. What is illegal about it is transfer mispricing, which includes trade between unrelated parties.
Taiwo Oyedele, the Tax Leader for PricewaterhouseCoopers West Africa, said that transfer mispricing is one of the major components through which Africa loses financially.
While he believes professional accountants have a role to play, he thinks political leaders have a major role to play.
“We (ACCA) are working with governments to write the rules around transfer pricing. This means we will be able to curb some of the illicit financial flows,” he disclosed.
Jamil Ampomah, director of ACCA Sub-Saharan Africa said that the issue is partly attributed to lack of enough qualified professional accountants. He highlighted that only Kenya, Nigeria and South Africa control the majority of professional accountants that work in Africa, reflecting the need to invest in accounting education.
In Rwanda, Innocent Bulindi said, the Institute of Certified Public Accountants of Rwanda – the regulator of the profession in the country, has laid out a strategy that will address most of the existing problems.
“Under our strategic plan, we want to make revisions in the law that establishes the institute, as well as upgrade and strengthen our curriculum to ensure that the profession is grounded,” he noted.
It was also indicated that technology will also disrupt the accounting industry in the coming years.