Written evidence submitted by Association
of Chartered Certified Accountants (ACCA)
1. INTRODUCTION
1.1 Association of Chartered Certified Accountants
(ACCA) is the global body for professional accountants. We aim
to offer business-relevant, first-choice
qualifications to people around the world who seek
a rewarding career in
accountancy, finance and management.
1.2 Globally, we support our 122,000 members
and 325,000 students throughout their careers, providing
services through a network of 80 offices and centres around
the world.
1.3 We feel that it is important that our
qualifications and the related opportunities are as available
to students in developing nations as they are to other students
around the world. We use our expertise and experience in areas
such as tax and finance to work with governments, development
agencies and professional bodies to develop the accountancy profession
and to advance the public interest.
1.4 By promoting our global standards, and
supporting our members wherever they work, we aim to meet the
current and future needs of international business.
2. CONTEXT
2.1 The World Bank's latest projection is
that global GDP growth for 2009 will slip from 2.5 percent
in 2008 to 0.9 percent in 2009.[1]
Growth in developing
countries, which make up about one-third of the world
economy, is expected to decline from 7.9 percent in 2007 to
4.5 percent in 2009, while growth in rich
countries next year will probably be negative.
2.2 As the sole source of growth in 2009,
developing countries will be important markets for developed and
developing country exporters alike. But the growth levels forecast
for next year will not be achieved if countries close their markets
and turn off the flow of development funds.
2.3 Aid budgets are under pressure due to
the financial crisis, especially in the UK, other European countries
and the USA. Key areas that are likely to suffer are:
— Foreign direct investment (FDI) and equity
investment will come under
pressure. While 2007 was a record year for FDI
to developing countries, equity finance is under pressure and
corporate and project finance is already weakening.
— Banks under pressure in developed countries
may not be able to lend as much as they have done in the past.
Investors are, increasingly, factoring in the risk of some emerging
market countries defaulting on their debt, following the financial
collapse of Iceland. This would limit investment in such countries
as Argentina, Iceland, Pakistan and Ukraine.
2.4 But development aid can only go so far.
It is vitally important that developing countries are equipped
with the tools they need to become independent of aid. A strong
economy needs physical infrastructure such as transportation and
communications systems. Equally important is a country's accounting
infrastructure, which includes the system for adoption of financial
reporting standards, the system of governmental regulation, and
the system for education and certification of professionals.
3. EVIDENCE
3.1 Organisations such as the World Bank
and the UN report that there is a shortage of trained accountants
at all levels, a lack of recognised and accepted accounting and
auditing standards, and inadequate accounting development. These
agencies are primarily concerned about the sustainability of development
and other projects in the absence of structured accountancy processes.
3.2 An example of this is Ethiopia. The
World Bank in 2007 stated that there are only an estimated
200 professional accountants in the country (it adds that
an estimated 95 percent of the professional accountants in
the country hold the ACCA qualification). The number of professional
accountants in Ethiopia is very low in relation to the size of
the economy. The shortage of professional accountants means that
there are positions in the private and public sectors that are
filled by people with lower or no qualifications.
3.3 Accounting plays a crucial role in the
economics of developing countries by:
— Providing the information they need to
implement their planning processes. The success of economic development
is tied to the way in which accounting systems, at both the micro
and macro levels, are developed and used.
— A growing body of economic research reveals
that governance arrangements strongly influence development outcomes,
including social indicators such as infant mortality and adult
literacy rates. Sound accounting and auditing practices are an
integral part of good governance arrangements.
— Sound accounting and auditing arrangements
are not just important for avoiding crises. Good arrangements
reduce opportunities for growth-sapping corruption. They also
enable countries to attract investment and to develop at a faster
pace.
— International institutions, including
World Bank and the IMF, are rightly giving a great deal of attention
to governance issues (such as corruption) and institutions in
developing countries. There is strong evidence that suggests that
good governance and institutions can accelerate development and
reduce poverty in developing countries.
— A key aspect of a developing domestic
accounting infrastructure is the code of financial reporting standards
for companies. Adopting international reporting standards attracts
both foreign and domestic investment capital. International investors
compare financial results of companies from different countries,
and any country that makes its financial results comparable on
an international level increases its likelihood of attracting
capital. International Financial Reporting Standards (IFRS) are
set by the International Accounting Standards Board (IASB). Their
goal is to harmonise financial accounting rules worldwide.
— The adoption of reporting standards is
a key element in the development of an accounting infrastructure.
Other principle aspects of the accounting infrastructure include
government regulation and the accounting profession. This article
discusses accounting infrastructure, including financial reporting,
government regulation, and the accounting profession, and how
these components work together to promote economic development.
The accounting infrastructure is part of the entire legal and
regulatory system designed to secure property rights, enforce
contracts, and provide financial information; this system, sometimes
referred to as "investor protection," is vital to the
development of emerging stock markets.
— After the initial adoption of IFRS there
is the ongoing need for interpretation, implementation, and updating
of the standards. Each country that adopts IFRS must support an
independent domestic technical body to help national accountants
interpret and apply the standards, as well as to adopt new standards
as they are issued by the IASB. Retaining such technical expertise
within the country aids economic development by allowing high
quality financial reporting to take place at a wide range of companies,
including those not yet listed. This allows successful smaller
and intermediate sized companies to eventually offer their shares
on stock exchanges, which further promotes economic growth by
attracting a wider array of investors.
4. ACCA'S WORK
IN DEVELOPING
COUNTRIES
4.1 Accountants play an important role in
promoting good governance in their societies. ACCA's core activity
of qualifying and supporting professional accountants directly
contributes to the elevation of individuals and whole societies.
The benefits of adequate levels of skilled accounting professionals
climate and promote better stewardship of donor funds.
4.2 At the core of ACCA's work is our desire
to make our qualification available to people everywhere in the
world who wish to acquire an international professional accounting
qualification—ensuring we maintain consistent global standards.
4.3 ACCA's success in delivering an international
qualification has also promoted the development of national professional
bodies, as ACCA members in Africa invariably also belong to the
national professional body. The membership levels of national
professional bodies have grown through this cooperation and members
of both ACCA and national bodies benefit from the services, professional
knowledge and support which both organisations can provide. Dual
membership enables accountants from these countries to not only
further their career by having an internationally recognised qualification,
but to also forge a successful career in their homeland. ACCA
is also active in providing support for members of national bodies
who find themselves abroad in areas where ACCA has a strong local
presence.
5. EXAMPLE: ACCA
IN AFRICA
5.1 We have more than 30 years experience
of working to develop the accountancy profession in Africa.
5.2 The total number of ACCA members and
students in Africa stands at over 60,000, having roughly doubled
in the last five years. Students and members are supported by
our local branches and staffed offices throughout the continent,
as well as by providers such as academic institutions and employers
in their role as workplace training providers.
5.3 Growth rate in terms of new student
registrations is around 15% per year and we are achieving milestones
of more than 5,000 students and members in countries such
as Ghana, Mauritius, Nigeria, Uganda and Zambia.
5.4 We have shared our expertise, experience
and knowledge with national bodies. Our members and students have
also benefited from our close working relationship with national
bodies across the continent. ACCA has also undertaken important
projects on behalf of many national bodies in Africa to strengthen
the accountancy profession and to help it develop sustainable
structures and procedures.
5.5 ACCA employs over seventy staff members
across Africa, all of which are nationals of the 11 countries
in which our offices are situated: Botswana, Ethiopia, Ghana,
Kenya, Malawi, Mauritius, Nigeria, South Africa, Uganda, Zambia
and Zimbabwe.
5.6 ACCA works in partnership with various
stakeholders in Africa (such as national accountancy professional
bodies, public sector and private sector employers, and international
development agencies) with respect to the delivery of education,
training and projects to develop the profession:
— ACCA was appointed to manage a project
funded by the EU and the Irish Government that aims to develop
a regional accountancy training programme for the countries of
the Southern African Development Community (SADC). This led to
the establishment of the Zambia College of Accountancy Studies
(ZCAS), which has grown to deliver tuition to several thousand
students. ZCAS is registered at the highest level of ACCA's Accredited
Learning Providers Scheme, which gives formal recognition to leading
tuition providers for the quality of tuition and support they
offer ACCA students. ZCAS now boasts pass rates on a par with
the best colleges worldwide, across developing and developed countries.
Similar colleges were established in Botswana and Lesotho and
similar work continues to develop local tuition provision throughout
the continent.
— Sierra Leone: ACCA recently completed
a project funded by the World Bank to build capacity in the accountancy
profession in Sierra Leone. We worked with the national professional
body to develop a strategy and regulatory framework that would
accelerate the adoption of international accounting and auditing
standards.
— Gambia: ACCA delivered a project funded
by the World Bank in 2003, aimed at development of the accountancy
profession. It included strengthening the structures of the national
professional body, updating company and tax laws, introducing
national accounting and auditing standards, and developing professional
curriculum and training materials.
— ACCA provides an audit quality review
service to the regulatory bodies for the accounting profession
in Botswana, Kenya, Swaziland and Malawi. This service was initiated
by a project funded by the World Bank in 2005.
ACCA has participated in many other such development
initiatives over the last 30 years.
1 Global Economic Prospects 2009, World Bank,
December 2008. Back
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