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Written evidence submitted by Association of Chartered Certified Accountants (ACCA)
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.
2.0 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
Ø 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.
Ø 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.
3.0 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
3.3 Accounting plays a crucial role in the economics of developing countries by:
Ø 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.
Ø 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.
Ø 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.
Ø 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.
Ø 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.
Ø 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.
Ø 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.
4.0 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
5.0
Example: ACCA in
5.1 We have more than 30 years experience of working to develop
the accountancy profession in
5.2 The total number of ACCA members and students in 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
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
5.5 ACCA employs over seventy staff members across nationals of the 11 countries in which our offices are situated:
5.6 ACCA works in partnership with various stakeholders in
Ø 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.
Ø 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.
Ø 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.
Ø ACCA provides an audit quality review service to the
regulatory bodies for the accounting profession in
ACCA has participated in many other such development initiatives over the last 30 years. [1] Global Economic Prospects 2009, World Bank, December 2008 |