LEADERS of the accounting profession and global partners last week gathered in Johannesburg, South Africa, for the Developing Accountancy Capacity in Fragile and Conflict-affected States Conference. The meeting’s agenda was to take an in-depth look at the World Bank’s list of 36 fragile states, which includes Zimbabwe, and discuss how robust accounting organisations can support the development of resilient governments and economies in fragile states around the world.
President Emmerson Mnangagwa has committed to fixing Zimbabwe’s financially mismanaged public sector, including launching a zero-tolerance corruption initiative. Issues surrounding anti-corruption and enhanced transparency are part of the core focus of the accounting profession and are a fundamental reason why a strong accountancy backbone is crucial to the health of Zimbabwe’s economy.
This week, Zimbabwe Independent reporter Wongai Zhangazha (WZ) caught up with one of the organisers of the conference, the International Federation of Accountants (IFAC), the global voice of the accounting profession) executive director, quality and development, and chief operating officer director, Alta Prinsloo (AP) on topics including: Zimbabwe’s public-sector crisis and how a robust accounting profession is essential to its success; how global and Zimbabwean organisations are working to build accounting capacity to support the country’s economy and how a robust accounting profession can support in solving the endemic issues of corruption and financial mismanagement and drive economic development. Below are excerpts of the interview:
WZ: Recently, President Emmerson Mnangagwa released a list of companies and individuals accused of illegally externalising money. Do you think Zimbabwe has robust accounting mechanisms to curtail externalisation of funds?
AP: IFAC and its partners believe that any level of corruption is too much. We are encouraged that Zimbabwe is taking steps to tackle this issue. President Mnangagwa’s 90-day amnesty offering was reported to have brought back US$591 million of the US$1,2 billion suspected to be illegally externalised, and we will watch to see what his administration does as a next step to combat corruption.
WZ: Are there any projections on how much in potential revenue Zimbabwe is losing as a result of weak public accounting systems?
AP: In 2016, Transparency International suggested that Zimbabwe was losing at least US$1 billion a year due to corruption. Corruption and weak public accounting systems make business more expensive raise barriers to entry for new businesses; slow civic improvements that can help the economy grow, and discourage global investment in Zimbabwe. While these results are harder to measure, they are a drag on Zimbabwe’s economic growth, which decreases revenue to the public sector.
WZ: Generally, there are rampant revenue leaks in Africa due to weak tax and revenue collection systems. What needs to be done to correct that?
AP: The 2017 Africa Congress of Accountants and the recent Developing Accountancy Capacity in Fragile and Conflicted-affected States Conference demonstrates the accountancy profession’s commitment to fighting corruption on the continent. Corruption thrives in the dark. Professional accountants operate in the public interest, and a strong accountancy profession, focussed on implementing high-quality international standards, helps to shine a light on financial management and make it more difficult for corruption to occur.
On July 15, 2017, the International Ethics Standards Board for Accountants’ Noclar (Non-Compliance with Laws and Regulations) standard came into effect.
It’s a first-of-its-kind framework to guide professional accountants in what actions to take in the public interest when they become aware of a potential illegal act, known as non-compliance with laws and regulations, or Noclar, committed by a client or employer. With the implementation of the Noclar standard, professional accountants are now responsible for resolving or reporting potentially illegal non-compliance with laws and regulations when their government has mechanisms in place to engage in such resolution.
Accountants are essential to building stronger organisations and economies but they cannot alone solve the problem. It requires public and private sector effort and international collaboration. For Noclar to function effectively, the standard needs to be adopted and implemented effectively, and systems need to be put in place that allow for whistleblowing.
WZ: Is it generally true that most politically fragile states have weak accounting systems?
AP: Having more accountants as a percentage of the workforce is correlated with better outcomes in Transparency International’s Global Corruption Perceptions Index, according to IFAC’s The Accountancy Profession: Playing a Positive Role in Fighting Corruption, and all fragile states rank in the bottom third for scores on the index. This data indicates accountants are a large part of fighting corruption, which is a large factor in destabilising states. IFAC—the International Federation of Accountants—and the accountancy profession are working to build effective professional accountancy organisations in fragile states because, as accountants are equipped to help fight corruption, they also help build resilient nations and stabilise economies.
WZ: What lessons can Zimbabwe draw from other countries with sound accounting and financial systems?
AP: Every day, governments spend large sums of public funds on a range of services and infrastructure for their citizens. Good public financial management is essential to ensure that these funds are managed in the public interest, and to build and sustain public trust in government. IFAC and the Chartered Institute of Public Finance and Accountancy (CIPFA) developed the International Public Sector Financial Accountability Index to track the quality of public sector financial reporting around the world, delivering a country-by-country snapshot of public financial reporting and budgeting, as well as plans for future reform in each jurisdiction.
WZ: Do you think anti-corruption bodies in Africa and Zimbabwe in particular have been well resourced to fight graft?
AP: It is worth noting the leadership of the accountancy profession in Zimbabwe is partnering with government to enhance transparency and accountability, and build the necessary public sector accountancy capacity to achieve this. Under IFAC’s accountancy capacity building programme funded by the Department for International Development in the United Kingdom, and with CIPFA as partner organisation, the Government of Zimbabwe is developing a roadmap to implement accrual-based financial reporting—a cornerstone of sound public financial management—as well as strengthening the accountancy capacity in government.
IFAC believes the accountancy profession is an essential driver of strong and sustainable government institutions. A robust accountancy profession, comprising highly-trained, ethical accountancy professionals, enhances transparency and accountability in the public sector.
IFAC and CIPFA are working closely with the Public Accountants and Auditors Board to strengthen professional accountancy organisations in Zimbabwe to deliver the accountancy professionals necessary to support the Government of Zimbabwe in its quest for enhanced transparency and accountability.
WZ: Does a country’s strong public accounting system provide an incentive in attracting investors?
AP: Yes—when evaluating the risk of any international investment, investors consider corruption and levels of transparency. By building trust in Zimbabwean institutions, and strongly encouraging a culture of good governance, transparency and accountability, Zimbabwe can bolster international business confidence, which will encourage international investment and the development of international business relationships.
nHolder of a master’s degree in Financial Management;
- Current Executive Director, Quality & Development, and chief operating officer for IFAC since January 2009;
- Previously served as deputy director of the International Auditing and Assurance Standards Board (IAASB), where she provided technical direction on the development of IAASB pronouncements and oversaw their publications;
- Joined IFAC in 2002;
- 1997 through 2002, Prinsloo worked at the South African Institute of Chartered Accountants (SAICA), becoming its technical director in 2000;
- In 1996, Ms. Prinsloo worked at Amalgamated Banks of South Africa, where she was responsible for professional development of the internal audit function; and
- Previously, she worked in the national technical and training office of PricewaterhouseCoopers.