ZIMBABWE, like the rest of the world, is reeling from the effects of the Covid-19 pandemic, which has been ravaging the world since early 2020.
In addition to this global pandemic, Zimbabwe faced one of its biggest natural disasters in 2019, when Cyclone Idai made landfall in Manicaland in 2019. Recovery from these national and global shocks is no easy task, but it does provide an opportune time to implement the “Building Back Better” (BBB) strategy adopted by the United Nations General Assembly in 2015 under the Sendai Framework for Disaster Risk Reduction (2015 – 2030). This strategy can help to ensure a more sustainable and fairer Zimbabwe post pandemic and disasters.
What is building back better?
The United Nations Office for Disaster Recovery Risk Reduction (UNDRR) defines Building Back Better as the use of the recovery, rehabilitation and reconstruction phases after a disaster to increase the resilience of nations and communities through integrating disaster risk reduction measures into the restoration of physical infrastructure and societal systems, and into the revitalisation of livelihoods, economies and the environment.
BBB aims to reduce vulnerability to future disasters and builds community resilience to address physical, social, environmental, and economic vulnerabilities and shocks.
Recovery within a BBB framework gives impacted communities the chance to reduce risk not only from the immediate hazard but from threatening hazards and conditions as well.
Key concepts introduced in a number of guidelines for building back better include risk reduction, psychosocial recovery, economic recovery, effective implementation, and monitoring and evaluation.
Accountants in Zimbabwe, for example the Institute of Chartered Accountants of Zimbabwe (Icaz) members are uniquely poised and positioned to play a pivotal role in Zimbabwe’s measures to build back better from the pandemic and natural disasters.
This is because members of Icaz hold influential roles in government and business ranging from Board Chairpersons to senior management. Opinions of accountants are also pivotal in the national dialogue as accountants are generally looked up to in society. Accountants can thus and are taking the following roles to assist the nation and the world at large to build back better.
Zimbabwe has moved swiftly towards sustainability reporting. The Government introduced the Companies and Other Businesses Act [24:31] and the Public Entities and Corporate Governance Act [10:31]. Both these pieces of legislation make sustainability reporting mandatory.
The BBB strategy requires people to step back and evaluate their impact on the environment and society, to avert crises in future. As such sustainability reporting is a way in which accountants can help to build back better from the global pandemic and other disasters. Through sustainability reporting, businesses will be able to assess and evaluate their impact on the environment and society in general and as such compel companies to intentionally pursue social and environmental objectives in addition to shareholder value addition. Auditors will and are also thinking actively about how these sustainability reports can be audited and verified for credibility of reported information.
Effective analysis of information
Accountants are generally responsible for communicating with an entity’s stakeholders through the financial statements. In building back better, information is a vital component as it enables sound decisions to be made.
Accountants therefore have the onus of maintaining and compiling accurate financial information and converting this into reliable financial statements, which can be utilised and relied on by the stakeholders. The financial information provided should faithfully represent what it purports to represent with necessary analysis done.
This is in line with the fundamental qualitative characteristics of financial information as required by International Financial Reporting Standards (IFRS).
The provision of accurate and faithful information assists economic recovery as users of financial statements (investors, suppliers and customers) are better placed to make solid financial decisions which will lead to improved financial performance of business.
Redesigning to the new normal
Covid-19 has brought some abrupt changes to how business is done worldwide. A major impact has been the requirement for companies to embrace digitisation at an unusually fast pace.
This has brought about major shifts in how organisations operate and deliver on their mandate. As custodians of most entities’ resources it is the duty of the accountants to design ways, in which businesses can operate more efficiently in this digital age.
This aids business recovery and ultimately feeds into economic recovery, a key pillar in Building Back Better.
Accountants also have a duty to design and implement adequate internal controls that safeguard a business’s assets and further its objectives as aligned to the changes in operating environment.
Recommendation of policies
Accountants play a critical role in informing, challenging and contributing to government policies.
The critical thinking skills, obtained by accountants through their training, can and are utilised in formulating government policies which ensures equitable distribution of wealth and resources as required by the BBB strategy. Areas accountants can lend their skills is in the formulation of national budgets, tax collection systems and monetary policy. Accountants should also take the lead in ensuring the formulation of laws arising from the disasters like information governance and control.
Risk assessments and documentation
As highlighted, a key concept in BBB is risk reduction. Accountants are rigorously trained in the processes of risk assessment and risk reduction and can thus contribute positively to this aspect. By maintaining detailed risk registers, organisations can be able to appropriately mitigate and be better prepared for any naturally occurring disasters. Risk registers feed directly to Companies’ Safety and Health issues. Ensuring the safety of their employees from pandemics and natural disasters, by having in place appropriate measures, entities inadvertently contribute towards the safety of the populace.
Assessment of Going Concern status
With a number of companies buckling from the Covid-19 pandemic effects, for investors, there is a higher burden placed on accountants to strengthen transparency in reporting.
Transparency is a key ingredient in effective BBB and as such it is the role of accountants, both in public and private practise, to ensure that correct assessments are made of entities’ going concern prospects.
Accountants must also communicate effectively with the users of financial statements on the issues thereof. Preparers of financial statements should ensure that consideration has been put on all factors that may have a negative effect on the business continuing in future. Auditors should also adhere to the requirements of ISA 570 – Going Concern, and obtain sufficient appropriate audit evidence regarding, and conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements. Auditors must conclude, based on the audit evidence obtained, whether a material uncertainty exists about the entity’s ability to continue as a going concern.
As Zimbabwe looks to reshape and recover from the pandemic and natural disasters, accountants should and are taking the driving seat towards structuring what the new normal looks like. This will ensure that in a world of many changes, accountants continue to be relevant and critical not only to business but to society as a whole.
Chihanya is an assistant technical manager at Icaz, which is the largest and longest standing professional accounting organisation in Zimbabwe, having been established on January 11, 1918. Icaz provides leadership on the development, promotion and improvement of the accountancy profession focusing in the areas of accounting education, assurance, good governance practices and leadership and organisational excellence. — firstname.lastname@example.org