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AB Accounting and Business
Africa Accounting and Business October 2017
Africa October 2017
Ethics in a
digital age
Finding the right path through
the changing corporate jungle
Moral maps
Companies are introducing ethical
frameworks for their staff to follow
Force for change
The World Bank’s Patrick Kabuya
on promoting prosperity
Unknown quantity
What impact will Brexit have on
the African continent?
AFR_Cover_New.indd 2 12/09/2017 15:53
-AFR_ads-Oct17_600dpi.indd 3 12/09/2017 12:47
Welcome
With an ACCA survey demonstrating that unethical behaviour is still a concern,
compliance education for professional accountants has never been more important
Strong ethical principles and making up this ground by raising and
behaviour will become increasingly maintaining standards. At the practice
important in the evolving digital age level, another article (page 23) discusses
and are vital for building trust. For how conducting adequate due diligence
professional accountants, being ethical when recruiting can help reduce the risk
is a necessary attribute that goes far of unethical behaviour and safeguard
beyond being seen to ‘do the right corporate reputations.
thing’. In this special ethics issue of AB, Meanwhile, in our interview this month
we offer a number of articles focusing we talk to Patrick Kabuya FCCA, senior
on this hot topic. financial management specialist at
On page 36 we look at the conclusions the World Bank. He discusses his work
of a recent ACCA survey of the views helping to strengthen public financial
of professional accountants on ethics management and corporate governance
and trust in a digital age. The report across Africa – crucial elements in
offers insight and guidance on issues building public trust. You can read more
from cybersecurity to cryptocurrencies. about his experiences on page 12.
It reveals that 24% of respondents have Elsewhere in this issue, we look at the
observed compromising behaviour at growth and potential of pan-African
their own organisation, and 19% at a banks and the difficulty in regulating
client’s, in the last 12 months; 47% have them (page 17), Africa’s agriculture and
seen accountants acting unethically climate conundrum (page 32) and the
‘from time to time’. implications of the UK’s exit from the
On page 25, our columnist Alnoor European Union (page 30), plus how to
Amlani points out that African attitudes improve your presentations. AB
to ethics in finance have some way to
go, and notes the key role individual Jamil Ampomah
accountants working in government, Director, sub-Saharan Africa, ACCA
industry and practice can play in jamil.ampomah@accaglobal.com
Accounting and Business About ACCA Leadership
The leading monthly magazine for ACCA (the Association of Chartered President: Brian McEnery FCCA
Deputy president: Leo Lee FCCA
finance professionals, available in six Certified Accountants) is the global Vice president: Robert Stenhouse FCCA
different versions: China, Ireland, Malaysia, body for professional accountants. It Chief executive: Helen Brand OBE
Singapore, UK and International. offers business-relevant, first-choice Member services
* Magazine contacts, page 66 qualifications to people of application, ACCA office details, page 66
ACCA Connect: +44 (141)582 2000
* Available in app and pdf ability and ambition who seek a
members@accaglobal.com
* AB Direct: weekly news bulletin rewarding career in accountancy, finance
and management. ACCA supports its
accaglobal.com/members
More at accaglobal.com/ab
Our alliance with CA ANZ
198,000 members and 486,000 students More about ACCA’s alliance with Chartered
Audit period July 2015 ISSN No:
to June 2016 151,120 1460-406X in 180 countries. accaglobal.com Accountants ANZ: accaglobal.com/alliance
November 2017 Accounting and Business 3
AFR_W_welcome.indd 3 13/09/2017 14:48
36 28
Ethics
Special edition
Insights
This month we feature
articles all about ethics 28 Audit under fire
Non-profit organisations
19 Helping hand
Companies are creating in conflict zones face
ethical frameworks numerous pressures
25 Alnoor Amlani 30 Long road ahead
The business of ethics Brexit may ultimately
in Africa is still fraught benefit the UK’s
African partners
35 Graphics
More CEOs are falling 32 Climate control
from grace Droughts are damaging
36 CPD New world order the continent’s
The digital age is beset agricultural sector
with dilemmas 40 CPD Come clean
64 The right stuff Improving corporate
Introducing ACCA’s new disclosure on carbon-
Ethics and Professional related risks is vital
Skills module
Careers
PwC in Kenya, plus
News Corporate 44 CPD The persuasionists
practice news
Our talent doctor
6 News in pictures 16 The view from 23 The real thing looks at the right way
A different view of Kalkidan Tadesse Are your employees who of asking
recent headlines of Sandoz-Novartis, they say they are?
8 News roundup Ethiopia, plus news Management
A digest of the latest 17 Across the line Comment
46 CPD Switched on
news and developments Crossborder banks need 26 Okey Umeano Organisations must
consistent regulation Africa needs more be bold in their
Interview commodity exchanges digital vision
Practice
12 Patrick Kabuya FCCA 27 Brian McEnery 48 The guiding force
We meet the World Bank 22 The view from It’s vital that members’ Know your critical
specialist Victor Kimang’a of voices are heard success factors
6 17 23 30
4 Accounting and Business October 2017
AFR_CON_contents.indd 4 13/09/2017 14:46
40 54 60
59 Technical
49 CPD Guiding force
The IASB is developing
new disclosure guidance
53 Technical update
The latest on audit, tax
and financial reporting
Tax
12 54 Transparent on tax
The EU is planning
to introduce country-by-
country reporting
Soft skills
56 The social network
Co-working is
catching on across
the continent
59 Peak presentation
Storytelling can
help you to convey
complex technical
information
ACCA
‘We need to 60 News
increase the Uganda launches
brand value of the CFO awards; SME
finance in spotlight
profession and in Kenya; Zimbabwe
actively inform hosts winter school;
policymakers and Nigeria holds a
the public about the CPD event
value we create’ 66 Update
The latest Global
Economic Conditions
Survey reveals a more
positive outlook
October 2017 Accounting and Business 5
AFR_CON_contents.indd 5 13/09/2017 14:47
6 Accounting and Business October 2017 INT_N_Newsinpix.indd 6 13/09/2017 14:48
Hurricane Irma, the
longest-lasting top-
intensity cyclone ever,
wreaked devastation on
the island of Saint Martin
as it rampaged through
the Caribbean and Florida.
Early estimates suggest
the economic costs could
reach US$300bn.
Two rare breeds of lizard
are delaying a prestigious
£5.9bn rail project in
southern Germany.
Protected by European
Union environment
law, the lizards must be
rehomed before work
can start on the land
needed for the project.
Real Madrid’s Cristiano
Ronaldo has denied
committing tax fraud
worth €14.7m, in
a case brought by
prosecutors at Spain’s
tax agency. He said he
has complete trust in his
advisers, who have told
him he is not guilty.
The world’s toughest ban
on the use, manufacture
and import of plastic
bags for commercial and
household packaging
has taken effect In
Kenya. People breaking
the ban risk a fine of
up to US$40,000 and
four years in prison.
October 2017 Accounting and Business 7
INT_N_Newsinpix.indd 7 13/09/2017 14:48
News roundup
This edition’s stories and infographics from across the globe, as well as a look at the
latest developments and issues affecting the finance profession
Sharif removed real estate. The case was a relating to its audit of Miller 2011. KPMG is committed
Pakistan’s prime minister result of the Panama papers Energy Resources. Miller to the highest standards of
Nawaz Sharif has been leaks, which revealed the was charged in 2015 with professionalism, integrity
removed from his role after offshore wealth of various accounting fraud and settled and quality, and we have
the Supreme Court ruled senior politicians and their the charges. The company fully cooperated with
him to be ‘unfit for office’. associates. Shahid Khaqan had reported assets bought our regulators to reach
A case was brought by Abbasi, an ally of Sharif, for US$2.5m as valued at a resolution.’
opposition politician Imran is Pakistan’s new prime nearly US$500m. KPMG had
Khan, claiming that Sharif minister. issued an unqualified audit PwC fined
had failed to declare family report. Engagement partner PwC has settled charges
assets. The court agreed KPMG charged John Riordan has been by the US Public Company
and found that Sharif’s family KPMG has agreed to pay suspended from practising Accounting Oversight
could not prove legitimate US$6.2m to settle US for at least two years. KPMG Board (PCAOB) for US$1m
ownership of valuable assets, Securities and Exchange said: ‘This matter is related over its audits of Merrill
including prime London Commission charges to audit work performed in Lynch. PCAOB found
that PwC issued an audit
report without obtaining
sufficient evidence about
Merrill Lynch’s compliance
with the requirement to
hold customer securities in
segregated accounts. ‘PwC
failed to fulfil its obligations
during a period when Merrill
Lynch exposed billions
of dollars of customer
assets to claims of its
creditors,’ said James Doty,
PCAOB chairman. PwC
did not admit or deny the
PCAOB findings.
EY reports growth
EY has reported that global
Kazakhstan embraces digital currency revenues increased by 7.8%
Kazakhstan has become the second country in the world to support the use of blockchain to US$31.4bn in the year
solutions for financial services. The Astana International Financial Center brings together ending June. This was EY’s
Deloitte, Waves, Juscutum and Kesarev Consulting as partners to develop legislation regulating seventh consecutive year
cryptocurrency transactions. They will establish an ecosystem for the use of blockchain of strong growth, which
technology, cryptoassets and blockchain-based projects in Kazakhstan, with the intention of had been supported by
improving the investment climate for development and support of innovative technologies. significant acquisitions
and new partnerships.
8 Accounting and Business October 2017
INT_N_newsroundup.indd 8 13/09/2017 14:49
Take one
In the latest of our series of video interviews with ACCA members, we meet Ajay Shah FCCA,
CFO of entrepreneurial table tennis bar chain Bounce and a UK county-level player in his youth
Taking opportunities
Shah shares his
experiences on
working for a growing
entrepreneurial
venture, the company’s
expansion into the US More information
and his advice for young
You can watch this interview
finance professionals
at bit.ly/AB-pingpong
Transaction advisory services regulation; there are many administrative court ruled avoidance and evasion. The
grew 15.5%, advisory 10.4%, different models in place that Google’s European agreement will lead to staff
tax 7.9% and assurance 4%. around the world that headquarters in Ireland exchange and investment.
Headcount increased by work effectively,’ said IFAC could not be taxed by the Zambia’s finance minister
7.3%, to 250,000 people executive director Alta French authorities as if it Felix Mutati said that South
globally. The firm promoted Prinsloo. ‘Understanding had a permanent base in African investment in Zambia
669 people to partner the key principles of France. ‘Google Ireland Ltd was ‘progressively creating
and recruited another 385 accountancy regulation, isn’t taxable in France over opportunities for tax revenue
partners. Senior leadership and how they function in the period 2005–2010,’ the collection for the Treasury
diversity improved, with practical terms, helps PAOs court said in a statement. through the Zambia Revenue
women comprising almost [professional accountancy Google will not have to pay Authority’.
30% of new partners and 36% organisations] and their VAT on sales or corporate
of new partners coming from key constituents ensure tax if the judgment stands. Pipeline project
emerging markets. the profession’s long-term The French authorities Capital raising has begun
sustainability, and their ability are expected to appeal to finance a US$3bn crude
IFAC issues guidance to continue to function in the the judgment. oil pipeline for Uganda and
The International Federation public interest.’ Tanzania, following approval
of Accountants (IFAC) Zambia/SA tax tie-up by the countries’ presidents
has issued guidance on Google tax win South Africa and Zambia Yoweri Museveni and John
the regulation of the Google defeated the French have agreed to work Magufuli. The investment is
accountancy profession. government in a court together on tax collection for a joint project by Tullow
‘There is no “one-size-fits- case involving a €1.12bn and administration, with the Oil, Total and China National
all” solution for accountancy tax demand. A French intention of reducing tax Offshore Oil Corporation
October 2017 Accounting and Business 9
INT_N_newsroundup.indd 9 13/09/2017 14:49
due to begin oil production
by 2020. Finance options
include bank debt and loans East Asia
from export credit agencies. 63%
Stanbic Bank Uganda and North America
Sumitomo Mitsui Banking 25% Europe
are acting as joint financial 11%
advisers for the funding of the
1,445km crude oil pipeline.
Pension investment
Three large Danish pension
funds – PensionDanmark,
PKA and Lægernes Pension % of trading volume in biggest cryptocurrency markets
– have committed €468m to
a new African infrastructure
fund. It will be managed
by AP Møller Capital. The
three funds intend to double
the size of the portfolio by
attracting other international
investors. The portfolio is Digital takeover?
expected to operate for The cryptocurrency market topped US$170bn in August, with
10 years, making 10 to the value of Bitcoin hitting a market high of over US$4,700 in
15 large investments in the same month. With more than 900 types of digital currency now
transport and energy. ‘Africa, in use, 98 digital currency exchanges and tens of millions of active investors
which has a hard working worldwide, the total market capitalisation is 50 times larger than five years
population expected to ago. Currently, East Asia, North America and Europe are the biggest markets
reach a billion within the of cryptocurrencies; in East Asia the percentage of trading volume is 63%,
next few decades, has a with Bitcoin and Ethereum selling above the global average in the region,
pressing need for more according to Exchange Union.
investment in infrastructure,’
said Robert Mærsk Uggla, Source: Exchange Union white paper, Bridging digital currency exchanges globally
AP Møller Holding’s
chief executive.
increased regional footprint Qatar downgraded led by Saudi Arabia and the
Crossborder banks of African banks suggests Fitch Ratings has downgraded UAE continue their boycott
A pan-African banking opportunities for a much Qatar from AA to AA-, in against Qatar, and their land,
system could generate greater banking scale. ‘The response to the regional air and sea borders with
between US$490bn and number of cross-border conflict with Saudi Arabia Qatar remain mostly closed.
US$950bn in additional subsidiaries of African banks and the GCC countries. International mediation efforts
credit for sub-Saharan Africa, has almost tripled since Qatar’s outlook is regarded are still ongoing but are not
predicts a PwC report. The 2002 and there are now 10 as negative. The agency showing significant progress.
findings were made in PwC’s pan-African banks with a explained: ‘Fitch believes In our view, the negotiating
latest Global Economy presence in at least 10 sub- Qatar’s diplomatic and positions of Qatar and the
Watch outlook, which says Saharan African countries, logistical isolation by some boycotting countries remain
the region’s financial sector and one with a presence of its neighbours is unlikely far apart.’ AB
remains relatively small and in over 30 sub-Saharan to be resolved for some
underdeveloped. But the countries,’ reports PwC. time. The group of countries Paul Gosling, journalist
10 Accounting and Business October 2017
INT_N_newsroundup.indd 10 13/09/2017 14:49Africa Ad_Oct17_600dpi.indd 1 14/09/2017 15:36
Accounting disruptor
Patrick Kabuya FCCA is passionate about his role with the World Bank in developing
the accounting profession in Africa to help promote prosperity and reduce poverty
N i
ot many accountants can claim accountancy profession, corporate
CV
they were inspired to join the governance and enhance public financial
profession by a grandfather who management (PFM).
did not attend school. As a child, Patrick 2009–present These, he says, are ‘fundamental
Kabuya FCCA, World Bank Group senior Senior financial management pillars that contribute to improving a
financial management specialist, was a specialist, World Bank, country’s competitiveness, and enhancing
regular visitor to his grandfather’s butchery Pretoria, South Africa effective allocation of public resources,
in Kenya’s capital Nairobi, about 150km efficient service delivery to citizens and
from his rural home in Nyeri. He noticed 2007–present accountability, which ultimately improves
how, every day at about 10am or so, his Governance roles at Institute the wellbeing of people’.
grandfather would ask for a ‘book’ from of Directors of Southern One of Kabuya’s proudest achievements
the butchery supervisor and spend time Africa, NEPAD Business was his involvement in the establishment of
poring over it, performing calculations and Foundation, and Institute of the Pan African Federation of Accountants
writing notes in the margins. Certified Public Accountants (PAFA). In 2011, as part of a World Bank
‘I became curious and started asking of Kenya team, he was actively involved in designing
why. I was impressed by what I learnt from and facilitating this project. It began with
him especially as I knew that he had never 2004–08 five professional accountancy organisations
attended school,’ he says. Project director, SAICA (PAOs) and now has a membership of 52
Among other things, Kabuya’s member bodies from 42 African countries.
grandfather taught him about profit 1993–2004 The organisation has also become a
and inventories, and the importance of Joined EY Kenya as audit voice for the profession in Africa, and
maintaining accurate records. Profit, he trainee; became technical is supporting the strengthening of the
learnt, was money left over from meat sales supervisor, EY South Africa profession on the continent. Kabuya
after related expenses had been paid. His remains actively involved in PAFA activities
grandfather said he’d ploughed the profit and recently assisted in conceptualising
into savings and investments, family expenses and, most and establishing a special PAFA committee to promote the
importantly, used it to help others, especially on visits to his adoption of integrated reporting in Africa.
rural home. ‘It is about people – the most valuable asset one Kabuya admits the accountancy profession has a long way
can have,’ his grandfather told him. to go in Africa. Based on 2016 membership declarations by
These lessons inspired Kabuya. He excelled at mathematics PAFA members, there are fewer than 101,000 accountants in
at primary school and worked hard to gain admission to better the continent, which translates to fewer than 90 per million
secondary and high schools, where he lived away from his rural people, he says. By contrast, Argentina, Chile and Uruguay, all
home as a boarder. Admission to Kenya’s top university, the countries with smaller economies as measured by GDP, have
University of Nairobi, followed and his hard work was rewarded 1,000 plus accountants per million.
when he graduated with a bachelor of commerce in accounting. ‘In the 17 French-speaking African countries, the number
‘It’s these lessons and love for mathematics that informed my is even lower as only accountants working in audit practice
desire and decision to become an accountant,’ says Kabuya. are registered as members of professional accountancy
Even now, in his job at the World Bank offices in Pretoria, organisations. The low number is further attributed to low
South Africa, those lessons are never far from his mind. demand for accountancy services, limited knowledge about
His work involves partnering with and supporting different the role of accountants, and the impact of fragility and conflict
stakeholders across Africa – governments, regulators in a number of these countries,’ Kabuya says.
and accounting professional bodies – to strengthen the While there are a number of strong professional accountancy
12 Accounting and Business October 2017
AFR_INTER_Kabuya.indd 12 13/09/2017 14:47‘Professional
accounting
organisations have
to be innovative
and smart in
how they attract
the youth to the
profession’
October 2017 Accounting and Business 13
AFR_INTER_Kabuya.indd 13 13/09/2017 14:47i Tips i Basics
*
‘Accountancy empowers you to be what you want to be The World Bank Group has two goals:
and serve in any market. When I visit universities to talk
* to reduce extreme poverty to 3% by 2030
to young people about the profession and inspire them
* to boost the shared prosperity of the bottom 40% of the
to join it by sharing my story, I ask them what being an population.
accountant means. They think accountants are number To do this, the WBG is currently focusing on three priorities:
crunchers or bookkeepers. That is not the case. I tell
them that accountants are business leaders, thought
* helping to accelerate inclusive and sustainable
economic growth
leaders and value creators.’
* investing more effectively in people by enabling access to
education, healthcare, water and sanitation, and energy
* *
‘As an accountant you develop the skills and the insuring to foster resilience to global shocks and threats.
opportunity to influence and contribute to the economy The WBG funds development projects through loans and
and create a good society for the benefit of all. It is a grants. It provides knowledge through research and analysis
profession in high demand and with high prestige in to help developing countries make informed investment
South Africa.’ decisions, as well as policy advice.
organisations in the region, the majority have capacity (human the continent,’ he says. ‘We need to create demand for
and financial) and governance constraints. In sub-Saharan Africa, accountancy services, increase the brand value of the
only 23 PAOs from 22 countries are full members or associates profession, and actively inform policymakers and the public
of the International Federation of Accountants (IFAC); a number about what we do, the value we create and how we contribute
of countries don’t even have PAOs. to improving people’s lives. Accountants should be creators
of future disruptors – the accountant’s equivalent of Uber –
Capacity building actively harness and use technology, and be in the driving seat
The World Bank has implemented numerous reforms to in creating, enhancing and managing the value of businesses.’
strengthen the profession in Africa at national and regional level, This, Kabuya says, is where ACCA can play an important role.
often in partnership with other regional and global institutions His ACCA Qualification, he says, has been valuable because
such as IFAC and the International Accounting Standards of the ‘comprehensiveness’ of the skills learnt. ‘I gained the
Board. The reforms are usually informed by the Report on the ability to understand business in a way that impacts on the
Observance of Standards and Code – Accounting and Auditing economy, society and people at large. I learnt the technical
(ROSC A&A) reviews – conducted by the Bank. and analytical skills, but also the soft skills: the ability to
‘There are incremental efforts by regional and national PAOs interact and share knowledge, the ability to negotiate, and
to strengthen the profession and develop more technician teamwork. Those are critical,’ he says.
and professional accountants required to serve both public Kabuya is particularly proud of the World Bank’s project
and private sectors at all levels, with particular attraction and supporting the government of the Seychelles to improve
inclusion of youth and women. budget systems, using an approach known as Programme
‘PAOs have to be innovative and smart in how they attract Performance Based Budgeting (PPBB), a project he is leading.
youth to the profession. This should include integrating and Its aim is to improve allocation of resources to government
involving youth in PAO committees and relevant activities. In priority areas, ensure effective delivery of services, and
addition, PAOs should aspire to develop accountants who are improve accountability. ’What motivates me more is seeing the
innovative, socially responsible and skilled to stay relevant in impact World Bank projects have on the people. We invest in
the 21st century. It remains critical for the profession to play a strengthening institutions and people,’ he says.
thought leadership role. The World Bank is involved in strengthening PFM systems in
‘With an African population of 1.2 billion, and considering African countries at both national and regional level. Kabuya is
the number of countries, there is room to get more currently involved in reforms in Zambia, South Africa, Botswana,
accountants to effectively manage and add value to the Mauritius and the Seychelles. Gradually, he says, countries are
endowed wealth of natural resources that we have on acknowledging the need to improve their PFM systems in order
14 Accounting and Business October 2017
AFR_INTER_Kabuya.indd 14 13/09/2017 14:48to enhance revenue collection and the role of the accountancy
services to citizens. To determine profession is ‘vital’: developing more
areas of improvement, countries have
‘We need to qualified accountants to serve the
conducted the PEFA assessment. create demand sector especially by including public
The assessment reviews all pillars of a for accountancy sector subjects in accountancy
budget cycle from budget formulation services, increase profession curricula and designing
to implementation, reporting and appropriate training programmes.
the brand value,
oversight by auditor general and ‘ACCA has recently included public
national assembly public accounts
and actively inform sector subjects into its curriculum
committees. ‘Forty-six PEFA reports policymakers and and other PAOs are doing the same.’
have been issued to date in sub- the public about Kabuya recalls an anecdote
Saharan Africa. Where reviews have what we do’ that brought home to him the
been repeated, there is evidence of importance of proper public financial
improved PFM systems,’ Kabuya says. management and the role the
accountancy profession can play in
Adopting IPSAS achieving it. On a visit to his rural home, an uncle told him his
One of PEFA’s main findings is that many governments in son was going to a school where there were limited books,
the region still prepare their financial statements on a cash and a grandmother in the family was going to a hospital with
basis. But this, says Kabuya, is changing with governments no medicine. The uncle asked him: ‘We know you are an
increasingly recognising the need to adopt accrual-based accountant. We know you work for the World Bank. How can
International Public Sector Accounting Standards (IPSAS). you help so that my son gets the books he needs? How can you
Kabuya singles out three countries as making ‘tremendous’ help so that your grandmother gets the medicine she needs?’
progress here: Botswana, South Africa and Tanzania. It’s this that drives Kabuya on. AB
The existence of suitably qualified finance and accounting
professionals is key to the success of this reform and therefore Nicki Güles, assistant editor, City Press, Johannesburg
October 2017 Accounting and Business 15
AFR_INTER_Kabuya.indd 15 13/09/2017 14:48The view from
41
Executives who say their organisation’s
Kalkidan Tadesse FCCA, finance manager, Sandoz-
Novartis, Ethiopia, and former globetrotter
When I went university, Ethiopia is undergoing
global ethics cultures are strong. Less accountancy wasn’t a the second Growth and
than a third are highly confident that profession I was keen Transformation Plan, and
their organisation’s employees will on at all. Throughout my laying down modern
report unethical behaviour. studies my perception of the financial infrastructure.
Source: Deloitte profession was that it was Adoption of International
not much beyond debits Financial Reporting
and credits. Little did I know Standards (IFRS) by public
Samsung boss jailed that financial reports help the world’s interest entities, SMEs and charities is
Samsung’s acting chairman, Lee Jae- capital markets and other users make now a requirement by law. As a member
yong, has been convicted of corruption economic decisions. of ACCA Ethiopia’s special IFRS
in South Korea’s latest political and network panel, I contribute towards the
business scandal. Lee took over the role Currently I work in an organisation implementation of IFRS by the different
of company leader after his father, Lee where my input is central to every sectors of the Ethiopian economy.
Kun-hee, suffered a heart attack three important decision made by the
years ago. The conviction was related company. As a finance manager at Aligning IFRS requirements to
to bribes of millions of dollars allegedly Sandoz-Novartis I report directly to the Ethiopian law and entwining them with
offered to former president Park East English Africa CFO. The numbers the systems and processes of public
Geun-hye in exchange for her support are both the justification and the tools entities is an exciting experience.
for a restructuring of Samsung. The that give structure to decisions. With I’m proud to be part of the pioneer
conviction is being appealed. the Ethiopia Cluster and Sudan under teams introducing IFRS to the finance
my jurisdiction, I am exposed to two community, and one of the first to
Bank faces proceedings very different sets of environments. implement IFRS in public entities. Such
The Commonwealth Bank of Australia I deal with issues ranging from port a challenging project brings a helicopter
is facing civil penalty proceedings clearance, margin analysis, financial view of developments.
for alleged failures in complying with forecasts and credit management to
anti-money laundering requirements. drug regulations, portfolio management Accountancy is a passion that I now
Australia’s financial intelligence and and compliance. share with people through teaching.
regulatory agency Austrac claims CBA I advise business owners who know
did not comply with its AML programme little about the importance of financial
on 778,370 accounts and A$625m reporting to their organisations,
(US$505m) of transactions, and did not and also women entrepreneurs just
report suspicious transactions totalling Little did I know venturing into the commercial world.
A$77m, mainly via ATMs that allow The business community is beginning to
that financial
anonymous cash deposits. The bank understand that finance associates have
said: ‘CBA’s response to Austrac’s civil
reports help the a pivotal role to play in the success of
proceedings, as well as the ongoing world’s capital their organisation.
programme of action to strengthen markets and
the group’s anti-money laundering other users make My hobby was travelling the world
frameworks, will continue to be overseen and visiting cities. I have a one-and-
economic decisions
by a committee of the board of the bank.’ half-year-old son now who keeps my
journeys local, but full of joy. AB
16 Accounting and Business October 2017
AFR_YCORP_intro.indd 16 11/09/2017 12:57The border patrol
As the continent’s economies grow, so pan-African banks have sprung up to
offer cross-border financial services – but regulation is proving a challenge
Africa’s economic growth means it does traditionally dominated banking on the comprehensive risk assessments.
not just have more banks than before; continent. Pan-African banks originate But establishing such controls in
banking groups are also spreading mainly in the largest economies of Africa is not simple. ‘The emergence
across national borders. And while Africa, such as South Africa, Nigeria of pan-African banks is challenging
this can boost the lending and savings and Morocco, and from countries supervisors and regulators,’ Loukil
security of banks, it also complicates of influence within a region, such as points out. ‘It may increase systemic
the job of regulators charged with Kenya.’ Tax advantages also play a part. risks. Regulation and supervision should
ensuring such institutions are evolve quickly,’ he suggests. This
honest and solvent. should include strengthening and
The challenge is of concern modernising supervision and
at the highest levels of the regulation at a supranational,
financial sector. Speaking to ideally Africa-wide, level, he says.
a conference on cross-border Such regulatory control should
banking and regulatory reforms be based on the adoption of
held in Mauritius in February, international standards, especially
Christine Lagarde, managing international financial reporting
director of the International standards (IFRS) and bank-specific
Monetary Fund (IMF), said: prudential requirements based on
‘The expansion of cross- the international Basel Accords.
border banking has been And African banking regulators
impressive. Ten African banks should be assigned more human
now have a presence in at and technical resources, while
least 10 countries on the striking cross-border supervision
continent.’ Yet, she noted, and cooperation agreements with
regulatory regimes across the their national peers, he suggests.
continent are uneven: ‘Unified The IMF’s Lagarde stressed
accounting and reporting that even in the developed
standards are absent. Data world, the financial crisis showed
weaknesses abound. National how cross-border banking
secrecy laws and constraints regulation and risk assessment
on information flows impair have been found wanting, so in
cooperation among supervisors Africa, ‘prudential rules affecting capital
in home and host countries. The key is and liquidity requirements need to
to ensure that supervision takes place With the continent’s banking sector match the risks found in a bank group’.
on a consolidated basis.’ becoming multilateral, cross-border This requires sharing more information
There is no doubt that pan-African cooperation and information sharing among supervisors and giving them
banking is big business. Speaking to between African regulators is of key the power and confidence to do their
AB, Zied Loukil, Tunisia-based partner importance, said Lagarde. job – by challenging bank management,
for accountancy firm Mazars, says: Several African banking regulators and perhaps even closing banks.
‘Pan-African banks are establishing hosting the headquarters of pan- ‘Supervisors need to be able to work
cross-border networks and overtaking African bank groups have established across borders to develop practical
the European and US banks, which supervisory colleges, enabling more resolution and recovery plans,’ she said.
October 2017 Accounting and Business 17
AFR_YCORP_Banks.indd 17 06/09/2017 16:23Speaking at the same event, Bank understanding with their home IFRS are far from universal in Africa, but
of Mauritius governor Rameswurlall regulators before they can trade in their adoption would harmonise the
Basant Roi noted that banking groups Nigeria; however, there are special accounting treatment for transactions
operating in Africa had moved away problems regarding African monetary and balances across legal entities within
from establishing legally separate unions – particularly prevalent in a pan-African banking group, says the
subsidiaries in the countries where Francophone Africa. accountant, who requested anonymity.
they operate, and were organising Take the West African Economic IFRS rules regarding the frequency of
subsidiaries along business lines. This and Monetary Union (WAEMU), which reporting, guidance on materiality and
was blurring branches and subsidiaries, includes Benin, Burkina Faso, Cote aggregation, offsetting requirements,
he noted, adding: ‘Could the failure of d’Ivoire, Guinea-Bissau, Mali, Niger, comparative information requirements
one of these subsidiaries bring down Senegal and Togo – all of these countries and consistency in presentation may be
the entire group?’ use the West African CFA (Communauté lacking in existing national reporting
While stressing that Mauritius, a key financière d’Afrique) franc, which is frameworks, he warns.
financial and business centre for Africa, guaranteed by the French treasury. With IFRS in place, not only would
was developing risk-based regulatory The IMF report highlighted how banking financial data be more reliable,
controls and crisis resolution systems, WAEMU operates as a single regional it could also save banks accounting
taking account of the digitalisation monetary and supervisory authority, costs, he adds. The holding companies
of the sector, the governor said such of many pan-African financial institutions
reforms should be ‘brought into every already apply IFRS, but subsidiaries
country in the African continent’. may hold multiple reporting ledgers for
local GAAP, IFRS ledgers and regulatory
Poor oversight ledgers. IFRS would reduce the need
And it is clear that there are for multiple ledgers, which would
real concerns that some African
‘Supervisors need ‘reduce compliance costs and increase
governments who host the headquarters to be able to work profitability,’ says the accountant. IFRS
of banks seeking to expand business across borders to would also help regulators with their
across the continent are not providing develop practical requests for detailed information from
effective oversight. These fears have banks and other financial institutions,
resolution and
been growing, as witnessed by a 2015 following specific regulatory guidelines,
report from the IMF, Pan-African Banks
recovery plans’ such as the Basel Accords.
– Opportunities and Challenges for Looking ahead, Loukil says the
Cross-border Oversight. It stressed that development of new banking products
while governments could insist bank but allows national bank licensing, and the arrival of mobile banking, Islamic
groups operate as separately capitalised which follows a binding opinion on finance, virtual currency and payment
subsidiaries to insulate them from applications by the WAEMU Banking systems, as well as the digitalisation of
financial problems arising from other Commission. National finance ministries existing banking services, offer great
national branches, even this would not can appeal against Banking Commission opportunities but bring new risks.
eliminate risk entirely. decisions at the WAEMU Council of Reforms to African banking regulation
‘Bank subsidiaries may well have Ministers. Such a system, the IMF report ‘should be implemented rapidly in
exposures to their parents or to other warned, ‘can seriously complicate the this changing environment in order
bank or non-bank subsidiaries within handling of bank problems’. It called for to set up an enabling and adequate
the same group. Difficulties in a bank’s urgent reform. regulatory and supervision framework.
operations in one country may well lead As for the impact of accounting International institutions and donors,
to problems for the group as a whole, standards on African banking especially the IMF, should play a key
particularly if governance is a concern,’ supervision, a senior accountant role in this ambitious project as political
said the report. working for a major South African and technical boosters and coordinators
The report noted that the Central bank says that the spread of IFRS at the continent level,’ he says. AB
Bank of Nigeria requires foreign across Africa would certainly help.
banks to have a memorandum of Despite progress in some countries Keith Nuthall, journalist
18 Accounting and Business October 2017
AFR_YCORP_Banks.indd 18 06/09/2017 16:23Ethics
Ethics in the frame
A growing number of companies are putting in place ethical frameworks to
help employees understand the moral dimensions of workplace decisions
Imagine for a moment that you are in This well-known exercise is designed wallet. There is £1,000 inside and a
the Wild West. You come across train to test your willingness to behave in a driving licence. The wallet belongs to
tracks and see a trolley approach at utilitarian way. If pushed, most people Bill Gates. Would you return the cash?
speed from a distance. Ahead, there would probably say they would pull Or imagine you are driving home late
are five people tied to the tracks and the lever to save five people, even if at night on deserted roads. You come to
unable to move. If the trolley continues it costs one life. But if this wasn’t an a red light at a junction. There’s no one
on its current course, it will kill all five. exercise and your actions really would to be seen. Do you wait for the green
In front of you is a lever. If you pull cost a life, would you pull the lever and light or drive through the red?
it, the trolley will be diverted onto knowingly kill someone, even to save Doing the right thing is tricky, in life
another track – but there is one person five others? And what if you knew one of and in business. Much as we would like
tied to that track. What should you do? the people involved – would that alter to think that we would make the ‘right’
If you do nothing, five people will die. your decision? decision in any given situation, it is
If you pull the lever, one person will die Try another one. Imagine you are unlikely that will consistently happen in
but the other five will be saved. walking along the street and find a practice. So the human race invented
October 2017 Accounting and Business 19
INT_UK_YCORP_Ethics_E.indd 19 01/09/2017 10:37Ethics
towards stakeholders
Sample framework for ethical decision-making and acting to
Recognise the ethical issue uphold the public
* Could this decision or situation be damaging to someone? interest’. For this
* Does this decision involve a choice between good and bad alternatives? reason the profession
* Is this decision about more than what is legal or what is most efficient? has consistently
taken a robust and
Get the facts
* What do I know? What facts are unknown? Can I learn more about this? methodical approach
Do I know enough to make a decision?
* Who has an important stake in the outcome? Are some concerns more
important than others? Why?
* What are my options? Have all the relevant people been consulted?
to ethics in training
Evaluate alternative actions
* Which option will produce the most good and do the least harm? and in practice.
* Which option best respects the rights of all those who have a stake? Professional accountants
* Which option treats people equally or proportionately? are introduced to formalised ethics
* Which best serves the community as a whole? during their training. A research study
* Which option leads me to be the person I want to be? carried out by Nonna Martinov-Bennie
of the International Performance
Make a decision and test it
* Considering all approaches, which option best addresses the situation? and Governance Research Centre
* If I told someone I respect my decision, what would they say? at Macquarie University and Rosina
Mladenovic of the University of
Act and reflect on the outcome
* How can my decision be implemented with the greatest attention to Sydney Business School looked at the
impact of formal ethics training on
the concerns of all stakeholders?
* What have I learned from this situation? students’ ability to identify and think
through ethical issues. It found that
Source: Markkula Center for Applied Ethics at Santa Clara University incorporating ethics education into
accounting education and training
increases students’ ethical sensitivity
the concept of ethics – the standards of the financial crisis. Workplace ethics and helps them to think through ethical
behaviour that dictate how we ought to are a different beast; difficult ethical issues in a business context.
act in given situations. decisions inevitably come with many As the demands placed on
Ethics are important because they pressures, from financial incentives accountants increase, though, the
take emotion out of the equation. Ethics to the fear of losing your job. These approach to ethical training must adapt.
and feelings are not the same thing – have become more intense during This was behind ACCA’s decision to
some people may feel good even when recent difficult economic times; and as introduce a new Ethics and Professional
they know they are doing something we move swiftly into the digital age, Skills module into its qualification from
that is ethically wrong – although workplace ethics are changing and October (see page 80). The module,
feelings and intuition do inform our becoming more complex. which has been developed in response
ethical choices. Ethics also deviate from For professional accountants, ethics to demand from employers, is designed
time to time from what is legally right have always been about a lot more than to allow professional accountants to
or wrong – if a legal framework has following your conscience. As ACCA demonstrate that they understand and
become ethically corrupt, for instance, chief executive Helen Brand says in her can apply ethical behaviour in complex,
or if the law has been slow to address a introduction to a new report, Ethics real-world situations.
rapidly developing issue. and trust in a digital age (see page 36), Professional accountants certainly
‘being ethical brings with it specific value their ethical training. A study
A different beast expectations, such as demonstrating of more than 10,000 professional
Ethics in the workplace, particularly in professional competency in the role accountants, trainees and senior
business, has been in the spotlight since being performed, exercising due care managers carried out as part of
20 Accounting and Business October 2017
INT_UK_YCORP_Ethics_E.indd 20 01/09/2017 10:38Ethics
the Ethics and trust in a digital age day-to-day procedures was important
* Assess the situation (who is
report found respondents believe in maintaining ethical behaviour in an affected? What is the impact?
that upholding their own professional organisation. An ethical framework Is it illegal?)
code is the most effective way to becomes even more important in a
* Decide what to do (what are the
contribute to an organisation’s ability to time of rapid technological change, as options and the implications of
uphold ethics; 75% took the view that previously unseen or untested situations each?)
‘ethics begins with me’. are likely to arise; in the paper-based
world, boundaries were reasonably clear
* Agree a way forward (is your
decision right? Can you sleep at
Creating a framework but in the world of big data and instant night? Would you be embarrassed if
But giving individuals a solid communication, the ‘right thing to do’ others knew about it?)
grounding in ethics is not enough to is not always immediately apparent.
For that reason, 80% of respondents to
* Report and communicate.
guarantee good governance across EY’s global code of conduct, by contrast,
an organisation. So an increasing ACCA’s study agreed that strong ethical is a set of principles in five key areas:
number of companies are putting principles and behaviour will become
* working with one another
in place an ethical framework for even more important in the digital age.
* working with clients and others
their employees. A framework helps So what does an ethical framework
* acting with professional integrity
managers and employees understand look like? It will usually take the form of
* maintaining our objectivity
the moral dimensions and implications
of situations they might meet, and
a series of questions or statements that
help the user clarify their thoughts and
* respecting intellectual capital.
But again, these are supplemented by a
provides a route map for asking the how they see the issue – which might series of questions that help employees
right questions and (hopefully) coming otherwise be clouded by emotion, decide in difficult situations if they are
to a conclusion that is consistently in context or external pressure. upholding the code.
line with the organisation’s values. A framework should help users avoid The existence of an ethical framework,
Encompassing ethics in a written rationalising their immediate reaction, though, is not the end of the story.
framework is an idea that is as old as encouraging them to take account of Ethical behaviour requires good
time (as anyone familiar with the Ten information that may be disquieting, leadership and strong support from the
Commandments will attest). Some and to consider differing opinions and top; in fact, two-thirds of respondents
professions are built entirely around an perspectives (see box opposite). to ACCA’s survey said that tone from
ethical code, most notably medicine’s Codes of ethics are not prescriptive the top was crucial in promoting ethical
Hippocratic Oath. or a list of simple dos and don’ts – behaviour within an organisation.
For organisations, ethical frameworks they are an aspiration of excellence, The message is that good governance
are an important bedrock of corporate for what people should and could and robust ethical behaviour takes
governance. Two-thirds of respondents achieve. An ethical framework is not awareness and effort from everyone –
to ACCA’s survey agreed, for example, intended to give the right answer in but the detailed training undertaken by
that embedding ethical standards into every conceivable situation; it provides ACCA-qualified professionals, and the
a principles-based structure for making pride that professional accountants take
day-to-day decisions that uphold the in their ethical understanding, ensures
organisation’s values. that they will lead the way. AB
Codes of ethics are While the basic format will probably
not a prescriptive be similar between organisations – Liz Fisher, journalist
usually including a mechanism for
list of dos and More information
reporting unethical practices – it will
don’ts – they are be customised for each. PwC’s ethical See ACCA’s report Ethics and trust in
an aspiration of framework, for example, is a code a digital age at bit.ly/ACCA-ethics
excellence for what of conduct for employees, known
See also more information about
people should and as RADAR:
ACCA’s new Ethics and Professional
could achieve * Recognise the event (are you being
Skills module at bit.ly/ACCA-
asked to do something you think EPSmodule
is wrong?)
October 2017 Accounting and Business 21
INT_UK_YCORP_Ethics_E.indd 21 01/09/2017 10:38The view from
Victor Kimang’a ACCA, senior associate – indirect tax, at
PwC in Nairobi, Kenya, and touch rugby player
15,000+ I stumbled upon the
accounting profession in
balance between acquiring
new clients and maintaining
The number of new staff PwC 2007 a few months after existing clients.
employs globally every year, including completing my O-level
4,000 interns exams. This was mostly I enjoy being alongside
Source: PwC due to persuasion by my people from different
father, who had sat for some cultural backgrounds and
accounting exams himself. regions. There is a high
Gupta review for KPMG Looking back, I can say the decision to level of collaboration, especially in
KPMG International is leading a embark on the ACCA Qualification has big teams and with multijurisdictional
comprehensive review into the South been one of the best in my life so far. assignments. The experience of working
African firm’s relationship with the Gupta across various business sectors and
family, which is embroiled in allegations I work in the indirect taxes business gaining first-hand knowledge of the
about its relationship with president unit where our clients are drawn from different operations is invaluable.
Zuma and his family. Trevor Hoole, CEO different business sectors. One of the
of KPMG South Africa, said: ‘While key challenges we face is the increase in The ACCA Qualification has equipped
the last audit opinions for the [Gupta] ‘boutique’ firms in the market, coupled me with the skills to take a solution-
group were signed for the 28 February with heightened competition among based approach in all I do. This helps
2015 year-ends, it is now clear that, the Big Four. This has led to more me to find solutions to issues even when
based on publicly available information, emphasis on quality, effectiveness and I don’t have one upfront.
KPMG should have resigned earlier than differentiated solutions to demonstrate
March 2016 and should have stopped value to our clients. I gain insight from ACCA’s technical
working for the Gupta companies articles, particularly those on finance,
sooner than we did.’ We have to adapt quickly to ensure our taxation and the evolving business
product offerings match technological environment. PwC also has a robust
Crowe Horwath expands changes. The influx of big data means system of CPD, which includes training,
Crowe Horwath has added member businesses must learn to do more online courses and open technical
firms in Albania, Bulgaria, Hungary, with less. Our aim is to keep a healthy sessions. I contribute to thought
Romania, Slovenia, Ukraine, Poland, leadership by writing articles on
the Czech Republic and Slovakia. The technical tax matters.
network already had firms in Croatia
and Serbia. Kevin McGrath, CEO of My appointment as the deputy chair of
Crowe Horwath International, said: I came into the the ACCA Kenya strategy board was a
‘Market expectations are high for rapid special moment. The opportunity to be
profession mostly
and increased growth across central involved in significant assignments for
and eastern Europe. The addition
due to persuasion the firm and being team lead on some of
of well-established, high-quality and by my father, who them have also been career highlights.
innovative firms is critical to our member had sat for some
firms’ ability, from China to the US, accounting exams I enjoy spending time with family,
to effectively serve clients in these playing touch rugby and touring new
himself
growing markets.’ destinations. Currently, I have my sights
set on the Middle East. AB
22 Accounting and Business October 2017
AFR_YPRAC_intro.indd 22 11/09/2017 13:00Identity check
Ensuring the people you employ are who they say they are is crucial for many reasons,
including reducing the risk of fraud and protecting your firm’s reputation
Pre-employment checks are a sensible, guarantee problems won’t arise, but it someone who appoints “ghost
even essential, risk management is a risk mitigation factor.’ employees” or may assist criminals to
step. ‘For anyone you hire, you need Gregory Rammego, risk advisory get access to employee information to
to know who that person is,’ says Africa leader for forensic at Deloitte, commit identity theft.’
Nadeem Maniar, director of risk also sees good reason for employers, Apart from the cost of any losses
consulting at Crowe Horwath UAE. including accountancy firms, to conduct through fraud, organisations with
‘This is especially true for accountancy pre-employment checks in order to poor recruitment controls risk
firms, as we have highly confidential reduce the likelihood of employing wasting HR investment. ‘The cost
and privileged information. If dishonest employees. ‘Rogue of recruiting, hiring, training and
information is leaked into the market, employees can become involved in terminating employees is a huge
it could cause reputational damage fraudulent schemes when working chunk of any organisation’s business
and financial loss, as well as litigation. in the finance department,’ he says. operations,’ Rammego says. ‘By not
So you need employees with integrity ‘A crooked employee working in the ensuring that the correct candidate
and you need to perform background supply chain management function can is employed, these costs may be
checks on them. Even if you have solicit bribes from potential suppliers. significantly higher than budgeted for
done background checks you can’t In the HR department you may have due to unnecessary high staff turnover.’
October 2017 Accounting and Business 23
INT_YPRAC_PreEmpChecks.indd 23 12/09/2017 12:38You can also read
