‘When I am talking to businesses, the first thing they ask me about is the security in Afghanistan, the second is about the security of their investment.’ So says Zarif Ludin, who heads up CPA Afghanistan, which is probably the fastest growing professional accountancy organisation (PAO) in the world. To build up a PAO in post-conflict environments or in fragile economies requires two imperatives – support from the authorities and a legislative framework, says Stephen Shields, ACCA‘s market director – partnerships and recognition.
He adds: ‘Throughout all levels of government, there has to be interest, drive and will. And we have seen that with the Afghan authorities. The nation’s president is personally invested in seeing positive outcomes from this work, as are senior leaders within the relevant ministries. Coupled with the drive and passion of the newly formed CPA Afghanistan, we are seeing rapid progress and impressive developments.’
‘Look at those developing countries that attract foreign direct investment and you see that they have an accounting base’
Backing up the politics is the law. Putting in place legal requirements sets out the framework of what is and is not permissible. Without this, says Shields, building all the different facets of a PAO is difficult.
A successful PAO is about building credibility as much as about ensuring adoption of standards. Keto Kayemba is Uganda’s assistant auditor general for audit. She is also a member of the International Federation of Accountants (IFAC) PAO development committee. She says: ‘First you need to have a mass of committed accountants who understand that it is important to form themselves into a professional association that adds value and can be respected.’
The local accountancy body needs outside help to build capacity. Nations are trying to develop their accountancy professions in the expectation of ushering in economic development and growth. Developing accountancy bodies can turn to global organisations including the World Bank, IFAC and more mature PAOs such as ACCA, which can help build capacity in different ways by sharing their knowledge and expertise.
What does success look like?
As well as numerical benchmarks – such as growing numbers of members and students – Uganda’s Keto Kayemba says one mark of success is recognition by the government that the PAO is important. When a government asks for advice, when government ministers regularly attend your functions (even those held at busy times, such as Budget breakfasts), when they engage and consult you as a matter of course – that is success. She adds: ‘It shows accountants are important and respected.’
Mahalah Groves is head of capacity building projects at ACCA. She says: ‘We try to understand the capacity within any particular profession. We look at what is achievable within the regulatory framework. We work in partnership with the national profession, tailoring our support to deliver focused, targeted initiatives.’
For instance, in Afghanistan, where ACCA and CPA Afghanistan signed a partnership agreement at the end of 2017, ACCA has supported the PAO through multiple initiatives to develop and implement the framework that a professional body needs – within the parameters of the new accountancy law.
The ultimate aim for all accountancy bodies is IFAC membership, which will confirm and confer their status as a competent professional body. Alta Prinsloo, IFAC’s executive director for quality and development, has seen first hand the work that ACCA has done in another of its capacity-building projects, in the East African state of Rwanda.
Here, ACCA is providing strategic support with building a PAO (the Institute of Certified Public Accountants of Rwanda – iCPAR). Its president Mkombozi Karake, chief internal auditor at Development Bank of Rwanda, says: ‘We are getting deeper engagement from stakeholders – the Government of Rwanda, development partners, members of the profession and prospective students, businesses and other regional PAOs. This tells us what they are expecting from Rwanda’s accountancy institute and has helped us develop our strategy.’ ACCA is partnering with iCPAR via a twinning model focused on partnership, mentoring and skills transfer.
IFAC’s Prinsloo talks about having an effective PAO rather than thinking of any particular size of organisation. She says: ‘Education is absolutely the foundation. For instance, ACCA’s work in Rwanda is focused on building quality education; both the technical and practical aspect of the training.’ She adds: ‘That practical training helps to build credibility, the foundation of a strong profession, which contributes to strong economic growth.’
IFAC suggests that an effective PAO is built on three pillars: a sustainable organisation; a relevant organisation; and a credible profession.
Uganda’s Kayemba agrees with Prinsloo that education is the first step in capacity building. Kayemba says: ‘In order to have any level of a PAO you have to ensure that you are going to improve on the number of accountants. When you talk about building the critical mass you go straight in to education.’
Before you produce qualified accountants, however, it is necessary to get potential students interested. She suggests that the message is two-fold: telling people that it is a good profession to enter and that the country has a need for accountants. For Kayemba the PAO has a key impact on both the government and on the economic development of the small and medium-sized (SME) sector. As she points out: ‘In developing countries it is the SMEs which push the development of the economy.’
Whether it is in Afghanistan, Uganda or other areas where multiple parties are supporting the development of a PAO – Myanmar in south-east Asia is another example – such a development brings a set of benefits as standard. Kayemba says: ‘When you have a strong PAO then you have information about cost, risk, control. SMEs need accountants to ensure they make the contribution they are supposed to.’ This goes beyond the SME sector, she adds. ‘Accountants enhance accountability and transparency. It is what I do every day; I am shouting about this. “This money was given to you: how have you used it? Are you carrying out stewardship well? Have you reported it well?”’ The sentiment is echoed by Ludin in Afghanistan. He says: ‘After security I believe that the second most important thing for the country is the accountancy profession. Look at those developing countries which attract FDI [foreign direct investment] and you see that they have an accounting base.’
Accountants powering economies globally
IFAC’s vision for professional accounting education is built on five steps, each leading onto the next:
Step 1 Accountancy education
Step 2 Competence and expertise
Step 3 Trust, ethics and credibility
Step 4 A strong profession
Step 5 Economic growth and stability.
‘With a PAO you can get growth and transparency. Also we’re running a really high rate of corruption and the accountancy profession can help to limit that.’ Afghanistan is ranked 177 out of 180 in Transparency International’s Corruption Perceptions Index 2017.
Foreign investors want to see whether a country’s systems are strong enough for them to rely on. Kayemba says her country receives development aid from international organisations. She says: ‘With a PAO in place it means that to a degree there is some system that you can rely on. That attracts FDI, which in turn contributes to economic development.’
Without a PAO, attracting FDI is hard work. Shields says: ‘Foreign investors are very reluctant – if not refusing outright – to invest in economies without a robust accounting and auditing profession. It is like throwing money into an abyss – there is no oversight of how the money is managed and governed.’
And for Rwanda’s Karake, strengthening the PAO happens in the detail. He says the work now is drilling down from the strategy to create implementation plans. He says: ‘When we say “strengthen the mandate of the secretariat”, what does that actually mean? What do we need to do to develop the secretariat?’
In the early stages of building a PAO in his country, Ludin says he searched the websites of different accountancy organisations in the region and elsewhere. Then he was helped by the World Bank’s Reports on the Observance of Standards and Codes (ROSC), which detailed what was lacking.
Now Afghanistan is much more integrated into the international community. As well as the ACCA deal, which is central to establishing the pillars of sustainability, relevance and credibility referenced by Prinsloo, CPA Afghanistan has joined the South Asian Federation of Accountants and the Confederation of Asian and Pacific Accountants and is working with IFAC. Ludin says: ‘We keep IFAC informed of our work towards compliance with the SMOs [statements of membership obligations] and are working with them on three areas: our IT development roadmap, benchmarking of our qualification and IFAC membership readiness.’
For accountants working in practice or in commerce, PAO building may at times seem esoteric. But Ludin insists that IFAC’s statements of membership obligations ‘are not a form to be filled in but a milestone to be achieved. They help us take practical steps which strengthen our local PAO.’
Building PAOs in fragile states and developing economies is tough. Unsurprisingly, resources are paper-thin. CPA Afghanistan now has nine members of staff (Ludin jokes that as most are ACCA members or part-qualified, his is the globe’s most professional PAO) and ACCA’s Groves says that in Rwanda recruiting at the senior staff level has been a major milestone on the route to meeting its strategy.
In Myanmar, Groves says the profession is driven by very committed volunteers. ‘As part of an IFAC capacity-building project, the small staff and voluntary executive committee are being supported to shape a strategy that is fit for purpose and brings in other donor support,’ she explains.
Defining success in PAO building is not straightforward. Groves is clear that one sign of success is sustainability: ‘We’ve seen examples in capacity-building work where it has not worked out because the money runs out and so of course the consulting stops.’
Prinsloo says that those involved in capacity building must sometimes think outside the box. She says: ‘It is easy to fall back on to what we know. To be successful you have to be relevant. Look out for the areas where the government is particularly interested.’
For instance, it may want to improve tax take, in which case it is important to work to modify the local exams so newly qualifieds understand tax well; or it may want to reach a certain target number of accounting technicians in five years’ time, which means making sure the PAO and its partners produce a quality qualification for accounting technicians.
And of course we all know times change. As ACCA’s Shields notes: ‘Measurement of development of the profession is not just in the number of accountants that exist, it depends on the needs of the economy. With changes in areas such as reporting and technology it is a question of refining and reinventing.’
Success is as much about counting the milestones along a journey as it is about a destination – a journey which in many countries may take more than one generation to produce a quality profession.