Accounting plays a key role in economic development
"ACCA (The Association of Chartered Certified Accountants) believes the accounting profession is well-positioned to contribute to sustained economic development. Accordingly, ACCA would like to see local and international accountancy bodies collaborate to collectively promote an enhanced contribution to economic success," says Head of ACCA SA, Nadine Kater.
ACCA prepared a paper for the United Nation's Conference on Trade and Development (UNCTAD's) recent high-level meeting on Accounting for Development in Doha Qatar. "Entitled: 'The role of accountancy in economic development,' the paper set out key areas where we believe professional accountancy can contribute to sustained economic development," Kater explains.
The report identifies capacity-building, global standards, sustainability, integrated reporting, and standards for business as areas where professional bodies are able to contribute to economic development.
"Good quality financial infrastructure is essential to the development of emerging economies as it provides investors with an acceptably high level of assurance. Unless resources invested in putting the plumbing in place can be accounted for, what will stop the roads going nowhere, the energy disappearing, and the communications breaking down?" Kater asks.
To provide investors with the necessary assurance, institutions, standards and people need to be in place: "This requires international accountancy bodies to work together to develop the requisite capacity to underpin national economies."
International Financial Reporting Standards (IFRS) have been embraced by over 100 countries worldwide. "Many benefits accrue from the adoption of global standards.
Global standards facilitate transparency and easy comparison in transactions, which cross borders and jurisdictions. They enhance a company's ability to attract capital from a larger pool of investors, driving down the costs of capital. There are also opportunities to eliminate regulatory arbitrage," Kater observes.
ACCA has always emphasised the importance of sustainability issues in reporting: "We acknowledge, however, that as a result of the global financial crisis, there has been a decline in interest in sustainability issues. We believe this situation will only prevail in the short-term."
ACCA is a member of the investor-led coalition, Corporate Sustainability Reporting Coalition. The coalition has helped to place a requirement for material sustainability disclosures to be made mandatory onto the Zero Draft paper of the forthcoming United Nations Conference on Sustainable Development in Rio in June 2012.
'Paragraph 24' calls for a global policy framework, requiring all listed and large private companies to consider sustainability issues and integrate sustainability information within the reporting cycle," she reveals.
Kater laments the fact that while there are a myriad of national and international investigations into areas such audit, there is no unitary body, which looks at Audit and corporate reporting, nor is there a formal process for promulgating consistent standards for corporate governance. The situation is exacerbated by the fact that the voice of investors is not being heard.
"ACCA would like to see key parties brought together under the umbrella of 'Standards for Business,' to address key accounting, auditing and governance issues. This could lead to a significant improvement in the current fragmented approach to regulation and standard setting," she argues.
Kater urges the accounting profession in South Africa to embrace its capacity- building role: "Strong national professions are required to develop a strong global profession. In addition to seeking continuous improvement in all that we do in the profession, there is also an urgent need to ensure we communicate to business, government and regulators the value, which we add."