ACCOUNTANCY, ACCOUNTABILITY AND MINIMISING CORRUPTION IN
NIGERIA
1.
In the 21st Century the World is becoming more of a confused planet as
the political and economic ideologies that have created prosperity for the
Western World are failing while the coping mechanisms for managing
these inadequacies need constant re engineering.
2.
In "Development (Geography)" Microsoft ® ENCARTA ® ENCYCLOPAEDIA
2000 © 1993-1999 Microsoft Corp, the authors wrote that" the absolute
number of poor people in the World has increased. Income disparities
between rich and poor nations and between rich and poor people within
both developed and developing countries have become far more
pronounced.
3.
They went on to say that "it seems reasonably clear, if depressingly so,
East Asia's miracle will not easily be replicated by poorer countries in
future developments." There are several reasons for our present situation
as we missed the opportunities when the Western Countries and Soviet
Union made Africa their football field and we were the spectators who do
not understand the rules of the game. The Asians to a certain extent did
and therefore tuned their internal techno-economic policies which is
Government led development based on technological foundation and
backed with good and quality educational infrastructure. Today, the game
plan has changed the political ideological competition is minimized
especially between Russia and USA but economic competition between
USA and Europe over China and to an extent India. We are still spectators
even though we think that we understand the rules of the game. This is
because unlike the past when the Asian countries were at the same level,
the emphasis was on political support for one side or the other and tied to
economic and military aid and assistance.
4.
Today, the emphasis is on Democracy and Free market or Market
Economy. As Gerard Berthoud said in his contribution to a book on
"Market”, First and foremost Man/woman is an economic individual, a
psychological person and a social being Which means that the Free Market
or Market is transforming African Man/woman from being his/her
brothers/sister's keeper to me myself and the nuclear family.
5.
These guidelines are enforced by Government Regulatory bodies for
discipline in the market place. They guide the operating principles of
Telecoms, finance, banking etc. The Professional bodies who are trained
through a standard course advise those who want to operate in this
regularized environment because you need to avoid anarchy in a truly free
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market. The Professional bodies do complement these Regulatory Bodies
by having a code of practice and code of moral comportment and
behaviours. Whether as Companies or individuals, reputation is
increasingly important in an ethical, competitive world and therefore
changing organizational and personal attitudes and behavioural patterns.
These state regulatory bodies become the key coping mechanisms in
Western oriented private sector driven market economy.
6.
Within this arena of competition, the most innovative supposedly wins as
innovation needs money, brains and something else, good luck. However,
innovations or winners can not operate without two key professionals, the
lawyers and the Accountants. Even Lawyers need Accountants who have
multi and omnipresent role in our lives especially in a free market driven
economy.
7.
Lawyers are solicitors, advocates, judges, legal draftsmen and legal
advisers in various sectors above all, they graduate to become judges who
interprete the laws. On the part of Accountants, they can be internal and
external auditors, academic financial analysts, tax consultants on one hard
and they are also forensic (fraud) accountants. These professionals play a
great role in the public and private sectors.
8.
One of the two key professions are responsible for helping their clients to
find loopholes in the regulatory laws and to use these loopholes to the
advantages of their clients in most cases. However, it is the judges who
are also lawyers interprete. The Regulatory Bodies in turn have
Accountants in the in the enforcement Departments. Apart from the
Regulatory laws, other non-regulatory laws exist which are made to guard
the chartered status of the professional body.
9.
Up till now, I have deliberately avoided using the word corruption. This is
because of the different meanings ascribed to it. There is no single day
that we do not read about national and international corruption cases. Is
this a sudden reawakening and why do the International Community now
pay attention on Corruption in governance? I have chosen Development
Governance because economic growth tends to be associated with
statistics which usually do not reflect the correct situation on the ground.
In addition, development signifies bottom-up through participation of all
stakeholders which means subsidiary at appropriate levels of our society.
10.
While our development economists have been there for the past 45years
of our independence, they are yet able to develop or Western adapt
economic principles and practices nor activate a known Development
model that will fast track economic growth. All our political, social and
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pure economists seem helpless in developing and setting a model that
works and their counterpants abroad have not succeeded either. The last
time a black person won a Nobel Prize for economics was in 1979 and it
was Sir Arthur Lewis of the Island of St. Lucia in the Carribean.
Therefore, some of the challenges we face are;

Lack of the cultural, philosophical and technological foundation for policies
 Lack of Social capital i.e trust between Stakeholders who can drive
Development

Lack of Legitimate economic governance because of corrupt practices
 Lack of well-rooted Professional and institutional think-tanks with focused
objectives and adequate resources for performance.

Lack of faith in ourselves, in our government, in our institutions, in our
country and above all the missing spirit of voluntarism and professionalism
Having discussed the above, the general role of our accountants in our lives, I
need to explain the reasons for choosing the subject of this paper and this will
be followed by definitions of the key winds of the subject i.e Accountancy,
Accountability and Corruption.
The concluding part will be how a non-professional Accountant can be bold
enough to tell you how you can minimize corruption in the Public, Private and
the increasingly Not for Profit Sector.
WHY THIS SUBJECT
In the Guardian Newspaper of Monday 17 July 2006, page 60-61 Ade Ogidan
interviewed Mr. Henry Egbiki, the Managing Partner and Chief Executive of the
big firms in the World of Accounting, Ernest and Young in Nigeria. In that
interview he asked many pertinent questions which most professionals take for
granted. These questions are key to our discussion today.
As a profession, we need to ask ourselves not whether but how the audited
financial statements and the related reporting model can be improved? Could
other forms of performance reporting be more useful to the stake-holders in the
capital markets?
How frequently should periodic reports be issued, semi-annually, quarterly
perhaps monthly or even daily?
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He went on to even touch the increasingly ordinary investors in stocks and
shares when he further asked how deeply do investors read and understand
financial statements? How much do they rely on them when making investment
decisions?
In asking these questions, he did realize the need to consider the trade-offs
between the time and use on one hand and completeness or thoroughness and
accuracy on the other hand. We can not run away from the costs of doing the
above and who pays? His suggestions for dealing with these questions motivated
me to make the choice of this subject which was to have a thoughtful dialogue
involving investors, regulators, analysts, auditors, stock exchanges academics
and all other points of view etc. According to him ICAN is playing a major and
leading role. Maybe, the 40th Anniversary series of lectures testify is a beginning
of that thoughtful dialogue. I do hope that what we are doing here today is part
of that “thoughtful dialogue”. May be, I also represent one of those other points
of view since I am not an investor or a professional.
The additional reason can be better discussed after the definitions of the three
key words I mentioned above.
DEFINITIONS
Wikipedia the free Encyclopedia tells us that accountancy (as a profession) and
accounting as a (methodology is the measurement, disclosure or provision of
assurance about financial information that helps managers, investors, tax
authorities and other decision makers make resource allocations. Financial
accounting involved processes by which financial information about; business is
recorded, classified summarized, interpreted and communicated Auditing has two
separate components External is the process whereby an independent
professional examines an organizations financial statements and accounting
records in order to express an opinion that conveys reasonable but not absolute
assurance as to the truth and fairness of the statements and the accountants’
adherence to the Generally Accepted Accounting Principles (GAAP) in all material
respects. The external public is the main beneficiary.
Internal Auditing is to examine in which the management is the main beneficiary.
It is carried out by internal professional staff. It certifies the efficiency and
effectiveness of processes, departments, projects or internal controls. An
effective internal auditing is the determinant of the integrity of an organization.
In both external and internal auditing, accountants are the main actors and with
other stakeholders determine the integrity of exercise and the credibility to a
great extent of the reality of the exercise.
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The profession of accountancy has also expanded into areas of non-audit service
as tax and management consultancies.
The reasons are well-known but what it means the above does is to increase the
role of accountants in a Liberal Economy where competition has led to success
being measured by profit. The drive for private sector companies profit has led to
series of fraudulent practices. This in itself has opened up another area known as
Forensic Accounting.
Information Technology has led to computer-based auditing and other related
services. While dealing with the Private Sector most of the time the Public and
the not-for-profit sectors are also exposed to all these fraudulent practices.
Therefore there is an increasing demand or obligations by the government to
seek for professional accountants as part of modernization or reforms the Public
Sector with emphasis on accountability to the taxpayers and donor. In the notfor-profit sector, the donor community and the funding institutions have come up
with strict accounting rules and regulations.
Therefore, the international and local environment today with more demand for
transparency and accountability put more and more responsibility on
Accountants as financial managers, Auditors, tax and Management Consultants.
There is also an increasing demand for Forensic Accountants.
Since I have mentioned the word fraud above, let me now define my own
framework of what I consider corrupt practices in which the Accounts can play
leading roles in that they are to protect the interests of investors (shareholders)
in private (Business) sector and interest of tax payers in the Public Sector.
In competing for briefs, the accountants lose this focus and it is not only in
Nigeria. In fact 70% of all global Auditing Services are in the hands of the Big
Four that are also represented here in Nigeria e.g Ernest and Young. All of them
in one way or the other have been involved in accounting restatements i.e.
correction of past financial statements by company, setting bankruptcies by
large companies. Examples of these corrupt practices demonstrate the failure of
self-regulation. US and UK Governments have no alternative but to set up
various regulatory bodies in consultation and collaboration with the professional
bodies to minimize these negative practices and to curb the greedy top
management operational and financial staff who perpetrates these frauds for
self-enrichment. The same goes for the Public Sector and not-for-profit
organizations. Therefore, corrupt practices are in the domain of those who
refused to use their inner moral will and disciplines to avoid pursuing personal or
group financial interest. Most persons in today’s world when left without
oversights are prone to cheating. Therefore, self-regulatory institutions within
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professional bodies are shown to be weak in order to protect own professional
reputation by not exposing too many cases of unethical behaviour.
We see all these scandals happen because auditors, and financial managers etc
believe that they are only accountable to themselves and those who sign the
cheques for their fees.
Members.” His view agrees with Dr. Ed Olowo-Okere’s paper entitled Futures
Perspectives: locally/Perceptive, presented in June 05 at the ICAN’s 40th year
Anniversary Lecture. He called it crises of public confidence in corporate financial
reporting”.
As another point of view is that the profession of accountancy especially auditors
have always refused to state any degree of responsibility in its report.
Dr. Olowo Ake’s paper also stated that with all the plethora of International
Accounting standards and principles existing, compliance has been weak because
of the will to enforce them.
From the above, the reforms that are on-going governance-public, private and
non-governmental sectors, none of them can succeed if the for transparency and
accountability. It is obvious to me that accountancy is yet to want to take that
historical responsibility in line with its professional motto of accuracy and
integrity.
The profession is yet to realize that there are three components of Integrity
namely, personal integrity, professional integrity and institutional integrity. There
are no doubts that if the accountancy profession makes accuracy its watchword,
there will be no frauds.
ISHOLA WILLIAMS
Major General (rtd)
Vice-President (TIN)
Executive Secretary
PANAFRICAN STRATEGIC AND POLICY RESEARCH GROUP
(PANAFSTRAG)
panafstrag@multilinks.com
isholawilliams@yahoo.com
GSM: 08032193910
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