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IFRS ROLL-OUT AND INSTITUTIONAL CAPACITY BUILDING ACCA Africa Members’ Convention 7 December, 2017 1

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Page 1: IFRS ROLL-OUT AND INSTITUTIONAL CAPACITY BUILDING · IFRS ROLL-OUT AND INSTITUTIONAL CAPACITY BUILDING ... The introduction of IFRS in Ethiopia is part of the plan to ... OUR INSIGHTS

IFRSROLL-OUTANDINSTITUTIONALCAPACITYBUILDINGACCAAfricaMembers’Convention7December,2017

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AGENDA

• IntroductiontoIFRS:Backgroundandsignificance

• IFRSinEthiopia• Implementationchallenges• BuildingcapacitytoassistIFRSroll-out

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INTRODUCTIONTOIFRS

WhataretheInternationalFinancialReportingStandards(IFRS)?

• SetofInternationalAccountingStandards

• IFRSareissuedbytheInternationalAccountingStandardBoard

• AcommonAccountinglanguagefortheworld

• Maintainingstabilityandincreasingtransparencythroughoutthefinancialworld

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INTRODUCTIONTOIFRS

WhatisIFRS?

• IFRSsaredevelopedprimarilyforprofit-orientedentities,whereasIPSASsareforpublicsectorentitiesthatprovideservicestoenhanceandmaintainthewell-beingofthecitizensofastate.

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INTRODUCTIONTOIFRS

RelationshipbetweenIPSAS

andIFRS?

• IPSASisconsideredthedefinitivesetofaccrual-basedinternationalaccountingstandards

• TherelationshipbetweenIFRSandIPSASisduetothefactthatIPSASstandardsarelargelybasedontheprinciplesofIFRS.

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BACKGROUND

• Applicability:

• Broaderstrategies• FinancialManagement• AssetManagement• Governanceand

accountability

• TheTechnicalBases

• Thecoreaccountingbasis• Accruals• Goingconcern• Capitalaccounting

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BACKGROUND

• TheStandards– andtheCoreStatements

•• Theprincipalstandards• Themajoraccounting

statements• Financialreporting• Disclosures• Consolidationandthe

accountingtreatmentofrelatedparties

• Reporting

• Financialreportingrules• Budgetingandreporting

onthesamebasis• Effectsondecisionmaking

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IFRSANDITSIMPORTANCE

Betterinvestments

Providestrustinthequalityoffinancialreporting

Encouragesinternationalbusinessandinvestment

Increasesstability,accountabilityandtransparencybothattheinstitutionalandgovernmentlevel

Willincreaselevelofprofessionaleducationofaccountants

Mobilisefinancialresourcesforlong-terminvestment

Improvinggoodgovernanceandreducingthelevelofcorruption

However- Theintroductionrequiresasignificantamountofprocesschange

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IMPLEMENTATIONCHALLENGES

Needsappropriateandrealisticprojectplansandnecessaryresources

Proactivemanagementsoprojectstaysontrackforon-timecompletion

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IMPLEMENTATIONCHALLENGES

HOWISITPROGRESSING?

Thereisnosignofanyoneelsechallengingforthetitleofbeingfirstacrosstheline

Mostcountriesarenowmakingprogress

Movingtotheintermediatepositionofcash-basedIPSAScompliance

Canothercountriesleapfrogastechnologyandimprovedsystemsshortenthepath?

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IMPLEMENTATIONCHALLENGES

Assetmanagement:oneofthechallenges.Gettingtheassetsontoaregisterwithavaluationbasis

Needanarmyofvaluerstoupdatethefigures!

Timingofrevenuebudgetsorcapitalprogrammes

Manycountriesdon’thaveenoughaccountantsandcertainlynotenoughskilledexperiencedoneswiththisbackground

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IMPLEMENTATIONCHALLENGES

NeedbiggeraccountingsystemsforIAS

1Needthesystemspeopletorunthem

2Politicalsupportcanbeanissue

3Fundingcanbepoliticallysensitive

4

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IMPLEMENTATIONCHALLENGES

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Thedeadlinehaspassed!

Timescalesweretoooptimisticinmostcountries

Mostcountrieswehavehaddelegatesfromarejustmakingastart

Ittakestime:theUKstartedimplementationaround1993,withtheintroductionofResourceAccounting

UK,AustraliaandNZnowclose

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CHALLENGESFACINGIMPLEMENTATIONOFIFRS INAFRICA

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Overambitioustimescales:MostcountriesinAfricawilltakeanother5-10years– lessforthemoredeterminedcountries

Shortageofaccountantswiththerightknowledge

Lackofunderstandingamongnonfinancialseniormanagementofrequirementsandconsequences

Systemsandprocesses

Aneedforvaluers

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WHYIFRSINETHIOPIA?

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GovernmentofEthiopiahasidentifiedimplementationasakeyenablertoeconomicgrowthpotentialandmiddleincomecountrystatusby2025

TheintroductionofIFRSinEthiopiaispartoftheplantoexpandtheimpressiveeconomicprogress

Enablingimprovedeconomicperformance,performancemanagementanddecisionmaking

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WHYIFRSINETHIOPIA?

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Theeconomicwell-beingandfuturedevelopmentwillbestronglysupportedbythesuccessofIFRSimplementation

Compliancewillbringinternationalrecognitionandtheimprovedcapabilitytoestablishcapitalmarkets

Bidsandrequestsforsupportfromdonorswillbelookedonmorefavourablyifsetoutintheagreedinternationallanguageofprofessionalaccountants

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WHYIFRSINETHIOPIA?

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IFRScompliantaccountswillnot,bythemselves,achievetheabovebenefits.Alsorequiressuitablechangestothegovernancearrangements,relatingto:

•InformationprovisiontomanagersandtheBoardReporting

Decision-makingprocessesandprocedures

RecruitmentofNon-ExecutiveDirectorsandthedefinitionoftheirroles

DefinitionofrolesandresponsibilitiesbetweentheBoardandmanagement

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WHOISIMPLEMENTINGIFRSINETHIOPIA?

TheAccountingandAuditing

BoardofEthiopia(AABE)crucialtothesuccessfulimplementationandregulationof

financialreporting

Reducingcorruption

Encouraginglongterminvestmentduetoanimprovedbusiness

environment

The2014FinancialReporting

Proclamationrecognised

theirimportance

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CURRENTSTATUS

• CouncilofMinistersRegulationsetting-uptheoversightBoard– theAccountantsandAuditorsBoardofEthiopia(AABE)

• TheProclamationsetsoutfinancialreportingframeworksapplicabletodifferentreportingentities

• AABEresponsibleforregulatingtheaccountancyprofessionandensuringitsdevelopmentinthecountry

• AABEhasafiveyearstrategicplanwhichfocusesonbuildingthecapacityandcompetencyoftheprofessionandourowncapacity

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CROWNAGENTS’EXPERIENCEINIFRS

Decadesofexperienceinimplementationofpublicfinancialmanagement

reforms

Developingcapacityinfinancialmanagementacrossawiderangeof

countries

Extensiveexpertiseinriskmanagementandanunderstandingofthespecificrisksthatcan

derailIFRSimplementation

Moreeffectivecorporategovernanceand

performancemanagementalsorequired

Organisationalcapabilitytosupportthefivepillars

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IMPLEMENTATIONCHALLENGES:OURINSIGHTS

TrainingprofessionalsinAccountingStandardsforlastthreeyears

Whodowetrain?

Knowledgeofthestandardsamongourtrainees

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HOWDOWETRAINIFRS?

GoingthroughtheStandardsishardfordelegatesbutbestwayoftacklingskillsgaps

Importanttomakeitinterestingandbackuptheconceptswithexamplesandcountry-specificcasestudieswherepossible

RepeatcommonthemestoshowhowtheStandardsarebasedonprinciplesratherthanrulesandthatthereisscopeforjudgementswithincompliantaccounts

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BUILDINGCAPACITY

Flexiblerangeofcoursescoversmanagementtrainingalongsidemoretechnicalareas

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BUILDINGCAPACITY

Leadership TeamBuilding ProjectManagement

ChangeManagement

ICTandSoftwareSkills

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Technicalaccountancyareasneedtobesupportedby:

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  IdeallyplacedtosupportthechangesthatenableIFRStobeimplementedandadopted

  Wecanidentifythesystemrequirementswhichcanavoidexpensivemanualcompilationofinformationforreportingpurposes

  Workingwithyouinallaspectsofsystemsreviewandselection

  Adviseonthechangesthatarenecessarytoachievecomplianceandhighperformance

  Workingwiththesystemssupplierstoaccessthechangesneeded

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BUILDINGCAPACITY

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• ManagingtheImplementationProgramme

• WorkingwiththeProgramme/ProjectPlan

• Reporting• Dealingwithvariances• Focusingonthebenefits• Postimplementationreview• Benefitsrealisation

management

SupportandguidetheRollOutofIFRSinlinewithgovernmentroadmap

• AdviseGovernmentoffices,publicenterprises,FinancialinstitutionsandrelatedorganisationsontherolloutofIFRSfromstarttocompletion,alongsideourchosenaccountingpartner

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BUILDINGCAPACITY

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CROWNAGENTS’PFM EXPERIENCEINAFRICAINCLUDES:

MinistryofFinance,GovernmentofZimbabwe

Wecoachedandmentoredstafftoobtainprofessionalqualifications(CAT)and(CPA)

Ethiopia WeprovidedtechnicalassistancetostrengthenandmodernisethecashmanagementandthedisbursementsystemofEthiopia

NationalRevenueAuthorityofSierraLeone

Wesupportedtheadoptionofmodern,efficientandeffectiveprocessesandsystems,achievingahighstandardoftaxpayercomplianceasessentialpartoffiscalpolicymeasuresadoptedinthecountry

CentralBankofNigeria

Microandmacroprudentialpolicy

PublicFinancialEnterprisesAgency,Ethiopia

Riskmanagementandstresstestingtoequipstaffwiththeskillstoidentifyandevaluatethemajorrisksinfinancialinstitutionsandplanstresstestprogrammes tomeettheneedofriskgovernance

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Privateandconfidential

CAPACITYBUILDING

 WedeliverIFRStrainersthroughanexpertassociateteam

  CrownAgentshasanMoUwithACCAforcollaborationandarecurrentlydiscussingapartnershipwithCIPFA

  OurclientsinEthiopiawillhaveatwinningpartnerwithworldclassexpertiseincapacitydevelopmentandaccountingstandards

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THANKYOU/

FantuGola- CountryManager,Ethiopia  [email protected]  +251116628969

SamronAdane- RegionalManagerforEastandSouthAfrica  [email protected]  +251116628969

TimRunacre– HeadofTrainingandProfessionalDevelopment  [email protected]  +44(0)7776464602


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