The Accountant Nov-Dec 2016

PEN OFF
International Accounting
Standards . . .” Although
Internal Accounting
Standards had become
International Financial
Reporting Standards by
2009, I think it is clear that
IFRSs apply.
IASplus, Deloitte’s
website dealing with the
adoption of IFRSs, states
that there is no stock
exchange in Burundi
and that IFRSs are not
permitted. In 2013, the
World Bank carried out
a second review of the
Burundi accounting and
auditing frameworks, a
follow up on the 2007 study.
In its Report, published in
May 2014, on the Burundi
Accountancy and Auditing
Framework, the World
Bank pointed out that
“the Chart of Accounts (COA) – the
accounting principles - are not aligned
to updated IFRS and are outdated. COA
have been issued for different sectors.
They include guiding principles and
standardized accounting practices. Most of
them are outdated. Progress is being made
to revise and align them to IFRS”.
PricewaterhouseCoopers points out
that the economic environment in South
Sudan deteriorated rapidly towards
the end of 2015. Cumulative inflation
for the year to the end of January 2016
exceeded 100% and South Sudan
should therefore be considered a hyper
inflationary economy in 2016. IAS 29,
“Financial Reporting in Hyperinflationary
Economies”, should be applied by entities
with a South Sudanese pound functional
currency to financial statements for the
year ending 31 December 2016 and for
interim periods within the year. IAS
29 should also be applied to restate the
financial statements of subsidiary entities
with a South Sudanese pound functional
currency before they are included in the
consolidation at 31 December 2016. I
was thinking of travelling to South Sudan
to see for myself what the accounting
situation is like there, but I was stopped at
the border – I was not allowed to carry my
AK 47 across the border – so I decided to
defer the trip.
In Kenya, the task of ensuring that
financial statements are actually in
PricewaterhouseCoopers
points out that the economic
environment in South Sudan
deteriorated rapidly towards the
end of 2015. Cumulative inflation
for the year to the end of January
2016 exceeded 100% and South
Sudan should therefore be
considered a hyper inflationary
economy in 2016.
accordance with IFRSs falls on ICPAK,
the Capital Markets Authority for listed
companies and various other regulators.
Human resource constraints restrict
an extensive examination process.
Kenya passed a new Companies Act in
September 2015. This new Act requires
that financial statements comply “with
the prescribed financial accounting
standards”, where “prescribed financial
accounting standards” means “statements
of standard accounting practice issued by a
professional body or bodies in accounting
and finance recognized by law in Kenya”.
Clearly regulations are needed to clarify
the position: IASB is not, as far as I know,
a professional body recognized by law in
Kenya. The new Act requires all companies
registered in Kenya to file their annual
financial statements with the Registrar of
Companies. This will enable us to check, on
a sample basis, compliance with IFRSs for
private companies: the modalities for this
have yet to be worked out. In Kenya at the
present time, but not under the new Act,
all companies have to be audited and the
opinion clause for companies in Kenya, as
is the case for companies throughout East
Africa, reads: “In our opinion, the financial
statements give a true and fair view of the
financial position of Kampuni Limited at
30 June 2016, and its financial performance
and cash flows for the year then ended, in
accordance with Inter-national Financial
Reporting Standards and the Kenyan
(in the case of Kenya) Companies Act”.
Those of you who
do not know Swahili
now know one more
word in East Africa’s
most widely spoken
language – “Kampuni”
is the Swahili for
“Company” – and
by the way, to
show you how easy
Swahili is, “Reporti”
is the translation of
“Report”: but when
you are having your
dinner tonight and
you would like to ask
the waiter for a little
more meat, do not say
“lete (that is, bring)
meati”, because “miti”,
pronounced in exactly
the same way means
“trees” – the waiter
may mistake you for a
trans-elephant.
At this time each year, a group of
members of the Institute of Certified
Public Accountants of Kenya starts
working on the massive process of grading
annual reports of companies quoted on
the Nairobi and Ugandan Securities
Exchanges, the Dar es Salaam Stock
Exchange, banks, insurance companies,
private companies that use the full IFRSs
or the IFRS for SMEs, the ministries,
departments and agencies of the national
and county governments in Kenya
and Rwanda. Hundreds of entities are
participating in the Financial Reporting
Excellence, or FiRe, Award, initiated by
ICPAK, but sponsored by ICPAK, the
Capital Markets Authority, the Nairobi
Securities Exchange and the Office of
the Accountant General of the national
Government in Kenya. The NBAA in
Tanzania has now started its own version
of this competition. But back to the FiRe
Award in Kenya: out of the total of the
two hundred marks denoting a perfect
score for the FiRe Award, one hundred
and twenty marks relate to compliance
with IFRSs. Last year the company which
won the FiRe Award for the highest level
of compliance with IFRSs was Sameer
Africa Limited, a manufacturing company
listed on the Nairobi Securities Exchange,
which scored one hundred and eighteen
marks out of the possible one hundred
and twenty, or 98.33%; welcome to IFRS
territory.
68 NOVEMBER - DECEMBER 2016