Leadership Role of Accountants/Auditors in Emerging and Developing Nations

Leadership Role of Accountants/Auditors in Emerging and Developing Nations Presentation to “Africa’s Economic Growth, Accountability and Democracy” Held on 14th -16th May 2013 in ACCRA – GHANA Presented by LudovickS.L.Utouh The Controller and Auditor General of Tanzania

Presentation Outline • Introduction • Emerging and Developing Economies • Leadership Role of Professional Accountants in business • Accountants’ Contributions to Emerging and Developing Economies • Conclusions

Introduction • An accountant/auditors is a practitioner of accountancy, whose main role is to keep, audit, and inspect the financial records of individuals or business concerns and to prepare financial and tax reports. • Modern society would be hopeless without accounting. No large enterprise could survive without it. Just knowing where you stand financially is critical.

Introduction…cont • Accountants/auditors, whether as leaders in organizations or acting in their professional capacity as individual accountants/auditors in organizations therefore cannot just stand aside and pretend that they are mere observers. • They must take accountability for their behavior as leaders and leaders of organizations. (Saleh and Ahmad)

Introduction ...cont • Leadership involves establishing a clear vision, sharing that vision with others so that they will follow willingly, providing the information, knowledge and methods to realize that vision, and coordinating and balancing the conflicting interests of allmembers and stakeholders.

Introduction ...cont • The leadership roles of Professional accountants/auditors in emerging and developing economies context is very critical • This paper shades light on the activities of accountants in their leadership positions and their overall contribution and significance to emerging and developing economies.

Emerging and Developing Nations • A developing country, also called a less-developed country (LDC), is a nation with a low living standard, undeveloped industrial base, and low Human Development Index (HDI) relative to other countries. • Developing countries are, in general, countries that have not achieved a significant degree of industrialization relative to their populations, and have, in most cases, a medium to lowstandard of living

Emerging and Developing Nations….cont • There are many problems plaguing emerging and developing nations. For example in Africa World Bank 2011 report identified the following challenges facing emerging and developing economies:

Emerging and Developing Nations….cont • undiversified production structure, low human capital, weak governance, state fragility, women’s empowerment, youth employment, and climate change. • A finding by Global Financial Integrity notes that $358bn flowed out of Africa between 2000 and 2008, due to corruption, trade mispricing, and other illicit activity (Globalization 101, 2011).

Emerging and Developing Nations….cont • Emerging and developing nations are faced with opportunities and challenges that they should address to attain sustainable development. • It is to these opportunities and challenges that leadership role of accountants should contribute.

Leadership Role of Professional Accountants • In the variety of roles that professional accountants in business perform, they are typically involved in the planning, implementation, execution, evaluation, or improvement of governance in their organization. • In addition, many professional accountants in business have a responsibility to provide objective and accurate information and analyses to support all of these activities, and may have overall responsibility in governance areas, such as external business reporting (IFAC, 2012).

Leadership Role of Professional Accountants….cont • From its inception, accountancy has been a profound feature of business. • Business survival in the world has and will continue to be dependent on the effectiveness of a performing accountancy profession • Business decision-making processes are largely dependent upon the financial information prepared by accountants. • Hence, accountants as leaders of businesses and other organizations, their role is key to business prosperity and decision-making.

Leadership Role of Professional Accountants In many respects, the profession is central to encourage and support competiveness and financial stability. Consequently, the following activities can be done effectively: • Facilitation of the mobilization of domestic and international investment, • Creating a sound investment environment, • Reducing corruption and mismanagement of resources, • Fostering investor’s confidence, and Promoting financial stability • Strengthening enterprise competitiveness

Strategic Roles of Accountants • Professional accountants in business often participate in the key areas of strategic leadership: strategy; values and attitudes; and the business model. • This involves • participating in strategy and planning by • providing information and analysis for strategic decision making and • maintaining strategic control and financial navigation to ensure execution of strategy.

Strategic Roles of Accountants….cont (b) Evaluation of strategic options that align with the organization’s risk management strategy and policies on internal control and recommending optimal strategies. c) Influencing top management to appreciate on the importance of the strategic management approach in performance of the public sector

Accountants’ contribution to businesses in emerging and developing economies • The contribution of professional accountants can be demonstrated through good financial management in both private and public sectors. • It affects how funding is used to address national and local priorities, the availability of resources for investment and the cost-effectiveness of public services. • Also, it is more than likely that the general public will have greater trust in public sector organizations if there is strong financial stewardship, accountability and transparency in the use of public funds (ACCA 2011).

Conclusion • Acting in the capacity of leaders, professional accountants have to actualize their roles with the highest level of integrity. • As such, the integrity of accountants in performing their role cannot be compromised and consequently their leadership roles is very critical and vital in the success of all businesses and particularly in emerging and developing economies

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Leadership Role of Accountants/Auditors in Emerging and Developing Nations