Public accountants of Uganda and companies have been advised to be sincere while making financial reports because it helps the company to grow.
Louis Kasekende, the deputy governor Bank of Uganda (BoU), in a written speech that was presented by Eliot Mwebya, the executive director strategic and risk management BoU noted that most accountants in Uganda in attempt to Dodge taxes; always tend to under-report the financial situation of companies a thing he says does more harm than good.
Kasekende advised that the business community in Uganda needed to understand the benefits of the benefits which firms can derive by preparing financial accounts that comply with best practice and global reporting standards.
“I want accountants and companies to reflect on the contribution which financial reporting makes to a developing economy and in particular the growth of a modern business sector,” he notes.
“The business sector in Uganda is dominated by small and medium scale enterprises (SMEs); the most recent comprehensive data which are available from the Census of Business Establishments indicates that the average number of employees of a registered business is only 2.3%. As is the case elsewhere in Africa, SMEs in Uganda struggle to expand. The vast majority of them never expand enough to become large firms. Of the approximately 460,000 registered businesses in Uganda, less than 1,000 have more than 50 employees.
Kasekende further stated because most of these firms are owned by a single individual or family member there is no formal governance, which limits these firms from expanding.
“The governance of these firms, including financial governance, tends to be informal, without transparent rules, records and procedures. This type of informal governance may be adequate for small companies but it is a major barrier to their growth and expansion,” said Kasekende.
“Firms cannot expand without mobilising capital for investment. Beyond a relatively small size, the investment needs of a firm outstrip the financial resources of a sole proprietor or a single family. Hence finance must be mobilised from outside sources. However, any investor or bank will only invest money in a company that has good record keeping accounts.”
Mweba read this speech during the 7th edition of the Institute of Certified Accountants of Uganda (ICPAU) Financial Reporting (FiRe) Awards that took place Friday at the Kampala Serena hotel.
The awards that were first held in 2011 have over the years attracted participation from various entities across the country.
Themed, “Moving beyond the Numbers: Unlocking Value through Reporting”, this year’s awards looked to help firms understand that accounting is not about the numbers but the value from those numbers.
Speaking at the event, Protazio Begumisa, the president ICPAU noted that the awards had already created impact on how firms do their financial reports.
“Organizations which scored below average at their first participation in the awards have demonstrated tremendous improvement in financial reporting with their subsequent participation over the years,” said Begumisa.
“The FiRe awards have impacted participants in various ways. This is evidenced in increased funding for Non-Governmental Organizations, increase in shareholder numbers for listed entities, among others. Good financial reporting is undoubtedly a measure for business success.”