The Status of Public Sector Financial Reporting and Professional Accountancy Organizations Membership in Francophone Africa
This article examines the status of public sector financial reporting in 18 Francophone African countries, as well as the level of membership in African Francophone Professional Accountancy Organizations.
The analysis is based on:
- recent Public Expenditure and Financial Accountability (PEFA) scores relating to public sector financial reporting indicators;
- The outcomes of the following two conferences:
- Public Financial Management – Financial Reporting for Results, held in Dakar, Senegal on October 29-30, 2015
- Public Financial Management—Strengthening Institutions and Accountability, held in Antananarivo, Madagascar on October 27, 2016.
- responses to a questionnaire submitted to experts representing the World Bank, African Development Bank, and PAOs based in 18 African Francophone countries;
- follow-up interviews based on the questionnaire focused primarily on the countries that did not return a completed written questionnaire or sent back only a partially completed questionnaire; and
- data extracted from the Fédération international des experts-comptables francophones (FIDEF) on national PAO membership.
At the conference Public Financial Management – Financial Reporting for Results, held in Dakar, Senegal in 2015, delegates from governments and professional accountancy organizations from Francophone African countries committed to accelerate their public financial management (PFM) reforms. “The effective implementation of these reforms will improve the use of public resources to enhance delivery of services, transparency, accountability, and citizens’ trust in our governments,” said the Honorable Ansoumane Condé, Minister for Budget of the Republic of Guinea.
In 2009 the West African Economic and Monetary Union (WAEMU), and in 2011 the Economic Community of Central African States (CEMAC) issued directives to reform PFM in their member countries, notably the Transparency and Governance Code, Finance Act, Public Accounting Code, Government Chart of Accounts, Government Budget Chart, and Government Financial Reporting. A call to action read by the Honorable Ansoumane Condé at the 2015 conference, urged the government officials and accounting professionals to partner and accelerate:
- Development of a strategy to start implementation of the International Public Sector Accounting Standards in 2017
- Monitoring, evaluation, and annual public reporting on progress, with the first reports issued by 2018
The World Bank has been supporting PFM reforms in Francophone Africa by providing technical and financial assistance (US$ 2 billion in operations assistance.)
Recognizing the importance of this assistance, the International Federation of Accountants (IFAC) and the World Bank commissioned an analysis of relevant available information to inform policy and institutional reforms directed at strengthening public sector financial reporting and the development of PAOs in the African Francophone region. Specifically, the analysis examines the status of public sector financial reporting in 18 Francophone African countries, as well as the level of membership in African Francophone Professional Accountancy Organizations (PAOs).
The Social and Economic Context in African Francophone Countries
In most of the 18 Francophone African countries, the GDP per capita and the income level are both low. The informal sector is very large. The state gets its financial resources from customs and the export of natural resources: oil and gas, mining, and agriculture (coffee, cacao, bananas, peanuts, etc.).
The users of budgets, public financial statements, and audit reports—such as governments, parliamentarians, city councils, and international development partners—have different and sometimes conflicting requirements. In small countries or cities, the parliamentarians or city council members know each other well, and also are well acquainted with members of government and all other important decision makers. Social pressure and networks are de facto more important than formalized public sector financial reporting. Solidarity within the society is based on networks, for example, the family, the village, the ethnical group, and the church. In addition, local users do not necessarily have the skills and/or do not invest the necessary time to analyze and use public financial statements and audit reports for their decision making. Pressure to implement formal public sector financial reporting practices normally comes from international development partners. That is, the demand for formalized public sector financial reporting comes mainly from outside the country, which risks achieving only “ceremonial PFM.”
Public Expenditure Financial Accountability (PEFA) Analysis in African Francophone Countries
Based on the PEFA analysis of 14 countries, more than half of the PEFA scores relating to public sector financial reporting were very low. Specifically, 57 per cent of those countries had low score of D and D+. The PEFA scores illustrate the severity of the present situation.
Following is an overview of the maturity level of performance by African Francophone countries on five PEFA items:
The number of red boxes (grade 1/D or 1.5/D+) clearly illustrates the severity of the PFM situation in the African Francophone countries. The average PEFA scores show that, except for Burkina Faso, the effectiveness of internal audits, the quality and timeliness of in-year budget reports, the quality and timeliness of annual public financial statements, follow up on external audit recommendations, legislative scrutiny of annual budget law and external audit reports need substantial improvement in most of the countries included in the PEFA analysis.
Public Sector Financial Reporting in African Francophone Countries
High-quality public sector financial reporting captures the entire picture of funding commitments, facilitates wise spending, strengthens economies; and, builds trust with citizens.
Regional directives in the WAEMU and CEMAC regions require the adoption and the implementation of accrual accounting in accordance with the International Public Sector Accounting Standards (IPSASs) in the respective countries. PFM reform interventions, supported by the donor community, could be more effective and the various countries in the region will likely experience challenges in meeting the requirement of these directives.
Madagascar’s Minister of Finance, Francois Marie Maurice Gervais Rakotoarimanana, recognized the lagging progress in PFM reforms in Francophone African countries during the 2016 conference Public Financial Management—Strengthening Institutions and Accountability in Madagascar. He said, “There is a need to further modernize public services, tax authorities, supreme audit institutions (SAIs), general inspection units, and internal audit units.”
The detailed analyses of the responses to the questionnaire and follow-up interviews consistently led to the conclusion that, with limited exceptions (Burkina Faso and, to some extent, Niger), public sector financial reporting is of very poor quality in the 18 African Francophone countries studied, even in countries where public sector financial reporting is provided for in the law.
- Except in Guinea, Mali, and—to some extent—Cameroon, budgets and public financial statements are prepared on the cash or modified cash basis of accounting.
- The quality of budgets and public financial statements appear to be low (except for Burkina Faso and Senegal), with different (national) standards being applied in different countries.
- Furthermore, except for Burkina Faso, Senegal, and Togo, public financial statements are not prepared in a timely manner.
- Only three countries (Cameroon, Gabon, and Mali) are planning to prepare public financial statements on the accrual basis of accounting for national government. This accentuates that in African Francophone Countries the journey to quality accrual-based budgets and public financial statements likely will be long and will require incentives and support.
- Four countries (Burkina Faso, Cameroon, Guinea, and Mali) prepare consolidated public financial statements at the national level. The six CEMAC countries and Ivory Coast plan to prepare accrual based consolidated financial statements in the future. Rudimentary financial information systems and scarcity of accountancy competencies, have significant implications for their ability to deliver such statements at an acceptable level of quality.
- De jure, the internal and external audit functions appear to be well organized. In practice, however, there are not enough trained personnel to support the demand for internal and external auditing services.
As a consequence, a lot of work still needs to be done to effectively implement these directives:
- dissemination and inclusion of the directives into national regulations;
- capacity building of civil servants ;
- adjustment and strengthening of information management systems; and
- implementation, monitoring, and evaluation of the reforms.
Partners such as the regional and national professional accountancy organizations can support this journey towards a modernized and harmonized PFM system.
Professional Accountancy Organizations in African Francophone Countries
In the Francophone African countries, the membership of professional accountancy organizations is limited to professional accountants working in audit practices. Both the 2015 and 2016 conferences challenged the accountancy profession in Francophone African countries to support the development of more accounting professionals and to serve both the public and private sectors. In Antananarivo, Madagascar’s Minister of Finance said, “We should … work towards integrating more accountants in public administrations to enhance services to citizens.” And in Dakar, the accountancy profession was challenged to enhance their understanding of and render services tailored to the public sector, while strengthening relationships with government.
The analyses confirmed membership numbers in the national PAOs indicate a scarcity of accounting professionals in the 18 African Francophone countries, and that PAO membership in the 18 African Francophone countries is limited to professional accountants in public practice. Information on the number and educational background of accounting professionals in the public sector is not available. Since they are excluded from PAO membership, accounting professionals in public service do not benefit from the PAO’s continuing professional development programs and, furthermore, don’t have to comply with a Code of Ethics for Professional Accountants, nor are subject to the PAO’s investigation and disciplinary procedures.
The table below compares the membership of the PAOs in the OHADA member states and Madagascar with each country’s population and Gross Domestic Product (GDP).
The number of accountants in public practice per million inhabitants varies from 0.5 (the Democratic Republic of Congo) to 12 (Benin). In comparison, France has 300 accountants in public practice per million inhabitants. The table clearly demonstrates that there is a significant scarcity of accounting professionals in the African Francophone countries. This is due to many factors:
- Universities do not have enough faculty members specialized in accounting and auditing and, therefore, do not offer enough degrees, curricula, and courses in these disciplines.
- Students qualifying as professional accountants abroad (mainly in France, Belgium, and Canada) tend to emigrate.
- National / local PAO membership is limited to professional accountants in public practice.
- Careers in the public sector are less attractive than those in the private sector.
Policy and institutional recommendations
The findings clearly indicate the need to strengthen the quality of public financial reporting and increase the number of professional accountants and members of PAOs in Francophone Africa, including accounting professionals in public service. Quality public sector financial reporting is an essential pillar in enhancing transparency and accountability—a prerequisite for economic development.
African Francophone countries should adopt and implement international public sector accounting and auditing standards to enhance accountability and transparency. Ideally, the countries should adopt IPSAS and ISAs. Country circumstances and capacity (for example, financial, human, and technical resources) should be taken into account in determining the best approach to implement these standards.
To implement international standards and maximize the potential for issuing quality public financial information in a timely manner, African Francophone countries should design and implement an appropriate public sector financial reporting strategy—a roadmap—that includes capacity building initiatives (human, systems, and processes) in the public sector. To achieve this, countries should collaborate with their (local) PAOs, with each other (at the regional level), and with (international) development partners, etc. There is an important opportunity for Francophone countries to collaborate with other African countries, for example, by studying best practices in developing their capacities.
There is a great need to develop more accounting professionals at different levels—technicians and professionals—to serve in both the public and private sectors. This would require (i) strengthening PAOs, (ii) re-evaluating and redesigning accountancy qualification models, (iii) strengthening the number and skills and competencies of public sector accounting professionals, including facilitating their membership in the national PAO; and (iv) promoting accountancy as a career of choice. The development of a competent, well organized, and strong national PAO inclusive of accounting professionals in the public sector is crucial.
Effort needs to be directed at enhancing the demand for accountability (the demand for quality public financial information) by encouraging dialogue between decision makers (governments) and users (such as parliamentarians, civil society organization (CSOs), and the media), and training users to understand and accurately interpret public financial information.
Better quality public financial information and increased transparency won’t solve all the challenges of governing in Francophone Africa, but they will greatly assist governments’ decision making, performance, and accountability to their citizens.
The journey to robust PFM, including enhanced financial reporting, is long and will require commitment and difficult decisions along the way at all levels, including politicians and senior government officials. Nevertheless, it is a journey worth making if governments are to fulfill their obligation to deliver a wide range of quality public services and be accountable for their actions at the same time.
 The author would like to thank the following persons for their support: Alta Prinsloo, Executive Director and Chief Operating Officer of IFAC, Patrick Kabuya, Senior Financial Management Specialist, Governance Global Practice, The World Bank, and Professor Donna Street, Mahrt Chair in Accounting and Chairperson, Department of Accounting, University of Dayton.
 The FIDEF is an international PAO uniting national francophone PAOs in 34 countries across four continents, with strong membership from Francophone African PAOs. Except in Quebec, Canada, membership is limited to accountants in public practice.
 The scope of the research includes the 17 member states of the Organisation pour l’harmonisation en Afrique du droit des affaires (OHADA) plus Madagascar. The 17 OHADA member states are: Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Democratic Republic of Congo, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo.