ZiCA Dates The Press at Q3
Economy, Opinion
ZiCA Council Led by President Jason Kazilimani (KPMG Managing Partner)

On the morning of 9th September 2018, ZiCA held what was the most important quarterly “date the press” event of their history. The ZiCA council has been hold quarterly briefing for some time now, and visibility has been stronger under the presidency of Jason Kazilimani.

The purpose of the event is not to act as a critic of government, but as a professional, they are obliged to give their two cents (cliché considering it comes from bean counters) on what is happening in the macro environment.

In their current address, Jason addressed a number of key matters that the council held dear to their hearts. The matters included:

  • Auditor General’s Office
  • The Austerity measures
  • The IMF Support
  • SI 34 Regulation of Accountants and Auditors fees
  • SI 42 Public Financial Management Act
  • The CA Zambia and the Diploma in Accountancy

Acting Auditor General Runs without Prerequisite Qualifications!

For some time now, in previous quarterly presentation, ZiCA has raised matters relating to the appointment of the Auditor General, the operationalization of the Public Audit Act of 2016 and the State Audit Commission Act of 2016. ZiCA’s president lamented that these matters continue to be left unaddressed. Subsequently, the office of the AG has seen the departure of the incumbent Acting AG (following a 2 half year stint).

ZiCA’s view is that the aforementioned matters have continued to affect the stability and effectiveness of the office of the AG in performing its constitutional responsibilities. What is worse, ZiCA fears, is that as a professional body, the current acting AG does not appear to qualify to occupy the office. It is legislatively known under Public Order Act number 29 of 2016, the qualifications of the person to be appointed as occupant of the Auditor General’s office shall include: being a qualified Accountant, a member of the Zambian Institute of Chartered Accountants, has served as an auditor for at least ten years (of which 5 were in senior management roles).  Jason appealed to Government to expedite the process of filling in the “vacant” position and also reminding all of us that Zambia possess many qualified professionals that would meet the requirements of executing the office of AG. In addition, opportunity was taken to call upon Government to issue the Statutory Instruments that would bring the two pieces of legislation into effect.

Home of ZiCA

Accountancy in the Era of Austerity

ZiCA is well aware and has taken note of all the measures that have been announced by the Minister of Finance. Although untimely, ZiCA believes that austerity is a positive move by Government in a bid to put the economy back on the recovery track.

However, it is the opinion of ZiCA that these measures will only materialize with the full commitment to fiscal discipline (something the IMF is ubiquitously know to scold us on) by Government coupled with the right tone at the top as well as the presence of a fiscal framework that will prevent excessive public expenditure in future.

In addition, in the era of knowledge sharing, ZiCA insisted on the importance of public disclosure of the expected gains and savings from these austerity measures. In short, if one makes savings operations, this must be reflected on the bottom line. Furthermore, to complete the story of recovery, ZiCA feels that it is pertinent for Government to have a clear road map on how the country intends to achieve economic recovery. This speaks to corporate governance tenants such as Stewardship and prudence: something citizens are able to use to assess Governments performance.

In order for the measures to achieve their intended goal, ZiCA advised that they must not be implemented in a “lukewarm” manner but require strong leadership in order to achieve their intended goals. For Government, that means having unfettered commitment backed with practical steps to actualise the objectives of the austerity measures that will address seemingly impulsive and wasteful expenditure that has characterised public spending. Previous Auditor Generals reports have shown evidence of this, hence ZiCA being point on this matter.

In light of lessons learned in the past, going forward, ZiCA calls on Government to enhance its procedures to ensure fiscal responsibility and debt sustainability. On the latter, ZiCA took this media brief opportunity to highlight Zambia’s current debt stock (external US$9.3 billion; domestic US$5.2 billion) indicating a 6.7% increase in the former and 30% in the latter. Although Jason did not discuss the consequences of this increase, especially on the latter (domestic debt stock), which has seen the private sector starved of cheaper access to capital, he emphasised the importance of putting in place measures that will culminate into prudent financial management and fiscal discipline that will be sufficient to migrate the growing public debt and fiscal deficit.

Therefore, ZiCA implores that’s Minister of Finance to expedite the process of enacting the Planning and Budgeting Act that is now seen as the silver bullet that will increase discipline in fiscal management, promotion of transparency, bring forth accountability and enable citizenship inclusion in public finance management.

IMF Bailout Lethargy

ZiCA expressed concern over what they believe is a collapse of negotiations with the IMF which have remained suspended since August 2017. With sentiments of a Chinese pursuit, we are not surprised by this concern. For ZiCA what is even more concerning was the exit of the IMF representative to Zambia. However, ZiCA has taken solace in the fact the Minister of Finance has been on record in assuring the nation that the departure of the IMF Rep must not be seen as source of undue concern citing normal office bearer changes that happened on a regular basis.

However, because of the national importance of the bailout and what it means to fiscal situation, ZiCA believes that matters around this conversation ought to be clarified. They believe that without the IMF support, the risk of debt distress will continue to impact negatively on the economy and expose the country to numerous economic challenges.

Citing challenges that ranged from social and economic hardship to excessive spending and mounting fiscal imbalances between revenue and expenditure, the accountants were on the mark regarding the importance of not compromising the country’s debt sustainability strategy. Furthermore, transparency was yet again appealed for especially on the status of negotiations with cooperating partners.

Insurance Bill for Health

In the era of skepticism regarding the introduction of new levies by Government, it was prudent for ZiCA to have a word on the newly introduced National Health Insurance Act number 2 of 2018. This bill is meant to achieve Universal health coverage for all Zambians. Very noble. However, ZiCA appealed to government to ensure that the funds collected from the citizens are strictly ring-fences and utilized for the intended purposes in line with the objectives of the scheme.

For professionals that are in the field of creating special purpose vehicles and understanding what they can achieve, ring-fencing will ensure that this scheme achieves its intended purpose. Hence, their insistence of the implementation of the bill to the letter must be heeded. By doing so, government stands a chance of having a resulting effect that will improve health care delivery services and ensure medicines are available in health facilities.

ZiCA are well aware that citizens at the moment are now faced with what they term as a “multiplicity of taxes” and although noble this could have the inadvertent consequence of rendering the citizenry in further financial abyss.

On the Dual SI Commentary

ZiCA applauded Government for the decisions made on SI 34 (Regulation of Accountants and Auditors fees) and SI 42 (Public Financial Management).

On the former, the regulation of the minimum charge out rates applied by practicing accountants when determining their fees for professional services rendered to clients will ensure that fees chargeable reflect the cost, risk and quality of the professional services offered to the general public. This was a wordy statement but in essence, the institute recognizes that the public must be billed based on the quality of work done. They understand that without a framework to regulate professional fees, compromises the integrity and quality of the accountancy profession as well as the benefits that are inherently obtained from audit services.

ZiCA was mindful though that charge out SI has received mixed feeling with various stakeholders in the economy expressing fears that its implementation would significantly increase the cost of accountancy services. This could not be further from the truth. Cost of doing business is not at threat. As a matter of fact, ZiCA were pleased to note that in response to some of the concerns, the Minister of Finance called for a stakeholder meeting about 2 fortnights prior to the press briefing. At which the SI was discussed at length.

On the latter SI, which brings into effect the Public Finance Management Act that empowers the Secretary to the Treasury to deal with non-performing Controlling officers and Controlling bodies in a bid to improve service delivery in the public sector will help in national development.

ZiCA believes that this is a progressive piece of legislation and if well managed and implemented will enhance the management of public resources. Of note for ZiCA, was the inclusion of Section 40 which requires the Secretary to the Treasury to get his “hands dirty” by preparing and including audited financial statements in respect of projects funded by, among others, public debt in the financial reports. Accountability does not get any better than this. Furthermore, the inclusion of Section 26 on contraction of financial obligations, the provision will curtail the practice of binding Government to unplanned and avoidable future financial commitments. Key to the success of this act is the diligence of the Secretary to the Treasury as he is the key to ensuring this piece of legislature does not end up as a good document that was never enforced.

Zambian Diplomas on the Rise

Jason concluded the press briefing by discussing the newly introduced Diploma in Accountancy. It is clear that the ZiCA team are very proud of their accomplishment in introducing the Chartered Accountant (CA) Zambia and Diploma in Accountancy. The qualifications are now a year old as at August 2018. The public has received these qualifications very well according to Jason. The CA is seen as the premier qualification with a global recognition aimed at developing business leaders.

Since launch, two examinations have been held (December 2017 and June 2018) with a good number of candidates. The institute is making more efforts to promulgate the qualifications both locally and internationally in order to develop more ZiCA Chartered Accountants on the market.

In a recent study conducted by the Financial Times, the United Kingdom is the global leader in ACCA graduates. Although ZiCA is far from the top 5 in the world, Financial Insight Zambia believes that the introduction of home grown qualifications of a global appeal, is a sure way to develop the profession in Zambia. With harsh macro-economic times being experienced by many businesses and Government, the role of the accountant could never be more important than now.

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