BAOA To Review Financials Of Public Enterprises
- Corrupt state-owned and private entities could be exposed
- Pension funds, large retailers, telecommunications giants and banks among the targeted entities
Botswana Accountancy Oversight Authority (BAOA) is preparing to start reviewing and scrutinizing financials for pension funds, large retailers, telecommunications giants and other public enterprises operating in this country, to ensure compliance with international financial reporting standards and corporate governance.
BAOA CEO Duncan Majinada confirmed last week at Botswana Pension Society Trustee seminar that, BAOA, a state-owned institution established to provide oversight to financial accounting, auditing and corporate governance for companies operating in this country, is registering big entities including state owned enterprises to enable easy regulation and review of their financials and corporate governance.
Majinada indicated that the regulation, annual review and scrutiny of financials for the entities is expected to pick up corrupt entities and minimize closure of businesses which collapse as a result of poor corporate governance. “It doesn’t matter where you get your money. If you are a big company employing a large number of people and could significantly contribute to unemployment and economic problems if your business collapses we are going to regulate you,” said Majinda who indicated that the review of both financials and corporate governance of the companies and oversight to public interest entities is intended to protect public interest. “Review of financial reporting of the entities and oversight is necessary to among others ensure that management does not pay themselves huge salaries which could result with companies running short of capital, collapsing and resulting with loss of jobs,” he said.
According to Majinda an entity which is categorized as a public interest entity and expected to register for review and regulation is any company with a total revenue amounting to P300 million, total assets over P200 million, total liabilities amounting to P100 million and employing over 200 people. The accountant indicated that companies regulated by Botswana Stock Exchange, Bank of Botswana and Non-Bank Financial Institutions Regulatory Authority (NBFIRA) will have their financials reviewed by the oversight authority to find out if they comply with financial reporting standards and best principle of corporate governance. “We know that Bank of Botswana regulate banks, NBFIRA non-bank financial institution and BSE listed companies, but the regulatory organizations cannot comment on financial reporting and standards of the companies they are regulating because they are not experts in the area of financial reporting and standards.”
According Majinda audit firms and accounting firms of public interest entities will also be reviewed to expose and blacklist firms and accountants who are engaged in fraud and do no account based on best international practices. “Accountants are useful, but dangerous if they are let do what they want without regulation. We want to regulate all accountants wherever they are in Botswana and we have set standards of auditing and codes which have to be followed. Auditors are our number one target. Auditors perform statutory role which involves looking at financial statements, giving opinions and concluding if the financials are not materially mistaken. BAOA reviews the audits and looks beyond what auditors do, by finding out reasons for movement of the performance and liquidity.” Majinda stated that BAOA has withdrawn practicing certificate for 8 auditors and 5 of them had their certificate taken away due to sub-standard work. “If you are an auditor and you perform sub-standard work and we pick that during our review we will be entitled to fine you P20 000 on the spot before we report you to you to your employer. We will also report you to the professional body or association such as BICA for prosecution.”
BAOA management has indicated that all public interest enterprises operating in this country are expected to register with BAOA and the deadline for registration is yet to be decided. According to BAOA entities which do not register will be penalized. BAOA has indicated that entities register by completing and submitting registration form accompanied with the most recent audited financials, external auditors management letter and regulatory review if it has any and added that the entities will pay registration fee amounting to P1 000 with a subscription fee which varies.