CMA, Accountants push for strong financial reporting

By Samuel Sanya and Oyet Okwera

THE Institute of Certified Public Accountants of Uganda (ICPAU) has partnered with the Capital Markets Authority (CMA) and the New Vision newspaper to recognize Uganda’s best financial records in the hope of getting more companies listed on the securities market.

Japheth Katto, the CMA boss, says proper financial record will open new doors for small-and-medium enterprises (SMEs), especially after the creation of a new segment for the sector on the equity market.

“When you embrace financial reporting, you begin creating avenues for raising finance, especially in the capital markets. All companies are required to prepare a prospectus and show progress in terms of financial performance,” he explained.

The Uganda Securities Exchange (USE) scrapped the alternative securities segment, reducing listing requirements for SMEs through a new Growth Enterprise Segment (GEMS).

Joseph Kitamirike, the USE boss, said only proper growth plans will be required for small enterprises to list under the new scheme.

Currently, there are 16 companies listed on Uganda’s stock exchange market, with Umeme aspiring to be the latest.

All listed companies are required to provide annual audited financial records prepared in accordance with the international standards of financial reporting.

Financial reporting provides key information to investors, which results into informed decision making.

Katto noted that the awards are improving the caliber of financial reports, especially at the local government level.

Derick Nkajja, the ICPAU boss, points out that although there is an international standard of financial reporting for SMEs, the firms are not harnessing it.

“We have all heard the saying that SMEs are the engine for our country’s economic growth. They are the best placed entities to spur growth of whatever nature in an economy,” he said.

“SMEs must take the lead and prepare strong financial reports to know where they are coming from and where they plan to go in subsequent years,” explained Nkajja.

Centenary Bank took top honors at the inaugural Financial Reporting (FiRe) awards last year. More firms are set to be awarded on Sunday.

Trading on the markets remained stable on Tuesday, with Stanbic Bank continuing to dominate activity with 1.4m shares sold for sh28.4m turnover at the sh20 per share price, same as last week.