SMEs urged to embrace accounting

By Billy Rwothungeyo

SMALL and medium enterprises (SMEs) have been encouraged to embrace professional accounting to boost the economy and their chances of growth.

The chief executive officer of the Institute of Certified Public Accountants of Uganda (ICPAU), Derick Nkajja, said SMEs play a big role in the development of the Ugandan economy, and, therefore, should embrace the support of small accounting practitioners.

“Some SMEs say they cannot afford employing an accountant, but most of the time it is the mind-set of not doing things professionally that gets the better of them,” he said.

Nkajja made the remarks on Tuesday ahead of the International Federation of Accountants (IFAC) small and medium practices forum in Kampala.

He expressed optimism that the new accounting law that is yet to be accented to will boost the accountancy profession in Uganda.

“It (new law), if passed, will criminalise those holding out on accountants, which is a big challenge today. Many people sign off accounts as if they are accountants,” he said.

Dr. Mussad Assad, the president of the Pan African Federation of Accountants (PAFA), said: “SMEs are supposed to grow.

As the economy grows, they should also follow suit. And the key requirement to manage growth is that companies should manage their business footing well and that their business partners can trust in their financial reports.”

“The role of accounting then becomes critical in the prospects of an SME.”

In Uganda, many SMEs fold within a year of operation and poor financial reporting is one of the prominent reasons for their demise.

Assad said the accountancy profession is facing challenges such as unregistered and unethical practitioners.

“An accountant is a person who is not only qualified, but also is regulated by a professional body. If a person is not regulated, then technically, that person is not an accountant,” he said.

He added that lack of adequate institutional capacity and the absence of an adequate legal framework to excommunicate errant practitioners from the profession is a challenge on the continent.

“We must not have only a good president or minister. We must have good institutions that outlive individuals,” Assad said.

The forum is organised by ICPAU and PAFA.