Poor financial management killing SMEs – Olakunri

on   /   in Finance 12:05 am   /   Comments

A past President of the Institute of Chartered Accountants of Nigeria (ICAN), Mrs Toyin Olakunri, has raised alarm that most Small and Medium Enterprises (SMEs) do no last long as a result of poor financial management, linked to lack of accountability.

Olakunrin, who doubles as Africa’s first female chartered accountant, lamented that despite the SMEs role in revitalising the economy, yet, many of these organisations have not benefited maximally from the accounting profession.

She noted that despite the challenging economic environment of the country, the wave of entrepreneurship sweeping across the nation is as a result of the resilience and survival instinct of the Nigeria spirit, adding “While some of them do not even have a proper accounting system, others have Accountants who are just engaged in the routine tasks of record keeping and financial statements. Yet, as a result of poor financial management which is linked to lack of accountability and informed business decisions, most of these businesses don’t last long.

“I am often asked about the role of the Accounting profession in curbing corruption. Over the years, accountants have earned a reputation for “creative dishonesty”. We have been implicated in several scandals and cases of financial misappropriation, which has created a general perception in the society that we are accomplices with evil. Most times, we dance to the tune of management, government officials and so on to aid them in unethical and corrupt practices.”

To this end, ICAN in collaboration with the Lagos State Government (LASG) brought together functionaries in the public sector to train them in line with the transition arrangement, in which the three tiers of government will base their financial statements on IPSAS modified cash basis of financial reporting from year 2013, IPSAS modified accrual basis in 2014 and full IPSAS accrual basis in 2015.”

ICAN President, Mr. Adedoyin Owolabi said, “The quest for transparency in governance necessitated the call for the preparation of financial reports by governments across various jurisdictions in line with IPSAS, to check the major defects of the cash basis of financial reporting particularly as it relates to the smooth tracking of assets created with public funds. It is known fact that assets acquired in the public sector are immediately expensed even when their useful life covers many years. This practice often encourages sharp practices and this reduces accountability of Ministries, Departments and Agencies (MDAs) in the management of public assets. The adoption of IPSAS will significantly help to eliminate this unacceptable practice.”

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