Accounting and Ethics - Poverty in Africa and Corporate Governance
As world leaders met in Gleneagles, Scotland last week to discuss proposals to address poverty in Africa, questions were raised by many about accountability by African states and companies doing business in Africa. John Snow, US Secretary of the Treasury, addressed the Council on Foreign Relations about proposals for debt relief and financial aid to Africa. Snow said that he believed the long-term solution to poverty was sustained growth. But, he concluded “you’ve got to be able to trust the books. If you can’t trust the books, you don’t get investors. If you don’t have confidence in the people running the enterprise that they’re looking out for your interests rather than their own interests, it makes you reluctant to want to invest, so getting corporate governance right will be important.”
What are accountants doing to assist Africa and other areas to address the challenges implied in Snow’s blunt remarks? Rob Outram, writing on the G8 for the Edinburgh Evening News, says” A combination of accountants from donor countries and a strengthened accounting profession in the developing nations can help to underpin the validity of the “audit trail” and ensure that it’s clear that the money is going where it should.” Outram reports “the Institute of Chartered Accountants of Scotland has been involved in helping to build and develop financial skills and institutions around the world for many years now. Many of these projects have taken place in former Soviet countries, such as Russia, Kazakhstan and Armenia, but also in Bangladesh, Tanzania and Uganda.”
IN June, KPMG’s Global Sustainability Services group published its “International Survey of Corporate Responsibility Reporting – 2005.” The report included the following findings:
“A dramatic change has been in the type of Corporate Responsibility (CR) reporting which has changed from purely environmental reporting up until 1999 to sustainability (social, environmental and economic) reporting.
“Almost two-thirds of CR reports include a section on corporate governance, although most reports lack specifics on how CR is structured and information on how governance policies are implemented within the organization.”
“Social topics are discussed by almost two-thirds of the companies, generally, in one or most of four areas; core labor standards, working conditions, community involvement and philanthropy. While the majority of companies express their commitment to these issues, reporting performance remains sketchy, possibly due to the lack of clear social indicators.”