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Yearning for Local Content in Accounting Profession
[September 03, 2014]

Yearning for Local Content in Accounting Profession


(AllAfrica Via Acquire Media NewsEdge) Obinna Chima examines the implication of the ongoing debate for implementation of the Local Content Act by some indigenous accounting and professional services firms in Nigeria Perturbed by what they described as an 'invasion' of the accounting profession in Nigeria by foreign financial and professional services firms, some indigenous accounting and auditing firms are currently pushing for the enforcement of the Local Content Act in the profession. Specifically, indigenous accountants are not happy that five accounting firms, KPMG, PriceWaterhouseCoopers (PwC), Accenture, Deloitte, and Ernst & Young (EY) have virtually taken over the accounting profession in Nigeria, in what they view as "a total breach of the Local Content Act 2010".



They noted that these firms parade themselves as indigenous Nigerian firms whereas they are at best franchises of foreign professional firms. However, mixed reactions have continued to trail the alleged foreign invasion of accounting profession, with some accountants and financial market experts expressing divergent views over the matter.

Proponents of the local content Act in professional services said they have been consulting with the federal government and other stakeholders to drive their position. They cited Section 52 (1) of the Nigerian Oil and Gas Industry Content Development Act, 2010, which inter alia that "all operators, contractors and any other entity engaged in any operation, business or transaction in the Nigerian oil and gas industry requiring financial services shall retain only the services of Nigerian financial institutions or organisations, except where, to the satisfaction of the board, this is impracticable." But those who are opposed to the idea argued that it would have a negative effect on the Nigerian economy. Determined to achieve their goal, those advocating for the local content policy have begun intense lobbying to actualise their goal.


They are also challenging agencies such as the Securities and Exchange Commission, Nigerian Stock Exchange, Institute of Chartered Accountants of Nigeria, Corporate Affairs Commission, Central Bank of Nigeria, Nigerian Deposit Insurance Corporation, Office of the Auditor General, Financial Reporting Council, Bureau of Public Procurement, National Assembly, Department of Petroleum Resources, Nigerian National Petroleum Corporation, Nigerian Communications Commission, Federal Inland Revenue Service, etc., for allegedly breaching the Nigerian content law.

Divergent Views Speaking on the issue in a chat with THISDAY recently, a former president of the Association of National Accountants of Nigeria (ANAN), Dr. Samuel Nzekwe expressed his displeasure over what he described as "so much foreign incursion in the accountancy profession." Nzekwe also chided the federal government for engaging foreign firms to conduct investigations into allegation of fraud against the NNPC, when there are competent Nigerian firms. He said: "If you remember when the NNPC was being investigated, it was some foreign firms that were engaged. Even when they were talking about forensic auditors for the NNPC, they were talking about some foreign firms." The former ANAN boss also noted that the Secretary to the Federal Government, Anyim Pius Anyim had in a circular, directed that before any professional accounting firm could be offered services in the country, such firm must belong to a professional accounting body established by the Act of the National Assembly and registered with the Financial Reporting Council.

He said: "The 'big five' have taken everything. Now, nobody refers to the law again and these foreign firms dominate everything and offer the services which the small audit firms can even offer.

"But that has to change, otherwise the local audit firms will not grow. There is no rule of law in Nigeria." On his part, the Chairman SIAO, a Nigerian professional services firm, Mr. Robert Ade-Odiachi stressed the need to have a legal pronouncement as to the real definition of a Nigerian firm.

"Our objection to the lop-sidedness of the distribution of work is not because some companies are not registered in Nigeria. What we are saying is that as contained in the local content development act, some companies do not qualify to be called Nigerian firms. Ownership is the key word," he insisted.

He however argued that there are certain areas where it is not feasible to have solely local accountants, but reasoned that in such areas, there could be joint auditors.

"There are certain areas where a local accountant can operate on its own but in certain cases where we have the multinational oil companies or the banks, an arrangement can be made as joint auditors by law. "We don't want them out of the country, but we need them in an arrangement that allows for the local firms to grow," he posited.

But the Country Manager, Association of Certified Chartered Accountants of Nigeria (ACCA), Mrs. Oluwatoyin Ademola harped on professionalism as well as the development of capacity by local firms.

"I think when we begin to think like this, we are limiting ourselves. All over the world, you have foreign companies. You have Nigerian companies in the United States, Russia, UK, and everywhere else.

"So, I don't understand why we are suddenly saying local content. The problem that I have with that is that if we focus too much on local content we will never get to where we want to get to", she said.

"All of us went to school and the English we are speaking is not our mother tongue. Why didn't we insist on local content?" Ademola queried.

She urged accounting firms in the country not to focus so much on local content, but should strive to develop the required manpower to be able to compete for big ticket deals.

"For me, the way I want to look at it is that it shouldn't be a focus. If you have an organisation that can do the work and it is a Nigerian organisation, there is no problem with that, but if you don't have a Nigerian organisation with the capacity, what is wrong with getting someone else? "If we really think about it and go back historically, who are the people that have helped us to grow? It surely was not only Nigerians, unless we are not being realistic.

"I think the disturbing trend is that the call for local content is getting out of proportion and people are not putting it into perspective," Ademola said.

She concluded: "I have no problem with local content, but do we have the tools to carry it through? That is the question. How many are the local firms have the manpower to audit Shell Petroleum? So, I am not saying it is not relevant; by we must balance the equation. "But with globalisation, you cannot insist on local content, otherwise you will be doing yourself a great disservice." Also, a Partner in one of the accounting firms being accused by the indigenous firms who pleaded to remain anonymous rhetorically asked: "Who are the people that have the local franchise, are they foreigners? Who are the people doing the job, are they not Nigerians? "But really, who is a local firm and who is a foreign firm? Is it that they don't want Nigerians to get franchise from anywhere? For me, it is a big debate." On his part, the Managing Partner of SIAO, Mr. Ituah Ighodalo noted that Local Content Act was to protect a "firm or company formed and registered in Nigeria, wholly owned by Nigerians and trading in its own name without any foreign affiliations, alliances, membership or any such inferences." But President of the Institute of Chartered Accountants of Nigeria (ICAN), Mr. Chidi Ajaegbu said his institute is engaging all the parties involved in order to accommodate everybody's position within the framework of the law.

"Essentially, we think the institute should be able to find a workable framework within the law for everybody. They are all our members," he said.

As Nigerians, we cannot disregard the contributions of foreign firms to the growth of our economy. Many foreigners have set up businesses in Nigeria and provided jobs to our unemployed youths. They have also brought professionalism into the country.

Need for Collaboration Therefore, from the foregoing, there is need to develop capacity of indigenous accounting firms because what has helped most countries to develop was that they embraced external support. It is also imperative that indigenous accounting firms collaborate with the bigger ones so that they can borrow expertise.

Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com).

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