The changes in accounting practices and procedures
58
Compiled and Presented BY Godwin Emmanuel OYEDOKUN (HND, BSc.Ed, MBA, MSc (Acct), MTP (SA), ACA, ACIB, AMNIM, FCTI, FCFIP, CFA, CFE, CPFA, ACCA-CertIFR) Asst. Director (Head) – Education, Research & Technical Directorate The Chartered Institute of Taxation Of Nigeria (CITN) DL: +2348033737184, +2348095491026, +2348055863944 [email protected], [email protected]Being a paper presented at the Annual Seminar of Nigerian Universities Accounting Students' Association Osun State University Chapter, Okuku Campus, Osun State. Nigeria On August 12, 2014 The Changes in Accounting Practices and Procedure: An appraisal of the related Current Issues and the expected role of Accountants
The changes in accounting practices and procedures
1. Compiled and Presented BY Godwin Emmanuel OYEDOKUN (HND,
BSc.Ed, MBA, MSc (Acct), MTP (SA), ACA, ACIB, AMNIM, FCTI, FCFIP,
CFA, CFE, CPFA, ACCA-CertIFR) Asst. Director (Head) Education,
Research & Technical Directorate The Chartered Institute of
Taxation Of Nigeria (CITN) DL: +2348033737184, +2348095491026,
+2348055863944 [email protected], [email protected] Being a paper
presented at the Annual Seminar of Nigerian Universities Accounting
Students' Association Osun State University Chapter, Okuku Campus,
Osun State. Nigeria On August 12, 2014 The Changes in Accounting
Practices and Procedure: An appraisal of the related Current Issues
and the expected role of Accountants
2. 2 The Facilitator- Nemo Dat Quod Non Habet Godwin Emmanuel
Oyedokun, HND, BSc.Ed, MBA, MSc (Acct), MTP (SA), ACA, ACTI, ACIB,
AMNIM, CNA, FCFIP, CICA, CFA,CFE, CPFA, ABR, CertIFR Assistant
Director (Head) Education, Research & Technical Directorate of
The Chartered Institute of Taxation of Nigeria (CITN) Godwin is an
Experience Certified Forensic Accountant, Certified Fraud Examiner,
Certified Forensic Investigator, Chartered Accountant, National
Accountant, Chartered Tax Professional, Chartered Banker, Chartered
Manager, Insolvency Practitioner, and Financial Analyst of good
repute. A registered Professional in Nigeria with the Financial
Reporting Council of Nigeria (FRC). He also holds a Certificate in
International Financial Reporting (CertIFR) of Association of
Certified Chartered Accountant (ACCA) Godwin attended Osun State
College of Technology Esa- Oke Osun State of Nigeria for his
National Diploma (ND) and Higher National Diploma (HND Upper
Credit) in Financial Studies and Accountancy respectively in some
16 years ago. Also, he holds B.Sc. Ed in Accounting at University
of Ado- Ekiti, (now Ekiti State University) Nigeria. He bagged his
MBA in Finance & Accounting at Olabisi Onabanjo University,
Ogun State of Nigeria in 2006/2007 academic sessions and graduated
with merit. He is currently awaiting his result of MSc. Accounting
of Babcock University, while is also currently an MSc Business
& Applied Economics (Finance option) student of Olabisi
Onabanjo University. He is a seasoned scholar-professional who is
currently serving as an Advisory Council Member of Association of
Fraud Examiner (ACFE), Austin, USA, and Vice President of Nigeria
Chapter of same Association. He is the Membership Mobilization
Director for Africa for the International Institute of Certified
Forensic Investigation Professional Inc. (IICFIP) USA.
3. 3 The Facilitator- Nemo Dat Quod Non Habet Godwin is a
leader in Forensic Accounting and Fraud Investigation, he is a
sought after intellectual, who has presented over 195 technical
papers in various Training/Seminars on Forensic Accounting, Fraud
Investigation, Internal Audit & Control, Risk Management, IFRS,
ICT, Strategic Management, Finance & Accounting related
subjects. He is also an Examiner to The Chartered Institute of
Bankers of Nigeria (CIBN) on Introduction to Financial Accounting
(FA) and Information Communication Technology (ICT) He has been
trained on Forensic Accounting, Accountancy and Fraud Investigation
and other Finance & Accounting related courses, in Ghana,
Senegal, Liberia, Kenya, Cote dIvore, Canada- Toronto, at some
States in United State of American and in Nigeria including Lagos
Business School of Pan Atlantic University. He was the Assistant
Director (Head) Finance & ICT of The Chartered Institute of
Taxation of Nigeria (CITN). He is the Chief Technical Consultant to
OGE & CO Professional Services Ltd. (a firm of Forensic
Accounts, Fraud Investigators, Finance and Management Consultants
www.ogecops.com) and A & D Forensic Consults Ltd. Nigeria
(www.adforensicconsults.com). Godwin was given a meritorious award
by the Students Union Government of Osun State College of
Technology on October 5, 2013 and he was also given a special
recognition and installed as one of the Patrons of Nigeria
University Accounting Students Association (NUASA), Obafemi Awolowo
University Chapter on March 28, 2014. For his contributions to
humanity, Godwin was honoured with a Chieftaincy title (Chief in
Council) as Otun-Mayegun of Apomu Land of Owu Kingdom, Ogun State.
Nigeria on November 23, 2013. Godwin is happily married with
Children Nemo Dat Quod Non Habet
4. Protocol & Appreciations I wish to appreciate the entire
students of accounting department of Osun State University and most
especially the leadership of the Universitys NUASA executives ably
led by my brother, Mr. Samuel Egesi for this good initiative. My
appreciation also goes to my Dad Professor Dayo Akintayo the Dean
FMS and Senior Colleagues, Mr. Adebayo Aderemi Olalere, FCA, the
HOD and the Ag. HOD, Mr. Gbadebo A. Okeyooyin, also I wish to
appreciate all our lecture in this Faculty but permit me to mention
but few in no particular order, Mr. Feyi Oluwaremi, (Patron NUASA),
Mr. Fatoki Ishola, Mr. Odelabu Temitope, Mr. Oyewole J. Olusegun,
Mr. Sunday Sasona, Mr. Lawal B. Akeem, Mr. Daramola Sunday Peter,
Ms. Olojido O. Esther. Thank you for being there for us.
5. This presentation will cover the following major sub topics:
General Introduction IFRS & IPSA Forensic Accounting and
related terms Environmental Accounting & Audit Social
Accounting & Audit International Accounting & Auditing
Petroleum Accounting Green Washing & Taxation Conclusion 5
Contents
6. 6 The hardest thing in the world to understand is income tax
Albert Einstein The reasonable man adapts himself to the world; the
unreasonable man persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man. GEORGE
BERNARD SHAW Quotes
7. 7 The role of accountants in this modern day is changing by
the day. I remember during my school days that we were thought
Statement of Accounting Standards SASs, also, gone are the days
where ICAN was in charge of these Standards, Nigeria Accounting
Standard Board (NASB) was taken over by Government, but in year
2011, another was the story and it is now known as Financial
Reporting Council (FRC). Courses like Environmental Accounting,
Petroleum Accounting, Forensic Accounting, Environmental Taxation,
Econometrics, IFRS, ISA, are now part of the Curriculum in the
Accounting Course. I remember how I was struggling with these
courses during my MSc Accounting programme at Babcock University
unlike fresh graduate who were taught during their undergraduate
programme My dear brothers and sister, go are the days where
students should be happy if their lecturers are on able to complete
their course Syllabi before the semester exams. The truth of the
matter is that you as a graduate would be expected to know much in
order to sustain this get age which is full of knowledge demands,.
How will you place my 6 years old boy who is already using iPad,
GSM and can use both touch screen devices and keypad mobile
devices? Introduction
8. 8
9. 9 The continuous spread of global integration and increase
in demand for international trade and investments among various
countries and multinational corporations has necessitated the need
for cross-national co-operation enhancement and international
comparability. First it was accounting standards, now auditing
standards have been identified to play a major role in the
comparability and analysis of audited financial statements
emanating from different countries around the world irrespective of
barriers in languages and culture. At the moment, the audit reports
emanating from different jurisdictions can use the same form of
words, but there is no guarantee that the same amount or even the
same audit work has been performed. If auditing is standardized,
then the finance director and investor will know that not only were
the words the same but they meant the same. Introduction
10. 10 Those who perform audits of financial statements
independently in order to be able to express an opinion on whether
those financial statements provide true and fair view and are drawn
up in accordance with the applicable financial reporting framework
referred to as Public accountants or external auditors. An external
auditor is an audit professional who performs an audit in
accordance with specific laws or rules on financial statement of a
company, government entity, other legal entity or organization, and
who is independent of the entity being audited. The manner of
appointment, the qualifications and the format of reporting by an
external auditor is defined by statute which varies according to
jurisdiction of different countries. Introduction
11. 11 The illiterate of the 21st century will not be those who
cannot read or write but those who cannot learn, unlearn and
relearn. ALVIN TOFFLER Quotes
12. 12
13. 13 Permit me to ask you all this question: Who is an
Accountant? Someone that studied accounting at Polytechnic or
University? Ok, let us try it together!!!! An accountant is a
practitioner of accounting or accountancy, which is the
measurement, disclosure or provision of assurance about financial
information that helps managers, investors, tax authorities and
others make decisions about allocating resources.
(en.wikipedia.org/wiki/Accountant) A professional person who
performs accounting functions such as audits or financial statement
analysis. Accountants can either be employed with an accounting
firm, a large company with an internal accounting department, or
can set up an individual practice. (Investopedia.com) Can you now
try the question below? What Role Does an Accountant Play in
Business Operations? Accountant
14. 14 There has been a concerted convergence effort between
the Generally Accepted Accounting Principles (GAAP) and the
International Financial Reporting Standards (IFRS) in order to
avoid conflict and confusion, promote simplicity, streamlining,
consistency and transparency, and avoid any future financial crises
or meltdowns. Despite the research-indicated evidence of a higher
accounting quality being experienced by firms that either apply the
IFRS standards or have switched to them from the GAAP, the
convergence process has not proven to be an easy task, mostly
because of the differences in approach between the two accounting
bodies. The GAAP is a rules-based methodology, while the IFRS takes
a principle-based approach. The rules-based approach is comprised
of a complex set of guidelines that establishes criteria for every
possible contingency and provides the rules required for specified
transactions, thus promoting uniformity. The principle-based
methodology lays out the key objectives of good reporting in each
subject area and then provides guidance, explaining the objective,
and relates it to common examples, thus promoting transparency. If
these methodological differences between the two approaches cannot
be resolved, they may prolong the process of compiling a true set
of international accounting standards and increase the costs
required to maintain two sets of books. GAAP And the IFRS
Standards
15. 15 General use of the term In everyday usage, the term
'International Financial Reporting Standards' (IFRSs) has both a
narrow and a broad meaning. Narrowly, IFRSs refers to the new
numbered series of pronouncements that the IASB is issuing, as
distinct from the International Accounting Standards (IASs) series
issued by its predecessor. More broadly, IFRSs refers to the entire
body of IASB pronouncements, including standards and
interpretations approved by the IASB and IASs and SIC
interpretations approved by the predecessor International
Accounting Standards Committee. IFRSs as defined in Standards
Paragraph 7 of IAS 1 Presentation of Financial Statements defines
IFRSs as comprising: International Financial Reporting Standards
International Accounting Standards IFRIC Interpretations SIC
Interpretations (The definition of IFRSs was amended after the name
changes introduced by the revised IFRS Foundation Constitution in
2010.) International Financial Reporting Standards
16. 16 Requirements for issuing IFRSs In developing IFRSs, the
IASB follows its due process requirements. Under the IFRS
Foundation Constitution, the publication of an exposure draft, or
an IFRS (including an International Accounting Standard or an
Interpretation of the Interpretations Committee) requires approval
by: nine members of the IASB, if there are fewer than sixteen
members ten members of the IASB, if there are sixteen members.
Other decisions of the IASB, including the publication of a
discussion paper, require a simple majority of the members of the
IASB present at a meeting that is attended by at least 60 per cent
of the members of the IASB, in person or by telecommunications.
Compliance with IFRSs Paragraph 16 of IAS 1 requires: An entity
whose financial statements comply with IFRSs shall make an explicit
and unreserved statement of such compliance in the notes. An entity
shall not describe financial statements as complying with IFRSs
unless they comply with all the requirements of IFRSs. When a
Standard or an Interpretation specifically applies to a
transaction, other event, or condition, the accounting policy or
policies applied to that item shall be determined by applying the
Standard or Interpretation and considering any relevant
Implementation Guidance issued by the IASB for the Standard or
Interpretation. [IAS 8.7] International Financial Reporting
Standards
17. 17 International Public Sector Accounting Standards (IPSAS)
are a set of accounting standards issued by the IPSAS Board for use
by public sector entities around the world in the preparation of
financial statements. These standards are based on International
Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB). IPSAS aims to improve the
quality of general purpose financial reporting by public sector
entities, leading to better informed assessments of the resource
allocation decisions made by governments, thereby increasing
transparency and accountability. IPSAS are accounting standards for
application by national governments, regional (e.g., state,
provincial, territorial) governments, local (e.g., city, town)
governments and related governmental entities (e.g., agencies,
boards and commissions). IPSAS standards are widely used by
intergovernmental organizations. IPSAS do not apply to government
business enterprises. International Public Sector Accounting
Standards
18. 18 IPSASB adapts IFRS to a public sector context when
appropriate. In undertaking that process, the IPSASB attempts,
wherever possible, to maintain the accounting treatment and
original text of the IFRS unless there is a significant public
sector issue which warrants a departure. The IPSASBs goal is to
serve the public interest by developing high quality accounting
standards for use by public sector entities around the world in the
preparation of general purpose financial statements. This will
enhance the quality and transparency of public sector financial
reporting and strengthen public confidence in public sector
financial management. In pursuit of this objective, the IPSASB
supports the convergence of international and national public
sector accounting standards and the convergence of accounting and
statistical bases of financial reporting where appropriate. A
number of countries have transformed their accounting systems to
accrual accounting based on IPSAS. Several other countries have
adopted the Cash Basis IPSAS as a first step to future full accrual
accounting based on the IPSAS. International Public Sector
Accounting Standards
19. 19 There are 31 standards on the accrual basis of
accounting and one standard on the cash basis of accounting
(source: IPSAS Handbook published). When the accrual basis of
accounting underlies the preparation of the financial statements,
the financial statements will include: the statement of financial
position (IPSAS 1), the statement of financial performance (IPSAS
1), the cash flow statement (IPSAS 2), the statement of changes in
net assets/equity (IPSAS 1), the notes to the financial statements,
or annex (IPSAS 1). When the cash basis of accounting underlies the
preparation of the financial statements, the primary financial
statement is the statement of cash receipts and payments.
International Public Sector Accounting Standards
20. 20 The illiterate of the 21st century will not be those who
cannot read or write but those who cannot learn, unlearn and
relearn. ALVIN TOFFLER Quotes
21. Forensic Accounting Forensic accounting has been defined as
"accounting analysis that can uncover possible fraud that is
suitable for presentation in court. Such analysis will form the
basis for discussion, debate, and dispute resolution." Forensic
accounting, sometimes referred to as investigative accounting, is a
unique career field that combines accounting with information
technology. A Forensic Accountant uses his knowledge of accounting,
law, investigative auditing and criminology to uncover fraud, find
evidence and present such evidence in court if required to.
According to Oyedokun (2013), Forensic Accounting is a Scientific
Accounting method of uncovering, resolving, analyzing and
presenting fraud matters in a manner that is acceptable in the
court of law 21
22. Why is forensic accounting so popular now? According to
some experts, this increased interest is because of the struggling
stock market and lack of investor confidence which has forced many
organizations to take a long, hard look at their financial
statements. A sluggish economy with its attendant problems might
also be an incentive to commit fraudulent acts, thus requiring the
services of an expert. The increase in white collar crime and the
difficulties faced by law enforcement agencies in uncovering fraud
have also contributed to the growth of the profession. Many
accounting firms believe that the market is sufficiently large to
support an independent unit devoted strictly to forensic
accounting. Whatever the reasoning may be, more and more forensic
accountants are being called upon to use their investigative skills
to seek out irregularities in their companies financial statements
22
23. 23
24. Who needs Forensic Accountants? Forensic Accountants work
in most major accounting firms and are needed for investigating
mergers and acquisitions, and in tax investigations, economic crime
investigations, all kinds of civil litigation support, specialized
audits, and even in terrorist investigations. Forensic Accountants
work throughout the business world, in public accounting,
corporations, and in all branches of government (from the EFCC,
ICPC, SSS, FBI and CIA to the offices of the local authorities).
Forensic Accounting firms are everywhere., even Nigeria Police need
these new bread of Accountants 24
25. A forensic accountant uses sophisticated computer programs
to analyze financial data and find evidence that would be legally
valid during a court proceeding. A forensic accountant is a
specialized accountant who performs investigative accounting as
well as litigation support. Those in the forensic accounting field
generally use both accounting and investigating skills to interpret
financial evidence and are often called upon to analyze and present
this evidence to others in a clear manner. For example, they may be
called upon as expert witnesses in a court of law or to provide
documented proof of financial misdeeds. A forensic accountant can
become involved in a wide variety of investigations among many
different industries.25 Forensic Accountants
26. Forensic accountants are often asked to review financial
records for mergers and acquisitions. They may also serve as
advisers to a corporations audit committee or work to resolve
shareholder disputes within a company. Objective verification is
the primary goal of forensic accounting. For this reason, many
forensic accounting professionals are asked to testify in court
cases as expert witnesses for either the prosecution or the
defense. Forensic accountants can work in both civil and criminal
court cases. In a civil case, a forensic accounting professional
may be asked to calculate economic damages that occurred as the
result of a breach of contract or provide insight into a case based
on a claim of professional negligence. In a criminal case, a
forensic accountant may be asked to present evidence of insurance
fraud, identity theft, money laundering, terrorist financing,
embezzlement, price fixing, stock market manipulation, or other
related offences. 26 Forensic Accountants cont
27. To be successful as a forensic accounting professional, you
must be detail oriented, persistent, ambitious, and highly
organized. Forensic accounting also requires a great deal of
creativity, since you must often explain complex financial concepts
to an audience that lacks basic accounting knowledge. Several
well-known case investigations around the world have involved
forensic accounting. The famous American gangster, Al Capone, was
arrested and successfully prosecuted in 1931 because a forensic
accountant was able to unearth his tax crimes. In another example,
it took 14 years for accountants to investigate the billion-dollar
embezzlement case of European publisher Robert Maxwell before
finally solving the financial puzzle in 1991. Additionally, after
the September 11 terrorist attack on the United States in 2001,
forensic accountants were hired by the CIA and the FBI to track
terrorist movement worldwide. These accountants are often able to
follow a criminal's money trail which can help lead to a subsequent
arrest. 27 Forensic Accountants cont
28. Forensic Accountants and the Vexed Problem of Corporate
World According to Owojori, A. A & T. O. Asaolu (2009), the
following are the Role of Forensic Accounting in Solving the Vexed
Problem of Corporate World: 1. Giving preliminary advice as an
initial appraisal of the pleading and evidence available at the
start of proceedings. 2. Identifying the key documents which should
be made available as evidence. This is important when the forensic
accountant is acting for the defense and lawyers are preparing
lists of documents to tender in court. 3. Preparing a detailed
balanced report on quantum of evidence, written in a language
readily understood by a non-accountant and dealing with all issue,
irrespective of whether o not they are favourable to the client. 4.
Reviewing expert accounting reports submitted by the other party
which may have impact on the quantum of evidence and advising
lawyers on these reports. 5. Briefing legal counsels on the
financial and accounting aspects of the case during pre-trial
preparation. 6. The other plane of the forensic accountant can
initiate measure for introduction of environment accounting to
highlight the damage done to the environment by the possible
recoupment of such damages or replenishment of lost properties
through environmental management continually. 28
29. 29
30. 30 Several organizations support and promote the practice
of forensic accounting. These include: The Institute of Chartered
Accountants of Nigeria (ICAN), The Association of Certified Fraud
Examiners (ACFE), The American College of Forensic Examiners
International (ACFEI), Institute of Certified Forensic Accountants
(ICFA) Institute of Certified Forensic Investigators International
(IICFIP) The Association of Certified Fraud Specialists (ACFS) and
The American Institute of Certified Public Accountants (AICPA).
Other resources include the Forensic Accounting Society of North
America, the National Association of Certified Valuation Analysts
and National Litigation Support Services Association. Many of these
organizations offer credentials to those who meet their rigorous
standards. How to become a forensic accountant
31. 31 Quotes "... the reason why we are where we are now is
break in value... - Prof. Yemi Osinbajo (SAN)
32. 32 Environmental accounting is a subset of accounting
proper, its target being to incorporate both economic and
environmental information. It can be conducted at the corporate
level or at the level of a national economy through the National
Accounts of Countries (among other things, the National Accounts
produce the estimates of Gross Domestic Product otherwise known as
GDP). Environmental accounting is a field that identifies resource
use, measures and communicates costs of a companys or national
economic impact on the environment. Costs include costs to clean up
or remediate contaminated sites, environmental fines, penalties and
taxes, purchase of pollution prevention technologies and waste
management costs. An environmental accounting system consists of
environmentally differentiated conventional accounting and
ecological accounting. Environmentally differentiated accounting
measures effects of the natural environment on a company in
monetary terms. Ecological accounting measures the influence a
company has on the environment, but in physical measurements.
(Source: Wikipedia) Environmental accounting
33. 33 Why environmental Accounting? There are several
advantages environmental accounting brings to business; notably,
the complete costs, including environmental remediation and long
term environmental consequences and externalities can be quantified
and addressed. Environmental Accounting
34. 34 Environmental audit is a general term that can reflect
various types of evaluations intended to identify environmental
compliance and management system implementation gaps, along with
related corrective actions. In this way they perform an analogous
(similar) function to financial audits. There are generally two
different types of environmental audits: i. compliance audits, and
Ii. management systems audits. Environmental Audit
35. 35 Social accounting (also known as social accounting and
auditing, social and environmental accounting, corporate social
reporting, corporate social responsibility reporting, non-financial
reporting or accounting) is the process of communicating the social
and environmental effects of organizations' economic actions to
particular interest groups within society and to society at large.
Social accounting is commonly used in the context of business, or
corporate social responsibility (CSR), although any organisation,
including NGOs, charities, and government agencies may engage in
social accounting. Social Accounting can also be used in
conjunction with Community-Based Monitoring (CBM). Social
accounting emphasises the notion of corporate accountability. D.
Crowther defines social accounting in this sense as "an approach to
reporting a firms activities which stresses the need for the
identification of socially relevant behaviour, the determination of
those to whom the company is accountable for its social performance
and the development of appropriate measures and reporting
techniques. (wikipedia.com) Social Accounting & Audit
36. International Auditing According to Nobes C. and Parker R.
(2008, p 482-483), International aspect of Auditing refers to the
harmonization of Auditing Standards and Rules across Countries as
well as referring to the practice of Auditing, based on one or more
set of Auditing rules, of the financial information prepared by
Multi-National Corporations. .the internationalization of auditing
started when Multinational enterprises began preparing consolidated
financial statements (Nobes C. and Parker R. 2008, p 483, para 3).
36
37. Factors contributing to International Auditing The
following among others are the factors contributing to the
internationalization of Auditing: The emergence of multinational
enterprise; The increasing internationalization of capital market;
The growth of international accounting firms, with common
approaches to audit methodology, training and quality review; The
convergence around common international frameworks for accounting
and audit 37
38. International Audit Process The followings are major 4 main
stages of an audit process: Acceptance and defining the terms of
engagement Planning, including assessment of audit risk and
materiality Gathering audit evidence; and Reporting 38
39. International Accounting & Auditing High quality
financial reporting contributes to promoting private sector growth
and reducing volatility, through: (a) strengthening countries
financial architecture and reducing the risk of financial market
crises, together with their associated negative economic impacts;
(b) contributing to foreign direct and portfolio investment; (c)
helping to mobilize domestic savings; (d) facilitating the access
of smaller-scale corporate borrowers to credit from the formal
financial sector by lowering the barrier of high information and
borrowing costs; (e) allowing investors to evaluate corporate
prospects and make informed investment and voting decisions,
resulting in a lower cost of capital and a better allocation of
resources; and (f) facilitating integration into global financial
and capital markets. Financial reporting is also a building block
of a market-based monitoring of companies, which allows
shareholders and the public at large to assess management
performance, thus influencing its behavior. (Rick S. HAYES, Arnold
SCHILDER, Roger Dassen & Philip Wallage, 2013)
40. International Auditing is the heart of International
Accountancy Practices. The necessity to go global in International
Financial Reporting calls for the globalization of Audit and
Auditing Practices. High quality financial reporting will be aided
with International Standards on Auditing. The general adoption of
International Accounting Standards (IAS)/International Financial
Reporting Standards (IFRS) enhances shareholding and the publics
ability to assess the extent to which public companies are creating
or eroding value. High quality financial reporting will contributes
to improving the assessment and collection of taxes on corporate
profits. Countries currently have fundamentally different
approaches to the relationship between accounting and taxation. The
greater the level of dependency, the greater the importance of
high-quality financial statements for the assessment and collection
of taxes on corporate profits. International Accounting &
Auditing
41. International Auditing and Assurance Standards Board
(IAASB) The International Auditing and Assurance Standards Board
(IAASB) functions as an independent standard setting body under the
auspices of the International Federation of Accountants (IFAC). The
IAASB works to establish high quality auditing, assurance, quality
control and related services standards and to improve the
uniformity of practice by professional accountants throughout the
world, thereby strengthening public confidence in the global
auditing profession and serving the public interest. Until 2002,
the IAASB was known as the International Auditing Practices
Committee (IAPC).
42. 42 Quotes "... Value are essential ingredient in National
development..." Dr Ezekwesili (Madam Due Process)
43. 43 Auditors can be classified into the following
categories: External auditor/ Statutory auditors Internal auditors
Consultant auditors Quality auditors What about Forensic auditors?
Auditors
44. Wednesday, February 18, 2015 44 Internal Auditing is an
independent, objective assurance and consulting activity designed
to add value and improve an organization's operations. It helps an
organization accomplish its objectives by bringing a systematic,
disciplined approach to evaluate and improve the effectiveness of
risk management, control, and governance processes. Managers are
responsible for designing control processes that provide reasonable
assurance for the following business objectives: Effective and
efficient operations Compliance with laws and regulations Reliable
financial reporting Internal auditors evaluate how well the control
processes designed by managers function, and therefore the extent
to which managers can have reasonable assurance business objectives
will be realized. Because of their expertise and thorough knowledge
of operations, internal auditors often fulfill a consulting role to
top management. Internal Auditing
45. 45
46. 46 Internal Auditing is an independent appraisal function
established within an organization to examine and evaluate its
activities as a service to the organization. The objective of
internal auditing is to assist members of the organization in the
effective discharge of their responsibilities. To this end,
internal auditing furnishes them with analyses, appraisals,
recommendations, counsel, and information concerning the activities
reviewed. The audit objective includes promoting effective control
at reasonable cost. The members of the organization assisted by
internal auditing include those in management and the board of
directors. Objective of Internal Auditing
47. Wednesday, February 18, 2015 47 If internal auditors are
only the second line of defense against the occurrence of fraud in
an organization, what is the first line of defense? The answer is
clear: Management is preeminently responsible for fraud deterrence
in two respects. First , through the example it sets the tone at
the top- management is first to deter and defend against corporate
wrongdoing of all kinds. Second, Management is responsible for the
system of internal controls Internal Audit: The Second Line of
Defense
48. 48 Green Washing: this is refers to the techniques by which
companies engages in antics and practises that do not reflect best
practises in the environment they find themselves. When companies
tries to convince people that they are doing something which is
good for the environment by being involved in small,
environmentally friendly initiatives, especially as a way of hiding
their involvement in activities which are damaging to the
environment. CSR/CS: Corporate Social Responsibility has become
subsumed by Corporate Sustainability issues which is a broader term
in describing the issues the firm is confronted in todays world. By
Corporate sustainability, we mean a business approach that creates
long-term consumer and employee value by creating a "green"
strategy aimed toward the natural environment and taking into
consideration every dimension of how a business operates in the
social, cultural, and economic environment. It also formulates
strategies to build a company that fosters longevity through
transparency and proper employee development. In other words, it
involves processes set up to ensure the adoption of a set of
ethical codes that serve as beacons in ensuring that the
environment is well catered for and business operation adequately
addresses the concerns of other stakeholders other than the
Investors/ owners of the business. Green Washing, CSR &
Taxation
49. 49 Tax: a tax is a charge imposed through the
instrumentality of the state with a view to establishing and
funding same for the common good and benefit of all therefrom.
Further explained, it is a compulsory contribution to the support
of government levied on persons, property, income, commodities,
transaction and so on. It can also be described as money to be paid
by people or businesses to a government for public purposes. It is
a payment in return for which no direct and specific quid pro quo
or benefit is rendered to the payer. In all of these definitions,
certain features underline and further elucidates the nature of a
tax. Green Washing, CSR & Taxation
50. 50 These features include: A Charge/payment Benefit(s) to
be derived is not directly ascribable to payer It is paid
to/received by government It is mandatory It is a creation through
the legal instrumentality of law In dispensing with its Corporate
responsibility, the firm sees itself as giving back to the
community they have taken so much from and have also impacted
positively and/ or otherwise during operations. It is the act of
demonstrating values of honesty, responsibility and equality as
well as show an ongoing concern for and contribution to the
well-being of the communities in which they operate. In other
words, organisations should be good corporate citizens. Green
Washing, CSR & Taxation
51. 51 A lot of persons and organisations have gotten it wrong
when they enter the economic and accounting argument that they do
not owe the government through the tax man a penny more than they
have already paid. Indeed, the law allows the firm to arrange its
affairs, within provisions allowable under the law, to pay over to
government just what is due same, however the same firm sometimes
finds itself walking the thin line between tax avoidance as
mentioned here and tax evasion which, simply put, amounts to
breaking the law. It therefore comes as little surprise to find a
discourse such as this relating one misleading aspects of
operations a company could find itself with another capable of
landing the firm in hot waters with the law using the veil of
Corporate Sustainability. Tax evasion as this paper has stated is
the process of arranging the affairs of the firm in such a manner
as to conceal and ultimately fail to pay over taxes due to
government. It is an act in contravention of the law whereby a
person who derives a taxable income either pays no tax or pay less
tax than he would otherwise be bound to pay. Tax evasion includes
the failure to make a return of taxable income or the failure to
disclose in a return the true amount of income derived. Tax
Criminality & Green Washing
52. 52 Environmental taxes are compulsory, unrequited payment
to general government levied on tax bases deemed to be of
particular environmental relevance e.g. i. energy products, Ii.
motor vehicles, Ii. waste, emissions, natural resources.
Environmental Taxes
53. 53 The sovereign debt crisis has illustrated the dire
consequences of insufficient transparency and accountability of
governments and poor public finance management and reporting.
Governments are not risk-free and the failure of fiscal management
in the public sector has an economic impact that will far exceed
the impact of losses incurred by corporate failures. This
jeopardizes both the interests of the public as well as investors.
Today, many key decision-makers, politicians, and public finance
management leaders are taking the key steps toward meaningful
reform, including the adoption and implementation of accrual
accounting and International Public Sector Accounting Standards
(IPSASs). There has been a concerted convergence effort between the
Generally Accepted Accounting Principles (GAAP) and the
International Financial Reporting Standards (IFRS) in order to
avoid conflict and confusion, promote simplicity, streamlining,
consistency and transparency, and avoid any future financial crises
or meltdowns. Despite the research-indicated evidence of a higher
accounting quality being experienced by firms that either apply the
IFRS standards or have switched to them from the GAAP, the
convergence process has not proven to be an easy task, mostly
because of the differences in approach between the two accounting
bodies. Conclusion
54. 54 Recently, the number of reported fraudulent cases,
especially in government agencies and banks has continued to grow
with low rate in the number of successful prosecution. According to
information gathered from law enforcement and prosecuting agencies,
the low rate of successful prosecution and conviction of fraudulent
cases is partly attributed to lack of necessary skills and
knowledge on the part of some fraud investigators and prosecutors
in providing suitable evidence to support prosecution. This is
where Forensic Accountants and Fraud Examiners come in. Forensic
accountants are currently in great demand, with the public need for
honesty, fairness and transparency in reporting increasing
exponentially. These Forensic Accountants and Fraud Examiners uses
accounting, finance, law and investigative skills to identify,
interpret, communicate and prevent fraud. As more and more
companies look for Forensic Accountants & Fraud Examiners, and
professional organizations offer certifications in the area, it is
becoming evident that forensic accounting would emerge as one of
the hottest jobs in Nigeria within the next few years.
Conclusion
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