Monday, May 20, 2024

Easy auditing


Tilahun Girma is a finance consultant at I Xcel Financial, Management and IT Consultation Company. I Xcel is a licensed company from Ethiopian Management Institute and works on consulting companies on financial and management issues, line up financial systems and also consult on International Financial Reporting Standard /IFRS/ system for organizations.
Tilahun has a long time experience on the banking sector and is a member of Accounting and Audit Board of Ethiopia and  ACCA. Capital talked to him about the implementation of International Financial Reporting Standards (IFRS) and other financial issues. Excerpts;

Capital: Can you please tell us about I Xcel?
Tilahun Girma: It has been three years since I Xcel has been founded using my personal license. In the last three years we have been doing different kinds of consulting services to companies in building up different kinds of finance systems and IFRS. I Xcel has been also giving different kinds of trainings on IFRS for the private sector by cooperating with the chambers of commerce’s. And recently we have developed a system that can support IFRS because one of the challenge companies are facing in applying the IFRS is how to facilitate the system. Therefore we have developed a software that can simplify the system of financial reporting using IFRS and Peachtree which is an accounting application for small and medium-sized businesses.

Capital: How do you see the use and practice of IFRS in Ethiopia?
Tilahun: IFRS in Ethiopia was officially adopted in 2014 through the enactment of proclamation and establishment of Ethiopian Audit Board. However in my assumption there are a lot of defects in applying the system. Starting from the beginning it lacks preparedness before the enactment of the proclamation.
One of the reasons is there is a lack of experienced and trained man power on the IFRS system and lack of technology. I don’t think there were more than 600 certificated accountants and the number of accountants specialized in IFRS is very low.
We have to teach our accountants the real IFRS system and at the same time we have to include it in our curriculum. Our students are still training by the old accounting system /general accounting system/ rather than the new system that the market needs.
Such kind of things should have been done before practicing the system directly. For example if you see the US they did not officially apply the system however they have included it in their education curriculum.
The other thing I notice is lack of technology. As a nation Ethiopia lacks reliable IT system suppliers that can support the financial sector. For example mostly companies uses the old Peachtree accounting application but then again most of them do not directly bought it from the source. They rather illegally cracked the system because it is expensive.
So at all there was no readiness in the technology and experience before the enactment of the proclamation.

Capital: What is your organization doing to close the wide gap?
Tilahun: We give trainings to the staff of different organizations on IFRS, but when they went back to their organizations they get to the old same system which is the Peachtree and this system is not compatible with the IFRS. Most organizations work their financial report on Microsoft Excel. So there is no system to exercise.
So to help this based on my experience I planned to develop a software that can support the practice of the system. In the last one year I was developing and testing the system to fill the gap that can coordinate with Peachtree system.
Our system will enable companies to do their financial report by Microsoft Excel using Peachtree. Then they can transfer it to IFRS standard by following simple steps.
Since I am a financial expert I hired IT experts so that I defined requirements based on my experience so that they can develop the software.
Currently our software has got the quality certificate from the Ministry of Innovation and Technology and about four companies have started to use it. Beside this system can help the experts what we trained.
It has been registered in the Ministry of Innovation and Technology and they gave us positive feedback including the Minister Abreham Belay. So currently to commercialize the system we are hiring and training experts.

Capital: What is the price for the product?
Tilahun: Such kinds of locally made technologies help to save foreign currency.
One of the things is when you install a system there is always a cost but it should not be higher than the benefit. Since we are an organization working for profit we supply it based on our cost. However we are trying to make it as affordable and available for organizations as possible. The software was developed considering small businesses.
I was planning to present it to the Accounting and Audit Board that controls over the financial report. It was better if the board have seen it to get support as well as to subsidize it to make it available for the mass. But currently our price is based on the capacity of the organization and data.
Also our plan is to sell it to accounting firms, there are more than 1,500 accounting firms and 130 auditors in the country.

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