- Commonwealth factor
Overview: Accountancy and auditing and tax in the Commonwealth
The reporting of financial results is a compulsory element of company law throughout the Commonwealth. There is, therefore, an ever-present and wide demand for accountancy, audit and professional services. Equally there are many firms of varying size and capacity up to the task.
Accountancy and auditing services for most major companies around the Commonwealth is done in many cases by member firms of international accounting networks such as the big four and, in a number of cases, a few established local medium-sized firms. One needs no introduction to the big four – Ernst & Young, Deloitte, KPMG and PwC – all of whose earliest origins are in the Commonwealth specifically London, UK. Three of them are still headquartered there.
It is necessary to mention that the existence of such big international players in the accountancy field does not, however, discount the work of local SME firms who are well qualified and ready to deal with the scope of many professional tasks requiring great expertise and local knowledge. Such accountancy and audit firms are in reality the backbone of the profession in all countries.
The average tax rate on corporate profit for a Commonwealth country is 44% as opposed to rest of the world, 49%. Vanuatu, Maldives and Namibia have the lowest corporate profit tax rates, all below 10% (2010).
Reform of financial reporting standards in the Commonwealth
Although the processes of setting up and running a commercial enterprise vary from country to country in the Commonwealth, basic tenets and legal definitions are very similar stemming from related corporate laws, inherited during the British Colonial era and influenced by the common standardisation of professional qualifications in the Commonwealth. Reform of such laws to match the changing global environment has been a major activity of international financial institutions. Since the financial crises which affected Commonwealth member states Singapore and Malaysia of the 1990s, the IMF and the World Bank have been working on ensuring adequacy and consistency of financial reporting standards around the world in efforts to strengthen the international financial architecture. The IMF and the World Bank prepare and publish reports summarizing countries’ observance of prescribed standards. International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB) now form the ideals for financial reporting in most Commonwealth countries.
Commonwealth factor: Professional standards
The most commonly recognised accounting qualifications in the Commonwealth are Chartered Accountant (CA or ACA), Chartered Certified Accountant (ACCA), Chartered Management Accountant (ACMA) and International Accountant (AAIA). The Association of Chartered Certified Accountants (ACCA) standard is the most ubiquitous international qualification in the Commonwealth. Headquartered in London, ACCA is in fact the largest accountancy body in the world. Common standards that have been adopted by Commonwealth countries in terms of accountancy education make it easy for anyone with the above accounting qualifications – subject to immigration laws – eligible to work anywhere in the Commonwealth.