Response to the following problem:
The accounting profession in Africa has been infl uenced by the European colonial powers that formerly governed there. Most African nations gained independence in the mid-twentieth century. In Nigeria, Kenya, Ghana, and Zimbabwe (formerly under British rule), accounting is seen as a tool for fi nancial management and is oriented toward the needs of the enterprise. Tax authorities are concerned with account items that can be valued in diff erent ways, such as fi xed assets, inventories, and depreciation. In Togo, Rwanda, and Gambia (formerly ruled by France), accountancy is regulated by charts of accounts that standardize fi nancial transactions and annual fi nancial statements. In Angola, Cape Verde, and São Tomé and Principe (formerly ruled by Portugal), the accounting system also is based on charts of accounts that provide rules and regulations for companies. There are no professional accounting organizations in many African countries. In the expanding economies of many developing African countries, the belief is that it is important to have wellqualifi ed and experienced accountants and a sound accounting framework to sustain economic growth.
Critical Thinking:
1. What should an investor consider when comparing financial statements of companies in Kenya and Gambia?
2. What would be the advantages of having a professional accounting organization in a country that does not currently have one?