Two financial experts from the National Housing Authority (NHA), Rufus G. Stevens and T. Emmanuel Gee, Sr., recently attended a two-day ‘MFDP 2018 SOEs Annual Financial Reporting and Renewal seminar in Buchanan City, Grand Bassa County.
The State Owned Enterprises (SOEs) Upgrading Workshop was sponsored by the UNDP for all senior financial staff and other senior managers of the Ministry of Finance and Development Planning (MFDP) and the various SOEs.
The first phase of the workshop began with the SOEs-Unit Director, Benedict Folly, who admonished Government Business Enterprises (GBEs) to be transparent in their reporting and consistent in their budget line spending.
Mr. Folly said GBEs must spend in line with their approved budget and if for any reason spending was done outside of the budget, that budget must be realigned and approved by the Board.
He also pleaded with SOEs to publish their financials as they are accountable to the public.
A representative of one of the key facilitators from Baker Tilly Liberia, an accounting firm, emphasized the need for all SOEs that meet the definition of GBE to use International Financial Reporting Standard (IFRS).
According to the International Public-Sector Accounting Standards Board (IPSASB) regulations, GBEs should apply the IFRSs issued by the IASB, as do private sector entities. Therefore, IPSASs do not apply to GBEs. IFRS applicable to SOEs essentially form the basis for developing accrual basis IPSASs.
According to the facilitator, a GBE within the meaning of IPSASs is an entity that has all of the following characteristics: It is an entity with the power to contract in its own name; it has been assigned the financial and operational authority to carry on a business; it sells goods and services, in the normal course of its business, to other entities at profit or full cost recovery; it is not reliant on continuing government funding to be a going concern (other than purchases of outputs at arm’s length) and it is controlled by a public-sector entity.
The facilitator stressed that on the basis of these characteristics, GBEs must show that within the meaning of IPSASs these entities operate on an economically sustainable basis, i.e., they must at least cover their costs or have the intention of generating a profit.
On the last day of the workshop, the participants broke themselves into working groups to identify issues, problems, challenges and solutions.
Many of the working groups highlighted “External Control” as a huge challenge to SOEs through political maneuvering. They believed that this has the tendency to divert the focus of managers from strategic goals setting for entity sustainability toward dancing by the political music in order to protect their jobs.
In finding a solution to the above problem, almost all of the participants recommended that senior management position must be on tenure basis.
At the end of the workshop, Mr. Folly admonished all SOEs to develop a strong business model if they want to be a going concern as subsidy from government may not be enough to drive growth.
He also asked all SOEs to think about preparing their financials according to International Financial Reporting Standards.