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March 1, 2024 3:28

Latest update:January 3, 2023

Transparency and accountability in public companies

The Public Business Sector (SEP) encompasses public companies and companies in the public domain and, for ease, we designate them as public companies.

Pursuant to Law 11/13 of September 3, the Public Business Sector (SEP) covers public companies and companies in the public domain and, for ease, we call them public companies, given that they are covered by similar regimes, in particularly with regard to accountability.

 

Accountability is one of the fundamental duties of any Administration, and is certainly even more important when the State is the capital holder, since in addition to the fiduciary responsibility inherent in the management of any commercial company, it is necessary to recognize the increased responsibility that arises from the management of public goods. Perhaps that is why the legislator was concerned to include specific provisions related to accountability in said Law 11/13, highlighting in this context Article 17, which may not be the most obvious, but to which we attribute special relevance. Effectively, this article enshrines the requirement for public companies to adopt adequate internal control procedures to guarantee the reliability of accounts and other financial information, as well as to ensure the effectiveness and efficiency of operations.

 

According to the IGAPE website, the Angolan Public Business Sector comprises a universe of around 81 companies, with around 73 reports and accounts for the year ended December 31, 2020 having been published on this website. publications on the IGAPE website is relatively recent (2018) and consists of a healthy contribution of transparency for taxpayers and the market in general. In addition, making this information available allows professionals and academics to study matters related to the national public business sector, in particular matters related to the quality of the financial reporting of public companies. In this regard, it will be easy to see that there is an important path to take in improving the quality of financial reporting, first of all due to the very high number of reports that present reservations on the part of the external auditor, many of which have reservations that have in common the insufficiency of internal control procedures that guarantee the reliability of the accounts.

 

In this context, it is also important to point out the increased challenges that are anticipated with the future adoption of an accounting framework that is more demanding than the (outdated) General Accounting Plan, namely if we consider the framework of international financial reporting standards (IFRS ).

 

Since accountability is a matter of paramount importance, the lack of quality of the financial statements of a significant number of public companies should be a cause for concern, as it is, from the outset, an indicator of difficulties for the SEP, which should strive for accountability transparent and of high quality.

 

Thus, there is a path of improvement that needs to be undertaken, with emphasis being placed on the role of the Administrations of public companies in the first instance, which, as a management body, has the primary responsibility for ensuring the design and operation of accounting and internal control systems that are adequate, but also the important role of the Audit Committees, which have the obligation to supervise the management and issue an opinion on the accountability documents, among other attributions that the law confers on them.

 

* Article written by Oseias Casimiro, Senior Audit EY, Assurance Services

 

Summary

Ultimately, it will be up to those responsible for the respective departments to assess the Administrations they appoint and ensure that they are in a position to implement the necessary improvements.

 

Source: EY

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