The United States is less than 250 years old and we certainly did not form this country with the know-how of the English colonists alone. In taking on improving today’s third world countries, specifically those in Africa, so many avenues are available that people have taken and are currently pursuing. Some of these include donating clothes, shoes and school supplies. Others involve services such as medical treatment or installing taps in wells for clean water. There are even microloan websites set up to allow outsiders the opportunity to grant loans to micro-businesses in lesser developed areas of the world. In studying these efforts, I began to think about the often quoted line from Anne Isabella Ritchie’s Mrs. Dymond (2008), “…if you give a man a fish he is hungry again in an hour; if you teach him to catch a fish you do him a good turn.”
This does not discount the efforts provided by the myriad of charities doing amazing work for these communities. It would indeed be difficult to get to work with a severe case of the measles, no shoes, and having bathed in bacteria-infested water. I would also add having not eaten for the last twenty-four hours. However, the merit of these will bring people to a point where they can begin to help themselves. It is that point acutely where education comes in. The World Bank president, Jim Yong Kim, encapsulated more on this idea,
It is imperative not just to lift people out of extreme poverty; it is also important to make sure that, in the long run, they do not get stuck just above the extreme poverty line due to a lack of opportunities that might impede progress toward better livelihoods. (Gabriel, 2014)
In this country, entrepreneurs and start-ups are told ad nauseam that they need to put in the hours, self-invest, and “grind” their way to success because no one is going to give it to them. We start with basic human needs, however, in a system that is not overrun with corruption and greed. We don’t start the race a marathon-distance behind our competition. Overseas, we aim to donate the supplies and services needed to support people at a sustainable level where they can pick themselves up and work toward a better future. Where does the education begin then?
The main points that the United Nations Educational, Scientific and Cultural Organization [UNESCO] outline for education goals are early childhood care and education, youth and adult skills, adult literacy and the issue of quality. This is part of their Big Push education initiative, which despite making enormous strides, is falling short in these four areas (UNESCO, 2012). This is where my education project’s main focus will reside, specifically childhood education.
The accounting concepts involved in these goals come in multiple forms. Accounting in education programs will need financial reporting and organizational architecture to begin. As a foundation to both of these, organizational integrity will be incorporated into all of the training. Starting with children’s education does not skip over the adult education field entirely – it is simply a matter of instituting education standards first with an age group that is already expected to attend school. In later stages of the project, adult skill acquisition is a necessity. Further, working first with children to instill educational principles, including the need for complete literacy, critical thinking and goal setting, will provide the newest generations with a set of values they will raise their children with and so on. It is similar to the idea in the United States that parents have adopted of strongly encouraging, albeit for some it is all but forcing, their children to attend college.
Accounting in the Education System
This project is in its extremely early stages, so application of any accounting concepts are simply that: concepts. Despite the internet’s vast knowledge base, one of the biggest roadblocks is the lack information on the accounting standards at a local level for these countries. Even on a larger scale, a national budget for example, is considered uncertain for some countries ravaged by corruption and government turnover.
Looking from a concept perspective without application, the first place our project will begin is Cameroon. Much of the feedback from interviews with Cameroonians is that they are truly tired of outsiders (non-Africans) bringing in solutions that serve only one purpose: the donator gets a tax deduction. This is not to say they necessarily know what it is they do need that will work; simply that it is no longer the thought that counts for them.
Accounting is a basic tenet that can be brought in from both the top and the bottom of these countries. From the bottom, schools who operate budgets will want to utilize the same resources in a more effective way. As a wrench manufacturing manager aims to reduce his raw material cost, so a school manager aims to reduce her school supplies and salary costs. From the top, weaker governments improving upon anti-corruption practices and shifting ruling parties will need standards such as the International Financial Reporting Standards [IFRS] to guide them in ethical and sensible accounting practices. These least developed countries will need the support of foreign entities, whether they be a country, an organization or an MBA program project; the goal is to guide the support in the most economically-sustainable way possible.
The management of inventory along with accruals and deferrals will be progressive groundwork for education assistance. Working with specific individuals in the government’s department of education, we can find the gaps in training that may be leading to unsustainable inventories or loss of funds due to mismanaged or poorly accounted for government allowances. The United States faces the often lamented subject of teacher salaries and teacher-provided supplies; it is difficult to grasp what results can be expected of a country working with half of our budget, or even one tenth of it.
Remote areas of the country suffer from a lack of readily available supplies. This will greatly affect the accounting methods used. For instance, knowing a set of books will need to be ordered for a one-year period can be depreciated accordingly; the same set of books estimated to last a three- to five-year period will need to be depreciated differently. These values across a region of schools and across a longer stretch of time will give different results to the sustainability of the schools’ operations when we look at the bottom line.
As accounting is often referred to as the language of business, the standard of accounting usage across every level of these countries and the programs that are installed will need to be timely and reliable. Dr. Dritan Fino (n.d.), current director in the Ministry of Finance in Albania, points out in an assessment on implementing the IFRS into developing countries that the difficulty of developing countries to produce effective budgets and measure a company’s efficiency burdens their ability to grow. If investors and creditors cannot rely on the financial reports of these businesses, economic development is suppressed. General accounting principles in every facet can serve to improve growth. The need for transparency in an organization deals greatly with its financial reporting.
The credibility with which an enterprise operates can improve when the accounting standards it uses are both highly dependable and well-suited to the enterprise. Well-suited as a concept applies to separate countries that may have different goals in mind for financial reporting. Some countries are more communal than others; some countries are less based in small businesses and are more reliant on natural resources such as oil and diamonds. The well-suited accounting standards will make it easier to measure success, development, and growth in the economy.
Utility is a key idea for the application of national accounting standards. Any single country will need to adapt the accounting standards they use to suit their specific needs. Moving down to the school level, there will be a lot more players in the game. This brings about agency theory and differing utility functions.
Bringing everyone on board to operate in the exact same method would be a futile effort. The different links in the chain will each need to find their own reason to participate. A basic building block of this entire project is incentivizing parents to send children to school. Just the same, when each employee of the education system is incentivized to improve the children’s learning, growth can begin. As a counterpoint, this also incentivizes the teachers and employees to falsify whatever measures of learning are being reported. Showing better grades and improved literacy test scores can increase budgets and thus encourage fabrication of heightened reporting.
To mitigate this, specific measures can be the focus of a teacher or employees that do not necessarily promote wrong-doing. The balanced scorecard is one such idea. The balanced scorecard was created to promote non-financial measures alongside financial ones in a limited scoring system. Underscoring this with training on national economic development, rather the big picture, is not to be ignored.
Many successful organizations in the United States often cite investment in employee empowerment and company culture as being top rated methods to improving business (Braswell, 2014; Moreland, 2011; Stoller, 2005; Zimmerman, 2009). This somewhat parallels the idea of planning an outing to the park: hope for sunshine, but prepare for rain. Invest in the employees but put in measures to account for wrong-doing. If teachers and employees are given the benefit of the doubt, all is not lost with ignorant hope. Training and empowerment can supplement the balanced scorecard to ensure the incentives are producing the target results.
Corruption is the main crack in the organizational integrity of a nation’s financial structure. To assess how corruption can generate complete chaos, I turn to the symptoms and causes. These can categorically enumerate where my efforts are best used. Some of the causes cannot be remedied but only taken into account and mitigated against. At the international organization level, with large sums of cash, these particular causes can be tackled.
In numerous countries, such as in Nigeria, where the military used to run the country, the new electoral processes are being pressured by former military officials to place certain people in power (Somerville, 2016). Many of these countries lack substantial anti-corruption policies that are enforced in any way; this leads to countless made-up fees by local law enforcement for every activity that range from getting a driver’s license or passport to transporting goods into cities (Johnston, 2009; T., 2013).
As international organizations like World Bank and the International Monetary Fund deliver countless donations in the billions of dollars to these nations, there is an easy path to accept these funds instead of investing them in superior economic improvements (World Bank, 2014). Pocketing many of these funds instead of using them for further country development provides substandard improvements and returns the country to poverty in a vicious cycle (Essasy, 2015).
Focusing on oil and diamonds, these resources are abundant in many countries on the least developed countries list. Foreign investors are happy to pay whatever unethical fees necessary to get their hands on these resources. Unfortunately, this means that the corruptibility of the more developed countries is vastly contributing to the corruption of the least developed countries. When accounting is taught across generations and across countries, the financial reporting practices for national and international corporations tends to be combined into lump sums of revenues and expenses (Oil and Gas, n.d.). This makes it very difficult to determine where payoffs are going. These companies have their own internal practices to mask these very payoffs as well as the necessary coffers provided to those who are paid off. For instance, an oil company could not only pay a large bribe to a country’s leader, it could also provide an equity stake in which to hide that payoff.
The International Financial Reporting Standards provides an active and highly monitored standard that these countries can outright adopt. Convergence at their level may be highly ill-advised as the cost of bringing their current practices in line with the IFRS convergence requirements would grossly outweigh the benefits over an adoption of the standards. Dr. Dritan Fino (n.d.) notes that “Many developing countries have neither the economic and technological capacity nor the capability to develop their own accounting and reporting standards.” Furthermore, these countries would be operating in a system where accounting corruption is much easier to detect. As these governments would not be familiar with these standards, rather the complete opposite in some cases, third party auditing firms would be beneficial for both the development of the country as well as the credibility of the government.
If this project is to move forward, there are some very significant roadblocks still very active in these countries’ operations today. Piggybacking on the efforts of international organizations like World Bank and UNESCO will move this project along faster than starting from the absolute bottom. However, as seen in personal interviews, a major pitfall is solving apparent problems rather than actual problems. Accounting standards will be based heavily on the ethics of the people who operate and enforce them. Empowerment and the alignment of employee utility will help grow the entire system. From education growth, a country’s aging youth can take it upon themselves to develop more programs to stimulate other areas of growth such as business, agriculture and foreign investments.
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