Who are your auditors?
How to change the narrative about Nigerian service brands/What constitutes an ‘investment ready’ company?
Recently, I spoke at the HIVE global leaders conference in Abuja. I met a young woman seeking investment for her make up business. She asked me what she needed to do. One of the first questions I asked her; even before asking her about her business model was the standard of her financial records, her tax payments and whether her accounts were audited. She was confused by my question. So in this article, I will be exploring why you should have your accounts audited, how to choose your auditors and the myths surrounding Nigerian auditors.
Why get your accounts audited?
The main reason for you to audit your accounts as a small-medium size business is to demonstrate credibility to stakeholders, both internal and external, regarding the accuracy and reliability of financial information. Without the third party assurance provided by audits, lenders and investors will be wary of making loans and investments.
Audits provide an unbiased, objective examination of the financial statements of the company, including the selective verification of specific information such as inventory. So in my business, our auditors, painstakingly look through every single piece of medical equipment, all our air ambulance aircraft & every drug ampule assessing that everything we say we have exists in the quantity we claim it does.
The external verification that auditors provide gives the assurance that the accounts are free from material misstatements and can therefore be relied upon to be presenting true and fair view of the affairs of the company.
If you have skilled auditors, the will also offer you valuable insights about your company.
For example:
- A skilled auditor may be able to spot if any fraud/suspected fraud has transpired in your accounting department, this is particularly important in Nigeria
- You auditor may comment on the quality of your financial record keeping. My auditors: Olayinka Oyebode (http://olayinkaoyebolaandco.com/) felt as my company grew that I would need a more qualified in-house accountant that could process more complex financial information. My auditors not only suggested this to me, but provided me with the CV’s of several skilled accountants that they called reference & vouch for.
- Your auditors may offer some financial and process advice from your accounts receivable/ sales cycle issues to more efficient treasury management. If not, Nigerian banks will continue to chop your money! You can find out from them how to re-negotiate your COT and get higher interest rates, which bank will benefit you the most etc
Choosing your auditors/Myths surrounding Nigerian audits
I have a friend that is a billionaire (Naira o!!)and proudly announces to me that he gets his yearly audit done for N12,000 (About $40). His auditor; Baba Tobi ,can barely speak English, communicating mostly in our native language; Yoruba and the audit is finished in less than a hour. It is probably neither meticulous or detailed and I doubt would stand the scrutiny of an investor or bank.
The big four Vs the ‘little’ five
On the other end of the spectrum are the ‘big 4' global accounting firms Deloitte, KMPG, Pwc and EY. However, they have no offering for small to medium sized businesses. I have never had the boldness to ask how much they charge; but I hear the fees are well above $100,000. So I have classified all the people that advise me to get them to do my audits, at this my stage in life, as enemies of my progress!! Lol.
The ‘little 5’ accounting firms like SIAO and my audit firm Olayinka & Oyebode are of course, far more expensive than Baba Tobi. But offer their audit services at international standards. The cost of service is up to 30% less than the international ‘big four’ counterparts and their yearly growth rates indicate that they are quickly transitioning from ‘little’ five of Nigeria to the big 5 of Africa.
These Nigerian accounting firms are often crowded out of the larger multi-national/audit/consultancy work from large investors as they prefer to work with the larger global brands; but this should change.
Many companies as they expand, forget the Nigerian audit firms that worked diligently for them in their early days as soon as they can afford the ‘sexier’ companies.
The turnover of Indian Tata Consulting firm (2015) was US$17.57 billion, whilst renowned American global consulting firm Mc Kinsey & Co turned over just US$8.4 billion
This just reveals the potential held by service companies with origins in the developing world to deliver excellent, profitable consultancy services at a high enough standard to compete with much older established companies.
As my company continues to expand across Africa; I want to try to take Olayinka & Oyebode with me. I want us to grow as industry dominating pan-Africa brands together. Its this type of continues collaboration that will help to place more Nigerian companies and brands on the global stage.
ps: Sha when I am talking to foreign companies and they ask who my auditors are, it’s very difficult/long to start saying Olayinka & Oyebode. You know oyinbo….they will start saying ‘Ola…what?’, ‘now how to you spell ..yinka’ etc. So please if you can rebrand to a sexy name like SIAO will be easier for me to promote you :-)
Dr Ola Orekunrin is a doctor, trainee helicopter pilot and entrepreneur who founded the leading air ambulance firm in West/Central Africa; the Flying Doctors Nigeria, transferring patients across the Nigeria, Africa and the rest of the world by air ambulance
