The much-repeated “Out of every crisis, there is an opportunity” seems to have become an accepted concept for business and governance across the world. Crisis brings an opportunity to modify or totally change systems; solutions; and influence. It challenges economic outlook; business directions; social trends; religious norms; and some rules and regulations related to those and other areas of importance.
Over the years small nations have been worried and have expressed the views that disparate geographical size and wealth have placed their development in jeopardy, and that they have to elect to “join a team” so as to assure their safety and development. This kind of political process often causes dependence leading to mendicancy that leads to low or no invention, and poverty.
It has been discussed under many headings in international agencies and world bodies controlled by developed countries. Some discussions have been titled: socialism; benevolent capitalism; exploitation; “developing and under-developed” nations; SIDS (Small Island Developing States); and failed nations.
Whatever the nomenclature the poor are still getting the shaft and the only minor relief comes when developed nations offer us assistance (read bribes) to consolidate our international policy with their own agenda.
However, over the years many SIDS have discovered that at certain times they are able to punch above their weight class. A good example is Jamaica’s ability to influence international athletics and music in ways that belie our economic status. So sometimes the tail wags the dog so as to provide opportunities to change things in our favour.
So the opinions of Jamaica, Kenya, Ethiopia, and Uganda, on the track and field Olympic agenda probably outweigh Russian, Chinese, and Canadian views, leaving only the USA in pole position. This is not true in every sport of the Olympic Games but it should alert us to other opportunities that have hidden themselves until exposed by crisis situations.
One of these areas that is not so obvious is the context of international regulations that we have failed to query or object to prior to our forced or blind acceptance; even as they place some damaging and costly compliance measures that may not suit our own corporate and national development.
Take for example the question of correspondent banking arrangements. Every citizen of the USA or Britain can open bank accounts in their own countries with little or no bureaucracy. This is a real threat for us in SIDS as even as we face the COVID-19 threat, people who need to get paid directly to their bank accounts cannot do so and venture out in the streets to collect and transact cash.
Sure I do acknowledge that this is an unwarranted penal position on money laundering and drug smuggling. However, I am certain that there are more wholesalers, retailers, street vendors, and consumers in those countries that probably exceed the total population of the Caribbean. So let us examine those rules again and face them down in a similar way to our actions that opposed Apartheid.
So, unlike the USA, we have adopted the metric systems in measurement and some standards and now must fulfil three standards and formulations in order to export goods, and incur the printing costs of labels in three or four sets of ingredients and languages.
The next consideration should be to take a close look at and discuss the regulations of the International Financial Standards (IFRS). Our main trading partners (USA and China) have not accepted these standards, and the USA sticks to GAAP (Generally Accepted Accounting Principles), and the Canadian GAAP differs with the USA’s.
So we have opted to almost “blindly accept” systems not invented here, and the net result has been our difficulty in adhering across the board for SMEs and even larger companies, to the timelines and scarcity of qualified personnel required to meet critical deadlines. It has greatly increased the demand for non-Jamaican accounting and auditing professionals involved with the certification of annual reports. This is sad.
It seems that the IFRS responds to its own bureaucracy, driven by a need to justify their own self-preservation by publishing more complicated standards; difficult (and dubious) methods of calculation; and restatement of prior year results. It is an arduous and non-beneficial process that does little to enhance the productive capacity of our relatively small collection of SIDS.
It has now become an additional cost for doing business imposed by an uncaring assailant from overseas. Many new regulations come about because the eternal quarterly results have been affected by malfeasance in large international corporations in the pursuit of falsely earned bonuses, share options, misrepresentation, or golden parachutes.
Do you remember the Enron debacle? Do you remember the oligopoly of accounting firms as the “big eight” became the “big four” following the Arthur Andersen scandal? Suddenly the “mild accountants” have taken their quietly unprecedented role as entrepreneurs who set their own rules and fees. They are now secretly feared and control the performance of huge corporation in a somewhat clandestine way.
But there is a possible opportunity presented by the economic and corporate devastation due to the COVID-19 pandemic. You may bet your last dollar on the expectation that accounting regulations will undergo quick review and implementation so as to assuage the massive corporations that will become insolvent.
So we may already be seeing the drafting of regulations to compensate and allow for the gradual depreciation of corona costs and timing of inclusion. The auditors and actuaries will have their pound of flesh. We may even have a new cadre of “viral accountants, actuaries, and lawyers”, and they will claim to be the “experts” and charge the appropriate fees. How will these affect the current calculation of IFRS 9 as it affects bad debt provisions?
The uncertainty of the current times requires that we look at any changes in IFRS rules and lodge strong objections when these are seen as inimical to our own and regional goals. It is at this time that preparation can see us in the forefront of a movement that calls for a rationalisation for SIDS, and remind them that beyond track and field, and music, there is a business mindset that says let us modify and simplify the economic and accounting apartheid by which we are disproportionally discriminated.