Auditing in Mozambique
A Brief History
The first auditing activities in Mozambique began with regulations setup by the Bank of Mozambique as operating requirements necessitated by the entrance of multinationals and non-governmental organizations in the early 1990s.
The trend in recent years has been extraordinary. The quality of financial reporting has steadily improved, which is similar to that enjoyed by a well-grounded legal framework. Together with greater controls established by the Bank of Mozambique, and as an obligation mandated by organizations such as the ISSM (Mozambique Institute for Insurance Sepervision) the need for audit services continues to grow in the country.
The popularity of audit services due to their intrinsic benefits have also permeated into the public sector with state-owned enterprises seeking these services.
However, the future of the audit profession in Mozambique awaits its most decisive moment which is expected to occur after the formation of the Association of Accountants and Auditors of Mozambique (OCAM). This body would be responsible for the representation and defense of the professional interests of its members and supervise all aspects of the profession.
The OCAM through its assessment and accreditation scheme validates the qualifications held by accountants and auditors across a common framework further enhancing the prestige of professionals in the industry today.
To this end, the OCAM will have to affirm itself as pillar of national and international trust. By 2020, the OCAM is expected to maintain an affiliation with the IFRS.
The Audit Market & Related Challenges
The Mozambican audit market is serviced by at least a dozen firms officially authorized by the OCAM to engage in audit activity. The largest share of the market is dominated by international firms, also referred elsewhere as "The Big Five" that are part of international networks of audit firms. These firms were the first to be authorized to carry on activities by the Ministry of Finance which at the time held a function to authorize the exercise of the profession before the creation of the OCAM.
One of the major challenges inherent in the exercise of the profession for other audit firms is the fact that there is a weak disclosure of audit services by the main users of these services, as well as the skepticism surrounding the engagement of a provider that is not part of "The Big Five".
However, small firms continue to make inroads into the sector as greater demands for transparency and integrity becomes a subject of considerable interest in Mozambique today.
In recent years we have noticed a growth in demand for audit services, by enterprises with foreign investment, partly because of the demands on the part of organizations such as the CPI and the Central Bank
In recent years we have noticed a growth in demand for audit services too by enterprises with foreign investment. This is partly because of the demands by organizations such as the CPI and the Central Bank.
Mozambique has not been shy of attracting investment in the oil and gas. The interest in the sectors continued unabated until the recent glut of commodities which negatively affected smaller businesses who themselves were providers of services.
It is expected however that this retreat will end in the coming years with the restoration of confidence in the world's markets.