With full appreciation that the Committee On Commissions, Statutory Authorities and State Enterprises (COSASE) is an accounting committee of the Parliament of Uganda, whose responsibility is to provide political audits of state bodies, I nevertheless highly recommend that each one of the members of COSASE, as part of their induction, should be required to go through Finance for Non-Finance Managers training. At the very least, that induction training should be focused on equipping members of parliament with the basic skills of reading and interpreting financial statements.
Take for example COSASE’s recent handling of the Uganda Airlines saga. Some find that it did not inspire a lot of confidence that the members of COSASE understood the importance of their role and therefore the need for them to have been strategic in their questioning of all those who were invited to the committee on the matter of Uganda Airlines. If COSASE, case in point, wanted to conclusively demonstrate incompetence, their line of questioning, for example, should have been to put all concerned to task to explain why they are not hiding such advice as:
“Uganda Airlines will stay in the loss position for the next 20 years until the structure of its balance sheet is addressed – the primary problem is that, rather than post the cost of aircraft acquisition as shareholder equity, that value continues to be reflected on one side of the balance sheet as assets and on the other as debt. There is no way you are going to escape an accounting loss with such a balance sheet and the long gestation period before routes break even.”Retired airline administrator, Fred Ochieng Obbo
It is difficult to know from what trended from the COSASE probe if the members of parliament thought competent the response to the above advice or not?
“According to Ms Bamuturaki, however, the contradiction will be resolved when the share capital of the company is revised upwards. The company was registered with a capital of 100 shares valued at Ush 2 million ($525) each, equivalent to Ush 200 million ($52,529). Total government investment is now in excess of Ush 1.6 trillion ($420 million) but it is not reflected as equity.”Source: The East African
Is this explanation satisfactory? Or was it rejected and corrective measures are part of the recommendation from COSASE. Why the need to wait until the share capital of the company is revised upwards? Why isn’t the total government investment reflected as equity? And what if it had been reflected as such, how would that have changed the balance sheet?
Irrespective of her paper academic qualifications and the manner in which she was appointed, does she know what she is talking about in terms of reading and interpreting financial reports or not? If she doesn’t and COSASE doesn’t as well, it like the blind leading the blind and that is not useful for the greater good of our country. And if it be the case that COSASE was financially literate and she not, then COSASE should have no qualms in recommending her dismissal on grounds of incompetence. But if the reverse is true that she is financially literate and COSASE isn’t then it was simply much ado about nothing.
Financial literacy – reading and interpreting financial reports is a prerequisite for chief executives of all government commissions, statutory authorities and state enterprises; ans as well as members of COSASE.
Featured photo @ Ibaraga Radio