INTRODUCTION

First, let me thank the organizers of this conference for inviting me to speak to you on this topic.

Business associations provide an important link not only amongst members, but also to other partners in the economic cycle of any country. Members of associations not only find strength in their unity, but also gain access to information and opportunities which they would not necessarily have on their own.

I have been asked to speak on the role of professional organizations. Apart from a few jokes, I am not qualified to talk of professional organizations other than my own. I will touch on the role of the trade and promotional organization, Fiji Australia Business Council. Maybe Rotary as well, but let me go on.

NEED FOR PRIVATE SECTOR AND GOVERNMENT CONSULTATION

Strong messages came out of this year's annual conferences, which I was involved with. The Fiji Institute of Accountants' 27th Annual Conference, held in September 1999 and attended by over 400 delegates, said in its communique and I quote, "There needs to be serious consultation between government and all sectors of the community." The Fiji Australia/Australia Fiji Joint Business Council meeting in October noted, and I again quote from the communique issued after the meeting, "... concerns amongst the business sector that despite government commitment to consult with the business community in the development of government policy, the process of consultation is not working."

The meeting reaffirmed the willingness of the councils to work positively with the government to create a strong private sector-led economy.

The message from the Joint Business Council seems more directly pointed than the Accountants' Conference. If Sir Geoffrey Henry recognized this as an issue from the Cook Islands government viewpoint, in your 8th Annual Conference last year here in Maui, it surely means that we in Fiji Islands and Cook Islands have a problem – there is no consultation in spite of commitments.

As an aside I will give you an example. There is a new Income Tax Bill in Fiji, which was read in the Fiji Parliament recently. This bill is largely based on the previous bill in 1998. The Fiji Institute of Accountants was given 48 hours to review and comment on this important major piece of legislation.

The 1998 bill was fortunately withdrawn. More than six months later, the Fiji Institute of Accountants received a response to its hastily prepared submission, which was heavily qualified.

The public was given 12 days to make submissions this time around. It is difficult to understand how one could call this consultation when the proposed legislation was approved by the Cabinet before it was presented to Parliament.

The objects and reasons for the bill state that the bill intended to consolidate all amendments, and make it simpler to centralize all tax legislation. We understood that the Fiji Cabinet was briefed on the bill and were assured that there were no new provisions introduced, and that it had the blessings of my Institute.

There are expletives I could express here which may not be appropriate at this forum so I will confine it to one that you will find a lot of in a cattle ranch! I can cite a number of other examples, which must lead one to conclude that there is mistrust between the government and private sector. At this point of time I should say that the views expressed here are my own and not those of any organization I belong to.

THE NATURE OF A PROFESSIONAL ORGANIZATION

Professions are characterized by four attributes:

• The work is skilled and specialized.

• There is a commitment to certain moral principles which go beyond the general duty of honesty, including confidentiality.

• There is a collective organization which regulates admission, seeks to uphold standards of the profession, and issues professional codes of conduct and ethics.

• There is status attached, which may be granted by Parliament like it is done in most of the island countries, or by common consent like it is done in Australia.

A professional organization has its primary duty to the profession and its members. The professional organization generally reacts to issues where it affects its members, the profession or the environment in which the members operate.

But members of the professional organization expect more from the organization. They expect the organization to provide it with leadership. The organization is expected to keep members informed on issues and any matters that would affect their livelihood or the way they work in addition to guidance on codes of behavior.

In the eyes of the public, a professional organization is seen to have the expertise of its profession and is in a privileged position. There is an expectation that the professional organization will look after the interest of the public if there is an issue within the ambit of their expertise that needs to be addressed. The public has a right to know, for example, that the new Income Tax Bill is adjusting figures in the 1974 Act to take into account the effects of inflation, and that the Bill has only adjusted the penalty clauses, not deductible allowances.

"If we can encourage others, we should encourage them. If we can give we should be generous. If we are leaders we should do our best. If we are good to others we should do it cheerfully." (Romans 12:8)

THE ACCOUNTING PROFESSION OF THE SOUTH PACIFIC

Some interesting statistics that I have been able to gather for some of the countries in the South Pacific:

Table 1: Registered Accountants in certain South Pacific Island countries

Notes

Some of the figures are estimates. Registered accountants are based on annual reports of accounting organizations, expect for Tonga which has been estimated. Australian figure is based on membership of the Australian Society of Certified Public Accountants and Institute of Chartered Accountants in Australia, and an estimate for other bodies such as National Association of Accountants. The Institute in PNG has some 469 members or 35% of its membership who are non-citizens, i.e. expatriate.

You may read whatever you like from these statistics, but the obvious one is the co-relationship between the wealth of a country and number of accountants per 1,000 of population.

THE ACCOUNTING PROFESSION IN FIJI

The accounting profession in Fiji is regulated under an Act of Parliament called Fiji Institute of Accountants Act. The Act provides the mechanism for registration, control and disciplinary procedures by the Institute.

Fiji Institute of Accountants at the end of last year had 585 members, of which 80 members or 14% were overseas residents. Of the 585 members, 345 are full members entitled to call themselves Chartered Accountants. The balance consists of provisional members who have to complete their practical experience (68), technicians (121), students and other categories (51).

The Institute is managed by a Council consisting of nine elected chartered accountants. The Council meets each month.

There are some 16 committees of the Council, including two prescribed by the Act: Investigation Committee and Disciplinary Committee. The organization chart of the Institute is depicted below. I will not bore you with the activities of all the committees. The committees of interest to us at this forum are:

What started off as the Annual Accounting Technical Conference in the 1970's developed into the Annual Business Congress in the 80's, and is now in the premier business/economic congress for the entire private and public sector in Fiji. It attracts over 400 delegates each year, and less than 1/3 are members of the Institute. The other 2/3 are government officials including ministers, politicians, senior executives and managers, university lecturers, members of other professions, representatives from business organizations, representatives of accounting bodies in Australia, New Zealand and other island countries. Recently, we have seen increased interest from the law profession. We would like to see greater participation from employee representatives, and we are working on this.

The Congress has become a forum where the private and public sector can air their views on issues of current national issues under a theme which is carefully selected after consultation, and in an atmosphere which encourages frankness, constructive criticism, and suggestions on the way to improve our lot in Fiji. It culminates in a communique, which is endorsed by all delegates and forwarded to all stakeholders in Fiji. This is not the end of it – the issues identified during the proceedings and summarised in the communique are followed up.

The themes selected for our Congress over the last few years have been:

1997 "Engineering Fiji – the Challenge"

1998 "Embracing Change Now for Century 21"

1999 "Financing Fiji's Future"

These, ladies and gentlemen, are not accounting-related themes and I assure you that given format of sessions, the caliber of speakers, commentators and panelists both local and overseas, have kept the delegates informed and participating actively throughout. What I mean is that not too many people have nodded off.

Representatives of overseas sister bodies have commended us for organizing the "mini National Economic Forum." In absence of the previous regular Economic Forums, which used to be organized by the Ministry of National Planning, the Congress has become the National Economic Forum. This year we were honoured to have the Prime Minister of Fiji, the Honourable Mahendra Pal Chandhry as our keynote speaker. The Annual Congress is the accounting profession's contribution to Fiji. Fiji Institute of Accountants is committed to continue with its Annual Congress, and planning is already underway for the year 2000 Congress.

On a personal note, I have been involved with Institute's Congress over the past 25 years as chairman member, including in 1999. There is a lot of hard work involved particularly with all other commitments and I assure you given the chance I will do it again.

Law Review Committee

The task of the Law Review Committee is to review and prepare submissions on proposed new pieces of legislation or amendments to existing legislation for consideration by the government. As mentioned earlier we have an issue regarding the consultative process and the Committee normally works under extreme pressure.

The Institute has been involved with the Income Tax Bill since last year and made submissions in October. At the time of writing this paper we do not know whether the bill was passed in Parliament or whether our submission for deferment was successful.

Apart from issues mentioned earlier we are concerned that certain provisions of the bill will take away incentives for investing in Fiji. In some cases, the bill discriminates against expatriates and non-residents. On the other hand, the government reaffirms its policy of encouraging foreign trade and investments. I hope our suggestions to the government are taken in the spirit in which they are made – for the economic growth of the Fiji Islands.

There are a number of other proposed legislations that the institute has made representations including:

• Proposed new amendments being considered for the Audit Act which can only be classified as Draconian measures not only from the professions point of view but also in the principles of free enterprise.

• Amendments to the Fiji Trade and Investment Board Act.

The government has invited the Institute along with other professional and business associations to make submissions on matters that the private sector would like to see addressed in the Annual Government Budget within certain government policy guidelines.

The previous government adopted a number of suggestions to create a better environment for investors. Unfortunately, while the government's intentions to introduce these measures have been announced, there has been no follow up by the authorities. We are told that the bureaucrats do not think that private sector expects the government to put these in place.

The annual budget, the first for the new government of the Peoples Coalition will be handed down on November 5.

If there is a criticism of the accounting profession, it is that the profession does not come out publicly with its views. Most of the time the profession is wary of potential conflicts between national interest and client interest. These may be conflicts for individual members, but acting collectively as a professional body the professional organization should and will rise above the individual members' concern and recognize that national interest takes precedence in many issues.

ISSUES FACING THE PROFESSION

Globalization

Almost all accounting bodies in the world are members of International Federation of Accountants (IFAC). The International Accounting Standards Committee of IFAC has been issuing Standards on Accounting and Auditing practices which individual country organization have undertaken to support. The island organization because of their size and resource constraints have, in most cases, adopted the International Accounting and Auditing Standards as their own standards. Fiji Institute of Accountants has also resolved to do this.

Major accounting bodies have issued their own standards. They are required to state the reasons for any variations from the International Standards. Moves are underway now to improve and harmonize financial reporting throughout the world, particularly in view of:

• Efforts of global organizations such as WTO and regional organization such as EU and APEC to dismantle barriers to international world trade
• The growth of global enterprises
• A trade towards internationalization of business regulations
• A host of other reasons

The island countries in this regard are ahead of their sister bodies in developing countries. In addressing the provision of cross border services, IFAC has formed a Task Force to address the following which will affect liberalization of such services:

• Control and ownership of firms
• The legal form of practice
• Residence as precondition of practice

The major issues facing the professions will be national laws and local culture. There are numerous unknowns as to the effects that globalization, WTO or regional free trade areas will have on the economies of South Pacific island countries.

On the one hand we are told that free trade, access and easing of entry requirements are not feasible and will affect the way of life of Pacific islands. On the other hand we are told that these forces are unstoppable, that we can't adopt a "wait and see" attitude, that the Pacific way of life will change, but the essence of it will be preserved.

The accounting profession in the islands has lived with International Standards, international clients and international brand names. I don't mean Coca-Cola, Toyota or the golden arches. I refer to the Big 5 of the accounting profession.

An international investor finds comfort in the existence of a familiar organization in a country he is considering investing in. Just as a traveller will choose Coca-Cola over the local brand name fizzy drink. While the Big 5 are not present in every country, the firms have some association with the local accounting firms. The firm has issued business guides for most of the countries around the world.

There is a need for greater cooperation among the island accounting organizations and our more developed neighbours, Australia and New Zealand. In Fiji two years ago, the Australia Society of Certified Public Accountants opened a branch office and is actively involved in providing courses to graduates which will entitle them to admission to the Society. The New Zealand Institute recently followed suite. In both cases the Fiji Institute has cooperated with them, and we see advantages in associating with them.

Retention of Skilled Staff

Fiji has been suffering from loss of skilled people, particularly accountants, through immigration. This factor has been a fact of life for the profession for many years and will continue to be a fact of life. My predecessor firm, Price Waterhouse, lost some 30 qualified accountants through immigration during the four years from 1994 to 1997 inclusive or an average of 16% of the staff complement each year. The merged firm of PricewaterhouseCoopers for 1998 to August 31, 1999 has lost 18 more in the short time. By the time the year is out we would have lost 16-18% per annum. The other firms have the same story to tell.

There is only anecdotal evidence as to the reasons why people migrate. These suggest better education, accessible and better health care, better employment opportunities and family reunion. Accountants are more mobile, more so than other professions (accounting and auditing plus the experience with a Big 5 firm makes him/her very marketable internationally. Our language is international).

Our graduates from the university in Fiji are top class. I hear from employers in Australia and New Zealand that Fiji accountants are equal to, if not better than, accountants from their own countries and that they have better work ethics. This fact does not help us from a business point of view, but as a profession we are devoting enormous amount of resources in training and retraining if only to lose them through emigration.

A comparison of membership by age could be of interest here:

Source: Annual reports

Membership by age in the last 3 years to Fiji has not changed significantly.

Source: FIA Annual reports

It is the 23-35 year age group that leave our shores. There remains an acute shortage of qualified experienced accountants in Fiji and this situation will not improve unless we admit that immigration is a major issue facing the profession and the nation. This fact cannot be ignored and we must work to overcome this.

In economic terms immigration means lost savings, valuable resource and investment, income tax base and efficiency and productivity. It doesn’t stop there. Enormous amounts of resources are spent on educating and training on those people who replace those who have left. It is a vicious, incomplete cycle.

There is an attitude that immigration has help our unemployment problem and to solve the political racial balance issue, and has actually been encouraged. The exponents of this view I suggest have not seen life in real terms.

The economic loss not only to the profession, but also to the country, has never been qualified. It is probably not quantifiable. The Institute can continue promoting the profession to fill in the gaps that are created and refocus its professional development program.

The greatest resource a country has, and in abundance, is its people and the potential is in is youth. We all admit that our future lies in our youth.

Fiji has over 40% of its people between the age 25-30 years old. Given that by the time a person graduates and completes his practical experience he is 25 years old. These people are keen, eager, enthusiastic and proud that they have made it. But it is at this age that they start wandering. They want challenges and want to be involved. There are some of course who stop developing further once they are qualified. We cannot afford to let the majority of the young accountants stagnate or think that this is all there is.

There is a mandatory requirement for most of the Big 5 for their staff to have a minimum number of hours in continuing education each year. The Institute in Fiji has introduced this requirement although not as stringently as those in Australia and New Zealand. The Institute has an active Professional Development Committee, which organizes seminars, workshops and lectures. With the introduction of compulsory continuing education requirement the Institute will be required to allocate more resources to run their course on a more regular basis.

The Institute has recognized the need for the involvement of younger members in the activities of the Institute. Some 30% of members of committees are under 40 years of age. We can do better.

My action plan would call for increased involvement of the youth in various activities. We should give them the responsibility and challenges thereby instilling in them elements of confidence and a sense of purpose. I don't mean to hand over the whole responsibility. There should be a balance within the young members and senior members to utilize the best of both – youth with their passion and enthusiasm and the experienced with their wisdom and accumulated knowledge.

Rotary Youth Leadership Award Seminar, organized by Rotary Club of Lautoka since 1980, attracts some 60-70 young people between the ages 18-25 years. The seminar subjects the awardees to lectures, workshops, discussion groups, field trips and games over a three day period. For most of these young people it is the first opportunity after leaving school, college or university to participate in such a seminar. The amazing change one sees in a person, and the confidence they acquire during the three days and when one meets some of them today, makes you feel proud that you had something to do with their success. They are given the opportunity to become leaders and leaders in their field, and they do it with passion and enthusiasm.

Part of the solution in our attempts to retain skilled people is simple: invest in our youth, train and motivate them, give them the opportunity to do better themselves. The spin-offs are obvious. They will be our future entrepreneurs, they will be the employers and leaders of the future. They will improve the education system, health services and all other facilities believed to be lacking in Fiji by those who leave.

Immigration will not stop – we can only slow down the process. There are deals we can make with our people if only to delay the inevitable.

Fiji imports some 45% of its total imports from Australia, the recipient of some 34% of our exports. This makes Australia the single most important trading partner for Fiji. In addition, over 100,000 visitors or 28% of our tourists are Australian and Australian companies dominate the corporate sector in Fiji.

FABC works closely with the sister organization in Australia, the Australia Fiji Business Council. Our common objective is to promote trade and investments between our two countries.

I give some examples of activities, which FABC has been involved with in the interests of both Fiji and Australia:

• We were able to bring together or smooth the way when the relationship between the politicians of the two countries turned sour after the coups of 1987. I believe there was a question of face. FABC found a way for the parties to get together again.

• The Fiji Australia Trade and Economic Relations Agreement (FATERA) signed this year was initiated by FABC two years ago.

• The issues raised by FABC and AFBC with the External Trade Ministers last year during the annual ministerial talks, including the matter of rules of origin, derogation, and Double Tax Agreement were subjects of comprehensive correspondence between the Prime Ministers of both countries. In accordance with the FATERA, these issues will be negotiated during the next round in talks to be held in December this year. FABC will be present at these meetings as private sector representatives.

The islands do not have the resources nor the manpower to provide the type of backup in the economic development of the island countries. They do not have the scale of operations which allows them the luxury of employing specialists to focus on economic and other issues. Professional organizations and professionals themselves have the added responsibility to fill this gap.

The consultation process is a two way street and both parties need to take each other seriously in an atmosphere of mutual trust and moral integrity. There is a watch dog role as well, to use the accounting expression. We need to be frank and open, face issues rather then suffer in silence, and communicate.

The professions need to mobilize their membership to contribute towards the well being of their country. They have the resources in the youthful membership. The youth are more adaptable, more knowledgeable and have greater access to information. We need to harness this resource for the economic good of our nation. Let's give them a chance.

Ladies and Gentlemen, I thank you.