Waiting for the auditor

WHEN Afghan lawmakers were debating rules of conduct for accountants, some were confounded by their strictness. Why should those found guilty of murder, asked one member of parliament, be struck off? That is a sign of the challenges facing the professional body for bean-counters, Certified Professional Accountants (CPA) Afghanistan, which was launched last month.

Attempts to establish a home-grown profession start from a low base. Back in 2009 Kabul, a city of around 4m, had fewer than 20 qualified accountants. Neither standards nor oversight for the profession were in place. Most local outfits were branches of firms from elsewhere in South Asia or farther afield.

Boring old accountancy might not seem a priority for a war-torn country. But in business it can foster trust and transparency—scarce commodities in a country where corruption is systemic. Because of the difficulty of verifying borrowers’ financial positions and valuing their collateral, banks are extremely reluctant to lend to the private sector; credit amounted to only 3% of GDP as of August. The need for formal records, along with high interest rates, deter smaller firms from approaching banks altogether; in turn, they remain locked into the informal sector. Financial accounts prepared or audited by accountants could help to break that cycle.

Accounting norms could also ease the entry of foreign investors—which is why Muhammad Zarif Ludin, the chief executive of the CPA, wants to adopt international standards. Mr Ludin developed CPA Afghanistan as part of a World Bank-funded project, which is also tackling the shortage of accountants by offering scholarships to those studying for international qualifications. So far, more than 1,000 people have begun the process of qualifying—around a third of them women. That is encouraging in a country where less than a fifth of women over the age of 15 are in the workforce.

The potential gains are large, but will the budding profession thrive in a harsh climate? As lawmakers’ attitudes suggest, establishing an accounting culture will take time. So far, though, demand has more than kept up with the supply of new accountants, says Mr Ludin, with interest from charities, government and big business in Kabul. If bean-counters do indeed manage to make access to funds easier and cheaper, then they might make a killing of their own in the local market.