PROPOSED REVISION OF STATUTORY INSTRUMENT ON ACCOUNTANTS (CLIENT FEES) REGULATIONS

The Zambia Institute of Chartered Accountants (“ZICA” or “the Institute”) is a professional membership body whose function, among others, is to advise Government on matters of national and economic development. The Institute is also mandated to develop, promote and enforce internationally comparable practice standards in Zambia as well as protect and assist the public in all matters relating to the practice of accountancy.

Section 20 of the Accountants Act mandates ZICA members who hold audit and non-audit practicing certificates to provide various accountancy services. The fees chargeable by these members have not historically been regulated but left to the market forces to determine. To a large extent in Zambia, this led to the aspect of low-balling by practitioners, thereby compromising on the quality of the accounting/auditing services being offered to the public. 

ZICA, therefore, proposes to introduce regulation to standardize the fees that are charged by firms for their services. Introducing the SI will ensure that audit quality (as well as that of other services) is maintained as it will ensure that practitioners spend sufficient time performing an engagement and are adequately remunerated for the service rendered. Compliance with International Standards on Auditing requires quality time.

Further, it should be noted that it is also costly to retain staff that can perform quality audits as they have to be trained and remunerated well. As the World Bank’s October 2017 Report on the Observance of Standards and Codes – Accounting and Auditing (“the ROSC Report”) on Zambia states ‘The number of auditors and auditing firms has increased but majority face challenges in applying financial reporting standards. Small and Medium Sized Practitioners (SMPs) – auditing firms with less than four partners that constitute 95% of the 124 audit firms in the country – face challenges in applying the complex, onerous accounting and auditing standards despite regular support from ZICA.’ This challenge equally applies to non-audit practice firms. It is therefore clear that the majority of firms in Zambia require investment in, and retention of quality staff. This cannot be achieved unless they have adequate financial resources to do so.

Based on studies in other jurisdiction, fees for accountants in public practice are normally 4.6% of the client’s revenue. Prior to the introduction of the revoked SI 34, fees in Zambia averaged 0.4% to 0.8% of clients’ revenue.

ZICA as the protector of the public interest needs to ensure that practitioners are providing the right quality of work. This will be done by ensuring that firms are not lowballing by setting a range of fees that should be charged for the services provided by practitioners.

Comments are invited from stakeholders on the proposed regulation.