Iraq needs accountants to win the peace

Log on to the Coalition Provisional Authority of Iraq’s website and you will discover something interesting.

Search the site’s economy section for ‘Iraqi Accountants’ and you will be directed to a page that is empty except for these two sorry sentences: ‘This site is currently under construction. Please check back in a few days.’ Check back in a few days and the site remains untouched.

Given the chaos, anarchy and alleged torture in Iraq at the moment, it is understandable that accountancy does not rank as a high priority.

But for a country to become ‘normalised’ – and that is the process meant to be taking place in Iraq – it is vital to create all the structures that allow it to rebuild. This includes the award of contracts, financial governance structures and untangling the web of the previous regime’s accounts.

Many companies will be attracted by the massive fees that can be made from the potential contracts on offer from a country that, for whatever reason, has to undergo fundamental restructuring. Others may question for whose benefit these contracts are really being awarded: the victors or the vanquished?

But, after the soldiers and peacekeepers have finished their work, a vast army of other professionals will arrive to start theirs. That is what has happened in recent years, or is still happening, in places such as Kosovo, Bosnia and East Timor.

The Kosovo Trust Agency, an organisation looking into corporate governance in the province, emphasised in its glossy July 2002 pamphlet Investors Guide to Kosovo that standards there are ‘entirely compatible with the international accounting and auditing standards of the International Federation of Accountants’.

When East Timor became independent in May 2002, one of the first bodies it set up was a business council that looked at the potential for economic development in the region, and at the same time emphasised the importance of accounting standards to this process.

Accountancy may be way down the reconstruction food chain – behind things such as setting up a fair judiciary, establishing law and order and getting a police force up and running, – but inevitably there is a place for people who are good with numbers.

And things are already happening in Iraq. In February this year, Ernst & Young made the bold decision to return to the war-torn country of Iraq.

‘The Middle East represents a fast-growing and sophisticated commercial region, which requires the right business advisory services founded on the highest standards of quality and risk management,’ says Nick Land, UK chairman of E&Y.

For E&Y, it was a step back into history, as the firm had opened its first office in Baghdad back in 1923 when Iraq was coloured pink on the map, or at least declared a League of Nations mandate under UK administration.

Historians may feel that not much has changed since then.

E&Y has been rewarded for moving back into Iraq with a contract to help trace its loan contracts and reconcile who is owed what from the country’s estimated $120bn (£68bn) debt pile. And KPMG may, or may not, have won the contract to investigate the Iraqi oil-for-food programme.

But as beneficial as it may be for companies to move in and claim the big prizes, it is also a tricky decision to make. There are several implications including, in particular, the security aspect for its staff.

A spokesman for E&Y says it constantly reviews the situation in Iraq.

This is something it may have to do for some time yet.

But it surely cannot be the last accountancy firm that will choose to set up shop in Iraq. Normalisation is as much about accountants as it is about soldiers.

Related reading