Partner, Audit and Attest Services, Bola Mogaji, in this interview speaks about how the pandemic has aided the use of technology for regulation as well as on other issues in the audit sub-sector. Adedayo Adejobi brings the excerpts:
If you look at the big four players, all of them have big investments. How much impact do they have in development of the sector?
About five years ago thereabouts, the Institute of the Chartered Accountants of Nigeria (ICAN) emerged with an initiative where the Big-4 Firms and Small and Medium Practices (SMPs) were to jointly audit all banks, government parastatals and other public listed entities. This initiative was applauded and seen as one that will sprout growth, increase the Cumulative Auditing Knowledge and Experience (CAKE) of the SMPs and improve audit quality. However, this development was shortlived, though the institute financial statements are still being jointly audited as of today.
In my opinion, I believe the Big-4 Firms are yet to pay their dues in the development of sector. Surprising, they (the Big-4s) are even competing with the SMPs for available jobs in the SME markets, this is an untoward event that should be halted by the relevant regulatory bodies. I therefore expect the Financial Reporting Council of Nigeria (FRCN) and ICAN to define the audit market structure and ensure that the Big-4 Firms are deterred from competing with the SMPs for SME audit markets. FRCN needs to make Joint Audit a legal requirement for all public listed companies, banks and public parastatals since the benefits of joint audit outweigh the possible negative impacts.
In a recession, when you look at the players out there, how do you remain profitable and sustainable?
One of our business strategies is to always deliver top-notch quality and value adding services to our clients. Our products speak for themselves. We will continue to offer better quality services at moderate fees compare to that which would normally be charged by the Big-four firms to clients seeking high quality services.
The US-China trade war has affected pricing of technology products, with most business turning to technology, how do you see that having an effect on growing technology services in Nigeria?
The on-going trade war between US and China is seen as a competition for global technological dominance. The trade war has economic consequences as well as competitive advantages but if it persists for a long time, it may cause great economic damage for other countries not involved in the war. One of the cons of the trade war is increase in commodity prices whilst one of its pros is that it is now a key driver of innovation and creativity for technology and product companies. Considering that Nigerians have a high taste for foreign goods, which are mostly obtained from the United States, United Kingdom and China. The ongoing trade war between US and China may lead to increased inflation in commodity prices which may adversely affect Nigerians, if measures are not taken to curb the effect. On the other hand, tech companies in Nigeria can grab the opportunity the trade war creates by developing innovative products that will satisfy the needs of the Nigerian market.
RegTechs try to help companies dealing with financial regulations in many ways. Where do your products and services fit in?
Regulatory Technology (RegTech) involves the use of information technology to enhance regulatory processes and compliance. It is an efficient and cost-effective methodology that eases regulatory compliance of companies. RegTech is an evolving innovation in the financial sector and with the regulatory bodies in Nigeria. In response to the needs of our clients, we have two proprietary RegTech solutions – IpaySuite and Geeboard. IPaySuite is a payroll software that seamlessly processes payroll data and payment. GeeBoard is an accounting program. These solutions have led to great improvements in our processes, reducing turn-around time and associated costs for our clients.
What are the key drivers of innovation and change in RegTech right now?
The quest to adopt innovative regulatory and compliance solutions, the drive for more efficient way of processing a large volume of data, a paradigm shift from the manual way of doing things and more importantly is the ease of doing business and making compliance process less tedious. These to me are the key drivers for RegTech.
What are the biggest challenges to overcome?
We have been futuristic in our strategy formulation. Year-on-year, we restrategise and ensure all the pros and cons are considered. However, the markets for our services and products have been a major challenge. We will unrelentingly continue to thrive for our share of the market.
What will RegTech mean for regulators? Are we going to see a change of how regulations are developed and what is the future of financial regulation in Nigeria?
RegTech is a welcome development for the regulators, as it will ease the time consumed in processing voluminous data. Nigeria being a developing nation might continue to witness series of new regulations, amendment to existing regulation and data privacy. The regulators need to keep enhancing the skills of their compliance officers as automation of process has come to stay.
What role does the RegTech play in the compliance sector?
It allows businesses to share data quickly and securely and also ease of time to business owners and financial institutions as the processes for regulatory compliance are automated. It also simplifies the process of regulatory requirements.
What does the future of regulatory compliance look like?
The automation of regulatory compliance will keep evolving and would be great, provided the information technological infrastructures are in place and duly maintained. The automation of regulatory compliance will continue to be a booster to the ease of doing business in Nigeria.
How has the pandemic accelerated Stransact’s growth?
Almost all companies in the world are affected by the pandemic either negatively or positively. The pandemic however, presented Stransact with an opportunity to redefine her mode of service delivery to her clients and the development of more tech-based products. Our technology department introduced new tech-based products that allowed for a better and enhanced remote working environment. This initiative accelerated our productivity and ability to serve clients more efficiently. New clients are now signing-up to our services because we guaranteed that their service needs would not be hindered by the pandemic.
How much has the pandemic driven your business online in this part of the world?
The Firm has always been driven by the use of technology-based approach to creating value to our clients. Transitioning to virtually a full-scale remote work environment, meant that we had to initiate investment in the associated infrastructural backbone. Thus, allowing our staff serve clients more effectively and efficiently without time or location encumbrance.
What about the challenges of infrastructure? What kinds of investments are you making to fill this gap?
Our planning strategy has always been futuristic in nature, infrastructural needs of the Firm are always evaluated year-on-year. Hence, we have been able to meet our infrastructural needs as they arose without the Firm being negatively impacted even with the advent of the pandemic.
How do you keep growing and keep profits growing with all of this competition?
The quality of our work does speak for itself. We are known for creating value-adding services for our clients and this stands us out all the time. Even before the pandemic, we “empathise” with our clients, whenever the need arises – this is one of Stransact values. Our ability to empathise with our clients at crucial moments such as the effect crude oil market price challenges posed on few of our clients; the unquantifiable effect of the pandemic; just to mention a few, has been a plus for us. Our continuous delivery of a superior level of quality compared to what other firms offer in the market in addition to our strategic global positioning has and will continue to enable us enhance our growth capacity and increase the firm’s profitability.
With your competitors harnessing the trend and power of technology, how do you stand out of the competition?
Our Firm has always been technologically driven. Nonetheless, we will continue to invest in technology and other management information systems. We have also been developing robust technology solutions to meet our clients’ needs and we are considering the deployment of these solutions to small and medium-sized enterprises. We believe the use of our technological solutions will continue to enhance and increase the efficiency with which we service our clients. Our tech-based products introduce a win-win to our clients in terms of cost, time and quality report. We will constantly leverage on current available automation process and opportunities.
The Stransact brand has expanded internationally with its new operations in the United States of America, are there any other alliances in the works for you?
At Stransact, our broad growth objectives have accorded us the opportunity to strategically position our Firm globally. We are currently looking forward to being admitted into one of the top 10 Firms in the world.