BRVM: Companies struggle to comply with the International Financial Reporting Standard

Nov 02, 2020 | Ecofin Agency

Companies on the Abidjan-based regional stock exchange BRVM are struggling to comply with the International Financial Reporting Standard (IFRS), which specifies how companies must maintain and report their accounts.

For FY2019, only seven companies (Ecobank Transnational Incorporated, Boloré Africa Logistics CI, Bernabe CI, ONATEL, SONATEL, SODECI, and Oragroup) fully respected this regulation while reporting their accounts. In H1 2020, only Oragroup and Ecobank Transnational Incorporated continued that way.

Over this same period, Bernabe CI, NSIA Bank CI, and Alios Côte d'Ivoire made only limited disclosure of their interim results under IFRS; while 24 other companies have published their financial results for the 2019 financial year in partial compliance with IFRS. This means that the companies simply followed the Balance Sheet-Profit & Loss-Cash Flow procedure without making any comments or clarifications as required by the IFRS rule.

There are still 9 BRVM companies that did not present their 2019 performance under IFRS. For the results available for the first half of 2020, nearly 28 companies in this financial market presented either summary data on their performance or detailed information, only following the OHADA accounting system.

As a reminder, the decision by the Council of Ministers of the OHADA member countries requiring companies listed on their financial markets to publish their results under the IFRS standard, in addition to the OHADA accounting system, was rendered in early 2017. The deadline to comply with the measure was January 1, 2018.

IFRS is considered to be a standard that allows an optimal analysis of the opportunities and risks that companies represent. It allows, for example, beyond the income statement, to read what the company achieves in terms of added value for shareholders.

However, its use requires certain adaptations, as the presentation of corporate operations differs greatly from that provided for in the OHADA chart of accounts. It may also require companies to make extra expenditures to adapt to a rule that is not required by the administrative entities that collaborate with them.
Overall, the listed companies' communication on the BRVM remains fairly limited. Investors have to be satisfied with the relatively minimal indications given by companies at the time of the publication of results.

The IFRS standard is common in several African financial markets. In Tunisia, Nigeria, and even Ghana, listed companies provide sufficient information to investors when publishing their financial performance each year.

Source: Ecofin Agency