Abstract

OHAA accounting system is the harmonization of business law in Africa. The Organization for the Harmonization of Business Law in Africa was initiated and made up by sixteen countries of the Zone Franc and was created by the treaty relating to the Harmonization in Africa of Business laws. Initially, fourteen African countries signed the treaty, with two countries subsequently adhering to the treaty (Comoros and Guinea).

On October 17, 1993, in Port Louis, Mauritius, 14 African Heads of State signed a treaty creating. The OHADA accounting law has introduced combined accounts without specifying uses. Even at the publication of such accounts, the text remains silent.

Regarding the valuation of fixed assets, the application of OHADA standards raises a difficulty. Indeed, the text does not mention a separate recording of the current fixed asset even though it is conducting the legal framing of economic realities in developing countries and thus in construction.

CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background To The Study

The Organization for the Harmonization of Business Law in Africa was initiated and made up by sixteen countries of the Zone Franc and was created by the treaty relating to the Harmonization in Africa of Business laws. Initially fourteen African countries signed the treaty, with two countries subsequently adhering to the treaty (Comoros and Guinea). On October 17, 1993, in Port Louis, Mauritius, 14 African Heads of State signed a treaty creating the “Organization for the Harmonization of Business Law in Africa .”

The treaty first came into force on September 18, 1995, and now numbers 16 Member States. The Treaty is open to all States, whether or not they are members of the African Unity. The OHADA treaty constitutes the legal basis and framework for achieving OHADA’s mission.

The treaty is self-executing in that it is directly applicable in the domestic jurisdiction of the Member  States,  and as such form part  of the internal legal order.  This implies that the treaty and its Uniform Acts (UAs) have a binding effect on the Member States. In terms of Article 5 of the OHADA treaty, the UAs are “Acts enacted for the adoption of common rules as provided for in Article 1 of the present treaty … known as „Uniform Acts”.

At present, nine UAs are in force in the Member States. They are Uniform Act on General Commercial Law; Uniform Act on Commercial Companies and Economic Interest Groups; Uniform Act on Organizing Collective Proceedings for the Writing Off of Debts; Uniform Act on Accounting; Uniform Act on Securities; Uniform Act on Contracts for the Carriage of Goods by Road; Uniform Act on Simplified Recovery Procedures and Enforcement Measures; Uniform Act on Arbitration; and Uniform Act on Co-operatives.

All the Member States of CEMAC are OHADA signatories. This ipso facto means that Cameroon being a member of CEMAC, with its bi-jural nature, where the Common Law and Civil law legal systems operate in Former West Cameroon and Former East Cameroon respectively, both parts of the country are bound to implement the OHADA Uniform Act in their various jurisdictions. This, therefore, means the treaty and the uniform acts are directly applicable in Cameroon.

In the early 1960s, after the independence of most African countries, accounting practices remained largely inherited from colonization.

Therefore, in the areas of “Economic and Monetary Union of West Africa” (WAEMU) and “Customs and Economic Union of Central Africa” (CACEU), companies continued to use the French accounting systems of 1947 and 1957. But given the importance of the informal sector and the lack of rigorous legal structures, those systems were variously applied. That is why Perochon had described African accounting as “heterogeneous”.

African countries have initially thought of their unity with the creation of OAU in 1963 and OCAM in 1965 before considering a regional integration into two subsets (WAEMU and CACEU). After these groupings, an overall need to have a system for collecting information showed up.

This idea initially animated OCAM which planned to design a French accounting plan which will prevail. That is why the Conference of Heads of State held in Yaoundé from the 28th to the 30th January 1970 would give birth to the first OCAM’s accounting plan; even if this plan was going to remain a simple basic model because it was known over time to be affected by many changes inside the sub-regions including the WAEMU .

The multiplicity of national and regional accounting systems did not prevent the launching of the second edition of OCAM accounting plan in 1980, a plan of credit institutions in 1979, and an accounting plan of agricultural activities in 1983. When OCAM was dissolved in 1985, the OAU created the African accounting Council (CAC) which fails to assume the responsibility of the Accounting Standards in Africa.

The transition from OCAM plan to the OHADA system is designed in the dynamics of regional integration and aims to modernize the legal framework of African businesses in order to secure their business, promote trade, and align itself with international accounting practices. The OHADA accounting system has many characteristics. Some are related to corporate governance while others are related to the organization of accounting practice.

Article 14 of the OHADA uniform act relating to accounting law provides that “the accounting system implemented in the company must meet the requirements of regularity and security, to ensure the authenticity of the entries so that accounting can serve both as an instrument for measuring rights and obligations of business partners, and evidence tool, as an information of management and third parties”. This research is therefore focused on bringing out the Accounting principles as established by the OHADA Accounting system.

1.2 Statement Of The Research Problem

The requirement for submission of combined and consolidated financial statements contains one of the imperfections of the OHADA accounting system. There should already be distinguish if the combination is not a form of consolidation; consolidation at the level of OHADA can be taken as a positive vision but however, it should be noted that in the real world, most companies interested in consolidation are subsidiaries.

Consequently, given that the auditor of the group is external, the content of his report has a high probability of being out of phase with the internal realities of the company.

The OHADA accounting law has introduced combined accounts without specifying uses. Even at the publication of such accounts, the text remains silent. Regarding the valuation of fixed assets, the application of OHADA standards raises a difficulty. Indeed, the text does not mention a separate recording of the current fixed assets even though it is conducting the legal framing of economic realities in developing countries and thus in construction.

1.3 Research Questions

1.3.1 Main Research Question

What are the principles governing the OHADA Accounting system?

1.3.2 Specific Research Questions

1. What is the OHADA Accounting system?
2. What entities must keep accounts?
3. What principles must these entities respect when keeping accounts?
4. Are there policy recommendations for better ways of keeping accounts?