SYSCOA vs. SYSCOHADA: Which to Apply?

Summary

Sources

ohada.com

The Système Comptable Ouest Africain, commonly referred to as SYSCOA, was established by regulation zero four slash ninety-six slash CM slash UEMOA on December twentieth, nineteen ninety-six. This accounting framework was heavily inspired by the draft of the OHADA Uniform Act, which aims to organize and harmonize business accounting within the OHADA space. SYSCOA was implemented across the various member countries of the West African Economic and Monetary Union, known as UEMOA, starting from January first, nineteen ninety-eight. On the other hand, the OHADA Uniform Act related to accounting was adopted after SYSCOA and came into force on January first, two thousand one. Its main objective is to harmonize accounting rules applicable within the member countries of OHADA, which also includes UEMOA countries, through the implementation of the OHADA Accounting System, abbreviated as SYSCOHADA. The introduction of SYSCOHADA led to the coexistence of these two accounting frameworks within the UEMOA region. This situation only presents a problem if significant differences and divergences are identified between the two systems. Such discrepancies were indeed found upon comparison, prompting the UEMOA Council of Ministers to update SYSCOA. This update was deemed necessary to ensure full compatibility of SYSCOA with OHADA's accounting standards, which form the basis of SYSCOHADA. This decision is in accordance with Article one hundred and twelve of the OHADA Uniform Act, which states that any provisions contrary to the Uniform Act and its annexes are repealed from the date of its entry into force. Since this decision by UEMOA authorities, there is essentially one accounting framework, SYSCOHADA, common to all OHADA member countries. Despite this, some in West Africa continue to refer to it as SYSCOA. Regardless of the terminology, it is the same set of regulations. This was the case until Regulation number zero five slash two thousand thirteen slash CM slash UEMOA of June twenty-eighth, two thousand thirteen, and the implementing regulation number zero zero five slash two thousand fourteen slash COM slash UEMOA of May thirty-first, two thousand fourteen, which stipulated that the new accounting rules and methods of SYSCOA would be adopted and applied to financial statements for fiscal years beginning on or after January first, two thousand fourteen. As a result, the UEMOA region currently operates with two different accounting frameworks, leading to differences in the accounting treatment of certain transactions and the presentation of information in financial statements. This situation raises the legitimate question of which accounting system to apply: the revised SYSCOA or SYSCOHADA, which has not undergone any modifications. To address this question, it is important to recall the following points: First, the initial modification of SYSCOA in two thousand one was made to align with the provisions of SYSCOHADA, specifically Article one hundred and twelve of OHADA's accounting law. At that time, UEMOA's governing bodies recognized the primacy of the OHADA Uniform Act over any other texts within OHADA member countries, regardless of their affiliation with other regional or sub-regional organizations. Article one hundred and twelve remains unchanged to this day. Second, UEMOA countries are members of OHADA and are bound by the provisions of the various OHADA Uniform Acts. For instance, the OHADA Uniform Act on General Commercial Law mandates that all merchants, whether individuals or legal entities, must maintain their accounting records in accordance with the OHADA Uniform Act on the organization and harmonization of business accounting. Furthermore, it requires the preparation of annual financial statements in line with the same Uniform Act and the OHADA Uniform Act on commercial companies and economic interest groups. The OHADA Uniform Act on Commercial Companies and Economic Interest Groups stipulates that at the end of each fiscal year, the manager or board of directors must prepare and finalize the financial statements in compliance with the OHADA Uniform Act on business accounting. These financial statements, along with the management report, must be submitted to the auditor and presented at the general meeting of the company. Moreover, commercial companies are required to file these financial statements with the commercial and movable property registry of the state where their headquarters are located within one month of their approval by the competent body. Since the financial statements under the revised SYSCOA differ from those specified in these articles, documents filed with the registry would not comply with the law. This non-compliance could have serious legal repercussions, including potential criminal penalties for failing to submit the required documents. Additionally, the OHADA Uniform Act on business accounting clearly outlines the financial statements to be prepared by each entity and their contents, which differ from those under the revised SYSCOA. Article one hundred and twelve, which was the basis for the two thousand one modification of SYSCOA to align it with SYSCOHADA, remains in effect. In response to the confusion caused by the coexistence of two different accounting frameworks within the OHADA region, the OHADA Conference of Heads of State and Government and the OHADA Council of Ministers reiterated in two thousand thirteen and two thousand fourteen that SYSCOHADA should be the sole accounting framework in force within the OHADA space and urged all relevant bodies to comply. It is clear from the above that the only accounting framework recognized by law in OHADA member countries is SYSCOHADA. The auditor's work is based on financial statements prepared in accordance with this framework, and any financial documents prepared on other bases should be rejected for certification. Using any accounting standards contrary to SYSCOHADA exposes violators to legal and civil penalties under current laws. All commercial companies and businesses are governed by the OHADA Uniform Acts, including the accounting law. Although SYSCOA played a crucial role in shaping SYSCOHADA into an excellent accounting standard inspired by international norms, the OHADA community continues to express gratitude to the BCEAO and UEMOA authorities for their significant contribution to OHADA's community law. The UEMOA member states, as part of the OHADA treaty signatories, must continue to be a contributing force and a factor of cohesion within the community. Since the introduction of SYSCOHADA in two thousand one, both SYSCOA and SYSCOHADA have coexisted within the UEMOA region. This coexistence, however, has not been without its challenges. The primary issue lies in the differences and divergences between the two accounting systems, which have significant legal and practical implications for businesses and accountants operating within the region. One of the key differences between SYSCOA and SYSCOHADA is the approach to financial reporting and the preparation of financial statements. SYSCOA, revised in two thousand thirteen and two thousand fourteen, introduced new accounting rules and methods aimed at improving the clarity and accuracy of financial data. These updates included changes to the classification of financial instruments, the recognition of revenue, and the treatment of certain transactions, which were intended to align more closely with international accounting standards. However, these revisions also created discrepancies when compared to the provisions of SYSCOHADA, which had not undergone similar updates. The legal implications of these differences are rooted in the OHADA Uniform Acts. According to Article one hundred and twelve of the OHADA Uniform Act on the organization and harmonization of business accounting, any provisions contrary to the Uniform Act and its annexes are repealed from the date of its entry into force. This means that the revised SYSCOA, with its differing financial statement requirements, conflicts with the legally binding SYSCOHADA framework. As a result, businesses that prepare their financial statements based on the revised SYSCOA may find themselves non-compliant with the OHADA regulations. The practical implications for businesses are significant. Companies must ensure that their financial statements adhere to SYSCOHADA to avoid legal repercussions, including penalties for non-compliance. This can lead to additional administrative burdens as businesses may need to maintain dual accounting records to satisfy both SYSCOA and SYSCOHADA requirements. Furthermore, accountants and auditors must be well-versed in both systems to provide accurate financial reporting and ensure compliance. For instance, the OHADA Uniform Act on General Commercial Law mandates that all businesses, whether individuals or legal entities, must maintain their accounting records in accordance with the OHADA Uniform Act. This includes the preparation of annual financial statements in line with the OHADA standards. The discrepancies between SYSCOA and SYSCOHADA can result in financial statements that are not aligned with the OHADA requirements, leading to potential legal challenges. Moreover, the OHADA Uniform Act on Commercial Companies and Economic Interest Groups stipulates that at the end of each fiscal year, companies must prepare and finalize their financial statements in compliance with the OHADA Uniform Act. These financial statements must be submitted to the auditor and presented at the general meeting of the company. The differing requirements of SYSCOA could result in financial statements that do not meet these legal obligations, exposing companies to penalties and other legal actions. The potential consequences for businesses and accountants are further compounded by the requirement to file financial statements with the commercial and movable property registry of the state where their headquarters are located. The financial statements prepared under the revised SYSCOA may not conform to the legal standards set by OHADA, leading to the rejection of these documents and subsequent legal penalties for non-compliance. In conclusion, the coexistence of SYSCOA and SYSCOHADA within the UEMOA region has created a complex landscape for businesses and accountants. The key differences and divergences between the two systems, particularly following the updates to SYSCOA in two thousand thirteen and two thousand fourteen, have significant legal and practical implications. Businesses must navigate these challenges to ensure compliance with the OHADA Uniform Acts and avoid potential penalties. This situation underscores the importance of harmonizing accounting practices within the region to reduce confusion and ensure a consistent legal framework for financial reporting.