AMK FINANCE HUB

For businesses in OHADA (Organisation for the Harmonization of Business Law in Africa) member states, including countries like Mali, SYSCOHADA (Système Comptable Ouest-Africain) provides the standardized accounting framework required for financial reporting. This system ensures consistency across member states, helps businesses meet legal obligations, and enhances transparency for stakeholders, including investors and regulatory authorities.

If you’re an entrepreneur, SME, or accountant in an OHADA member state, understanding how to prepare SYSCOHADA-compliant financial statements is essential. This guide will take you step by step through the process.

What is SYSCOHADA?

SYSCOHADA is a regional accounting system that harmonizes business laws and accounting practices in OHADA member countries. It is built around accrual accounting, which requires businesses to record transactions when they occur, rather than when cash is received or paid. This approach ensures financial consistency across all OHADA states, making it easier for businesses and investors to assess financial health.

Key Components of SYSCOHADA Financial Statements

Before starting, it’s important to understand the key financial components of the SYSCOHADA system:

1. Balance Sheet (Bilan): Displays the company’s financial position, including assets, liabilities, and equity.
2. Income Statement (Compte de Résultat): Shows the company’s performance over a period, summarizing revenues, expenses, and profit or loss.
3. Cash Flow Statement (Tableau des Flux de Trésorerie): Illustrates how cash flows in and out of the business through operating, investing, and financing activities.
4. Notes to the Financial Statements (Annexes): Provide detailed context about the figures, accounting policies, and assumptions used in preparing the financial statements.

Step 1: Gather Financial Data

Accurate data is the foundation of financial statement preparation. You’ll need:

• Accounting Books: Record all transactions made during the accounting period (sales, purchases, expenses, etc.).
• Trial Balance: A list of all balances from the ledger accounts, serving as the starting point for preparing the statements.
• Invoices, Receipts, and Bank Statements: These support your entries in the accounting books and help reconcile balances.

Step 2: Prepare the Balance Sheet (Bilan)

The balance sheet is divided into assets, liabilities, and equity. It must balance, meaning:

Assets = Liabilities + Equity

1. Assets:
   • Fixed Assets: Long-term assets like property and equipment.
   • Current Assets: Assets expected to be used or converted into cash within a year, such as inventory and accounts receivable.
2. Liabilities:
   • Long-Term Liabilities: Debts due after more than one year, such as loans.
   • Current Liabilities: Short-term debts, including accounts payable and short-term loans.
3. Equity: Represents the owner’s residual interest in the company after subtracting liabilities from assets. This includes share capital, retained earnings, and reserves.

Step 3: Prepare the Income Statement (Compte de Résultat)

The income statement provides an overview of the company’s profitability over a period.

1. Revenue: Record all income from sales or services rendered during the period.
2. Cost of Goods Sold (COGS): Direct costs associated with producing goods or services sold, such as raw materials and labor.
3. Operating Expenses: Indirect costs such as salaries, utilities, marketing, and rent.
4. Operating Profit: Subtract COGS and operating expenses from revenue.
5. Other Income and Expenses: Include non-operating income (e.g., interest) and expenses.
6. Net Profit or Loss: The final amount after subtracting all expenses from revenues. This shows the company’s overall financial performance.

Step 4: Prepare the Cash Flow Statement (Tableau des Flux de Trésorerie)

The cash flow statement shows how cash is generated and spent during the accounting period, divided into three sections:

1. Operating Activities: Cash inflows and outflows from core business operations, such as payments from customers and expenses paid to suppliers.
2. Investing Activities: Cash flows related to the purchase and sale of long-term assets (e.g., equipment or property).
3. Financing Activities: Cash inflows and outflows from obtaining capital (e.g., loans, issuing shares, paying dividends).

The goal of the cash flow statement is to provide insight into a company’s ability to generate cash and meet its obligations.

Step 5: Prepare the Notes to the Financial Statements (Annexes)

The notes provide additional context and detail about the numbers in the main financial statements. These include:

1. Accounting Policies: Outline the methods used to prepare the financial statements (e.g., inventory valuation methods, depreciation methods).
2. Contingent Liabilities: Disclose any potential liabilities, such as pending legal actions or tax audits.
3. Related Party Transactions: Report transactions between the company and its executives, shareholders, or affiliates.
4. Post-Balance Sheet Events: Disclose events occurring after the balance sheet date that could affect the financial statements, such as acquisitions or market changes.

Step 6: Review and Finalize the Financial Statements

After preparing the balance sheet, income statement, cash flow statement, and notes, you need to review the financial statements for accuracy:

• Ensure the balance sheet balances (Assets = Liabilities + Equity).
• Verify that the numbers match the trial balance and supporting documents.
• Make sure all disclosures required by SYSCOHADA are included, including accounting policies and contingent liabilities.

It’s also wise to have the financial statements audited by an external auditor to ensure they meet regulatory standards and build credibility with investors.

Step 7: Filing and Reporting

Once the financial statements are finalized, they must be filed with the appropriate regulatory authorities. This could be a national tax agency, financial reporting body, or an industry regulator. Ensure that the filing complies with local laws and that the statements are made available to shareholders, investors, and other stakeholders.

Conclusion

Preparing SYSCOHADA-compliant financial statements is essential for businesses in OHADA member states. By following the steps outlined in this guide, you can ensure that your company meets legal requirements and provides accurate, transparent financial information. This not only helps your business remain compliant but also strengthens relationships with investors, customers, and regulatory authorities.

Adopting SYSCOHADA’s standardized approach will help businesses across Africa communicate their financial status consistently, enabling better decision-making and fostering trust in the marketplace.

Sources

1. OHADA Guide d’application du SYSCOHADA reduit 2
2. World Bank – Accounting Standards and Financial Transparency in Africa
3. OHADA Uniform Act on Accounting Law
4. PwC – Accounting and Financial Reporting in Africa