Globally, ethics is becoming recognised as the hidden asset on which long-term success is founded.
This is especially true for the professions like accounting.

By Shahied Daniels, CEO, South African Institute of Professional Accountants (SAIPA)

As South Africans come to terms with state capture and everything it means for our economy and public life, the importance of ethics is receiving recognition. We can all see that even the best laws can be circumvented or broken—and that legal processes are slow and expensive.

By contrast to law, ethics relates to an individual’s sense of morality, or right and wrong. An ethical person is guided by law, to be sure, but he or she is fundamentally motivated by trying to do what is right. One could say that law is about rules while ethics is concerned with principles.

In the most basic sense, one can trust that an ethical person is not trying to get away with what he or she can but is trying to do the morally correct thing.

Clearly, it is important that everybody is ethical in how they deal with all their affairs, personal and business, but it is critical in the professions. Professionals like accountants, doctors and lawyers deal with extremely sensitive matters, and their advice and actions have life-or-death consequences or spell the difference between financial success or failure.

Managing ethics
When it comes to ethics in general, there are different conceptions of what is right and wrong. This problem is more acute when one exists in a multicultural environment such as South Africa.

Another challenge is that deciding specific ethical questions can be surprisingly difficult at times, as most people can confirm from experience.

In response, professional organisations like SAIPA develop ethical codes to guide their members’ actions in their professional lives. These codes offer clients the peace of mind that comes from knowing that the professional they engage with have subscribed to the code and will be held accountable to it.

SAIPA has subscribed to the Code of Ethics for Professional Accountants developed by the International Ethics Standards Board for Accountants. Those holding SAIPA’s certification as Professional Accountants (PA(SA)) thus have a well-structured framework to assist them in making ethical decisions.

It is important to emphasise that ethics is not about following rules, but rather principles. Codes of conduct can help Professional Accountant (SA)s work out how principles should be applied, but they do not specify certain actions.

King IV, the latest iteration of South Africa’s governance code, follows the same approach by focusing on outcomes and not rules.

Audi alteram partem--the requirement to be fair
For a professional body like SAIPA, holding its members accountable to an ethical code is critical in building public confidence in the profession generally, and the Professional Accountant (SA) designation in particular. That means holding members accountable to the code.

Here it is important to stress that SAIPA and other professional bodies must be rigorously fair when it comes to holding members accountable. The key principle here is audi alteram partes, the Latin maxim that means “listen to the other side”. This is a foundation of any fair legal system and should never be ignored in the interests of expediency. SAIPA thus has a carefully thought-out process to allow members to respond to complaints, sift the evidence, and decide whether sanction is needed, and what form it should take. As in law, there is also an appeal process when a member feels that an incorrect decision has been taken.

Gold standard
The gold standard refers to the practice of backing paper currencies with gold, a practice that has fallen somewhat out of favour in today’s financial systems. However, the phrase remains as a vivid metaphor for the concept that true worth is underpinned by something solid.

Digital technologies are ushering in the Fourth Industrial Revolution, which in turn is automating many accounting processes. But in this often confusing and fast-moving digital environment, trust has become almost a currency—and trust is founded not only a profession’s record but the knowledge that he or she is bound by an enforceable ethical code. Ethics, and the trust they engender, have always been the foundation of a successful professional career, and that is one thing that is not going to change.

ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@thatpoint.co.za, www.atthatpoint.co.za 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African Institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants

On Tuesday 5th May, SARS Commissioner Edward Kieswetter detailed improvements in the tax authority’s operations and its proactive response to COVID-19. However, he painted a gloomy picture of national revenues.
 
“It’s sadly ironic that SARS has worked towards reversing its poor collection performance of the past only to be faced with an economic outlook comparable to the Great Depression,” says Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants (SAIPA).
 
Tax performance
According to Kieswetter, tax and customs revenue collection is being negatively affected by several factors, including: the country’s poor economy before COVID-19, weakened further by rating downgrades; COVID-19 tax relief measures; the effects of the phased lifting of the national lockdown on economic activities and capacity; and the overall impact on compliance.
 
He explained that a great concern was reduced economic capacity due to business closures and job losses. According to Stats SA, business liquidations for February 2020 increased 12.3% compared to February 2019, while business insolvencies were 13.9% higher in January 2020 compared to January 2019. Total retrenchments for April 2020 were just over 20,000, a 1622 (or 9%) increase from last April.
 
“These directly affect taxable incomes and therefore revenue collection levels,” emphasises Retief.   
 
Lower expectations
Three modelled scenarios predict local GDP outcomes of -5.4% to -16% for the current year. Kieswetter said that SARS’ initial estimates are that revenues will be 15% to 20% lower than announced in the February Budget Speech, amounting to an under-recovery of R285 billion.
 
SARS’ preliminary assessment of revenue performance for April showed a R9 billion under-recovery, a year-on-year decline of 8.8%. This was the result of a drop in prior year performance of PAYE by 5.2%, domestic VAT by 4.3%, import tax by 19.7%, specific excise duties by 54.7%, and corporate taxes by 55.4%. VAT refunds were 12.5% lower than estimated due to fewer credit returns this year.
 
COVID-19 tax relief measures could cost SARS much more than the initially predicted R70 billion, said Kieswetter.
 
Continued compliance
Kieswetter also highlighted the need for employers and employees to remain compliant during the upcoming 2020 filing season for personal tax, which he described as more important than ever.
 
“SAIPA urges employers to ensure their employee tax submissions are current and that all PAYE has been paid to SARS to support economic recovery,” says Retief.
 
Businesses seeking tax relief, government aid or business rescue should contact a Professional Accountant (SA) to maximize the chances of their applications being successful.
 
ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@thatpoint.co.za, www.atthatpoint.co.za 
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African Institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants