By: Faith Ngwenya,
Acting CE and Technical Executive,
South African Institute of Professional Accountants (SAIPA)
 
Choosing an accountant based on prestige rather than proficiency can sometimes have expensive and risky results.
 
A common misconception is that the term “accountant” encompasses a small – although significant – set of skills that deliver basic financial management. Another incorrect assumption is that areas of specialisation in the accountancy profession follow a superiority ranking, or the notion that some accountancy designations are better than others.
 
There is no accountancy designation that is superior to another when it comes to accountancy. Rather, the value of the accounting service performed is not dependent on title or designation, but on the relevance of knowledge and experience according to what the client or employer needs.
 
To gain the most benefit from their accountancy service, an organisation needs to understand exactly which type of accountant is the right fit for them, specifically, and why.
 
Many people find it surprising that there are a number of designations and regulatory bodies in the accountancy space. In South Africa, professional designations are formalised and regulated by the South Africa Qualification Authority (SAQA) through a stringent process. While some of the accountancy designations require only a university degree, many require additional studies and practical work, or articles, to be completed before the professional designation can be awarded.
 
Once a designation has been registered with SAQA, these marks of professional competency are regulated by specific professional bodies. These institutes take on the role of awarding professional competency recognition to people who have proven their competencies in their specialised areas of expertise. In addition, the institutes are then responsible for ensuring that professionals who use these designations adhere to a strict set of rules and professional conduct.
 
While the title allocated to an accountant might sometimes allude to the type of function in which each designation is competent, a deeper understanding of the areas of specialisation can save businesses a lot of time and money. It is worth visiting the websites of each regulating body to discover whether the competencies and experiences of a relevant accountancy designation hold relevant value for a specific type of business.
 
Accountants can perform numerous functions and issue reports in terms of the Companies Act, Close Corporations Act, Micro lending industry regulations, Sectional Titles Act, Non-profit Organisations Act, Income Tax Act, Schools Act and various other Acts.
 
From a business value point of view, an accountant can – dependent on their specific combination of knowledge and expertise – add value to the performance or compliance of any business in the following ways:
 
Creator of business value
As a creator of business value, some accountants can drive strategy and design business models. In this role an accountant needs to be capable of focused decision-making and have a clear understanding of financial statements and how they impact the business. They also have to know how to preserve business value through risk management and awareness of functions like business rescue.
 
In this area the accountant might perform the role of CEO, strategic manager, business advisor/consultant, due diligence consultant, financial manager, or business analyst.
 
Enabler of business value
In the space of acting as an enabler of business value, an accountant can become involved in financial decision making for the business – often the role is that of the company CFO, or an official of the Treasury department.
 
This role focuses on performance and assessment of cost and management requirements, playing the role of internal auditor and even systems analyst towards a deeper understanding of business process and performance. Accountants in this role are often the financial manager and/or general business manager as they understand the overall value of the business.
 
Preserver of business value
As preserver of business value, an accountant becomes involved in functions such as Interpretation and analysis of financial information, Internal Auditing, Risk Management and Business Rescue. It demands an understanding of the importance of compliance and the role it plays in perpetuating growth and a sustainable business.
 
In this area an accountant may take on the role of business analyst, business risk manager, systems analyst and even financial manager. They are an advisor and a consultant, someone who can guide and support a business in its growth and development over the long term.
 
Reporter of business value
Some accountants specialise in reporting the value of a business through an involvement in both financial and non-financial reporting. A great example is legislators, or practitioners preparing financial statements and independent reviews. They are aware of compliance, can plan ahead, forecast the financial future of a business, and hold a managerial role in the financial department.
 
An accountant, regardless of specialised designation, has to provide a business with the support it needs to drive it forward, create employment and ignite growth. If they can create and enable value while managing risk and reporting, then they are an invaluable asset to any organisation.
 
Finding the right accountant is more than the sum of their qualifications, it is a blend of training and insight which has the potential to support a business. A firm hand and a sound background will see any accountant become a trusted advisor and reliable partner in any enterprise.
 
Choosing an accountant based on proficiency, rather than prestige, is the start of a valuable partnership.
 
ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za 
 
For more information on SAIPA please visit:
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Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants group
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The leaking of information relating to secret offshore accounts and companies from the files of a Panamanian law firm—now known as the Panama Papers—has already occupied many column inches in the media, mostly focusing on the famous names implicated. The assumption is that anybody who is named in the Papers is culpable in some way but that’s not necessarily the case, says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committee at the South African Institute of Professional Accountants (SAIPA).

“Having offshore accounts, funds or companies is not in and of itself illegal, provided the correct taxes are being paid and properly disclosed, all necessary permissions have been obtained from the Reserve Bank or similar regulations,” says Retief.

“The real implication of this leak, which comes on the heels of the HSBC Swiss leak  last year, is that secrecy pertaining to your financial affairs is increasingly elusive. More than ever, individuals and companies need to assume that their financial affairs are going to come under scrutiny. Leaks will continue to occur and, more important still, revenue authorities around the world are sharing information about taxpayers. In today’s digital, connected world, information access is the great leveller.”

The Standard for Automatic Exchange of Financial Account Information in Tax Matters, also known as the Common Reporting Standard, was endorsed by the G20 in 2014. South Africa is one of a group of early adopters of this Standard, which means that from 2017, SARS will be sharing information about accounts held in its jurisdiction by foreign nationals, and receiving similar information about accounts held by South Africans overseas. Ninety-six countries have committed to implement this information-sharing framework. South Africa has already concluded information sharing agreements with many other jurisdictions.

Information sharing between governments in this manner, says Retief, will make it increasingly difficult to avoid scrutiny by tax authorities. And even if information about questionable transactions is successfully hidden, the greater prevalence of leaks makes such information increasingly vulnerable.

Retief notes that while structuring one’s financial affairs to avoid paying excessive tax is perfectly legal (within the letter of the law), trying to evade paying tax is both illegal and unethical, and in some cases even fraud. The trouble is that offshore accounts and companies shrouded in anonymity and complexity lend themselves to tax evasion, either by individuals seeking to hide money from the tax authorities, to harder ill-gotten gains, terrorist activities, or by companies seeking to reduce the corporate tax they are due to pay.

Corporate tax evasion via base erosion and profit shifting has become a particular concern over the past several years, and has seen several high-profile corporates revealed to have been paying very low taxes through the use of tax havens and complex multi-national structures. Retief explains that this is done by routing transactions through shell companies located in various jurisdictions with favourable tax regimes, or jurisdictions that have strong secrecy, and in some cases little to no disclosure required in those jurisdictions. In each jurisdiction, high charges are made for non-existent services, or greatly inflated values are levied in order to reduce the ultimate profit reflected in the country where the transaction actually took place, and where it should properly be taxed.

Great ingenuity is used to make these routes as meandering as possible in order to make obtaining proof hard, which is why confidential accounts and anonymous companies are so popular.

“The tax authorities can deem this kind of financial manoeuvring to be tax evasion if nothing of value is added within each jurisdiction or where there is a lack of economic substance—but they first have to know that the activity is going on. Getting the information is critical,” says Retief. “That’s why the real significance of the Panama Papers is that information is increasingly hard to conceal. One should structure one’s financial and tax affairs accordingly. There are many legitimate reasons why companies and individuals would like to have offshore accounts and companies, but their confidentiality is no longer guaranteed.”

The Minister of Finance introduced a voluntary disclosure program that will be initiated later this year to allow individuals and companies to come-clean with regards tax and exchange control contraventions.

ENDS

MEDIA CONTACT: Juanita Vorster, 079 523 8374, juanita@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
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SARS has set 12 August 2015 as the voluntary disclosure deadline for South Africans that are implicated by information leaked to the media in the HSBC tax evasion scandal.  “Tax dodgers must run towards the second chance that the Voluntary Disclosure Program offer,” says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at the South African Institute of Professional Accountants (SAIPA).

“Anybody implicated by the leaked HSBC information can make use of the Voluntary Disclosure Programme before the deadline to regularise their position with SARS, and avoid understatement penalties, and even prosecution,” says Retief. “The alternative is to face a SARS audit process with, potentially, a very unpleasant outcome.”

Provided full disclosure is made, any individual or company making use of the Voluntary Disclosure Programme will avoid penalties of up to 200%. The tax would, however, still be payable.

“Hiding information is less effective as tax authorities have ever greater access to global information through a growing web of tax treaties and information leaks,” says Retief. “The HSBC leak demonstrates the powerful dynamics at the heart of today’s connected world.”

“One of the biggest changes in the Tax Administration Act of 2011 is the broadening scope of information that SARS can request,” explains Retief. “Before 2011 SARS had to request specific information relating to a particular taxpayer.”

Since the promulgation of the Tax Administration Act, with greater international information sharing agreements, and automatic third party data being submitted to SARS, it has become very difficult for taxpayer’s to hide income and gains. In South Africa, SARS has the authority to request information or documentation about a taxpayer from any third party, such as the bank, financial advisor, or even your accountant.

Retief also warns taxpayers against entrusting their financial affairs entirely to a third party without retaining a measure of hands-on involvement. “Not knowing how others managed your finances does not absolve you from personal consequences.”

ENDS

MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@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

Tapping into the growth markets of Sub-Saharan Africa appears to be a promising way of expanding business but a closer look reveals that doing business in these countries comes with a few challenges. 

According to the World Economic Forum (WEF) Global Competitiveness Report, Sub-Saharan economies continued to register impressive growth rates of close to 5% in 2013 and the forecasts over the next two years are even better. The latest research report by Dr. Thomas Höppli, Economic Research Analyst for the South African Institute of Professional Accountants (SAIPA) confirms these findings and also highlights the challenges in these Sub-Saharan African countries.

“Much of the growth is due to natural resources such as oil and gas. The increase in oil and gas production has caused other related sectors to grow too but consistent high growth has not yet trickled down to all segments of the population,” says Höppli. “As the WEF highlights, most economic activity in Sub-Saharan Africa still happens in the informal sector, which accounts for more than 50% of GDP and employs more than 80% of the population. The main challenge in the years to come will be to turn growth into inclusive growth,” Höppli adds.  

Consumer purchasing power
Despite this challenge, the growth has resulted in increased spending, particularly on consumer goods such as mobile telephony, soft drinks and other small luxuries as consumer purchasing power increases. “There has been a marked upswing in growth of businesses in the consumer goods, communication, and construction and supply chain sectors,” Höppli remarks. “One could therefore consider investing in these types of businesses or establishing your own in these markets.” 

Import and export markets
Furthermore, Höppli notes: “Another way for South African businesses of tapping into these growth markets – instead of physically establishing a business in one of these countries – is through trade. The high economic growth, which has been spurred by export activities and related investment, suggests that demand for imported products as well as purchasing power is increasing rapidly and that they could thus be interesting export markets and foreign direct investment destinations.”

Ease of doing business 
“The major challenges facing the ease of doing business in Sub-Saharan Africa include bureaucratic red tape, infrastructure issues like poor roads and unstable power supplies, a low availability of skilled and suitably trained staff, cultural differences, language barriers and corruption. These problems, although not insurmountable, add to the cost and effort needed to do business,” Höppli warns.

The ease of doing business index implies that the majority of the Sub-Saharan countries are among the more difficult countries in the world to do business in. While countries in which doing business is easier have not seen higher average growth rates since 2008, there is a correlation between how easy it is to do business and the income level achieved in these countries.  GDP per capita, based on purchasing-power-parity (PPP) per capita GDP, tends to be higher the better the country is ranked in the Ease of Doing Business Index.

The higher GPD per capita in countries where it is easier to do business suggests that over time, a more conducive business environment has contributed to achieving a higher level of GDP per capita.  For South African companies it is also an indication that potential customers in these ‘easier-to-do-business’ countries tend to have a higher purchasing power.

Business in Africa not for the fainthearted
“Doing business in Sub-Saharan Africa is a challenge, but those who are undeterred by a business environment that may not be as easy as it may be in other countries could reap high rewards,” Höppli concludes.


ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@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

This year, the Top Women Awards will benefit from the input of one of South Africa’s leading women in finance, Shirley Olsen – chairperson of the South African Institute of Professional Accountants (SAIPA).

“As a woman who started her own accounting practice at the age of 20, and now focusses on being a consultant and trainer in Finance and Corporate Governance, Shirley is eminently qualified to judge the attributes of other top women,” said Shahied Daniels, Chief Executive Officer at SAIPA. “We are very proud of her achievements to date, as well as this particular acknowledgement!” he added.

The Top Women Awards is a prestigious event in which female leaders are celebrated for outstanding performance in the world of business and government. The winners will be announced at a gala event at Emperors Palace, Johannesburg, on 14 August 2014.

“I felt extremely honoured to have been invited to be a judge this year and took this position very seriously,” said Olsen. “As there are many women who have succeeded in business, I looked for women who stood out because of their uniqueness as well as women who struggled to succeed against all odds, particularly in a male dominated area such as mining.”

“The nominees were of a high calibre and I am very interested to see who the final winners will be, especially in the highly competitive individual categories,” she said.

ENDS
_______________________________________________________________________________________________________

MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@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