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The Financial Times recently reported that the Bank of England, UK’s central banking authority, had launched a probe to evaluate if KPMG worldwide will survive the fallout from its South African division’s troubles.
“Such high profile incidents are not indicative of the overall state of accounting,” insists Ragiema Thokan-Mahomed, Legal, Ethics and Compliance Executive at the South African Institute of Professional Accountants (SAIPA). “We can’t let a few deviants destroy a profession that is essentially the world’s economic foundation.” Accounting integrity stronger than ever Agreeing with SAIPA’s stance, a 2017 paper from the International Federation of Accountants (IFAC), conducted independently by the Centre for Economics and Business Research (CEBR), concluded that accountants play a central role in fighting corruption. According to Thokan-Mahomed, most accountants have a conscience and adhere to prescribed accounting standards. In fact, the latest International Ethics Standards Board for Accountants (IESBA) handbook obliges practitioners to take action when observing or even suspecting a non-compliance with laws and regulations. “Like every IFAC member, SAIPA also has a robust investigations and disciplinary structure in place to deal with offenders,” she adds. “However, we can’t monitor the integrity of millions of companies and transactions, so we need eyes on the ground. It’s time for all South Africans to get involved.” The role of professional accountants In the past, accountants’ response to NOCLAR (Non-Compliance with Laws and Regulations) was limited by client confidentiality but the introduction of sections 225 and 365 of the IESBA code removes this barrier. Now, Professional Accountants (SA) must be conscious of their role when confronted with a NOCLAR and promptly follow the IESBA procedure when identifying a means to remedy the contravention. Where a matter is not resolved effectively, they are required to report it to an appropriate authority. Accountants must further establish whistleblowing policies and procedures in their organisation for this purpose. “We want our members to be at the forefront of promoting good practice, so we encourage them to ensure that these systems are in place,” says Thokan-Mahomed. Investigation and disciplinary process Anyone can report NOCLAR to SAIPA’s legal department directly, by email or by following the complaints procedure on its website. However, the legal team require adequate information to do their job effectively. If the complaint has merit, an investigation will ensue and the SAIPA member may be visited by an assessor collate the relevant documents and inspect them for compliance with accounting standards. When a whistleblower desires anonymity, SAIPA will take on the role of the complainant. For lesser offenses, SAIPA’s Investigations Committee can levy a fine against the transgressor. However, where gross misconduct is apparent, the matter is passed to SAIPA’s Disciplinary Committee. If convicted, a member could be struck from the Institute’s membership role and their dismissal is publicised to protect the public and SAIPA’s reputation. SAIPA is currently negotiating agreements with other accounting institutes to prevent disgraced members from joining another body in South Africa or participating countries. Thokan-Mahomed says observers may become frustrated with the length of the process but notes that dues process must be followed. “Every South African has the right to justice, so evidence must be carefully cross examined and the defence, if any, must be heard. It’s time-consuming but that thoroughness ensures that justice is done.” Taking a stand SAIPA calls on all South Africans to join its ongoing battle against NOCLAR. “We have the systems in place to fight corruption,” concludes Thokan-Mahomed. “But we need information from our members and the man in the street. Together, we can win.” Sources:
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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
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Author: Professor Rashied Small, Executive: Education and Training at SAIPA
The International Federation of Accountants (IFAC) recently released its 2017 Global Status Report which measures the progress of its members in adopting its international accounting standards. IFAC found that, although member organisations are committed to meeting their SMO’s (statement of member obligations) for each standard, the process is complex and progress is rarely quick. In fact, full implementation may take years. As the report notes, professional organisations typically share responsibility for adoption with external stakeholders like government and educational institutions. Their ability to win the cooperation of these parties is therefore vital in achieving their end. Why South Africa leads It is encouraging that South Africa has been ranked number one in implementing IFAC standards over the previous five years, except for 2017. As a member of the South African Institute of Professional Accountants (SAIPA), I can attest that the country’s status as an early adopter is due in no small part to the organisation’s focus on relationship building and collaboration. The same is true of any of the nation’s various professional accounting organisations (PAO’s). Education Adoption of IFAC standards starts in the country’s education system. Courses for accounting must meet government regulations and address the needs of industry. It is therefore appropriate that SAIPA, like most professional bodies, sits on the advisory committees at South Africa’s various universities. These panels review current curricula to evaluate if they are still relevant to industry requirements and incorporate international standards. The Institute also consults with other tertiary education providers. In addition, SAIPA works with the South African Qualifications Authority (SAQA), the Council of Higher Education and the Quality Council for Trades and Occupations. Government Government plays a key role in the adoption of IFAC standards and SAIPA’s relationship with them is extremely good and positive. The Institute has worked hard to win the right to positively influence regulation by being involved in and adding value to the legislation development process. The Institute provides representation to government in parliament on matters like tax and the Companies Act and is a member of the recognised controlling body (RCB) with SARS. Government is also entrusting professional bodies with more responsibility to ensure that regulations and standards are embraced by their members . Professional bodies A country’s regulators can greatly accelerate adoption of IFAC standards by working together towards this goal. Fortunately, the many professional bodies in South Africa maintain a good working relationship with one another. This has contributed to our success. For standards that govern the field, SAIPA is represented with each stakeholder to ensure correct interpretation and implementation of the standards. These include the Financial Reporting Technical Committee, Accounting Standards Board and Ethics Standards Board. Other countries If some of South Africa’s trade partners do not fully implement IFAC standards, this can reduce the benefits of our own adoption. To address the issue, SAIPA joined several African accounting bodies, most notably the Pan African Federation of Accountants (PAFA) and the Southern African Community Institutes of Accountant (SACIA) a sub-structure of PAFA that promotes collaboration and co-operation amongst regional PAO’s. This gives us the opportunity to help ensure standards are fully adopted across the continent. For unaffiliated countries, SAIPA has signed memorandums of understanding (MOU) with several who wish to adopt the standards but lack the guidance or resources to do so. Currently, we offer our services to seven African professional bodies to assist them with adoption and developing a curriculum of minimum competencies. Non-regulated accountants All auditors in South Africa must belong to a professional body, but not all practicing accountants. This is of concern because non-regulated practitioners are under no material obligation to adhere to IFAC standards. Through the Forum of Accounting Bodies, SAIPA is working with Treasury on new regulations to compel all accountants to join a professional body. This will give their employer or clients the assurance that they are fully compliant, being bound by our code of conduct, investigation and disciplinary processes, and continuous professional development programmes. Treasury should begin rolling out a new regulatory framework by 2020. Setting the pace In adopting IFAC’s international standards, South Africa has become a yardstick for the rest of the world. International bodies are investigating our implementation frameworks, educational curricula and professional programmes as blueprints for their own endeavours. While collaboration is the key to making adoption happen, the secret ingredient is the hard work of relationship building that makes close cooperation possible. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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 Author: Ragiema Thokan-Mahomed, Legal, Ethics and Compliance Executive,
South African Institute of Professional Accountants (SAIPA) The increasing number of matters involving fraud, corruption and money laundering emphasises the role of the professional accountant to report any non-compliance with laws and regulations. In July this year the International Ethics Standards Board for Accountants, established by the International Federation of Accountants (IFAC), introduced a new section to their code of ethics. The draft was out and available since 2016. Non-compliance goes far beyond reportable irregularities, and includes actual or suspected non-compliance with data protection, securities trading, terrorist financing and environmental protection. The newly added Section 360 in the code of ethics guides accountants to act in the public’s interest when they become aware, or suspect a NOCLAR (non-compliance with laws and regulations) Roles and responsibilities of professional accountants The code states that a distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest (section 100.1 of the IESBA). When responding to a NOCLAR, the professional accountant is required to comply with the fundamental principles of integrity, objectivity, professional competence and due care and professional behaviour. Once they become aware of the NOCLAR they have to report it to their direct superior, and if they are the most senior person they have to consult with the board of directors or anybody who is involved in corporate governance in the organization. The responsible people must be allowed time to rectify, remediate or mitigate the consequences of the identified or suspected non-compliance as long as there is no urgency in the matter. SAIPA advises accountants to follow the internal route first. If they feel there is insufficient action to rectify the non-compliance, they can approach the regional forums and their professional bodies. If there still remain unease they should consult legal counsel. The code acknowledges that a senior professional accountant is expected to apply knowledge, professional judgment and expertise. However, he is not expected to have a level of understanding of laws and regulations beyond that which is required for the professional accountant’s role within the employing organisation. The newly added section provides accountants with an override to the principle of confidentiality when reporting the non-compliance is in the best interest of the public. Once they have taken appropriate action, they must feel comfortable that the noncompliance has been fully dealt with and remember to document everything. Dealing with threats and intimidation Professional accountants need to maintain their independence and objectivity, and not succumb to intimidation or threats when they encounter and report non-compliance. South African legislation supports this professional duty in the form of the Protected Disclosures Act. The code states that where it is not possible to reduce the threat to an acceptable level, a professional accountant shall refuse to remain associated with information that is considered misleading or may cancel their mandate to ensure that the code is upheld The Letter of Engagement should reflect clearly that the client’s information will be held confidential, but if there is a legal or professional duty to disclose non-compliance the professional accountant will not hesitate to do so. This sets the ground rules for the client to understand that the professional accountant will not tolerate non-compliance if it impacts on the public’s best interest. The accountant has a trained eye, and can determine if something seems untoward. Meticulous record-keeping It is critical for the professional accountant to meticulously document what he has done to address the non-compliance. This will act as proof that he adhered to the requirements and responsibilities set out in the new section of the code. It is advisable to document the nature of the matter, the results of discussions with a superior or, and where applicable, those charged with governance. It is important to document the response of the accountant’s superior, the courses of action taken by the professional accountant and the judgments made and the decisions that were taken. The International Ethics Standards Board for Accountants: https://www.saipa.co.za/wp-content/uploads/2017/01/2016-IESBA-Handbook.pdf ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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 |
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