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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: 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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