 There’s been much talk in the press about the robotisation of accounting and how artificial intelligence (AI) will inevitably make professional accountants obsolete. According to Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA), it’s not that simple. “Professional accounting organisations like IFAC and SAIPA are closely monitoring the impact of AI-driven systems on the industry,” she says. “While some bookkeeping and reporting functions may require minimal human intervention in the future, the professional accountant who is willing to expand their horizons will be more in demand than ever.”
AIs in training To date, there are no commercially available general AIs, that is, ones that can learn to do anything a human can. Rather, today’s AIs must be trained to perform an individual task by analysing historical data related to that function. They also have to be given statistical boundaries so they know whether a given piece of information is relevant to completing the task or not. And they must be configured to recognise when they have reached the desired goal. Once set up, an AI continually executes the task by trial and error in a training environment until it achieves an acceptable rate of success. Only then can it be deployed to a live business environment. If the task is unique and limited data is available, system and data preparation could take several months. The accountant’s role in financial AI projects If the provided training data is insufficient or not strictly relevant to the task, or the configuration parameters are inappropriate, an AI may never reach its goal. Worse still, an incorrectly trained AI might complete the task without fail, but with compounding inaccuracies that go unnoticed until it's too late. For financial functions, this scenario gives rise to an opportunity cost, risk to the business and concerns about protecting the public interest. “The correct training of an AI to perform even basic accounting work clearly falls within the professional accountant's purview of developing, implementing and auditing financial systems,” says Ngwenya. “They must therefore be prepared to study and understand at least the rudimentary principles of AI because the accountability for its results falls on them. AIs don’t sign off on internal audits or financial reports.” A new opportunity for accountants How AI can be applied to complex business functions and problems is still largely a matter of human ingenuity. Apart from guaranteeing that an AI’s work is accurate, accountants must also ensure that the way the technology is used adds value to a company’s financial processes. Being exposed to the full body of business data and requirements, they are in a prime position to drive business automation in a direction that best serves their customers or employers. Private practitioners may partner with AI specialists to develop useful business solutions or even hire employees with these skills. For example, one company has launched an AI that can rapidly detect embedded leases in contracts, an expensive and labour-intensive requirement of IFRS 16. Says Ngwenya: “Instead of worrying about AI, professional accountants should pioneer the way forward by offering AI assurance services and innovating the future of automated accounting. This will only enhance their standing as trusted business advisors.” 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 SOURCES: ● https://www.businesswire.com/news/home/20180716005195/en/Axiom-Launches-Contracts-Intelligence-Lease-Accounting-Ready
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 The South African Institute of Professional Accountants (SAIPA) today released the results of its November 2018 Professional Evaluation. Professor Rashied Small, Executive: Education and Training at SAIPA, congratulated the successful candidates and welcomed them as full members to the Institute. “Those who passed have proven their competence and may now proudly bear the distinguished title of Professional Accountant (SA),” he says. “We are delighted to have them as members and look forward to supporting them throughout their careers and endeavours.”
The purpose of the PE The Professional Evaluation is a four-hour written exam that every prospective SAIPA member must complete before being granted access to the Institute’s ranks. Prerequisites for taking the test are a SAIPA approved degree or diploma and the completion of a three-year learnership at a SAIPA accredited training centre (ATC). The stringent pre-entry evaluation is a distinctive requirement that sets SAIPA apart by testing the applicant’s ability to apply what they have learned to complex practical and ethical problems. “We don’t assume an accountant to be competent,” explains Professor Small. “Rather, they must be able to demonstrate their proficiency on demand. This assures the public that our members understand their burden of responsibility and are equipped to practice professionally from the very beginning.” Demographics For this round, a total of 676 candidates wrote the Professional Evaluation exam. This number comprised 265 males (39%) and 411 females (61%). From an equity perspective, 378 (56%) of the candidates were African, 55 were Coloured (8%), 43 Indian (6%) and 200 White (30%). “We’re excited to observe so many female accountants entering the field and it’s encouraging that over half our applicants are black,” remarks Professor Small. “However, we’d definitely like to see many more Africans pursuing a career in accounting. It is an incredibly rewarding profession that also plays a key role in accelerating South Africa’s socio-economic transformation.” Project Achiever Project Achiever is a special five-month course designed to prepare candidates for their Professional Evaluation. It has proven very popular, with 415 of those being tested having participated. This optional programme is open to both university and university of technology graduates who have completed their 3-year learnership. Selected formally disadvantaged groups qualify for full funding through the Finance and Accounting Services Sector Education and Training Authority (FASSET). “We dare not lower our standard to meet the overwhelming demand for accountants at the cost of protecting the public interest,” says Professor Small. “Through Project Achiever, we are instead helping aspiring accountants reach that standard and thereby satisfying both concerns.” In addition to technical and ethical competency, the programme imparts vital soft skills, like team work, communication, business writing, reporting and more. The future with SAIPA With their Professional Evaluation behind them, these newly fledged Professional Accountant (SA) holders may go on to, say, work at corporations, start their own private practice or even extend their skills to specialised fields, like tax consulting. Whatever they choose, each will be considered a valuable business advisor. “Furthermore, SAIPA will be behind them all the way to help them realise their full potential,” says Professor Small. Results A total of 521 candidates successfully completed the Professional Evaluation exams. Below the top 10 achievers for November 2018 exams.
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  Author: Faith Ngwenya, Technical Executive, South African Institute of Professional Accountants (SAIPA)
In the ever-changing world of technology, it may seem that professional accountants have become somewhat obsolete. We will be looking at what steps professional accountants can take to ensure they stay relevant. Areas where technology has systematically been replacing professional accountants include accounting software packages that have been around for decades and have advanced significantly in recent years. In the past it would have taken weeks to prepare financial information, but today it can be done with the push of a button. SARS e-filing and Easy File have also automated a lot of previously manually prepared compliance returns. And it is not only the financial accounting world that is being overtaken by technology but also auditing. A lot of the audit processes have recently been highly automated. How to remain relevant For accountants who have buried their heads in the sand, assuming they will still make a living by continuing the same services they have rendered in the past, the reality is that they are fast becoming irrelevant. These days clients see little or no value in simple compliance services, and are rather looking for accountants who can add concrete value to their businesses. Accountants need to realise that even though it may seem like a daunting task, they must keep looking out for developments in their areas of operation, and by doing so they will provide the much sought-after service of adding value to their clients. The days of billing based on “time” spent on the job will soon be a thing of the past and the billing should now be based on the value that you have added to the client’s business. Adapting to a changing environment More than a decade ago the industry awoke to cloud based accounting. Accountants under-estimated the impact of this innovation and today it has become the way of doing business. In the near future all systems will be cloud based and those accountants will be left behind. The lesson that we should learn from this is that as the profession evolves and technology advances we need to keep pace with the changes. Today we speak of techno-currency (Bitcoins and Blockchain) and these are transactions that accountants should understand, be able to process and be able to advise their clients on. If you ignore equipping yourself with the necessary knowledge of these important evolvements you will wake up one day and realise that half the business has moved away from traditional methods to the distributable ledger technology. The IFAC 2018 Small and Medium sized Practioners (SMP) survey of 6258 SMPs globally revealed that 38% of the respondents viewed technology as a significant challenge. This realisation has resulted in majority of the respondents committing to heavily invest in technology. It becomes clear that business priorities have to be changed and more emphasis be put in enhancing the technology resources. Offer new range of services Professional accountants need to embrace artificial intelligence and seek opportunities to ensure that they are able to add value that cannot be taken over by technology. The analytical capability of a professional accountant of the 21st century becomes an important resource that will keep them relevant in this changing environment. The range of services that are presented by professional accountants need to change significantly from what they currently offer. Some need to undergo a complete business re-engineering process and reconfigure who the client is and what are and should be the needs of the client in this dynamic business environment. The changing environment brings with it new risks that the professional accountant should be aware of and bring to the attention of the client. Risk identification on its own is meaningless if there is no mitigation and monitoring of future and residual risk. Available resources to assist Professional Accountants (SA) Professional accountants must seek professional development that will keep them abreast of the developments in technology. The biggest resource available to accountants is the reading material that is available. Accountants must read and attend training that will be relevant to the identified course that they want to follow in this changing environment. SAIPA has identified continuing professional development workshops that will address the changing necessities of the profession. The onus is on the accountant to capacitate him/herself adequately to remain relevant. 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  Authored by: Ragiema Thokan-Mahomed, Legal, Ethics and Compliance Executive at the South African Institute of Professional Accountants (SAIPA)
Recently, the South African Institute of Professional Accountants (SAIPA) signed a groundbreaking memorandum of understanding with five other professional bodies to effectively close a loophole that allowed professionals with multiple memberships to evade the consequences of misconduct. The other signatories to the memorandum include the Institute of Internal Auditors SA (IIA SA), the Institute of Risk Management SA (IRMSA), Chartered Secretaries Southern Africa (CSSA), the Institute of Directors in Southern Africa (IoDSA), and the Association of Certified Fraud Examiners (ACFE). Together, these organisations represent over 44,000 of South Africa’s company directors, company secretaries, internal auditors, accountants, fraud examiners and risk management professionals. In the wake of revelations of corruption in government and business since last year, complaints against professional accountants have increased by 150%. This is understandable as the public has become acutely aware of the impact of corruption and are more likely to investigate courses of action available to them. This is true not just of accountants but many professionals in positions of authority, including business directors, company secretaries, corporate investigators or managers. An integrated disciplinary solution One means of resolution is to approach their professional body, which typically implements an investigative and disciplinary process based on internationally prescribed standards. SAIPA, for example, adheres to the framework of the International Federation of Accountants (IFAC), of which it is a voting member. However, as a result of specialisation, many professionals belong to several associations, therefore holding more than one professional designation. In the past, if they were expelled from a particular association for misconduct, they could continue practicing under an alternative designation, thereby evading the full consequences of their actions. Now, those days are over. In terms of the agreement, if a complaint is received against a professional who holds designations associated with several of the signatories, the relevant professional bodies will take a unified approach to investigate and resolve the charge. A lead investigator shall be nominated from among the parties and the final judgement shall be binding across all participating bodies in as far as their codes of conduct determine. Swift justice The goal is that such cases will be addressed more swiftly, efficiently and cost effectively but, most importantly, that their effect will be complete and justice will be rightly served, all in the interest of the public. This is yet another step SAIPA has taken to combat non-compliance with laws and regulations (NOCLAR) in its efforts to restore faith in the accounting profession and protect the public interest. The implications of this initiative are profound, promising a unified front against corruption by putting the very careers of wrongdoers at risk. It is also a valuable extension to SAIPA’s own rules that require the names of members struck from its roll to be made public and a letter of good standing to be obtained for applicants already associated with another body. Better legislation required Yet, more needs to be done. Currently, no legal constraints exist to practicing accounting. Anyone, regardless of qualification or intent, can hang out their shingle and call themselves an “accountant” or, for those who presume to know better, “a professional accountant”. As a result, there is no way to estimate how many accountants there actually are in South Africa or the magnitude to which these unregulated practitioners contribute to NOCLAR. This is a grave injustice to the reputation of the profession and the public interest. It is critical that new laws are promptly enacted to compel anyone practicing accounting to join an appropriate professional body, like SAIPA. SARS already enforces such a requirement to ensure that tax practitioners are suitably qualified and professionally traceable, thereby protecting taxpayers from harm. Demanding the same of accountants should be a standard condition. Right now, it is left to organisations to decide if they will risk hiring or doing business with unregulated accountants, and forego the assurances provided by a professional designation, like Professional Accountant (SA), and the protection offered by initiatives like the collaborative agreement mentioned above. SAIPA’s designation is backed by a prescribed study path, a three-year practical learnership, a Professional Evaluation of applied competence and ethics appreciation, a strict code of conduct and disciplinary process, and continuous professional development programmes (CPD). All that is missing is sweeping legislation to ensure that South Africa enters a new era of ethical accounting. 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  Author: Zobuzwe Ngobese, Executive: Marketing & Business Development at the South African Institute of Professional Accountants (SAIPA)
It’s one thing to study accountancy at university, even with practical exercises. It’s quite another to practice as a professional accountant every day in the real world of business. A conscientious graduate will acknowledge the need to transform their education into polished competency before taking on complex accounting duties in earnest. This means getting practical training under the mentorship of senior accountants so one’s lack of experience does not jeopardise the public interest or tarnish the profession. Experience is not enough Just finding a position in a company and starting work won’t produce the desired results. Many organisations, especially smaller ones, only implement simple accounting records or part of the full scope of financial responsibilities. However, a SAIPA Accredited Training Centre (ATC) is a real business that follows SAIPA’s learnership guidelines to ensure a graduate gains work experience across a wide range of financial concerns. In this environment, they can work under the watchful eye of experienced accountants who will identify any mistakes they make and guide them in the right direction. During their learnership period, trainees complete 214 practical modules relating to unique accounting skills in every business area. They record these in SAIPA’s online electronic logbook, a first for the industry, which is moderated by the Institute. In addition, SAIPA assessors visit the ATC to evaluate trainees’ progress. Once learners complete all the modules, SAIPA issues them and the ATC with a letter of completion and forwards their results to the Finance and Accounting Services Sector Education and Training Authority (FASSET). FASSET then awards them a certificate of competence and their achievement is registered in the South African Qualifications Authority (SAQA) National Learners’ Records Database. In this way, graduates can be molded into fully-fledged professional accountants with the correct mindset and complete complement of skills needed in business. More than training The ATC is a very different setting from university. Its main goal is not learning but productivity - getting things done efficiently to be profitable. Working in such an environment will equip trainees with know-how that cannot be taught in academia because of this unique dynamic. Apart from essential work experience, trainee accountants will acquire additional capabilities they can leverage throughout their careers. These include becoming acclimated to the culture of the financial department, learning to work as a member of a team with interrelated responsibilities, and learning to operate systematically as part of a larger process. Other soft skills, like presentation and speaking, emotional intelligence, listening and observing, understanding requirements, reporting, conflict resolution and business writing, will also be gained. And each discreet quality contributes to grooming the ideal professional accountant. Professional designation Most accountants sooner or later realise the benefits of holding a professional designation, like SAIPA’s Professional Accountant (SA). It’s trusted by organisations because of the strict conditions placed by the Institute on its members’ competency and conduct, which inevitably protects the profession’s end users from poor service. Such a recognised and well-regarded qualification can open doors to career advancement for employees or business opportunities for private practitioners. However, before one can even apply for the designation, they must complete their three-year learnership at a SAIPA ATC. Becoming a trainee accountant Because ATCs are actual businesses with specific workforce needs, SAIPA never tries to influence the recruitment process. A graduate must apply for a position as they would with any other company. This means submitting a professionally drafted CV and presenting oneself confidently at interviews. SAIPA Student Members do have some advantages over other candidates. Firstly, ATCs may notify SAIPA of vacancies for learners, which we post online in our student membership area. In addition, SAIPA will advertise on our website that a student member is seeking placement. ATC recruiters often check these notices and may contact that member before sourcing candidates elsewhere. Practicing at a higher level Becoming a real professional accountant is about more than getting a job. The earnest practitioner strives for excellence in service and aspires to the highest ethical standards from the get-go. So completing a three-year learnership at an ATC sets the pace for everything that follows. It fosters competency and clears the way to a professional designation. After that, the sky’s the limit. Therefore, those currently in university should be sure to plan for their learnership. There’s a list of ATCs on SAIPA’s website as well as instructions on how to become a SAIPA Student Member. Becoming an ATC SAIPA is also eager to partner with more organisations that can offer a broad spectrum of accounting experience to recent graduates. This will help the Institute bolster its ranks of proficient accountants who will serve our growing economy’s future needs. It’s a great way to demonstrate one’s commitment to the profession and contribute to its advancement. If you would like to know more about becoming a SAIPA ATC, please contact us through our website. 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  Authored by: Faith Ngwenya, spokesperson of the South African Institute of Professional Accountants (SAIPA)
A recent trend that has emerged in South African businesses shutting their doors is to opt for the path of business rescue, as opposed to liquidation. While many believe that a business rescue process is only implemented to stall a liquidation, thereby also frustrating the creditors of a company, this is not the case. Business rescue, which is a process of rehabilitating a business that is in financial distress by providing temporary supervision and management by a business rescue practitioner, should not be used as means to stall the liquidation process. Business rescue aims to provide the business entity an opportunity to reorganise and restructure its affairs, while having the protection of the law against any legal proceedings. It is possible that at the time of applying for business rescue it seemed as the best solution to address the financial distress of the entity; however, in many instances, after initiating the rescue, it can become obvious that the prospects of a successful rescue are slim. The business rescue practitioner then moves to terminate the rescue and applies for liquidation. This way it will save the assets of the entity from further being depleted. Business Rescue step by step Once a company commences business rescue proceedings either voluntarily (section 129) or by an order of court (on application by an affected person) the following actions are prescribed by the act: The registered business rescue practitioner must be approached to investigate the affairs of the company as soon as possible after the start of business rescue. Within ten business days after being appointed, the practitioner must convene a meeting of the creditors and a meeting of the employees and advise them of the prospects of rescuing the company. The business rescue plan, as proposed by the practitioner, must be published by the company within 25 days after the date on which the business rescue practitioner was appointed. The business rescue practitioner must then convene a meeting of the creditors and any other holders of a voting interest, for considering the proposed plan, within ten business days of the publication of the business rescue plan. Last year, the Companies and Intellectual Property Commission (CIPC) accredited the South African Institute of Professional Accountants (SAIPA) to regulate its members that are eligible to be business rescue practitioners in line with Companies Act. This forms part of a broader plan to regulate the business rescue sector and only SAIPA members in good standing can be licensed as Business Rescue Practitioners as from the beginning of 2017. How does it affect creditors? Under the supervision of the business rescue practitioner, creditors need to comply with their obligations to supply goods or services to the company in the same way they did prior to the commencement of business rescue proceedings, unless the agreement between the company and the creditor regulates the relationship between the parties in the event of an insolvency or business rescue. However, it is understandable that unsecured creditors and lenders during business rescue would be wary of continuing to service or supply goods to the company on the same basis on which they did prior to a business rescue as their claims will be satisfied last in accordance with the order of preference for the payment of claims prescribed by the act. Going, going, gone Liquidation, which is the dissolving of a business entity by realising its assets and liabilities and distributing the net proceeds if any to the shareholders, can be set about by a voluntary application. The trigger for a liquidation is the moment liabilities of the business exceed its assets, the business is insolvent and must stop trading. The first step is to decide on a date for the last day of trading. Any income derived after this date will be for the benefit of the insolvent estate and thus the creditors. The application is submitted to the High Court of South Africa and the court supplies a case number, which is delivered to the business’ registered address. The provisional application court date is set and the application is brought by the applicant on a semi-urgent basis. The application entails immediate relief granted by the court, which means that the creditors don’t receive notice of the application first. The court grants the provisional order and postpones the matter to ensure that creditors receive notification, with the exception of the South African Revenue Service, who receives notification of the application before the set court date. The provisional order is important, as once it has been granted, no creditor can take any steps to recover debt from the business. The matter is postponed for a period of 30 days and during this period, notice is sent to all relevant parties, giving them time to oppose the liquidation application before the court return date. If no opposition is lodged during this period, the court grants the final liquidation order and the business entity is liquidated. If there is opposition, the relevant party must submit an affidavit detailing the reasons for opposing the application and a trial may follow. 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 Almost on the eve of the Medium-Term Budget Policy Statement, or mini-budget, South Africa gets a new Minister of Finance after Nhlanhla Nene offers his resignation.
His successor, Tito Mboweni, is no stranger to the financial world. He was the first labour minister in our fledgling democracy, he succeeded Chris Stalls as the Governor of the Reserve Bank and served in that position for 10 years. He has been in the private sector for many years, serving on the boards of private companies. He will have a clear understanding of the state of the economy, says Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants. The road ahead “It is evident that international markets have confidence in the appointment made by President Cyril Ramaphosa...Although the obvious vote of confidence on this appointment is welcomed, that momentum can easily be lost,” says Retief. The question many commentators and taxpayers have is whether he will forge ahead with the policy statement that National Treasury officials have been preparing, or whether he will take this opportunity to announce drastic changes. He is going to present his first mini-budget on 24 October. In February the expected shortfall for 2017-18 was R48.2bn. In the meantime, the economy has shrunk, and is in the fold of a technical recession. Revenue collections South Africans have experienced tax increases on almost all fronts. The personal income tax rate has been increased to 41%, another band at 45% has been added and the Value Added Tax rate was increased to 15% in the February budget. South Africans have also felt the pinch of increases in the rates of dividend withholding tax and capital gains tax and skyrocketing fuel prices. “We have already noticed that the tax collections are not mirroring the tax increases introduced in the last few years,” says Retief. This cannot only be attributed to tax avoidance or tax evasion; the economic slowdown also plays a major role. Less people are employed, meaning less income tax, high worth net individuals are emigrating taking their wealth with them, and there has been a tangible slowdown in consumer spending. Legitimate expectations Taxpayers desperately seek stability. They want to hear that government is taking control of our economy. Ratings agencies are keeping a keen eye on what is now being said and done. They too want to see and hear that economic stability is in sight. “We want clarity on how government is going to deal with the revenue shortfall, how it is going to bring an end to the mismanagement and financial chaos at state owned enterprises and we want greater transparency on our increased reliance on expensive foreign debt to finance government expenses.” South Africa needs answers about future electricity generation, the cost of electricity and how government’s plans will impact the economy. South Africans certainly do not want to hear that tax rates will again have to be raised to pay for the mistakes of the past. “Although some tax experts expect a further VAT increase, we believe it to be unlikely at this stage, as it would impact the poor too significantly. And considering the negative reaction following the previous announcement that VAT will increase,” Retief notes. Mboweni has been a proponent of a wealth tax in the past, but it is still early days to know whether he still holds that view. Restoring trust The first major appearance of a new minister of finance is an important test for international and local confidence and whether the investors and financial markets trust what he says. President Ramaphosa has stated the importance of restoring public trust in government. South Africans want to have confidence that their government is in control and doing the right things, even if it takes longer. 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 Authored by: Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants
The decision by the South African Revenue Service (SARS) to re-establish its Large Business Centre (LBC) will undoubtedly ease the administrative and compliance burden of big business and high net-worth individuals. It will also enhance tax collections that have fallen sharply since the centre was dismantled in 2015 following major restructuring under the reign of suspended commissioner Tom Moyane. Under the restructured business model, currently the focus of the Nugent commission of inquiry into governance and administration at the tax agency, the LBC was systematically dismantled to “eliminate duplication and improve efficiencies”, SARS said at the time. The impact of the dismantled LBC The tax affairs of large corporates and high net-worth individuals are highly complex. Their risk profiles differ vastly from ordinary taxpayers. The potential loss to the fiscus is substantial if they are not managed properly. Before the LBC was dismantled it was responsible for the collection of more than 30% of total tax collections. This included individual income tax, corporate income tax, Value Added Tax, employee taxes, dividends tax, donations tax and royalties tax. The dismantling of the centre led to a decline in the ability of SARS to collect what was due to the fiscus. Concerns were also raised about a decline in compliance. The “one-stop-shop” for large businesses was gone, leaving multi-million-rand enterprises in the same position as ordinary taxpayers. This had a major impact on the way they had to deal with complex issues, the manner and time in which queries was solved, audits conducted, and disputes resolved. Compliance, collections and enforcement When the LBC was established in 2004 the aim was to encourage compliance, to ensure responsible enforcement and to offer specialised and sector specific expertise to large businesses. Sector specific expertise was developed in the most crucial sectors in the economy, including financial services, construction, mining and agriculture. The scope of the LBC covered listed and unlisted companies, parastatals and high net worth individuals. Expertise in highly complex tax legislation, notably transfer pricing, was developed to ensure that revenue is taxed where it is generated. The expertise in the LBC was not only in terms of the interpretation and implementation of tax legislation, but also included expert knowledge of the businesses in the different economic sectors. This assisted hugely with greater administrative knowledge, better risk-profiling in terms of audits, and better audit and dispute outcomes. The LBC ensured that there was one dedicated relationship manager which dealt with clients within specific sectors. This meant that a company raising a specific issue or query with SARS were dealing with the same individuals, who not only understood the essence of the issue, but was able to give feedback to how the matter was being dealt with. The dismantling led to much of the expertise being lost to SARS. An exodus of expertise followed the restructuring process, which was done by the consultancy firm Bain at a cost of more than R160m. Pivotal role of the LBC The announcement by Acting commissioner Mark Kingon to re-instate the LBC, as well as the Illicit Economy Team, must be welcomed. The acting commissioner said in his statement, announcing the move, that it was based on the “pivotal role” these units play in its service to large corporate taxpayers, and in fighting illicit trade in the country. SAIPA supports the move to re-establish the LBC. There is a deep understanding of the time and effort it will take to rebuild the capacity that existed before the dismantling of the units. However, this will certain increase better administrative outcomes, faster turnaround times and better compliance, audit results and dispute resolution. Although SARS has not put a timeline on when the units will be reinstituted, the fact that dedicated teams have already started the process, is encouraging. 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 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 In celebration of Women’s Month, the South African Institute of Professional Accountants is putting the spotlight on members of the Institute who are not only making a difference in the industry, but also having a profoundly positive impact on the female professional accountants of the future. One such member is SAIPA’s Eastern Region Chair (Kwa-Zulu Natal) and eThekwini District Chair, Prem Govender.
Govender runs her own practice, Mosswick Investments (Pty) Ltd, a company that was started by her late father 56 years ago. Her successful company not only services various clients, but it also does accounting and tax work pro bono for several welfare, religious organisations and schools. “I live by the mantra that we need to give back to the communities in which we operate, and I am actively investing in the mentorship and empowerment of women within my business. In my role at SAIPA, one of my goals is to encourage more females to join the accounting profession and to succeed in this goal, I need to be a role model,” says Govender. Helping women where it matters Govender encourages her employees to pursue further qualifications, learn different parts of the accounting industry, and stay abreast of legislation. As a mother, she says she knows how hard it can be for women with young children to balance work life and the demands of a household, which she says may makes her naturally more empathetic and willing to help make their lives easier whenever she can. “I never say that the women work for me, but rather that they work with me. I’m never too busy to explain something they are having difficulty with, I regard them as my equals and nobody gets reprimanded in front of clients. If an error creeps into someone’s work, I take responsibility because the buck stops with me,” says Govender. Differentiating your business in KZN Govender says that businesses in Kwa-Zulu Natal face unique challenges but that tailoring her company’s service offering has helped it to grow and flourish in the region. “Despite our province boasting two of the largest ports in Africa, we are still seen as ‘the poor cousins’ because we don’t have a large financial hub. Despite much potential, local industries in Kwa-Zulu Natal often face financial hardships due to a lack of direct investment,” says Govender. Accounting firms in Kwa-Zulu Natal, and across South Africa, are plentiful, which is why Govender has focused on training her staff to provide a high level of service. “What has helped us to differentiate ourselves in the region is our high level of service and attention to detail,” says Govender. Govender concludes by saying that all business owners should be investing in mentoring the women within their businesses. “We need to take them under our wing, mentor them and teach them everything we know. This needs to be done with kindness and compassion but mostly with enthusiasm and passion.” Georgina Barrick, MD of Cassel&Co, the finance and accounting recruitment partner to SAIPA, agrees that female role models are so important to remind young girls of what they too can be because “if you can see it, you can be it.” “Research shows that there is a strong correlation between woman with strong and positive role models and women with leadership goals. Role models are not only important for women who are already building their careers but also for future generations,” comments Georgina. 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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