SARS collected R1.28 trillion for the tax year ending 2019, falling R14.6 billion short of its target of R1.3 trillion. However, Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants (SAIPA), believes the tax authority should be commended.
 
“SARS’ operations have been hampered by significant handicaps due to past mismanagement, including a massive VAT refund obligation, deep systemic breakdown and flagging employee morale,” says Retief. “Add to that weak economy growth and the steps implemented to rebuild SARS, it is commendable to have fared so well.”
 
Well done, Mark Kingon
According to Retief, that SARS was able to come so close to its expected revenue target can largely be attributed to the excellent work of Mark Kingon, the organisation’s outgoing interim commissioner, and his team. “Mark definitely deserves recognition for his leadership in keeping SARS from operational failure, and staring to rebuild trust in the organisation,” he says.
 
Revenue realised under Kingon has grown by 5.8% compared to the previous financial year. Also, much of the work done in the background will continue to bear fruit long after this year’s final audits are completed. Retief points to initiatives like relaunching the Large Business Centre (LBC) which, even though it delivered notable value, was terminated under disgraced former SARS commissioner, Tom Moyane. Kingon has also implemented processes for combating illicit tax activities and correcting internal issues. “These progressive steps may result in windfalls that have yet to be realised,” Retief observes. “Overall, we can expect that Kingon’s efforts will provide a strong platform for the incoming commissioner to work from.”
 
Good job, President Ramaphosa
Retief also applauds the transparent selection process used to vet potential candidates and nominate the new SARS commissioner. Unlike previous president, who at times appointed a commissioner based on personal or political preference, President Ramaphosa opted for an approach that was both open and objective, effectively placing himself at arm’s length from the proceedings, as was recommended by the Commission of Inquiry.
 
A high-level panel, led by Trevor Manuel, was appointed by Finance Minister Tito Mboweni, to identify capable applicants and make their selection from a list of candidates that included Mark Kingon himself. Their final choice was Edward Kieswetter, who will take up the role of Commissioner of SARS from 1st May.
 
Welcome, Edward Kieswetter
“There’s no doubt Kieswetter is up to the task,” says Retief. “Apart from having been part of SARS’ history, he has a strong pedigree when it comes to running organisations, including heading up Alexander Forbes.”
 
No doubt, the new commissioner will have his hands full as he builds on the good work started by Kingon. However, Kieswetter’s first and foremost task will be to re-engage SARS staff, whose attitude and competence plays a pivotal role in winning back public trust and rebuilding tax morality. He’ll need to provide strong leadership, assure them of their value and motivate them to value service excellence. Secondly, he’ll have to focus on rebuilding SARS systems and capacity. . “He has a long road ahead of him but he’s the right man for the job,” says Retief.
 
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 Accountant

Authored by: Zobuzwe Ngobese, Marketing and Communications Executive at the South African Institute of Professional Accountants (SAIPA)
 
While technology products are emerging to help automate the financial year end, it remains largely a manual process. This makes it one of the most labour intensive periods the professional accountant will face during the year.
 
But the work doesn’t stop when the books are closed. Rather, it sets the stage for the preparation of their company’s integrated reports or, for smaller concerns, a set of financial statements that highlight the performance of the business. Yet, even this doesn’t scratch the surface of the value the modern accountant is expect to add. Rather, it signals that the real work is about to begin.
 
Sustainability
While other executives understand the siloed information generated by their own departments, a professional accountant, like the financial director, is exposed to their organisation’s full spectrum of data. This makes them the main strategic advisor for their company, who understands the interplay between various business activities and the cross-cutting concerns.
 
Yes, previous year performance is important, but their focus must shift to how sustainable the company will be in the future. Professional accountants should not only assist their business leaders to determine this sustainability. Where it’s lacking, they can also help develop strategic direction and action plans to achieve greater confidence in the organisation’s endurance.
 
Risk-controlled initiatives
The purpose of a business is to grow, and robust financials may encourage overly enthusiastic expansion. However, both timing and situational awareness are vital, and these are sixth senses the professional accountant must possess in spades.
 
In 2018, British media reported that Jamie’s Italian, a UK restaurant chain launched by famed chef Jamie Oliver, had hit hard times. After rapidly expanding to 43 outlets, based on Oliver’s reputation, the business, as he puts it, “simply ran out of cash.” With only hours to spare before bankruptcy, the chain was saved by a cash injection of 13 million pounds from Oliver’s own funds. But the episode led to the closure of 12 restaurants and the loss of 200 jobs. Yet, many other restaurants also closed around the same time, mainly due to nationwide rent increases and other economic factors. And Oliver himself admits that around 40% of his businesses have failed, some after years in operation.
 
These and other cases in the media illustrate how important it is for the professional accountant to be cognisant not only of their own financials but the macroeconomic forces at play as well. They must apply prudence, backed by astute financial analysis, to every business initiative and guide their CEO along a sensible growth path.
 
Business rescue
Sometimes, the year end results confirm the story no one wants to hear - the business is failing. Once, this meant almost certain bankruptcy. However, the Companies Act of 2008 introduced a provision for business rescue by which an ailing company can be placed under the supervision of a recognised business rescue practitioner. Any claims against the company are temporarily put on hold, provided an approved business rescue plan is implemented.
 
Accountants who are certified as business rescue practitioners, usually through a professional body like the South African Institute of Professional Accountants (SAIPA), can turn such businesses around and steer them back to profitability so their next year end is much more positive.
 
Preservation of earnings
An often overlooked aspect of accounting is capital management. Even admirable retained earnings can be devalued by a poor economy. It is the job of the professional accountant, again in the form of the financial manager or director, to invest post-year-end funds wisely. Should they remain in the bank at a nominal rate of interest, be invested in the stock market at risk, or be used to buy new equipment that may or may not improve production and provide an excellent return on investment? The available options are unlimited but the opportunity costs could go either way. Making the right call is a skill that every accountant must strive for.
 
Automating the year end function
As mentioned, products are being introduced to automate the year end function. Although complete automation is not yet possible, accountants should look for ways to hand off repetitive, low-skill activities to robotic process automation (RPA) or other data processing and decision making technologies. This will give them more time to focus on high-value services that can help their organisations grow and thrive.
 
As the designer of their company’s accounting systems, the accountant, not the IT department, is responsible for the implementation of automated functions. They must therefore gain a good understanding of AI, RPA, data analytics and related technologies.
 
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: Professor Rashied Small, Executive: Education and Training at the South African Institute of Professional Accounting (SAIPA)
 
After finishing their tertiary studies, every graduate pursuing the Professional Accountant (SA) designation must complete a three-year learnership at a SAIPA approved training centre (ATC). This ensures they gain supervised practical experience in a wide range of accounting tasks before taking on their duties independently. However, prospective trainees are often concerned about an ATC's entry requirements and why such parameters are demanded of them. Below are the top 10 requirements and why they are important.
 
1. Application for employment
The first thing to acknowledge is that an ATC is not an educational institute but a real company that has partnered with SAIPA to train its trainee accountants. To attract and retain the clients that keep it in business, it must acquire the appropriate resources to deliver quality services. This includes the staff it hires. You will therefore need to apply for a position and convince the company of your value like any other employee.
 
2. Language
The language required by an ATC is not a reflection of its culture but the culture of the client base it must please to stay profitable – customer relationship management is critical to its success. A firm located in Soweto will have different language requirements from one in Port Elizabeth. Trainees often work at a client’s premises and must therefore be able to speak its employees’ dominant language to exchange information accurately and add value to the business.
 
3. Driver’s license and vehicle
Because trainees often travel between clients and the ATC, it is to their advantage if they own a vehicle and have a valid driver’s license. Services like Gautrain and Uber are often too expensive to be practical for everyday transport, and these costs may only be covered at a lower rate by the employer. Also, a trainee may need to carry a client’s sensitive documents with them. If they leave them behind in a coach or cab, they risk breaching client confidentiality and information protection laws.
 
4. Digital skills
Many ATCs are moving their data to the Cloud to make it easier to exchange between clients and staff. You may also need to work directly on a client’s accounting software over the internet. At some ATCs, you could even be expected to own a laptop or smartphone for work. In any case, you must know how to use essential Cloud and mobile services like messaging, calendars, file sharing, email and others. Utilisation of technology and digitisation, which was a competitive advantage in the past, has become a basic requirement for an ATC.
 
5. Soft skills
Most recruiters will favour candidates with excellent soft skills. These are personal disciplines that allow trainees to work interactively and be more productive. For example, regardless of your language, you must be able to communicate technical information with clients clearly and concisely. Other soft skills you should develop include business writing, team work, report writing, speaking and presentations, time management, and more. 21st century business demands and the advancement of technology are placing greater emphasis on the need for the professional’s soft skills to take their rightful place in the accounting domain.
 
6. Professional appearance
In one study, an airline asked passengers if a dirty meal tray suggested the aircraft’s engines were poorly maintained. Over 70% said yes. Likewise, an accountant’s smart appearance assures the ATC’s clients that it is serious about their needs and capable of delivering excellent service. You will therefore be expected to dress in neat business attire and maintain a tidy appearance that respects the image the ATC wishes to project.
 
7. Professional CV
When applying for a position at an ATC, you will need to present the recruiter with a professional CV. Do some research to find out what information is required and what you should leave out. A well- crafted CV that offers only useful information is a reflection of your aspirations and drive to succeed in your career. So put in the time and effort to make yours stand out because the CV is the first impression gained by the recruiter.
 
8. Online presence
If the ATC can find information about your personal life online, so can its clients. Both like to know they are dealing with people of good character and sober habits, so they might check your social profiles. Trainees should ensure their social accounts are private and that any public-facing profiles are complete, professional and don’t share personal opinions on sensitive topics that might bring the firm into disrepute.
 
9. Psychometric testing
You may be required to undergo psychometric analysis to determine your personality and behavioural traits. The purpose of this examination is to identify useful information like your preferred management style, which soft skills you need training on, or how well you handle conflict. This, and testing for drug use and alcoholism, is common when hiring for professional positions.
 
10. History of misconduct
A trainee must not have a criminal record or any record of professional misconduct. Again, the ATC has to protect its reputation because clients may lose confidence if its employees have a questionable history.
 
Getting more information
Apart from the above ATC requirements, prospective trainees can review SAIPA’s comprehensive Learnership Guide for more details on what’s expected of them, the ATC and their Monitoring Officer. Please email our offices for a link to the document: ddewet@saipa.co.za.

END
 
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

Group 5 entered business rescue last week after persistent cash flow problems brought the construction giant to its knees. It’s one of a growing list of well-known companies to seek rescue over liquidation.
 
However, Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA), warns that business leaders tend to be unprepared for their ”loss of control” when business rescue begins.
 
The wrong end of the stick
Companies may seek business rescue as a way to buy time to get back on their feet while enjoying protection from creditors’ claims. They might also assume they will drive the recovery process, and their assigned business rescue practitioner will merely act as a consultant who will guide them through the proceedings.
 
“This couldn’t be further from the truth,” says Ngwenya. “Management must understand they have been thrown a lifeline and must therefore adhere to the strict conditions of the accompanying legislation. The first is to completely surrender their management control - power to the business rescue practitioner.”
 
Total control
According to the Companies Act 2008, Chapter 6, the business rescue practitioner assumes total control of the company during the entire business rescue period.
 
Section 140 (1)(a) says the practitioner “has full management control of the company in substitution for its board and pre-existing management.” In other words, the practitioner doesn’t assist the company’s leadership on the road to recovery; instead, they become the leadership. Also, subsection (3) asserts that, during the business rescue proceedings, the practitioner “is an officer of the court” who reports to the court in accordance with it rules or orders. The practitioner also has the responsibilities of a director of the company.
 
In fact, the practitioner may “remove from office any person who forms part of the pre-existing management of the company” or “appoint a person as part of the management of a company, whether to fill a vacancy or not”. This means, in theory, that the practitioner could reshape or even replace the board or management in its entirety.
 
Further, the practitioner may decide after their initial investigation into the company’s status, or at any time during the business rescue process, that the company cannot be rescued, and must apply to the court to have it liquidated.
 
Initial shock
Ngwenya says the full extent of the practitioner’s authority usually hits home in simple ways: “For example, when the practitioner orders the directors to surrender their company credit cards.” The initial shock of realising they are no longer in charge may cause directors to rebel against the practitioner’s instructions. However, Ngwenya warns that the practitioner can dismiss any director who impedes them in their duties, by court order if necessary, and may even have them declared delinquent. 
 
Being prepared
It is vital that company leaders about to embark on business rescue familiarise themselves with their obligations as set out in the Companies Act. “SAIPA encourages them to comply for the sake of their organisation and its employees,” concludes Ngwenya.
 
SAIPA awards a business rescue practitioner designation to its qualifying members and is therefore able to offer advice on this important subject.
 
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, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA)

Late last year, the Edinburgh Group released The Small to Medium Sized Practitioner (SMP) of the future in a changing world, 2019, a report on the results of its SMP of the future survey. Rather than summarise a document that is both sweeping in its scope and publicly available on the Group’s website, let’s look at a selection of its recommendations on how SMPs can build a future-proof accounting firm.
 
Surprisingly, most of the report’s recommendations could be described as “textbook” or “back-to-basics”. Yet, as pressure to survive grows, SMPs might set these business mainstays aside in favour of fighting fires. The owners of small and medium entities rely on their SMP for support and providing guidance in the changing environment. The fourth industrial revolution requires new solutions to the old and current problems.  It would pay any firm’s leadership to revisit them frequently.
 
Know your client
Easier said than done, this business fundamental still vexes even the largest organisations. However, the SMP that is willing to follow the breadcrumb trail left in the media, online forums, consumer research and other data sources will discover unmet needs. When they focus their resources on or design new services around them, they start becoming the practice clients turn to for results, not sales pitches. Their limited resources can be overcome by forming networks, thus leveraging each other’s resources.
 
Know your competitor
Another basic marketing principle is to win clients by offering services your competitors don’t or cannot. To capitalise on their shortcomings, you must first know who they are and what they are up to. This means regularly scanning the market for new firms and discovering their strategies for growth. Not only will you identify the gaps they’ve overlooked but also their strengths that pose a threat, so you can start developing robust plans to defend your territory.
    
Build a distinctive brand
Building a brand is hard; building one that differentiates itself favourably from the rest is a knight’s quest. Think of your brand as an actor on screen. Can it evoke the emotions from your audience you direct it to? Will it win their respect and motivate them to do business with you? If not, a brand consultant or PR firm can help you fashion a brand identity that positions you favourably and prompts new business.
 
Automate everything
In other words, embrace technology to improve efficiency. Every repetitive task can be automated, even in part. Every minute once wasted can now be made productive. Favour accounting software that takes work away from you. Use mobile technologies to do business on the go and Cloud services to share information while collaborating with clients in real time. And if you can hand work off to an AI, don’t hesitate. Because if you don’t do these things and more, others will, and they will win the market. What was clear from survey responses is that most SMPs have started refocusing most of their resources on technology and innovation. 
 
Smarten up
Well-trained, knowledgeable staff bring in more income. That’s a fact. You could hire the best you can afford or train up existing workers to increase their performance and expertise. Either way, you can take control of your firm’s brainpower and productivity by leveraging the vast number of online learning courses. These include advanced accounting skills but also important soft skills like time management and critical thinking. Additionally, take advantage of the information resources provided by your professional accounting organisation (PAO).
 
Network professionally
Professional networking is when several firms, each with its own specialisation, work together to provide shared clients with a more diverse set of services. Potentially, they can also share resources to offset costs and collaborate on larger projects. Only 30% of respondents in the survey said they belong to a network, association or alliance. Yet, this is an ideal way to emulate the strengths of larger firms and close the competitive gap where growth capital is not readily available.
 
Scale gracefully
It may seem counterintuitive but excellent sales can kill a firm. If an SMP takes on more engagements than it can handle, corners get cut, quality drops, mistakes increase, and dissatisfied clients go elsewhere. Every SMP should understand its practical limits and only retain the number of clients and assignments for which it has sufficient resources. How then can it grow?
 
It must scale those resources and therefore their capacity. This can be done in two ways. The first is to increase the number of resources. This requires that more clients are indeed available and it means costs will rise with each new resource. The second is to increase the capacity of existing resources. This is more cost effective and can be achieved mainly through previously discussed points - upskilling, automation, networking, etc.
 
More information
IFAC’s Guide to Practice Management for Small- and Medium-Sized Practices, 4th Edition, along with its supporting Companion Manual, is an excellent resource for private practices. You can also contact SAIPA’s national office for advice about your SMP and more information about a district support group in your area.

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: Professor Rashied Small, Executive: Education and Training at the South African Institute of Professional Accountants (SAIPA)

When discussing the future of accounting, the conversation usually veers to the digitization of the profession or the role Artificial Intelligence (AI) will play in transforming the practitioner’s duties. However, there are additional predictions one can make about how accounting will or should evolve over the next five to ten years.

Technology
Technologies like AI, Internet of Things (IoT), blockchain and cloud computing will continue to disrupt classical accounting but won’t replace accountants. Rather, the practitioner’s value proposition will migrate away from manual transaction entry, compiling reports and number crunching. Instead, they will channel automatically generated insights into actionable business development initiatives, risk management plans, flexible and sustainable business models, and much more. In short, today’s accountant will be tomorrow’s strategic advisor. SAIPA included in its strategic vision for the Professional Accountant (SA) to become a “value-added business advisor” with competencies in (i) creator of value (strategic business advisor); (ii) enabler of value (operational business advisor); (iii) preserver of value (risk management advisor); and (iv) report of value (business reporter). This requires they embrace technology while developing vital soft skills, like creativity, problem-solving and critical thinking, to intuitively deliver powerful solutions.

Persistence of accounting
The US Bureau of Labour Statistics predicts a 10% growth in the demand for accountants and a 19% growth in the demand for financial managers until 2026. That's better than the average US profession and, with the need for accountants growing worldwide, a similar projection would be valid for South Africa. So, robots and AI’s aside, the accountant's services should remain a key business function for at least the next decade.

Gender Equality
Iceland recently made it illegal for a man to earn more than a woman. This is a very positive step forward in combating gender discrimination, but it does little to address concerns that many professions are still dominated by men. A quick analysis of the membership count of some of South Africa’s PAOs renders a gender ratio of approximately one female accountant to every two males.  However, the success achieved by SAIPA is pursuing the gender transformation of its membership has been phenomenal, viz. the composition of its female members has increased from 28% in 2010 to 47% in 2018.

It is therefore not a prediction but a fact that the profession needs to change dramatically over the next decade. Firms must actively encourage women, who have been marginalised in the past, to enter the profession and give them assurance of equal pay, opportunities and treatment.  Through the implementation of Project Achiever, a programme developed to facilitate the preparation SAIPA’s Professional Competence-based Evaluation as well as for the career as a Professional Accountant (SA), the number of female candidates that have graduated to become full members over the past four years amounted to 1,900.

Empowerment
In five to ten years from now, a new generation of accountants will have entered the workforce. But will they represent South Africa’s true demographics? To ensure they do, South Africa needs more black accounting candidates today. First, though, we must acknowledge the economic constraints many young black Africans face and provide stronger programmes to help them reach their goal. This includes subsidised education, possible earn-while-you-learn opportunities, and career support that turns an unattainable dream into an achievable future.  To this end, SAIPA has through the partial funding of FASSET for Project Achiever professionalised approximately 3,000 Black African Professional Accountants over a period of four years – this has been achieved through the aggressive commitment to its transformation agenda.

Stronger regulation
Earlier this year, it was reported that there was a cross-party consensus in the UK parliament that the Big 4 firms have become complacent. The country’s Competition and Markets Authority (CMA) has suggested forcing companies to use two alternating audit firms with only one being a Big 4 practice. This will increase competition from smaller firms, like Grant Thornton or BDO, compelling the giants to take service excellence and adherence to standards seriously. Likewise, in South Africa, stricter laws are being developed in the wake of several high-profile scandals. Such attempts to curb misconduct will likely pick up pace around the world. By 2030, legislation governing accounting practices will be even more restrictive and specially appointed industry watchdogs with legal clout could exist. The ROSC report published in June 2013 recommended that both the auditing and the accounting professions should be regulated. PAO’s including IRBA made a submission to National Treasury about the proposed regulations of the accountancy profession, however, the discussion on this matter has been delayed.  To strengthen its responsibility of self-regulation, SAIPA has been proactive in strengthening its investigations and disciplinary processes as well as implementing inspection and reviews of all of its members.

Advanced standards
Does the quality of historical data affect AIs decision-making abilities? Can AI learn unethical behaviour? How can accountants give assurance on an AI’s financial assumptions based on data too large for humans to analyse? Could AI’s spontaneously invent cryptic accounting processes and should we stop them? Global standards bodies have begun asking these difficult questions to develop new standards that enable automation while still protecting the public interest. These standards will, therefore, become much more sophisticated, regulating both humans and machines.

Technology-oriented training
Tertiary education, initial professional development (IPD) and continuing professional development (CPD) frameworks will evolve to complement technology adoption. They should also take cognisance of the professional accountant’s ever-changing role in response to this trend. As mentioned, soft skills will enhance the practitioner’s ability to bring meaningful solutions to the table based on the insights generated by intelligent systems. So they will feature prominently in these programmes. Many future accountants, now operating at an advanced strategic level, may even choose to pursue advanced qualifications, like an MBA.    

Embracing the future
While accountants will still be in demand for quite some time, they must start preparing themselves to move in synch with the forces that will shape the industry over the next decade. By doing so, they will promote themselves to a more valued position than ever.

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 (SA)
​
South Africa’s new Cybercrimes Bill is currently under consideration by the National Council of Provinces, having been greatly simplified after its previous draft. While other laws have defined cybercrime as it relates to their particular domain, the new bill is the first to articulate the complete range of activities that constitute cybercrime and penalties for those perpetrating them. It also describes legal and policing responsibilities and powers, obligations of electronic communications service providers and financial institutions, assistance given and received in foreign cybercrime investigations, and several other subjects.
 
The bill is a welcome addition and brings South African law into alignment with international legal trends. However, just detecting a systems breach and subsequent crime is incredibly difficult. Then there’s the costly and time-consuming matter of identifying the criminals, tracking them down and bringing them to justice. This becomes especially difficult when they are based in other countries. International agreements and foreign enforcement agencies are then required to coordinate amongst themselves using the correct protocols. Yet, after all this, the damage is already done and usually cannot be reversed. So while the new bill is vital, the best approach is still to be vigilant about systems and data security before the fact.
 
On the defensive
The weakest link in information security is people. Organisations and individuals alike must be particularly aware of social engineering, which is any technique used to deceive a computer system’s users into surrendering their login information, downloading a malicious program or phishing. An example is an email that appears to be from a trusted source, like one’s bank, that either asks for the information directly based on a convincing need or persuades the user to click a seemingly innocent link. While visiting the link, a malicious program is downloaded and runs silently in the background, either capturing login information or damaging data. The only way to overcome these threats is by conditioning staff to never give out their login credentials - or any other sensitive information - through emails or web pages, and never to click links without checking that the author is who they say they are.      
 
When sending critical information to a trusted party, say by email, always make sure it is encrypted using a public/private key system. The keys are effectively two serial numbers the recipient generates with a special program, giving only the public key to the sender. The public key can only encrypt messages and the private key can only decrypt them. So a hacker who gets hold of the public key won’t be able to read the sender’s encrypted message anyway. However, the recipient must always protect their private decryption key. It’s also best to generate new keys for each message. While this takes some training, it’s worth it to ensure that confidential information cannot be intercepted after it is sent.
 
Apart from encouraging these skills, organisations should engage the services of a security expert to carry out readiness audits on their system security at least twice a year. Larger entities should also invest in threat detection systems that can monitor network traffic and data access for unauthorised activity. Some newer systems are AI-enabled so they can intelligently learn activity patterns normally associated with data tampering or fraud, and raise the alarm as they occur.
 
Designated Point of Contact
No matter how careful a person or organisation is, they may still fall victim to cybercrime. So they will inevitably need both legal and police assistance to resolve the issue. An outstanding feature of the Cybercrimes Bill is the establishment of a designated Point of Contact, which the Cabinet member responsible for policing is obliged to establish, equip, operate and maintain. Although the form of this entity is not specified, one could imagine a dedicated enforcement unit with a call centre.
 
The types of assistance offered will include technical advice and assistance, liaising with international enforcement agencies, the provision of legal assistance, identifying and locating an article or suspect involved in cybercrime, and assistance in carrying out enforcement procedures specified in the bill. Such an entity would hopefully offer the public a reasonably rapid response once they become aware of a crime.
 
A two-pronged approach
Last year, the South African Banking Risk Information Centre (SABRIC) reported that South Africa has the third highest number of cybercrime victims worldwide, resulting in around R2.2 billion loss each year. It’s obvious that a stronger stance on cybercrime is needed, starting with better awareness and responses by individuals and businesses alike. Where these fail, the new Cybercrimes Bill provides a solid legal platform for bringing the wrongdoers to justice.

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

Every year, the South African Institute of Professional Accountants (SAIPA) holds its National Accounting Olympiad. Entries for this year’s competition are now open and the Institute invites all schools to begin registering pupils who wish to participate.
 
Zobuzwe Ngobese, Marketing and Communications Executive at SAIPA reports that, since its inception in 2002, the competition has continued to grow in popularity. “For 2019, we're expecting our best turnout yet,” he says.
 
How it works
NAO 2019 entrants from grades 11 and 12 will write an accountancy test at their respective schools. Afterwards, representatives from SAIPA will mark the papers and select those with the highest scores. The top three students nationally in each grade will then be declared as the overall winners.
 
These champions will be awarded at a gala event whose date and venue will be announced nearer the time. They and their teachers will also receive prizes and be featured in the media.
 
Bring it on
Last year, thirteen winners tied for the top three spots provincially and nationally across the grade 11 and grade 12 categories. Eight pupils from Johannesburg public school, King Edward VII, reached the national top 50. Western Cape’s Rondebosch Boys High placed one grade 12 winner and two in grade 11. And the province to beat this year will be Kwazulu-Natal, which shone brightly in 2018 with six winners out of the total thirteen.
 
“It was an incredibly tight competition,” says Ngobese. “So we’re excited to see what happens this time around. Will KwaZulu-Natal give a repeat performance or will another province rise to the challenge? And who will push the envelope to be the only winner in their spot? All I can say to the entrants is, if you're in it to win it, study hard and bring your A game.”
 
Encouraging accountancy
The NAO competition is a key part of SAIPA’s strategy to promote accounting as a career of choice among schoolgoers.
 
South Africa needs new accountants to continually enter the job market. A significant lack of interest now will mean a skills shortage seven to eight years in the future. “Accounting is an exciting and rewarding career, so we want teens everywhere to seriously consider it as they prepare for tertiary studies,” says Ngobese.
 
The NAO 2019 is also a good way for scholars to get a taste of the profession. They’ll have the opportunity to interact with SAIPA staff, sponsors and potential future employers.
 
How to enter
Pupils wishing to compete must be registered by their schools on the NAO website at https://www.saipa.co.za/national-accounting-olympiad-2019/ . The entry fee is R50 per student but free for no-fee schools. There is also no limit to the number of pupils each school may register. However, entrants must currently be taking Accounting as a school subject with the intention of studying a B.Com degree.
 
Entries close 14th June 2019. The exam will take place on 29th July 2019 and winners will be announced after all papers are scored. The NAO website will be updated as the competition progresses and participants should visit it regularly for the latest news and information.

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

South Africa will reach the fiscal cliff by 2042 if does not change its ways and back up speech with concrete actions, says Professor Jannie Rossouw, the Head of School of Economics and Business Sciences at Wits Business School.
 
Speaking at a budget breakfast hosted by the South African Institute of Professional Accountants (SAIPA) in Sandton, Rossouw warned that if the actions of the government in managing the fiscus are not prudent, taxpayers were going to stop paying taxes.
 
“If we use the analogy of fishing, the taxpayers are the ones fishing and the government takes the fish and eventually people will stop fishing because they don’t see their fish being put to good use,” he says.
 
According to Faith Ngwenya, Technical and Standards Executive at SAIPA, the main takeaway from the budget speech is that the country is in trouble and needs to take proactive steps to recover. “People who are taxed too much, either directly or indirectly, will stop being productive or find ways to reduce their tax bill, often illegally,” she says. “At that point national revenues drop with any further tax increases. We are now at that point. So the government’s future income will have to be derived from reducing its own costs, which starts with fulfilling its promise to turn around SOEs and reduce its enormous wage bill.”
 
Below are the top budget speech takeaways discussed at SAIPA’s event:
 
GDP
GDP was forecast at 1.5% against an IMF global projection of 3.5%, with improved growth predicted over the next 3 years. “The Treasury has been overly optimistic in its GDP forecasts for many, many years,” says Professor Rossouw. “They overestimate their revenue, then spend according to this estimated revenue. Then they don’t make the revenue because GDP growth is lower, and they end up in a fiscal hole.” Rossouw recommends that Treasury use more conservative forecasts to regain the public’s confidence.
 
Wage bill reduction
The government promised to reduce its wage bill by R23 billion over the medium term and offer voluntary retirement to older public servants. This is a good start but needs to be followed by reviewing the public sector workforce and reducing it dramatically. 
 
Revised visa requirements and e-visa pilot
To attract needed skills to South Africa from foreign countries, the government will review its business visa and child immigration requirements as well as pilot an e-visa system. This is great news as it will help South Africa more readily attract the talent needed to bolster the economy.
 
Revision of support for SOEs
SOEs will need to meet certain business transformation requirements to receive future support from the government and Eskom will be broken into three independent divisions. While this is a positive step forward, any support is still like throwing money down the drain. A more concrete plan of action is needed and the process should be communicated transparently to the public.
 
Annual budget deficit
Professor Rossouw also noted that the annual budget deficit would be around 4.3% over the next three years, up from 3.5% just last year. “This is too high,” he says. “Our growth ceiling is only 2.5% per annum.”
 
Tax collections and revenue shortfall
Total tax collections for 2018/2019 was around R1.3 trillion with a shortfall of R42.8 billion and the government expects to collect R1.422 trillion next year. Mboweni announced there would be no changes in personal and company tax but additional revenue of R15 billion would come from indirect taxes. Although tax remains unchanged, indirect increases will reduce overall disposable income, meaning South Africans will have to adjust their lifestyles accordingly.
 
Revenue from tax bracket creep
Income tax brackets will also not be changed. This means that although South Africans will not gain greater purchasing power from inflation-based pay increases, they will be earning more in SARS’ eyes and will be taxed accordingly. Further, those who move into a higher bracket will be obliged to pay substantially higher taxes, reducing their effective monthly income to below their previous level.
 
No increases in medical tax credits
Medical tax credits will not be increased to allow for a rise in cost of living so South Africans will effectively be paying more for medical treatment.
 
Income from fuel increases
Fuel will go up by 29c/litre, which includes a 15c/litre increase in the general fuel levy and a 5c/litre increase in the Road Accident Fund levy. A carbon tax of 9c/litre on fuel will be effective from 1st June 2019. All of this was expected.
 
Excise duties
Excise duties on alcohol and tobacco will be increased. Further increasing the price of tobacco is a bad idea. We are already witnessing the sale of illegal cigarettes overtake legally marketed ones. Another increase will further motivate cash-strapped smokers to buy on the black market. 
 
Restoring SARS effectiveness
Mboweni also promised to repair SARS to ensure it is able to collect revenues effectively. And with the VAT refunds backlog being cleared, the normalised flow of future refunds will provide businesses with greater cash flow confidence. Much revenue is lost to tax collection inefficiencies, so it makes more sense to focus on SARS’ operations rather than increasing direct or indirect taxes further.

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

Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA), says that while it is possible, it is highly unlikely that African Global Operations Group could be rehabilitated if sold.
 
eNCA broke the story early today that South African banks had given notice to African Global, formerly called Bosasa, that they would terminate its accounts at the end of February. This was reportedly done for fear of “reputational damage” from doing business with the company following revelations of its alleged  bribery of government officials to win tenders. 
 
In response, African Global announced it has filed for voluntary liquidation in accordance with the provisions of the Companies Act as it will not be able to pay its creditors without proper banking facilities.
 
Irreparable damage
Ngwenya says that usually voluntary liquidation is more relaxed than forced liquidation, giving the directors time to get their affairs in order before winding down. However, in this case, the company will not have the banking services required to receive income or pay creditors and employees. “This is a very different scenario because of the short period in which the company has to act,” she says. “But it’s not probable they would be able to wrap everything up in 10 days.” 
 
When asked if it was possible for the company to be bought and turned around, Ngwenya said under normal circumstances it would be possible , however in the African Global case it was doubtful. She observed that the damage to African Global’s reputation would be too extensive, resulting in an irreparable loss of customer confidence and market value. “Any buyer would find it very difficult to restore its viability as a going concern,” she concluded.
 
Employees and subsidiaries
With the inability to continue operating, it is most definite that a reported 4500 workers will lose their jobs. Any contracts the company entered into would also have to be terminated, resulting in loss of business for their subcontractors and suppliers as well. Says Ngwenya, “Because they have a large number of government contracts, some of them for critical services, it will have to be determined whether and how these would be transitioned smoothly to alternate vendors.”
 
Ngwenya also noted that the business had several subsidiaries that too faced an uncertain future. She questioned whether these business units would go into liquidation as well or if they would be spared. If the latter, would they be able to absorb the employees that would otherwise be retrenched? “Unfortunately, a scandal of this magnitude taints the entire company, so the next few days will tell us if these subsidiaries will suffer the same fate,” she says.
 
Business rescue option
Since SAIPA offers a business rescue designation, Ngwenya was able to comment on whether African Global should have opted for business rescue as they are entitled to do under the Companies Act. “Business rescue is always the preferred alternative to liquidation because it preserves jobs that would otherwise be lost as well as the economic contribution of the organisation,” she says. “As we’ve noted in this case, though, the loss of trust in the company’s brand is too great and its closure is unfortunately inevitable.”
 
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