 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
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African Global Operations Group (former- Bosasa) to Liquidate, Beyond Rehabilitation Says SAIPA18/2/2019  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  Finance Minister Tito Mboweni’s upcoming 2019 Budget Speech on 20 February will be a waltz with the recent SONA to the tune of the upcoming elections. This is according to Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants (SAIPA). Says Retief: “President Ramaphosa’s address set the tone for the budget, which must also keep ANC voter confidence high when the nation goes to the polls on 8th May. But with revenue collection under constant pressure and a shrinking taxation profile due to immigration, high unemployment and job losses, and the results of poor economic growth, the question remains - how will the President’s vision be funded?”
Income sources In his October mini budget speech, Mboweni stated outright that the country could not continue borrowing as it is currently doing. So it looks as if funding the budget with more debt is definitely Plan B. Yet the consensus among commentators is that any opportunity to increase primary taxes is limited and undesirable. The Finance Minister appears to agree, indicating that changes to the current personal and corporate income tax rate or VAT should be avoided. However, the government may still have some wiggle-room with other taxes. These include adjustments to high ticket or luxury items, reducing tax allowances and deductions, and possibly extending its attack on estate planning and the use of trusts. Indirect taxes, such as sin tax - alcohol, cigarettes or sugar - might see further increases, as well as the Road Accident Fund and fuel levy. One would expect that the new Carbon Tax, scheduled to come into effect from 1 June 2019, will not be postponed further. Mending the dam An obvious place to find extra funds is by cutting huge losses in government itself. Specifically, these include the exorbitant wage bill and the cost of supporting several limping state-owned enterprises, among others. “Fix these first,” says Retief. It is public knowledge that SARS’ capacity to meet its collection targets has been severely compromised. Mboweni did commit to mending SARS during the mini budget speech, so it follows that his next address should outline his plan for doing so, which includes the funds needed to address the aging IT infrastructure, and the appointment of a new Commissioner. He has also been outspoken on his approach to correcting SOEs: stop bailing out Eskom and sell SAA. With an unsolicited - if sketchy - R21 billion offer for 51% of SAA on the table and the plan to unbundle Eskom, these should at least receive mention in his speech. But it is expected that any major policies or structural changes will be held over until after the elections. In an election year the pressure is on to allocate money to fund the various initiatives, policies, and promises made, such as national health and free education. However, how can we afford this without significantly increasing our budget deficit or cutting other spend? Furthermore, Mboweni previously stated that per head salary increases in government were often well in excess of inflation and had to be reigned in. A constructive policy for doing so should be a main feature of the budget, as well as at least a mention of the steps that will be taken to bring people to book for fruitless and wasteful expenditure. Freeing revenues “Whatever happens, these problems can’t be fixed by throwing more money at them and they won’t be resolved overnight,” says Retief. “However, by at least beginning to tackle them, their strain on tax revenues can be alleviated over time and that means a growing pool of income for other projects.” 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:
 SAIPA’S Professional Evaluation Graduation Ceremony at Greyville Convention Centre in Durban on 2 February 2019.
From left to Right: Nazia Ismail - 2nd Regional Top Achiever; Pranisha Moodley - National / Regional Top Achiever; Nomawethu Tenza – 3rd Regional Top Achiever* Photography courtesy of SnapThat™ Pranisha Moodley was recently named as Regional Top Achiever, as well as overall National Top Achiever during SAIPA’S Professional Evaluation November 2018 Graduation Ceremony at Greyville Convention Centre in Durban. Following in Moodley’s footsteps are Nazia Ismail (2nd place Regional Top Achiever) and Nomawethu Tenza (3rd place Regional Top Achiever). The future with SAIPA Professor Rashied Small, Executive: Education and Training at SAIPA, congratulated the successful candidates and welcomed them as competent Professional Accountant (SA). “Those who passed have proven their competence and may now proudly bear the distinguished title of Professional Accountant (SA),” he says. “We are delighted and have encouraged them to take to register as full members and look forward to supporting them throughout their careers and endeavours. 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.” The purpose of the PE The Professional Evaluation is a four-and-half-hour written competency assessment (aligned with the International Education Standard – IES 6 issued by IFAC) that every prospective SAIPA member must complete before being granted access to the Institute’s ranks. Prerequisites for taking the assessment are a SAIPA approved degree or diploma (aligned with IES 2) and the completion of a three-year learnership at a SAIPA accredited training centre (ATC) (aligned with IES 3 – 5). The stringent pre-entry evaluation is a distinctive requirement that sets SAIPA apart by evaluating 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.” 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  A late-2018 study from IFAC titled Make Way for Gen Z: Identifying What Matters Most to the Next Generation suggests accounting is the perfect career choice for today’s young adults. Zobuzwe Ngobese, Marketing and Business Development Executive at SAIPA, says it is a timely insight into the aspirations of the new generation, some of whom are still deciding on their career while others are already entering the workplace. “The document reports that people in that generational group mainly desire stability and job security,” he says. “The accounting profession satisfies this requirement as well as many others revealed by the survey.” The study is also an invaluable guideline for employers who need to understand what motivates the next wave of workers to maintain high productivity in their organisation.
What Gen Z wants The report classifies Gen Z as those born between the mid-1990s and around 2005, who will make up one third of the global workforce within a decade. Their bias toward economic stability - both personally and marketwise - and nationalism over globalism, stands in stark contrast to the previous Millennial generation’s “live the dream at any cost” outlook. Ngobese observes that Gen Z were fundamentally affected by the economic crisis of 2008 and therefore yearn for greater security. The study surveyed 3388 people between the ages of 18 and 23 in G20 countries, considering two broad topics - public policy, and careers and work. It revealed that the majority want their governments to focus on their country’s economy, quality of education and availability of jobs. 51% prefer a national approach to policy while only 32% desire a globalist approach. 89% prioritise a stable career, 87% a competitive salary and benefits, and 84% a good balance between work and life. Although lower in their priorities, the majority are keen on leadership opportunities (64%), working abroad (63%) and driving business strategy (63%). South African perspective In South Africa, the main Gen Z concerns are, first, stopping corruption in government and corporations, followed by addressing income and wealth inequality and, third, tackling climate change. 63% favour a nationalist approach. It is notable that, in South Africa, those surveyed prioritised the ethics of their chosen industry or profession ahead of work-life balance. “This is exactly the attitude required for SAIPA to realise its vision of a new era of ethical accounting for the country,” says Ngobese. Over half of the respondents indicated they will pursue or would consider pursuing a career in accounting. Professional Accountant (SA) Ngobese says SAIPA’s Professional Accountant (SA) designation is the ideal career path for Gen Z. Its ultimate goal is economic stability, it is backed by strong ethical standards to protect the public and national interests, and it is one of the most stable and rewarding careers in history. “We definitely need professionals with Gen Z’s strong moral and economic ideals.” Information on education, practical training and membership entry requirements for becoming a Professional Accountant (SA) can be found on SAIPA’s website at www.saipa.co.za. Employers may review the IFAC study at https://www.ifac.org/publications-resources/make-way-gen-z-identifying-what-matters-most-next-generation 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://en.wikipedia.org/wiki/Generation_Z  By Ragiema Thokan-Mahomed, Legal, Ethics and Compliance Executive at
the South African Institute of Professional Accountants (SAIPA) As announced in government gazette 37980 on 12 September 2014, the Justices of the Peace and Commissioners of Oaths Act No. 16 of 1963, Regulation No. 61B, recognises every Professional Accountant (SA) as an ex officio Commissioner of Oaths by virtue of their position of trust in society. Says Ragiema Thokan-Mahomed, Legal, Ethics and Compliance Executive at the South African Institute of Professional Accountants (SAIPA): “The fiduciary duties of the title are few but their correct execution is essential to protecting the public interest and serving justice. They must, therefore, be treated with the same care and precision as the practitioner's professional services.” A Commission of Oaths’ duties are twofold: administering oaths and certifying document copies. Readers can download SAIPA's Commissioner of Oaths Guide for more details, available at www.saipa.co.za/commissioner-oaths-guide. Administering oaths A person can make a statement or agree to make a statement which they formalise by swearing to its truthfulness before the Commissioner of Oaths. The Commissioner must be present to confirm the person’s identity, and their willingness and competence to make the declaration. The statement is reduced to writing and certified by the Commissioner as a record that it was indeed made in their presence. Certifying document copies Valuable documents are seldom transferred to third parties for processing for fear of them being lost or damaged. A Commissioner of Oaths can certify a copy of a document as a true copy, allowing it to be used instead of the original. The Commissioner must, therefore, inspect the original, never taking it on faith or accepting secondary evidence that it exists and is identical. If it was later discovered that there was a difference, this would be a serious breach that may carry legal consequences for the Commissioner of Oaths. “Regardless, SAIPA will discipline accountants found guilty of negligence in these duties to protect the Institute from disrepute,” says Thokan-Mahomed. Due care The requirements of the above duties must be satisfied in all respects as even the slightest error or omission can render the process ineffective. In Absa Bank Ltd vs Botha NO and Others, an affidavit described a female defendant using alternating masculine and feminine terms. This contradictory identification called into question whether the Commissioner of Oaths had been present and therefore the validity of the affidavit. Inevitably, the court dismissed the case with costs payable by the plaintiff. “Sadly, the plaintiff likely had a strong case and suffered unnecessary loss. Whether the Commissioner of Oaths was held accountable is unknown but they were undoubtedly professionally embarrassed,” reports Thokan-Mahomed. Unfortunately, similar incidents are common, involving both the administration of oaths and the certification of copies. In extreme cases, those involved in serious crimes may walk free. Additionally, a careless Commissioner of Oaths could be deemed complicit in a crime, for example, if they certify false copies later used in fraud. Professional conduct “SAIPA members acting as a Commissioner of Oaths continue to be ambassadors and must conduct themselves with the same professionalism and trustworthiness befitting their designation,” concludes Thokan-Mahomed. 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  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  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 |
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