Black audit firm aims for the big league

2012-10-06 12:53

Newly merged firm SekelaXabiso upbeat about operating independently

Having merged their two businesses to form the country’s sixth-largest accounting firm, Abel Dlamini and Lindani Dhlamini are setting their sights on carving out a big slice of the auditing market for themselves.

Last month, Dhlamini combined her firm Xabiso Consulting with Dlamini’s Sekela Consulting, giving birth to a firm with a staff complement of 285 people and a turnover of more than R200 million.

The new name of the merged entity is SekelaXabiso and its intention is to give the so-called big four accounting firms – PriceWaterhouseCoopers, Deloitte, KPMG and Ernst & Young – a run for their money.

These established accounting firms dominate the market and are estimated to each be raking in between R2.5 billion and R3 billion in annual revenue.

“Our ambitions are not small,” says Dlamini, “we would like to be a R1 billion business by 2020, employing more than 1 000 professionals.

“As blacks, we need to start seeing ourselves as people who are running big businesses and there is nothing wrong in getting rich along the way.”

SekelaXabiso’s emergence follows in the footsteps of a merger last year between SizweNtsaluba VSP and Gobodo Incorporated.

The two firms formed the largest black-owned accounting firm and the fifth largest accounting firm in South Africa, with 800 employees.

The International Accounting Bulletin put SizweNtsalubaGobodo’s revenue at R400 million.

SekelaXabiso specialises in internal auditing although it also offers other services ranging from external and forensic auditing, to IT auditing and corporate finance.

In fact, more than 80% of the firm’s work is related to internal auditing.

Dhlamini says the increase in corporate failures has raised the profile of internal auditing and this has helped make it more lucrative than external auditing.

“There is a guideline that says internal auditing fees must be twice that of external auditing,” Dhlamini says.

Dlamini and Dhlamini have known each other since 2003 and have worked on a number of accounts together despite running separate companies.

“Although we grew (in) parallel, we have worked jointly in internal auditing. We have worked together, for instance on the (transport and logistics parastatal) Transnet account, since 2005,” says Dhlamini.

The pair have clearly defined their roles so that they don’t step on each other’s toes.

Dlamini is executive chairperson of SekelaXabiso, responsible for giving strategic direction to the firm and helping it penetrate new markets; while Dhlamini is responsible for day-to-day operations as chief executive.

One of the new markets the firm wants to crack open is the private sector, especially JSE-listed companies.

“We are still struggling to penetrate the private sector market. With this merger, we are signalling to the market that we are ready to service it.

We are ready to handle big assignments,” says Dhlamini.

The merger is also sending the same message to the public sector, which has always shown caution when dealing with small, black-owned accounting firms by asking them to work with the big four on large  assignments.

“We are ready to handle big public-sector assignments alone,” says Dlamini.

The two mergers of black accounting firms are a clear indication that black African professionals in the sector want to boost their say as the sector is still white-dominated.

Out of 33 000 chartered accounts in South Africa, only 2 000 are black Africans.

Dhlamini and Dlamini were approached to join the SisweNtalubaGobodo merger last year, but they opted for their own merger.

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