Some of the biggest corporate "heists" in recent months, from the Guptas to Steinhoff to VBS Mutual Bank have involved chartered accountants accused of misconduct and misuse of power, leaving the once proud industry with its reputation in tatters.
Accounting bodies, such as the South African Institute of Chartered Accountants (Saica) and the Independent Regulatory Board for Auditors (IRBA) have been accused of dropping the ball and taking too long to act against their errant members.
The list of people who face investigation and possibly disciplinary action by the two organisations include former Steinhoff CEO Markus Jooste, several senior KPMG staff members involved in the auditing of the Gupta accounts, a number of VBS Mutual Bank and Vele Investments executives and the KPMG auditors who signed off on the allegedly fraudulent VBS financial statements.
But Saica's Acting CEO Fanisa Lamola says that out of their 46000 members, only some 265 face disciplinary action and these are the ones who have tainted the profession.
"Saica has 46 000 members (including associate general accountants), and roughly 10 000 are expatriates, living all over the world," said Lamola.
"I was in the US last month and some of our members there were worried. They asked what is being done about the profession, but they never said that they were struggling. There is still high demand for South African chartered accountants across the world. The negative publicity has created an unfortunate perception about the industry but only 265 out of 46 000 members are currently facing disciplinary processes. So the few are tainting the reputation of the many ethical members."
Lamola took over as acting Saica CEO from Terence Nombembe in March. Nombembe was seconded to the Zondo Commission of Inquiry into state capture.
Asked why disciplinary measures seemed to be drawn out, Lamola said it was a "legal based process".
"We don't start with a disciplinary. The complaint first has to go through an investigation which is presented to a professional conduct committee and the member is allowed an opportunity to respond. If reason is established to charge the member, it goes to the Saica disciplinary committee," she said.
"The disciplinary is chaired by a judge or an advocate and follows a legal process. The accused is allowed the right to representation and on average,cases can take six to eight months to finalise and we can’t comment on them during this period in case we prejudice administrative justice of the case and open ourselves up to appeals or litigation."
She said Saica was not a prosecuting authority but a voluntary organisation. For those found guilty, the worst sanction is de-registration and/or a R500 000 fine per charge, said Lamola.
"According to Saica’s by-laws, if CAs(SA) are also registered auditors with the Independent Regulatory Board for Auditors, Saica has to wait for the outcomes of IRBA investigations and would usually adopt the IRBA’s findings against CAs who are also registered auditors.
Accounting scandals are also not the only difficulties facing the industry.
The state of municipal finances are laid bare year after year by the Auditor General and in Kimi Makwetu’s 2016/17 report, he found that only 33 municipalities out of 257 had managed to produce financial statements and performance reports of an acceptable standard, and received clean audits. Only 22% of municipalities managed to provide financial statements without material misstatements.
“It’s even worse when you are a city manager because as an administrator, you rely on your CFO (chief financial officer) and you cannot be everywhere and do everything by yourself and it means you must sleep with your eyes wide open because if you dare blink, there is a submission that is not necessarily correct,” Lamola said.
Lamola, who also has experience in the private sector having worked at Anglo American and JP Morgan Securities, previously worked as the Provincial Accountant General in the Limpopo Treasury. Prior to joining Saica in 2012, she was Polokwane's city manager.
She said accountants in the public sector “will definitely burn out” as they often do not have the necessary support structure, unlike in the private sector.
Coupled to this was that city managers and CFOs usually report to politicians who sometimes "don't even have an understanding of what the Municipal Finance Management Act or Public Finance Management Act is all about".
“The public sector is a difficult environment, you can’t go in naïve, you must understand the dynamics, and part of the dynamics is that the politician is there to deliver to his ... people.
"The last thing a politician wants to hear is the city manager telling him it's impossible, but you have to tell them it's not doable to make them understand or find a solution that is within the law...in line with regulations to be able to deliver."
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