From Steinhoff CEO Markus Jooste to several senior KPMG staff and a number of VBS Mutual Bank executives, acting CEO of the SA Institute of Chartered Accountants (Saica) Fanisa Lamola talks to Fin24 about the state of the accounting industry in SA.
Fin24: Why do you believe there has been slippage in accounting standards?
Fanisa Lamola (FL): There are two factors behind this. The first is the environment that CA’s(SA) are operating in is not strong enough. In all sectors in the economy, there is unethical leadership and some people want instant gratification.
Secondly, we as the accounting industry believe in what we have produced, (so) we have become complacent and believe that members know what is expected of them in terms of governance and ethics.
The profession is almost 100 years old and the by-laws and constitution need to be updated. There’s a gap between members’ interests and the public interest and that needs to be addressed.
Fin24: Why has it taken so long to discipline members who are are alleged to have been embroiled in accounting scandals?
FL: It is a legal-based process. We don’t start with a disciplinary process. 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 then goes to the Saica disciplinary committee.
The disciplinary committee is chaired by a judge or an advocate and follows a legal process. The accused is allowed the right to representation and on average, the high profile cases can take six to eight months to finalise. 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.
We are not a prosecuting authority but a voluntary organisation.
The worst sanction can be de-registration and/or a R500 000 fine per charge. According to Saica’s by-laws, if CAs(SA) are also registered auditors with the Indepent Regulatory Board for Auditors (IRBA), 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.
Fin24: What are you doing to improve the loopholes?
The Saica Board instituted a governance review process in August, led by world renowned corporate governance specialist and former chairperson of the King Committee on Corporate Governance, Professor Mervyn King.
The constitution needs to be comprehensive enough with by-laws in place to ensure enforcement in order to close the gap between member interest and the public interest.
For example, we noticed a gap that members don’t want to give documents relating to their disciplinary cases and they even argue jurisdiction. Why should we be struggling with our own members when it is a voluntary organisation? Saica also does not have the rights to subpoena.
Fin24: How have accountants responded to the heat on the industry? Saica has 46 000 members (including associate general accountants), and roughly 10 000 are expatriates, living in basically every continent over the world.
I was in the US last month and some of our members there were worried. Although they asked what is being done about the profession, they never said that they were struggling.
There is still a high demand for CA's(SA) across the world. The negative publicity has created an unfortunate perception about the industry but only 250-265 out of 46 000 members are currently facing disciplinary processes. So the few are tainting the reputation of the many ethical members.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER