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‘SA auditing firms must revamp and emphasise accountability’ – Auditing experts at UFS-hosted panel discussion

01 August 2023 | Story Kekeletso Takang | Photo Supplied

Business Acumen Day 2023 — The UFS School of Accountancy hosted a panel discussion in the Centenary Complex with the topic ‘The audit profession’s response to the financial reporting scandals of the past decade: Has enough been done?’. Panellists included Prof Bernard Agulhas, Rob Rose, and Patricia Stock, and the session was facilitated by Prof Philippe Burger and Conrad de Wee.

Auditing firms in South Africa should go back to basics and emphasise accountability in revamped corporate structures to avoid repeats of the big auditing scandals of the past decade such as the Steinhoff, VBS, Tongaat Hulett, and Bosasa scandals. This was some of the opinion expressed during a panel discussion hosted by the University of the Free State (UFS) School of Accountancy and featuring auditing and accountancy experts.

The discussion tackled the topic ‘The audit profession’s response to the financial reporting scandals of the past decade: Has enough been done?’, and featured a panel of experts including Rob Rose, Financial Mail Editor and author of Steinheist; Prof Bernard Agulhas, former CEO of the Independent Regulatory Board for Auditors (IRBA) and current Adjunct Professor of Auditing at the UFS; and Patricia Stock, audit partner and CEO of MGI RAS and former South African Institute of Chartered Accountants (SAICA) board member.

The event took place on 19 July 2023 in the Centenary Complex on the UFS Bloemfontein Campus. It was facilitated by Prof Philippe Burger, Dean of the Faculty of Economic and Management Sciences, and Conrad de Wee, Chairman of the SAICA Central Region Council and Senior Manager at auditing firm Mazars.

Prof Agulhas said a lot has been done to prevent a repeat of the root causes of the financial reporting scandals of the past decade. “Everyone has responded. The profession, regulators, universities, labour markets, the public, and professional bodies.” Still, he said a lot more needs to be done. “We have to go back to basics. Look at the framework, ISA standards, skills, and competencies. Professionals must be adaptable and responsive. Firms must set the tone at the top and create a conducive environment. Establish a culture of accountability. We have to go back to behavioural competencies. Universities can also investigate the inclusion of forensic auditing as part of the curriculum.”

The panel felt that accountability is central to going back to basics. Rose said he believes businesses need to change their organisational cultures. “The likes of Glencore and Tiger Brands are making an immense effort to revamp. There are numerous ways companies can go about it, including setting the tone at the top and establishing accountability structures in-house. Also, not only having fraud-detection systems, but also implementing them.”

He also questioned why no one is holding bankers accountable for failing to uncover recent corporate scandals. “In the case of Tongaat Hulett, how did they miss all the issues through their risk assessment? At the end of the day, they should also be held accountable.”

Where it all went south

Prof Burger said the World Economic Forum had for seven years, until 2017, rated South Africa number one for the strength of auditing and reporting standards. “And then we started to see things go wrong, with the likes of state capture, Steinhoff, VBS, and others. In light of this, has enough been done to equip external auditors to deal with fraud in organisations, and to ensure that they act in the interest of the public?”

Prof Agulhas, speaking from his experience as a regulator, said, “Initially, South Africa was one of the few developing countries to adopt international standards. For seven years, we have received a good rating from the World Economic Forum. But if we can be honest, while our professional qualifications are among the best in the world, we were not that good at implementing these standards due to behavioural issues on the part of certain accountancy/ auditing professionals.”

Stock, sharing her perspective as an audit practitioner, commented: “We are noticing a growing trend among firms to improve on reporting, and audit committees are holding professionals accountable. While this is said, we should also acknowledge that there is a need to look at the whole ecosystem relating to financial reporting.”

Auditing in the era of artificial intelligence

When questioned about the impact of technological advances on auditors, Stock said she believes artificial intelligence and technology integration offer the auditing profession a wonderful opportunity. She stressed that technology will not replace human capital. “We need critical thinkers and value creators. Technology won’t replace that, especially where Environmental, Social, and Corporate Governance (ESG) is concerned.”

Interaction between universities and industry

Prof Burger posed the question, “When looking at the interaction between universities, industry, and trainees, would you say this model is still fit for purpose, and are these individuals ready?”

Stock responded, “The profession needs the diversity of minds. We need their enquiring minds. We need to hear the voices of our trainees. In fact, one of the scandals of the past decade was picked up by a trainee, but was unfortunately ignored by the more senior staff.”

Where we are now

The panel discussion was attended by stakeholders from the School of Accountancy, which included managers and directors of various auditing and accounting firms, representatives of professional bodies, members of management from large businesses, and university staff members. Interactive polls and the opportunity to submit questions allowed guests to participate in the discussion, which ended with a consensus that while much effort has been made to restore the credibility of the auditing profession, there is still further work to be done.

The panel discussion was made possible with the financial support of Standard Bank.

News Archive

Graduates encouraged to use their knowledge to the benefit of SA

2017-06-28

Description: Graduation read more photo 27 June 2017 Tags: Graduation read more photo 27 June 2017

On 26 June 2017, the last day of its mid-year graduation
ceremonies, the University of the Free State conferred
388 master’s and 72 doctoral degrees.
Photo: Charl Devenish

You have the knowledge, which is a big resource, and should use it to the benefit of South Africa. This was the overwhelming message to graduates obtaining their master’s and doctoral degrees at the University of the Free State (UFS).

Their responsibility was emphasised by the likes of Justice Mahube Molemela during the ceremonies in the Callie Human Centre at the Bloemfontein Campus on 26 June 2017. Justice Molemela, Judge President of the Free State Division of the High Court and Acting Justice of the Supreme Court of South Africa, was the guest speaker at the morning and afternoon ceremonies.

The UFS conferred 388 master’s and 72 doctoral degrees on the final day of its mid-year graduation ceremonies, which was the biggest set of ceremonies in the university’s history. The doctorates came from the Faculty of Natural and Agricultural Sciences (30), Faculty of the Humanities (15), Faculty of Economic and Management Sciences (9), Faculty of Education (8), Faculty of Health Sciences (5), and Faculty of Theology (5). A total of 5 258 degrees were conferred over six days from 19 to 26 June 2017.

Future dependant on youth
Justice Molemela said the master’s and doctoral graduates have the skills to make a difference. “The future of a nation is largely dependent on its youth playing a meaningful role in creating a strong economy, culminating in a good standard of living for everyone.”

She said they should plough back into their communities and give opportunities to others. “I am certain that if each one of you thinks innovatively in your respective fields, you will find solutions which will eradicate poverty, improve service delivery, and hence our education will advance gender equity, and promote public participation.”

Dr Khotso Mokhele, UFS Chancellor, said these graduates have every reason to hold their heads high, their shoulders square, and walk with a bit of an attitude, as they have distinguished themselves.

Generation of new knowledge
According to Prof Francis Petersen, Rector and Vice-Chancellor, the UFS strives to be a university that is research led. “For me, one of the important aspects about universities which set them apart from other training and vocational institutions is the generation of new knowledge,” he said at a lunch function for PhD graduates on 26 June 2017. He feels it is critically important for them to make a contribution to the country.

Dipiloane Phutsisi, Principal and Chief Executive Officer of the Motheo TVET College in the Free State, also emphasised this. Phutsisi was the guest speaker on 23 June 2017. “Your courage and eagerness to face the future and tell the truth in the midst of this confusion, is highly desired by South Africans.”

Justice Ian van der Merwe, Judge of Appeal at the Supreme Court of Appeal and former Chair of the UFS Council, was the guest speaker at the ceremonies on 22 June 2017. He encouraged graduates from a chapter in the book War and Peace by Leo Tolstoy.

“There is no greatness where there is not simplicity, goodness, and truth (according to Tolstoy). Or maybe more modernly translated: There is no greatness where simplicity, goodness, and truth are absent.”

Click here to see a list of Deans’ and Senate medals awarded.

Graduations ceremonies:

19 June 2017:

Faculty of Education, except educational qualifications in Open and Distance Learning – South Campus
Faculty of Health Sciences, Faculty of Theology, and Faculty of Law (including the School of Financial Planning Law)

“Every one of us, is destined for greatness. In the words of Dr Martin Luther King: Everyone has the power for greatness, not for fame but greatness, because greatness is determined by service.” – Dipiloane Phutsisi (Guest speaker and Principal and Chief Executive Officer of the Motheo TVET College in the Free State)

Photo Gallery
Livestream Footage (morning session)
Livestream Footage (afternoon session)

Photo: Charl Devenish

20 June 2017:

Faculty of Natural and Agricultural Sciences: All Bachelor’s degrees
Faculty of Natural and Agricultural Sciences: All Diplomas and Bachelor Honours degrees

“Graduation marks a start of a new and wonderful journey. During the last couple of years you have not only developed your intellect, but also expanded what I call your social self,” - Prof Francis Petersen, Rector and Vice-Chancellor

Speech: Prof Francis Petersen (morning)
Speech: Prof Francis Petersen (afternoon)
Photo Gallery
Livestream Footage (morning session)
Livestream Footage (afternoon session)

Photo: Charl Devenish

21 June 2017:

Faculty of Economic and Management Sciences: All certificates, diplomas, Bachelor’s degrees, and Bachelor Honours degrees, excluding BCom degrees
Faculty of the Humanities: Social Sciences and Communication Sciences only

“Graduation is one of the most accomplished achievements one can ever experience.” – Justice Connie Mocumie (Guest speaker and Judge of Appeal at the Supreme Court of Appeal)

Photo Gallery
Livestream Footage (morning session)
Livestream Footage (afternoon session)

Photo: Charl Devenish

22 June 2017:

Faculty of Economic and Management Sciences: BCom degrees only
Faculty of the Humanities: All qualifications, except Social Sciences and Communication Sciences

“The question is not if you will make mistakes, but how do you deal with your mistakes? Do you admit them, do you learn from them, and do you grow as a person?” – Justice Ian van der Merwe (Guest speaker and Judge of Appeal at the Supreme Court of Appeal)

Photo Gallery
Livestream Footage (morning session)
Livestream Footage (afternoon session)

Photo: Johan Roux

23 June 2017:

Educational qualifications in Open and Distance Learning – South Campus

“Class of 2017, go and make your own unique contributions but remember to look into your own heart. South Africa needs your skills, your innovation, knowledge, your expertise and creativity.” – Dipiloane Phutsisi (Guest speaker and Principal and Chief Executive Officer of the Motheo TVET College in the Free State)

Photo Gallery
Livestream Footage (afternoon session)

Photo: Charl Devenish

26 June 2017:

All faculties: master’s and doctoral degrees

“Class of 2016/2017 graduates: You are critical thinkers, you can analyze, you can think independently. That is why you managed to successfully complete postgraduate degrees and diplomas.” – Justice Mahube Molemela (Judge President of the Free State Division of the High Court and Acting Justice of the Supreme Court of South Africa)

Photo Gallery
Livestream Footage (morning session)
Livestream Footage (afternoon session)

Photo: Charl Devenish

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