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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

UFS Physics Research Chair receives more funding
2017-11-20


 Description: Prof Hendrik Swart, Physics Research Chair receives more funding Tags: Prof Hendrik Swart, Physics Research Chair receives more funding

Prof Hendrik Swart, Senior Researcher Professor in the
Department of Physics at UFS.
Photo: Charl Devenish

A research project into low-energy lighting using phosphor materials for light emitting diodes (LEDs) at the Department of Physics at the University of the Free State (UFS) has received further recognition. 

The South African Research Chairs Initiative (SARChi) has awarded further funding for the Research Chair in Solid State Luminescent and Advanced Materials situated in the department. Prof Hendrik Swart, a Senior Research Professor in the Department of Physics, says this means that the Chair will carry on receiving funds from SARChi for another five years. The Initiative also awarded Prof Swart in 2012 for the research, which resulted in funding for equipment and among others, bursaries.    

Better light emission in LED’s
The research focuses on better light emission of phosphor powers in LEDs. It is also looking into improving LED displays in flat screens. The research into solar cells has shown that phosphors can also increase their efficiency by increasing the range of light frequencies, which convert into electricity. It also entails that glow-in-the-dark coatings absorb light during the day and emit it at night. 

Prof Swart says over the next five years the research will focus on developing and producing devices that emit better light using the substances already developed. “We need to make small devices to see if they are better than those we already have.” In practical terms, it means they want a farmer’s water pump that works with solar energy to work better with less energy input.” 

Device that simulates sunlight
Prof Swart says the renewal of the Chair’s funding means the department can now get equipment to enhance its research   such as a solar simulator. The solar simulator uses white LEDs whose intensity output and wavelengths can be tuned. The output is measured in number of suns. It enables researchers to work in a laboratory with a device that simulates sunlight.     

According to Prof Swart the long-term benefit of the research will result in more environmentally friendly devices which use less energy, are brighter and give a wider viewing field. 

About 10 postdoctoral researchers are working on the studies done by the Chair in collaboration with the Council for Scientific and Industrial Research. 

The Research Chair Initiative aims to improve the research capacity at public universities to produce high-quality postgraduate students, research and innovative outputs. The criterion for evaluating the department’s Chair includes aspects such as how much development has occurred over the past five years. The assessors look at features such as the number of students the research entity has trained and how many publications the research team has produced.

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