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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

Higher than expected prevalence of dementia in South African urban black population

2010-09-22

Prof. Malan Heyns and Mr Rikus van der Poel

Pilot research done by University of the Free State (UFS) indicates that the prevalence of dementia, of which Alzheimer’s disease is only one of the causes, is considerably higher than initially estimated. Clinical tests are now underway to confirm these preliminary findings.

To date it has been incorrectly assumed that dementia is less prevalent among urban black communities. This assumption is strongly disputed by the findings of the current study, which indicates a preliminary prevalence rate of approximately 6% for adults aged 65 years and older in this population group. Previous estimates for Southern Africa have been set at around 2,1%.

The research by the Unit for Professional Training and Services in the Behavioural Sciences (UNIBS) at the UFS and Alzheimer’s South Africa is part of the International 10/66 Dementia Research Group’s (10/66 DRG) initiative to establish the prevalence of dementia worldwide.

Mr Rikus van der Poel, coordinator of the local study, and Prof. Malan Heyns, Principal Investigator, say worldwide 66% of people with dementia live in low and middle income countries. It is expected that it will rise to more than 70% by 2040, and the socio-economic impact of dementia will increase accordingly within this period. 21 September marks World Alzheimer’s Day, and this year the focus is on the global economic impact of dementia. Currently, the world wide cost of dementia exceeds 1% of the total global GDP. If the global cost associated with dementia care was a company, it would be larger than Exxon-Mobil or Wal-Mart.

The researchers also say that of great concern is the fact that South Africa’s public healthcare system is essentially geared toward addressing primary healthcare needs, such as HIV/Aids and tuberculosis. The adult prevalence rate of HIV was 18,1% in 2007. According to UNAIDS figures more than 5,7 million people in South Africa are living with HIV/Aids, with an estimated annual mortality of 300 000. In many instances the deceased are young parents, with the result that the burden of childcare falls back on the elderly, and in many cases elderly grandparents suffering from dementia are left without children to take care of them. “These are but a few reasons that highlight the need for advocacy and awareness regarding dementia and care giving in a growing and increasingly urbanized population,” they say.

Low and middle income countries often lack epidemiological data to provide representative estimates of the regional prevalence of dementia. In general, epidemiological studies are challenging and expensive, especially in multi-cultural environments where the application of research protocols relies heavily on accurate language translations and successfully negotiated community access. Despite these challenges, the local researchers are keen to support advocacy and have joined the international effort to establish the prevalence of dementia through the 10/66 DRG.

The 10/66 DRG is a collective of researchers carrying out population-based research into dementia, non-communicable diseases and ageing in low and middle income countries. 10/66 refers to the two-thirds (66%) of people with dementia living in low and middle income countries, and the 10% or less of population-based research that has been carried out in those regions.

Since its inception in 1998, the 10/66 DRG has conducted population based surveys in 14 catchment areas in ten low and middle income countries, with a specific focus on the prevalence and impact of dementia. South Africa is one of seven LAMICs (low and medium income countries) where new studies have been conducted recently, the others being Puerto Rico, Peru, Mexico, Argentina, China and India.

Mr Van der Poel says participating researchers endeavour to conduct cross-sectional, comprehensive, one-phase surveys of all residents aged 65 and older within a geographically defined area. All centres share the same core minimum dataset with cross-culturally validated assessments (dementia diagnosis and subtypes, mental disorders, physical health, anthropometry, demographics, extensive non-communicable risk factor questionnaires, disability/functioning, health service utilization and caregiver strain).

The local pilot study, funded by Alzheimer’s South Africa, was rolled out through an existing community partnership, the Mangaung University of the Free State Community Partnership Programme (MUCPP).

According to Mr Van der Poel and Prof. Heyns, valuable insights have been gained into the myriad factors at play in establishing an epidemiological research project. The local community has responded positively and the pilot phase in and of itself has managed to promote awareness of the condition. The study has also managed to identify traditional and culture-specific views of dementia and dementia care. In addition, existing community-based networks are being strengthened, since part of the protocol will include the training and development of family caregivers within the local community in Mangaung.

“Like most developing economies, the South African population will experience continued urbanization during the next two decades, along with increased life expectancy. Community-based and residential care facilities for dementia are few and far between and government spending will in all probability continue to address the high demands associated with primary healthcare needs. These are only some of the reasons why epidemiological and related research is an important tool for assisting lobbyists, advocates and policymakers in promoting better care for those affected by dementia.”

Media Release
Issued by: Mangaliso Radebe
Assistant Director: Media Liaison
Tel: 051 401 2828
Cell: 078 460 3320
E-mail: radebemt@ufs.ac.za
21 September 2010

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