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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

Unique partnership flows out of our Schools Projects
2011-06-29

 

 At the meeting between our university and principals and teachers of three of the 23 schools in our university’s Schools Partnership Project were, from the left: Mr Motlolometsi Tshidiso,  Tsotseletso Secondary School; Dr Choice Makhetha, Vice-Rector: External Relations (acting); Mr Vuyo Mlinde, Bloem-Oos Intermediary School; back: Dr Peet Venter, Head of our South Campus, and Mr Tlhabedi Mafoyane from Kagisho Secondary School.

Our university established a unique partnership flowing from two of its community initiatives; the UFS Schools Partnership Project and the Extreme Make-over for Schools Project. Bloem-Oos Intermediary School which will benefit from the Extreme Make-over for Schools Project formed a partnership with Kagisho and Tsotseletso Secondary schools becoming a feeder school for the two schools. Both Kagisho and Tsotseletso Secondary schools are now beneficiaries of the UFS Schools Partnership Project.

With the Schools Partnership Project, the university is working closely with the 23 schools for a three- to five-year-period to help schools to become top achievers of which the teachers, learners and parents could be proud. The schools were identified last year and the groundwork for this project was finalised in 2010 as well. The university’s involvement in the Extreme Make-over for Schools Project includes amongst others a partnership with the Department of Basic Education and the Bloemfontein business community to work together to launch the first of a number of a newly upgraded schools to learners, teachers and the community. Bloem-Oos Intermediary School became the first school in Bloemfontein to undergo an extreme makeover.
 
Management structures from the University, including Prof. Jonathan Jansen, Vice-Chancellor and Rector, Dr Choice Makhetha, Vice-Rector: External Relations (acting), and Dr Peet Venter, Campus Head of the our South Campus, recently met with the principals and some of the teachers of three schools that form part of these two community initiatives of the university. The meeting between the university and principles Mr Tlhabedi Mafoyane (from Kagisho Secondary School), Mr Motlolometsi Tshidiso (Tsotseletso Secondary School) and Mr Vuyo Mlinde (Bloem-Oos Intermediary School) took place to enhance the relationships between the parties involved.
 
Dr Makhetha said, “When you support a school you groom learners to fit into the culture of the university. We were excited to learn that Bloem-Oos Intermediary School is a feeder school for Kagisho and Tsotseletso Secondary Schools. This partnership allows us to not only prepare learners already from an early age for university but also throughout their high school career. Let us make this project a model for South Africa.”
 
Continuous efforts and projects from the university as well as partners in the community, to invest in the learners of Bloem-Oos Intermediary School, include:
-       The Project for Peace: A calculator project where learners will be taught on how to use a scientific calculator properly. A group of the learners will also be supplied with a free calculator.
-       The Music Project: The Odeion School of Music at the UFS will also bring a music programme to the school.
-       The Desk Project: This project includes fixing of all broken desks by Group 4 Correctional Facility. (This initiative includes all the broken desks of all the 23 schools in involve in the UFS Schools Partnership Project.)
 

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