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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

Studies to reveal correlation between terrain, energy use, and giraffe locomotion

2016-11-18

More than half of giraffes in captivity in Europe are afflicted by lameness. This high prevalence represents an important welfare issue, similar to other large zoo animals.

According to Dr Chris Basu, a veterinarian at the Royal Veterinary College in the UK, giraffes in captivity are often afflicted by overgrown hooves, laminitis and joint problems. Diagnosis and treatment is limited by our understanding of anatomy and function, more specifically the locomotion of these animals. Although the giraffe is such a well-known and iconic animal, relatively little has been studied about their locomotor behaviour.

Dr Basu recently visited South Africa to do fieldwork on the locomotion of giraffes as part of his PhD studies under the mentorship of world-renowned Professor of Evolutionary Biomechanics, Prof John Hutchinson. This project is a joint venture between Dr Basu and Dr Francois Deacon, researcher in the Department of Animal, Wildlife, and Grassland Sciences at the UFS. Dr Deacon is a specialist in giraffe habitat-related research.

Together Prof Hutchinson and Drs Deacon and Basu form a research group, working on studies about giraffe locomotion.

Wild giraffe population decrease by 40% in past decade

“Locomotion is one of the most common animal behaviours and comes with a significant daily energetic cost. Studying locomotion of wild animals aids us in making estimates of this energetic cost. Such estimates are useful in understanding how giraffes fit into ecosystems. Future conservation efforts will be influenced by knowledge of the energy demands in giraffes.

“Understanding aspects of giraffe locomotion also helps us to understand the relationships between anatomy, function and evolution. This is relevant to our basic understanding of the natural world, as well as to conservation and veterinary issues,” said Dr Deacon.

Locomotion study brings strategy for specialist foot care

On face value it seems as if foot disease pathologies are more common in zoo giraffes than in wild giraffes. “However, we need a good sample of data from both populations to prove this assumption,” said Dr Basu.

This phenomenon is not well understood at the moment, but it’s thought that diet, substrate (e.g. concrete, straw, sand and grass) and genetics play a part in foot disease in giraffes. “Understanding how the feet are mechanically loaded during common activities (standing, walking, running) gives our research group ideas of where the highest strains occur, and later how these can be reduced through corrective foot trimming,” said Dr Basu.

Through the studies on giraffe locomotion, the research group plans to devise strategies for corrective foot trimming. At the moment, foot trimming is done with the best evidence available, which is extrapolation from closely related animals such as cattle. “But we know that giraffes’ specialist anatomy will likely demand specialist foot care,” Dr Basu said.

Studying giraffes in smaller versus larger spaces

The research group has begun to study the biomechanics of giraffe walking by looking at the kinematics (the movement) and the kinetics (the forces involved in movement) during walking strides. For this he studied adult giraffes at three zoological parks in the UK.

However, due to the close proximity of fencing and buildings, it is not practical to study fast speeds in a zoo setting.

A setting such as the Willem Pretorius Nature Reserve, near Ventersburg in the Free State, Kwaggafontein Nature Reserve, near Colesberg in the Karoo, and the Woodland Hills Wildlife Estate in Bloemfontein are all ideal for studying crucial aspects such as “faster than walking” speeds and gaits to measure key parameters (such as stride length, step frequency and stride duration). These studies are important to understand how giraffe form and function are adapted to their full range of locomotor behaviours. It also helps to comprehend the limits on athletic capacity in giraffes and how these compare to other animals.

Drones open up unique opportunities for studying giraffes

The increasing availability of unmanned aerial vehicles (UAVs)/drones opens up unique opportunities for studying locomotion in animals like giraffes. Cameras mounted onto remotely controlled UAVs are a straightforward way to obtain high-quality video footage of giraffes while they run at different speeds.

“Using two UAVs, we have collected high definition slow motion video footage of galloping giraffes from three locations in the Free State. We have also collected detailed information about the terrain that the giraffes walked and ran across. From this we have created 3D maps of the ground. These maps will be used to examine the preferred terrain types for giraffes, and to see how different terrains affect their locomotion and energy use,” said Dr Deacon.

“The raw data (videos) will be digitised to obtain the stride parameters and limb angles of the animals. Later this will be combined with anatomical data and an estimation of limb forces to estimate the power output of the limbs and how that changes between different terrains,” said Dr Basu.

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