ACCOUNTANT - ISSUE 38 l 2020 REASSESSING RELEVANCE OF THE BUSINESS MODEL IN A CHANGING MARKET ENVIRONMENT - SAIPA
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PROFESSIONAL
ACCOUNTANT
OFFICIAL JOURNAL OF
TM
REASSESSING RELEVANCE OF
THE BUSINESS MODEL IN A
CHANGING MARKET ENVIRONMENT CPD
60 MINS
(Unstructured)
1 Professional Accountant ISSUE 38 l 2020
Reassessing our business
models for the future 04
contents SAIPA Value
Connect Network
It’s official! Professional accountants
do make a difference
06
07
Three ways AI turns
accountants into changemakers 09
Whose Responsibility is
Going Concern Assessment? 11
The high level impact
of Covid-19 on reporting 13
Looking forward
to CPD 15
Risky business: Avoiding non-compliance
through good judgement 18
COVID-19
Accounting Considerations 20
Table of
What happens if I can
no longer practice? 22
Building a flexible,
futureproof workforce 25
The Psychology of
remote working 27
SAIPA’s CoBA sets new bar
for business advisory 29
Ettiene Retief:
tax lover & lifelong learner 32
Rising stars show dedication,
discipline and hard work 34
SAIPA Membership e-Certificates
Professional trust on demand! 36
Take a tour of
MySAIPA 38
3 Professional Accountant
A word from SAIPA
Reassessing
PUBLISHING INFORMATION
Professional Accountant is the official journal
of the South African Institute of Professional
our
Accountants (SAIPA)
business
Editorial Board
Rochelle Bates – Marketing and
Communications Manager
Noma Mpfona – PR & Brand Comms Officer
models
Stephné du Toit - Editorial and Project
Coordinator saipa@thatpoint.co.za
SAIPA Contributors
for the
Prof Rashied Small – Executive: Centre of Future
Excellence
future
Faith Ngwenya – Executive: Technical and
Standards Services
Mahomed Kamdar – Tax Specialist
Leana van der Merwe – Accounting and Assurance
Specialist
Phillip Bouwer – Technical and Research Specialist
Aysha Naino – Professional Conduct (IC/DC) Officer
Design & Layout Marelise Scholtz
Production At That Point
Advertising Sales
Email: connect@saipa.co.za
SAIPA National Office SAIPA House,
Howick Close, Waterfall Park,
Vorna Valley, Midrand
PO Box 2407,
Halfway House, 1685
Tel: 011 207 7840
www.saipa.co.za
© This publication is protected in terms of
the Copyright Act 98 of 1978 © Copyright. All
copyright for material appearing in this magazine
belongs to SAIPA. No part of this magazine
may be reproduced without written consent
of the publisher. The views expressed by the
contributors do not necessarily reflect those of
SAIPA, Professional Accountant or the producers.
Faith Ngwenya, Technical and Standards
The content published is not intended to and
Executive at the South African Institute of does not constitute professional advice. The
Professional Accountants (SAIPA) accuracy, completeness, adequacy or currency
of the content is not warranted or guaranteed
and any use of or reference to the substance of
T
the published content remains at your own risk.
he Covid-19 pandemic caught all of us Members are advised to seek professional counsel
slightly off-guard, some more than others. from the relevant expert where required. All views
We were still considering how to prepare for and opinions contained herein are not necessarily
the Fourth Industrial Revolution (4IR) and those of the Institute and do not necessarily reflect
the next minute we were all fast-tracked into its official policy or position.
the future because of the technological demands the
4 Professional Accountant
A word from SAIPA
lockdown as a result pandemic forced upon us. At it until retirement. No one can predict a pandemic
SAIPA we were impressed by our members’ agility as the one we are facing right now. We also do not
and ability to embrace digitalisation in order to know when something similar can hit us again.
continue operations during a very trying time. We have seen our members transforming their
The remote workforce had its fair share of business models from being solely compliance
financial implications because of the unexpected focused (compiling financial statements and
investments in IT-infrastructure and additional data preparing tax returns) to moving more to
requirements. However, this has been a vital capital business advisory services for their clients. To
investment into the future of our business. It is this effect SAIPA has launched the Centre of
important to continue investing in what is best for Business Advisory (CoBA) within its Technical and
your practice. Standards Department.
We are sympathetic to our members and the The ability to offer business advice is now
clients who have had to downsize because of crucial. One can only imagine the circumstances
financial distress. We are also deeply saddened by of clients who are in the hospitality industry. Even
the news that some of our members passed away when lockdown restrictions have been lifted
in recent times. Aysha Naino addresses the issue of dramatically, many are still not close to operating
what happens when the owner, partner or manager at full capacity. Companies are faced with liquidity
of an accounting practice is no longer at the helm. and solvency concerns, and this is generally where
An important consideration is to promptly inform the accountant will notice the initial signs of
your clients and to give them the assurance that they financial distress and what the future outlook of
have your support during the transition. their clients’ businesses is.
The pandemic has again highlighted the In this issue Leana van der Merwe the
importance of succession planning and not to delay Accounting and Assurance Specialist at SAIPA
unpacks the question of whose responsibility it is
to conduct the “going concern” assessment. Going
concern is one of the fundamental assumptions
on which annual financial statements for
companies are prepared.
When directors assess a company’s ability to
continue as a going concern, they have to take
into account all the facts and circumstances as
well as future forecasts and plans. Directors thus
The pandemic has have to consider the business plan, budgets and
forecasts as well as new business lines and the
again highlighted economy.
the importance of
Although the directors are legally responsible
for determining if the business will continue as
succession planning a going concern and that the going concern
assumption is appropriate, the professional
and not to delay accountant and tax practitioners should also
it until retirement.
remain a strategic player.
They should remain vigilant about debtor
No one can predict behaviour as the inability to collect debt will
certainly impact their client’s business. A proper
a pandemic as the trend analysis will be able to act as an early
warning. The accountant should advise his clients
one we are facing of the trends and assist with strategies to mitigate
right now. We also the negative impact on cash flow.
The accountant of the future needs to fully
do not know when understand the business of their clients to identify
issues that may affect it going forward. In the
something similar current environment most businesses need all the
can hit us again.” support they can get to put them on the road to
recovery. It is time for the professional accountant
to step up.
5 Professional Accountant
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Professional Accountant
www.saipa.co.za/value-connect-network
Executive message
It’s I
have often said that professional
accountants play an important role in the
economic development of their countries.
Is this actually true? Are we as accountants
official!
really making the world a better place?
I assure you that we are. In fact, as a member
of an IFAC-affiliated PAO like SAIPA, you’re
doing even more than accountants associated
PROFESSIONAL
with other bodies.
A new study from IFAC, in partnership
with the Centre for Economics and Business
ACCOUNTANTS
Research (CEBR), reveals that more accountants
make for better drivers of economic growth.
do make a
And if those accountants are associated with
IFAC, the results are amplified. Let us take a look
at these astonishing findings.
difference Observations
The report, Accountants’ Role in Economic
Development, notes that an increase of
500 accountants per million correlates to
measurable economic improvements. Again,
when those extra accountants are associated
with IFAC, the effects are even greater.
First, their presence sees an increase in GDP
per capita of USD 5,073. With IFAC, the
increase is USD 11,224 in GDP per capita, or
2.21 times better!
In fact, as a
By: Shahied Daniels, Chief Executive, SAIPA member of an
IFAC-affiliated PAO
like SAIPA, you’re
doing even more
than accountants
associated with
other bodies.”
7 Professional Accountant
Executive message
The size of the service sector relative to GDP organised cooperation at various points in the
increases by 3.3%, but 4.2% with IFAC, that is, 1.27 system to enable financial crimes.
times better. We, too, must take cooperative steps to break
We see a 9.8% increase in the value of exports down the infrastructure of corruption and stop it in
relative to GDP although there is no notable its tracks.
difference for IFAC.
There is a 7.4% decrease in the sum of tax rates Education
and, if IFAC related, a 9.8% decrease. That’s 1.32 I believe our response must start with educating
times better. society, especially in ethics. Unintentional non-
A 16% increase in the size of inward foreign compliance and a lack of situational awareness
direct investment related to GDP was measured. around non-compliance are major contributors
For IFAC members, this was 34.3% - 2.14 times to corruption. This ignorance opens the door for
better. criminals to go about their business unhampered.
And, finally, the report shows an increase of 0.3 So, as professional accountants, we must also
index points on the World Economic Forum’s be prepared to guide and educate those in key or
Global Competitive Index Quality of Education strategic positions who could be fooled into becoming
Measure. This became 0.4 index points for IFAC unwilling links in the corruption supply chain.
affiliates, or 1.33 times more. And when push comes to shove, when all
prescribed interventions have been exhausted, and
It is uplifting to know that, as a Professional the non-compliance persists, we must be prepared
Accountant (SA) and a member of IFAC, we not only to approach the appropriate authorities.
contribute to a stronger economy but more so than It is not possible to build inclusive prosperity
we previously imagined. without first removing the forces that break it down.
Therefore, we must take a stand against corruption,
Chain of corruption or it will continue to spread and lead to further
However, economic development is hampered by economic decline.
corruption and accountants also have a vital role to
play combating corruption. You can find the reports mentioned at the
Another IFAC report, The Accountancy Profession following locations:
– Playing a Positive Role in Tackling Corruption, Accountants’ Role in Economic Development,
found that accountants are most effective in https://www.ifac.org/knowledge-gateway/
combating corruption where there is a strong contributing-global-economy/publications/
governance architecture in place. accountants-role-economic-development
Yet, we must realise that corruption has its own The Accountancy Profession – Playing a Positive
architecture. It is not just the result of a few rogue Role in Tackling Corruption, https://www.ifac.
operators. Rather, a “supply chain” of conspirators is org/knowledge-gateway/building-trust-ethics/
needed to make it possible. publications/accountancy-profession-playing-
Society’s complex laws and regulations are not positive-role-tackling-corruption
easily bypassed. So we must assume that it takes
8 Professional Accountant
AI
AI
THREE WAYS
A
I is already good at
automating repetitive
accountancy tasks,
which increases
accuracy and
efficiency and helps firms discover
hidden insights and trends that
affect their clients’ businesses.
This allows accountants to do
more with fewer resources and
TURNS ACCOUNTANTS
has freed up time and energy for
creativity when it comes to analysing
and interpreting data to extract real
INTO CHANGEMAKERS value for clients.
Many professionals are excited
by the benefits that AI can offer. In
By PJ Bishop, Vice-President for fact, according to Sage’s Practice of
Partners, Accountants & Alliances: Now report, the majority of South
Africa & Middle East at Sage African respondents (82%) agreed
that they need to increase the pace
of technology adoption to stay
Artificial intelligence (AI) and competitive.
automation have brought the As advances in AI and machine
accounting profession to a point learning (ML) pick up the pace,
three additional benefits have
of pivotal change, and it’s about emerged: invisible accounting,
to revolutionise the way that continuous auditing, and active
insights.
accountants work.
9 Professional Accountant
BENEFIT 1 BENEFIT 2 BENEFIT 3
AI
Invisible accounting Continuous auditing Active insights
At the beginning of 2020, over Nearly all South African Two-thirds (65%) of South African
half (54%) of South African accountants (90%) say that the accountants said that investing in
accountants were moving ongoing effects of technology technology has enabled them to
away from traditional service advancement and digitisation provide a faster service and nearly
models and reinventing their are forcing them to move faster a third (29%) have invested in
core technologies, recruitment and invest more to keep pace emerging technology.
approaches, and skillsets to with the market. AI’s ability to analyse large
offer customers an end-to-end Artificial intelligence can quantities of data at speed and scale
consulting service. help accounting firms to build allows it to deliver actionable insights
They were able to do this trust through better financial in real-time.
because AI had eliminated protection and controls. In pulling data from customer
repetitive tasks from the daily As the volume of online demographics, past transactional
workload and increased the transactional data increases, so data, and external sources, AI helps
amount of readily available data does the potential for financial accountants to optimise their
and, therefore, intelligence to fraud, manual accounting errors, workflows and make better business
understand the current health and and dishonest payments. decisions. It puts them in a position
direction of their clients’ businesses. This has made compliance a where they’re looking forwards with
Take Bank Rules from Sage lot more complex. clarity, rather than backwards with
as an example. By applying rules But AI can review data at obscurity.
and ML to banking transactions, speed. This means that accountants can
accountants can seamlessly bring It can detect anomalies, help clients respond to financial
banking account information determine links between challenges before they become
into the accounting system seemingly normal (but not) acute, by adjusting spending or
to automate transaction payments, and assign expenses processes as required. And, as AI
reconciliation and processing. to the correct categories, so the evolves, accountants will soon
This means the books are always business doesn’t pay out for be able to provide predictive
balanced, and the account status is items it shouldn’t. consultancy beyond pure financial
updated in real-time. Automated anti-fraud and planning to incorporate other areas
Using Bank Rules improves finance management systems of the business.
business productivity and saves help practices to significantly
time: if the average manual improve compliance procedures. Same, but different
transaction takes 20 seconds to It enables them to pick up on The accounting profession is
capture, Bank Rules can save a potential issues before they arise. modernising and becoming more
business more than five years of What’s more, AI lets sophisticated. While the rules of
manual data entry time. accountants capture business finance remain the same, the rules of
This happens in the activity in real-time, perform how the work is done are shifting. AI
background – hence, invisible continuous reconciliation, and can turbocharge the profession from
accounting. AI automatically make adjustments throughout a backward-looking “bookkeeping”
manages the process of gathering, the month, which reduces the function to delivering forward-
sorting, and visualising pertinent reporting burden at the end of looking insights that drive strategic
data in a way that helps the the financial period. decisions and transform accountants
business run more efficiently. into true changemakers.
10 Professional AccountantGoing concern
Whose Responsibility is
Going
Concern
Assessment?
T
The Covid-19 pandemic and he business world, creditors and other
stakeholders will keep an eagle eye on
related worldwide market every set of annual financial statements,
conditions have created a and they will pay specific attention to not
only the going concern assumption and
unique set of circumstances for disclosure but also the adequacy of that disclosure.
the professional accountants Many companies are currently dealing with the
who compile annual financial immediate challenge of managing their liquidity
and solvency as well as looking into the future of
statements as well as the their business. Current circumstances are forcing us
directors of companies who to, once again, look at the going concern assumption
and assessment and whose responsibility this is.
review those statements.
Going concern is one of the fundamental
assumptions on which annual financial statements
By: Leana van der Merwe, Accounting for companies are prepared. Under the going
and Assurance Specialist SAIPA concern assumption it is expected that the company
will continue as a going concern in the future and
assets and liabilities will be realised on the basis of a
company that is trading and in business.
Financial statements are prepared on a going
concern basis unless management do not believe
that the business can continue going forward or
management plan on liquidating the business or
cease operations. Under the Companies Act 71 of
2008 and the accounting standards applied, being
IFRS or IFRS for SME, directors are responsible for
determining if the business will continue as a going
concern and that the going concern assumption is
appropriate.
When directors assess a company’s ability to
continue as a going concern, they have to take into
11 Professional AccountantGoing concern
account all the facts and circumstances as well as the going concern assumptions, the professional
future forecasts and plans. Directors thus have to accountant should consider and review these
consider the business plan, budgets and forecasts assumptions. The professional accountant should
as well as new business lines and the economy. They use professional judgement in determining the
must also consider the market share and end user of appropriateness of the going concern assumption
the company. and the basis for preparation of the annual
The period for which the going concern financial statements.
assumption is performed should be disclosed in the The professional accountant should then
annual financial statements and it should be, at a consider the impact of the going concern
minimum, for a period of 12 months after the year- assumption on his/her compilation of the annual
end period. financial statements and/or any independent
Upon completion of the going concern review reports issued. The accounting policies and
assessment, directors should determine if the disclosures in the annual financial statements should
evidence supports any of the following scenarios and be in line with the going concern assumptions and
whether the disclosure and basis of preparation for disclosures.
the annual financial statements should be on one of Assets and liabilities should be carried in the
these bases: annual financial statements on the basis at which
they will be realised in the future.
l There are no material uncertainties, and the If the company is not a going concern, assets and
company is a going concern for the foreseeable liabilities should be carried at values at which they
future; will be realised in the manner of a company that is
l There are material uncertainties around the not a going concern.
going concern assumption, but the going Shareholders, stakeholders and users of the
concern assumption is still appropriate; or financial statements make decisions based on the
l The company is not a going concern. annual financial statements. It is crucial for them
to understand how the current pandemic and the
Once the directors of a company have completed economic state of the world economy will impact
the going concern assessment and concluded on the business and its future.
Assets and liabilities should be
carried in the annual financial
statements on the basis at which
they will be realised in the future.”
12 Professional AccountantTHE HIGH
Reporting
LEVEL
IMPACT
of Covid-19
on Reporting By: Leana van der Merwe, Accounting
and Assurance Specialist SAIPA
As we near the end of 2020, Covid-19 continues to have an economic
impact on our country and every business in it. The economy
has suffered its biggest blow in years (or even decades), and the
imminent threat of a second wave hangs over every business.
T
he disruption to
business has raised
some important
concerns and
requirements around
the disclosure of financial
information.
Some of the financial reporting
issues companies will face are
the inability to comply with
financial covenants and loan
agreements; the restructuring of
leases; valuation and impairment
concerns around assets; and, most
importantly, going concern impact.
It is crucial to consider not only
the going concern ability of the
company but also the risks and
internal controls and the interest
of shareholders and stakeholders.
The impact of the pandemic
varies from company to company.
The significance and type of
disclosure requirements will thus
also differ between companies
and between industries. There are
13 Professional AccountantReporting
requirements will fall subsequent How will the current state
to their year end. For others, it will impact dividend declarations
hit them within their year end and and possible future capital
subsequent to it. The disclosure and funding? Will it impact
will therefore vary between employees and salaries? How
The pandemic subsequent events, the current
impact, and the forecast and
will such changes impact
employees? It is also crucial
has again sustainability of companies.
This challenge is new, and
to include possible changes
in working conditions and
highlighted with new challenges come new pay rates. Lastly, the impact on
the reporting requirements. The
principles around reporting,
customers and suppliers must
also be disclosed: Will customer
importance however, remain unchanged.
The reporting should focus on
payment terms increase? How will
suppliers be repaid?
of succession the particular circumstances of Results reported for the
planning the company and the impact
on the company specifically. The
February 2020 year end will, in
general, not be impacted as much
and not to reporting should be clear and fair
and easily understandable to the
by the pandemic, but the results
of subsequent year end periods
delay it until users of the financial statements. will display its direct impact.
retirement.
Looking at the going concern The declaration of a national
and future sustainability of a disaster and the Covid-19 crisis
No one can company, the company should
disclose in detail how and when
dictate that management and the
professional accountant consider
predict a the pandemic impacted their adjusting and non-adjusting
business as well as the impact on events after year end. For an event
pandemic as solvency and liquidity. The going to qualify as subsequent, the
the one we concern assessment and reporting
should include not only the impact
professional accountant should
determine whether it existed at
are facing of Covid-19 but also scenarios
and the expected outcome.
year end.
As the national state of disaster
right now. We Furthermore, it should set out was declared on 15 March 2020,
also do not sufficient information for the users
to understand the scenario, the
it is expected that for the majority
of February year end reporting
know when impact and the result.
More compilation reports,
the event will be a non-adjusting
subsequent event. The event
something review reports and audit reports should be disclosed in the annual
similar can hit with a material uncertainty
regarding going concern are
financial statements if it is of such
a nature that its non-disclosure
us again.” expected. There is no single
template or standard disclosure
will impact the decision-making
of the users of the annual financial
that can be used for every statements.
company: the nature of the Any accounting estimates and
very few companies that remain company’s business, the countries fair value adjustments should be
completely untouched by the with and in which it trades, and its disclosed with the information
pandemic, and companies that workforce should be considered used and the judgement applied
are not disclosing the impact of in determining the type of in calculating the estimates and
the pandemic on their business uncertainty and the disclosure the fair value adjustments.
have to carefully assess whether required. The current economic climate
they are on the right track. The disclosure should also is uncertain territory for companies
The timeline of the pandemic’s consider and emphasise the and the professional accountant.
impact will also differ between impact on the company’s various In times like these, good disclosure
companies. For some companies stakeholders. This should include and governance should be
the impact and disclosure asking the following questions: considered at all times.
14 Professional AccountantLOOKING
CPD
FORWARD
TO
CPD
There are more benefits to continuous professional
development (CPD) than meet the eye. You’re not just
updating and improving your skills and knowledge.
You’re creating new opportunities for yourself and
your practice. When you start thinking like this, you’ll
get more value from CPD.
By Karl Smith, Senior Manager: Education, Training & Membership
A better A better
accountant practice
Becoming the best accountant you can be is sure If your practice’s accounting staff approach CPD
to bring in more business. Our CPD sessions cover with the same mindset, you’ll be more competitive.
a wide range of topics including changing industry It develops their situational awareness of trends in
trends, emerging technologies, new legislation, top the profession, allows them to contribute to business
practice management strategies, and more. development, and increases the overall professional
With COVID-19 disrupting global trade and intelligence of your firm.
industry, and 4IR changing the way organisations It also provides you with a measurable benchmark
do business, CPD reconnects you with what really you can use for staff performance reviews and career
matters. It will definitely boost your confidence to progression.
accept new challenges and explore new avenues of Those who meet their CPD quotas show they
business. CPD also reveals next generation business are conscientious about service excellence and your
skills and technical competencies you need to practice’s success.
acquire with laser-like focus. When all your accountants do their part, you will
Of course, maintaining your professional achieve a consistently high standard throughout your
competence publicly reflects your commitment to business.
excellence in accounting. And your clients will notice.
15 Professional AccountantCPD
Easy Looking
registration forward
& logging to 2021
Logging your CPD hours is easy using MySAIPA, the Next year, we expect to present a particularly rich
Institute’s member services portal. If you haven’t yet, series of CPD events. The world is changing and
register on the site by filling out a single form and what clients expect of their accountant is evolving
validating your email. with it. We’ll focus heavily on your role as a trusted
Just click the Register link at the top of the SAIPA business advisor, capable of squeezing every drop
home page. of strategic value from your clients’ financial and
After logging in, you’ll have access to MySAIPA’s business data. Organisations are well aware of the
services gallery, the icon at the top of the page that challenges facing them, especially COVID, and
looks like a keypad. Click on it to reveal the gallery they’ll need your guidance more than ever.
and select Log CPD Hours. Fill out the simple form, So make sure you join us and extend your
upload your proof of participation, and you’re done. capabilities like never before. There are exciting
Make sure your staff join up too. times ahead for those who prepare themselves.
New attitude,
new rewards
When you start thinking about the difference CPD can make to you and your
practice, it stops being an obligation and becomes an asset.
We encourage you to take advantage of every CPD event SAIPA offers, not
only to meet our minimum requirements but to create more professional
opportunities for the future.
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17 Professional Accountant
www.casewareafrica.co.zaRisky business
Avoiding non-compliance
Risky business through good judgement
By Aysha Naino, Professional Conduct Officer at SAIPA
U
I’m often amazed nfortunately, these accountants
missed the point that, over the long
by reports of those term, their professional reputation is a
few accountants gold mine. And that what they invest in
it today will yield profits for them, their
who put their practice and their clients for many years to come.
professional This is sustainable wealth – the kind the Institute’s
reputation on the slogan “Your Wealth” refers to. It’s risk free and,
managed correctly, offers returns many times that of
line for a quick ill-gotten gains.
personal score. Yet, even those who are not intentionally non-
compliant might put their reputations at risk by
Unfortunately, neglecting critical actions in the accounting process.
when they are Let’s review some examples of how you could fall
caught, it can ruin short.
Ultimately, risks of non-compliance emerge in
their careers and three general areas. These are legislation, accounting
their potential for standards and ethical requirements.
future prosperity.
At the same Legislation
time, they bring In terms of legislation, you refer chiefly to the
Companies Act 71 of 2008, the Closed Corporations
down the good Act 69 of 1984 and the Tax Administration Act 28 of
name of the 2011, as well as several others. It is your duty to ensure
entire accounting the financial statements and processes you review
agree with accounting policies set out in these
community. various statutes.
Any persistent irregularities must by law be
reported to the Companies and Intellectual
Properties Commission (CIPC). Similarly, irregularities
in terms of taxation law must be reported to the
South African Revenue Service (SARS). Not doing so
is a non-compliance on the part of the professional
accountant.
Yet, you also risk non-compliance and the
resulting consequences if you approach authorities
too early.
You must follow the prescribed process and
exhaust all corrective avenues beforehand, or face
disciplinary action from your PAO and possible
lawsuits from your clients.
It is important to acknowledge that you walk a
tightrope between right and wrong. Your safety net
is your up-to-date knowledge and application of
proper procedure.
18 Professional AccountantRisky business
Accounting subpoenaed by a court, the accountant would
standards
find themselves in legal hot water.
Ethics
You also risk non-compliance by not representing
your client’s financials in accordance with the correct
IFRS requirements. For example, SME financial Lastly, ethics is the essential foundation on which
statements must be compiled against the IFRS every professional accountant conducts their
for SMEs Standard. Likewise, you may risk a failed business.
engagement if not complying with ISRS 4400 Yet, even the IESBA’s Code of Ethics for
(Engagements to Perform Agreed-Upon Procedures Professional Accountants does not offer rules
Regarding Financial Information), ISRS 4410 and regulations for every instance where the
(Engagements to Compile Financial Statements) practitioner risks misconduct. Rather, it presents
or ISRE 2400 (Engagements to Review Financial a conceptual framework against which you can
Statements). test each ethical dilemma you face.
One example of risk is not having a In other words, ethical compliance hinges
comprehensive engagement letter that clearly on your own good judgement and professional
defines the exact services to be rendered and the scepticism, against which you are held to
terms under which they must be delivered. Any account. This requires an accurate internal
perception by the client that the contract has been moral compass. You cannot allow yourself to be
breached could turn into a lengthy court battle that influenced by subconscious bias or emotional
could have been avoided with a detailed letter of intuition.
engagement. For example, you must do due diligence
Another example is not retaining a full set of when deciding to take on a new client. Are
working papers or, worse still, not creating them you more likely to do business with someone
in the first place. This amounts to professional wearing shorts and a T-shirt or someone in a
negligence and failure to take due care in one’s work. smart business suit and shiny tie? Judging a
It is clearly non-compliance and, if those papers were client’s standing mainly on the appearance of
wealth could see you consorting with a shady
or criminal element. The risks involved suddenly
become immense.
Preparing
for risk
Whether complying with legal, accounting or
ethical requirements, accountants may face
Any perception by highly nuanced risks. Rather than having specific
rules for dealing with each, they must often
the client that the rely on their own judgement about the right or
contract has been wrong solution.
The only way to approach the problem is
breached could turn by thorough training and rehearsal. Yes, you
should actually rehearse your response to these
into a lengthy court situations well before they occur.
battle that could
So the biggest risk you face is not being up to
date with the latest requirements and industry
have been avoided best practices for dealing with risk in the first
place.
with a detailed letter SAIPA offers CPD programmes on this critical
of engagement.””
topic and we encourage you to strive to upgrade
your knowledge by ensuring your attendance at
such events.
19 Professional AccountantAssistance
COVID-
Accounting
Considerations 19
G
overnment assistance is action by government that is
Governments designed to provide an economic benefit specific to an
around the world entity or range of entities that qualify under certain criteria.
are providing With reference to the International Financial
Reporting Standards (IFRS) and International Accounting
access to a Standards (IAS), this article provides broad insight into the accounting
broad range of for government assistance, which is dependent on the nature of the
possible actions assistance granted. The requirements of the standards specify when to
recognise such assistance and how to measure it.
to assist legal
entities, such as
companies and GOVERNMENT
sole proprietors,
in the current GRANTS
A government grant is assistance by government in the form of a
conditions caused transfer of resources to an entity in return for past or future compliance
by the Covid-19 with certain conditions relating to the operating activities of the entity
(IAS 20.3).
pandemic. Under IAS 20, a company recognises a government grant when it has
By Azhar Mia of reasonable assurance that it will comply with the relevant conditions
and the grant will be received.
Kreston KZN
Government grants shall be recognised in the entity’s statement
of profit or loss on a systematic basis over the periods in which the
entity recognises as expenses the related costs for which the grants are
intended to compensate (IAS 20.12).
GOVERNMENT
LOANS
A company generally accounts for the benefit of a government loan
at a below-market interest rate as a government grant. It accounts for
the loan in accordance with IFRS 9 Financial Instruments. The benefit
is that the government grant is measured as the difference between
the fair value of the loan on initial recognition and the amount received
(IAS 20.10A).
20 Professional AccountantAssistance
INCOME
TAXES
Government assistance in the form of benefits that may impact a
company’s taxable profit or its income tax liability – such as tax reliefs for
certain types of income, additional tax deductions, a reduced tax rate,
or an extended period to use tax losses carried forward – is generally
accounted for under IAS 12 Income Taxes, not IAS 20.
For example, a non-taxable government grant related to an asset will
result in a deferred tax asset being raised on initial recognition since the
grant is not deducted from the asset’s depreciable amount.
SUPPLIES OF GOODS
AND SERVICES
Transactions with government that cannot be distinguished from the
normal trading activities of a company are not government grants.
In times that necessitate ubiquitous government assistance, it BIBLIOGRAPHY: A
is imperative that the accounting for government assistance be as guide through IFRS
accurate as possible. Standards – July 2016.
Under IAS 20,
a company
recognises a
government
grant when it
has reasonable
assurance that it
will comply with
the relevant
conditions and
the grant will be
received.”
21 Professional AccountantProvisions
What
happens
if I can
no longer
PRACTICE?
As COVID-19 presents very real risks to our
lives and long-term health, it is necessary for
SAIPA members to reflect on the provisions
they should already have made in the event
that they are no longer able to practice their
trade. This is especially true for those in private
practice, whose clients would be directly
affected by their passing or incapacitation.
By: Aysha Naino, Professional Conduct Officer(IC/DC/AC)
I
n this article, we offer direction on steps that
should be taken and limitations imposed
on a practice whose managing/controlling
Professional Accountant (SA) is no longer at
the helm. We advise that all members inform
their next of kin, beneficiaries and executors of
these conditions or include them in documents
attached to their will.
A partnership that was formed for the purpose
of operating as an accounting practice will be
dissolved should one of the partners die. SAIPA
must be notified by the remaining parties and
clients also have the right to be informed of the
situation.
Non-debilitating disability
We ask that if you become disabled and are in
a position to inform SAIPA of such disability, a
declaration be made to SAIPA within 60 days of
22 Professional AccountantProvisions
diagnosis, which must include a supporting letter
from your doctor. After receipt of this declaration, we
will discuss your options with you.
The purpose of this declaration is to
accommodate any special needs you may have and
assist you in terms of your CPD participation as well
as inform an assessment to determine your ability to
service your clients professionally post disability.
Incapacity or death A partnership that
If you are incapacitated to the degree that you are was formed for
the purpose of
unable to practice as a Professional Accountant(SA),
or the accounting practice partnership is dissolved,
or upon your death, your next of kin, beneficiaries,
previous partners or executors must:
operating as an
1. Give written notice to SAIPA and all your clients
of the change in circumstance, and
accounting practice
2. Provide SAIPA with your death certificate or will be dissolved
medical certificate as confirmation.
should one of the
What about the practice? partners die.”
Professional Accountants (SA) who own a practice or
have a members’ interest in an accounting practice
or who have formed a partnership in terms of an
accounting practice must responsibly prepare their must never withhold an e-profile, even if the
business well in advance for situations where they requesting client still owes fees, although
will no longer be able to service their clients’ needs this does not preclude their right to use legal
or complete work in progress. recourse to recover the outstanding debt.
The Professional Accountant (SA) must sensitise 5. If the next of kin, partners or executors are
his or her next of kin, partners or executor to the not SAIPA members, they may not sign off
following: any financial statement that the deceased or
1. It is important that they (next of kin, partners incapacitated member was busy with or process
or Executor) put the practice’s clients first. any SARS transactions. They may only release the
They should promptly inform the clients about e-profile under the deceased or incapacitated
proposed changes in light of the member’s member’s profile.
passing or incapacity and reassure the clients of
the firm’s support during this transition. 6. The next of kin, partners or executors may
temporarily appoint an appropriately qualified
2. The next of kin, partners or executor may be member to thoroughly peruse and calculate
required to contact each client individually. All all amounts, confirm all working papers and
clients must be given written notification that thereafter sign off the financial statements
their accountant can no longer fulfil his or her that were left incomplete by the deceased or
duties towards them. This will promote the incapacitated member.
goodwill of the practise.
7. If the practice wants to employ a Professional
3. The next of kin, partners or executor must accept Accountant (SA) or one of its clients wishes to
that clients have either the option to continue engage a new provider, SAIPA can provide a list
using the practice or to pay all fees owing and of accredited members in that firm’s area.
collect their documents.
8. If another SAIPA member purchases the
4. Should the unfortunate situation occur during practice, the clients still need to be informed
tax season, the accounting practice may be accordingly and provided with new engagement
inundated with requests for the transfer of letters stating the details of the new Professional
e-profiles. The next of kin, partners or executor Accountant (SA).
23 Professional Accountant?
Practical questions
Provisions
and answers
Below are some questions and answers that should be kept in the beneficiaries’
or executors’ minds should the above situation befall a member.
Can the firm continue to trade necessary legal steps to protect its their own designation. If the
as registered Professional brand and industry reputation. deceased was a sole practitioner,
Accountants (SA) if they now Can the independent external then the account will be frozen
use an independent external accounting officer’s practitioner and will fall into the estate. Only
accounting officer to sign number or an employee’s the executor will have control
reports on their behalf? practitioner number be used once appointed.
No, the person who held the to engage with SARS for What are the implications if
designation of Professional information and submissions? someone who is not a qualified
Accountant (SA) is no longer SARS will only cooperate with a accounting officer or a member
available to sign off and take tax practitioner whose unique of SAIPA purports themselves to
responsibility, so the use of the practitioner number appears be such?
designation will be considered on a letter of engagement SAIPA will take legal action
illegal. signed by the taxpayer. A new against that person. A non-SAIPA
Can independent external tax practitioner must sign a member may not use the SAIPA
accountants use the SAIPA logo new engagement letter with designation, regardless of their
on their billboard, signatures, each client, invoking their own office within the practice or their
letterheads, etc.? practitioner number. This letter relationship to it.
No, they cannot. The logo and all cannot be signed until the What are the implications of an
other elements are designated to practitioner discusses the change independent external accounting
the admitted SAIPA member only. in status with the client. officer signing reports on the
The SAIPA brand, its designations What are the implications of letterhead of the deceased that
and provisions, and all the using the deceased’s practitioner still contain the details of the
“fruits” associated with it are not number after their death? deceased, including practice
transferable under any conditions. It amounts to fraud and is illegal, number, qualifications and
If the accounting firm was equivalent to using the ID number SAIPA membership number?
registered as a close corporation of a deceased person. It is fraudulent and illegal. If the
(CC), can a non-member who If the banking details were in the person is a SAIPA member who
purchases it continue to trade as name of the accounting officer has not verified all documentation
before? who passed away (individual), before signing it off, disciplinary
No. The new non-member owner can a new bank account be action may be taken against
can only operate the business opened in the name of a CC them. If they are not a SAIPA
under a designation awarded (where the deceased accounting member, their institute will be
by their own professional body. officer is the only member) notified.
No SAIPA branding may be used after their passing and before How long should it take for the
by the firm or its employees, the finalisation of the estate to deceased/disabled member to
and the new owner should take continue trading? be replaced?
all precautions to ensure the No. The CC can be bought and the The member should be replaced
practice’s clients are aware of its member changed, but the new within 60 working days after their
new status. SAIPA will take any member will have to trade with death or disability.
Conclusion
The COVID-19 pandemic has highlighted the urge you to take action on these matters now.
need to be prepared for the worst and to make It is our sincere hope that all our members
arrangements that support your clients should you remain safe and healthy and that our world sees a
no longer be able to serve them. At the same time, steady return to normality, as has been the case with
you will uplift the reputation of the Professional previous pandemics, even in the absence of a vaccine.
Accountant (SA) designation and the Institute. We Our thoughts and prayers are with each of you.
24 Professional AccountantHiring contractors
Building a
FLEXIBLE,
FUTURE- and the freedom to schedule
PROOF
breaks between projects to
enhance their work-life balance.
For employers, the rise of an
agile, flexible, contract-based and
performance-focused workforce
offers the prospect of managing
workforce critical projects without the risk or
cost associated with permanently
appointing top talent,” she says.
Barrick notes that for the past
T
two decades, the International
here’s no doubt that of contract or non-permanent Labour Organisation has
COVID-19 has changed staff in recent months,” says been reporting on the rise of
how we work, and Georgina Barrick, Managing the ‘flexible workforce’ – or a
while there have been Director at Network Contracting workforce that ‘grows in number
many negatives to this Solutions, ADvTECH Resourcing’s to meet business needs at
pandemic, it presents a unique Contracting Division. any given time and falls back
opportunity to shape the world of She says this change has to a baseline number when
work in a way that improves the brought benefits for both the increased size is no longer
environment for a greater section employers and employees. necessary’.
of the workforce, a leadership “For contractors or temporary “Companies that embrace
expert says. workers, there is the opportunity the use of flexible workers
“In many countries, we’re set to chase technology, to hone keep their number of full-time,
to see a large uptick in the use skills or upskill between projects, permanent employees at a more
25 Professional AccountantHiring contractors
Companies
sustainable level, while hiring workers, who select work considering hiring
more temporary, freelance or contracts based on interest and contractors
contract employees to meet how the work offered can grow should consider
demand during busier periods or their skills and expertise.” the following:
for specific projects. Barrick says that as the Deemed Employment: South
“The concept isn’t new. We economy starts the slow journey African law makes provision
only need to look at retail or to recovery, many leaders have for temporary or contract
agriculture, where seasonal had to reduce their permanent workers to be deemed
workers have always been staff complement as a result ‘employed’ if temporary or
brought in to meet demand in of the effects of COVID-19 contract employment persists
busy periods. However, what is lockdowns. beyond a certain period.
new is the dramatic increase “However, this has not 3rd Party Tax and Statutory
over the past decade in the use removed the need to deliver on Exposure: If there is a
of highly skilled contractors to outstanding projects. Expanding transgression, it’s likely that
deliver on specific projects or the flexible workforce to support the company will be pursued
work. For employers, the benefits business and project needs is and not the contractor/ temp
are numerous and include the obvious answer.” worker.
reduced payroll costs, greater Effectively managing a large Worker Misclassification:
talent diversity, access to expert non-permanent workforce is not Incorrect classification of
skills that might not otherwise without its challenges, she says. your freelancers could mean
be affordable or indeed available “While your flexible contract that you become liable for
locally, and greater employee workers aren’t employees in the minimum wages, pension
engagement. traditional sense, their work and contributions, holiday and
“And for employees turned performance still need to be sick pay.
contractors, working flexibly is tracked. IP Leakage: If your contract
part of the trend towards a gig To manage this it is doesn’t make provision for IP
economy – or the move towards important to establish a flexible ownership, you may have no
temporary, flexible jobs and away workforce programme to ensure claim over valuable IP when
from permanent employment. that you have the right tools in the contract ends.
In an ideal world, this move place to manage this type of Data and insight on costs,
is powered by independent work effectively.” hourly rate benchmarking
and the effective onboarding/
offboarding of contractors.
Companies who already have contractors as Payroll Implications: What,
a part of their workforce should consider: if anything, do you need to
If you currently have any flexible workers in your business, were consider around payroll?
they onboarded into the business in a way that reduces your risk?
Are they timeously offboarded at contract end? Issued by: MEROPA COMMUNICATIONS
On behalf of: ADvTECH Group Pty (Ltd)
Who do these contractors report to? Who has sight of them and
Note to editor: ADvTECH Resourcing
their output? is a division of the JSE-listed ADvTECH
What are they doing for your business? Do they touch customers Group, Africa’s largest private education
or work on any mission-critical systems? provider and a continental leader
in quality education, training, skills
Are they paid correctly and on time and within the project development and staffing services.
budget? Is your business exposed to any legislative, tax or statutory Through its 9 recruitment brands,
risks as a result of these flexible workers? Do you think that you across 19 countries throughout Africa,
ADvTECH places thousands of candidates
have any business risk exposure as a result?
annually, in permanent and contracting
roles, maintaining its focus on niche
placements in the finance, IT, engineering,
HR, logistics, freight and supply chain
“A properly managed flexible workforce can significantly and positively
management sectors.
influence business success and, with the right amount of visibility over www.advtech.co.za
your contractors, you can experience a better outcome,” says Barrick.
“There is no doubt that, in uncertain times, talent agility is critical to By: Georgina Barrick
organisational success. Using flexible, non-permanent talent can give Managing Director
you the skills that you need to get urgent work done immediately. It can at Network Con-
also help you to build a talent pipeline to support future growth.”
tracting Solutions
26 Professional AccountantRemote working
The Psychology of
REMOTE
WORKING
During the
Covid-19
pandemic,
“remote work”
has become the
rule rather than
the exception.
Employers and
employees
have realised
the benefits
associated with
remote working
and its potential
productivity
advantages.
By Philip Bouwer,
Technical Legal and
Research Specialist.
E
mployers have also Despite this, many companies Several early studies have
realised that remote have embraced the benefits of shown that remote workers
working offers remote working and continue tend to have higher levels of
substantial cost to permit the majority of their work-related stress. A factor
benefits, as they now employees to work from home. that contributes to this is the
require much less of a physical Although the cost savings inability of many remote workers
office, which reduces overheads and productivity gains derived to “switch-off”. As employees do
such as rent and the other costs from remote working have been not commute to and from the
of maintaining a large office fairly evident, the true cost to office, there is no longer a clear
footprint. employees still awaits to be seen. start and end to the workday.
South Africa’s move to The question in particular being, Employees thus tend to put in
lockdown Level 1 has reopened “What is the psychological cost longer work hours.
most of the economy to resume to employees during prolonged Remote working also requires
ordinary business activities. periods of remote working?” a much higher degree of self-
27 Professional AccountantYou can also read
