Audit transformation touches every aspect of the profession

From making the accounting and auditing profession more inclusive to ensuring the right skills are being taught and the entire ecosystem is ready to face digital disruption, audit transformation is something that every stakeholder needs to consider. By Tamara Oberholster

Portia Tsakane Mkhabela, head of the Association of Chartered Certified Accountants (ACCA) South Africa, Botswana and remotely managed markets, says that the word transformation can be interpreted in many different ways, depending on context. While the word “transformation” in South Africa is often used in the context of the pursuit of racial and gender equity, it also relates to broader change, from digitisation to audit reform and beyond. “At ACCA, we believe transformation is critical because it forces us to think differently about what the world requires from us as a professional body, to do things differently in developing the accountancy profession the world needs,” Portia says. “From our perspective, and in the work we are tasked with implementing, one fundamental question we always ask ourselves is, ‘How do we remove artificial barriers to the accountancy profession and allow entry at various levels?’ We believe we need to continuously improve and revisit our strategy as an organisation on how best we service our clients by responding to the current challenges we face within our country and neighbouring states.” Portia says ACCA believes that access to financial literacy at a young age will shape how we change the current inequalities to access the accounting and auditing professions, as will offering multiple pathways into a career in audit for interested professionals, and efforts to broaden the market (such as providing more options for SMPs and upcoming professionals, particularly in terms of building capacity with the introduction of mandatory audit firm rotation requirements). ACCA is also working with the Local Government Sector Education and Training Authority (LGSETA) to assist in supporting the transformational agenda with municipality finance staff. “The project was launched in 2020, and to date we have a total of 153 beneficiaries who have been trained on International public Sector Accounting Standards (IPSAS),” Portia says. “The LGSETA has made it possible for beneficiaries to improve their skills while we drive them towards formal ACCA designations. This project is addressing the current audit findings confirmed in the AG 2020/21 reports. The importance of interpreting financial statements, governance and financial reporting by municipal workers is key in addressing the current challenges. This is how ACCA is contributing to capacitating the public sector and improving financial management competencies in collaboration with the LGSETA.”

Ensuring sustainability

Bashier Adam, CEO of Nexia SAB&T, says there are many themes relating to audit transformation in 2022, ranging from new regulations and auditing standards, to developing talent pipelines, and dealing with digitalisation and disruption, among others. He believes that the most important measure to ensuring the sustainability and success of the profession is for audit stakeholders to define common objectives. “In South Africa, the profession is dealing with the introduction of the Auditing Profession Amendment Act, which came into effect in April 2021,” says Bashier. “It’s given the regulator (the Independent Regulatory Board for Auditors, IRBA) far-reaching powers, including the power to conduct search and seizure operations in

Buhle Hanise Bashier Adams

certain circumstances and to subpoena someone with information required for an investigation or disciplinary process, for example.” Bashier says that while the Act was introduced with noble intentions, it has also created some unintended consequences. “Nobody wants to be in a profession where someone's constantly looking over your shoulder and where there is a perception that the regulator’s view is superior to that of the practitioners and the firms who make up the profession” he says. “This has resulted in a significant amount of attrition in the profession. We’re losing registered auditors at a very rapid pace. And unfortunately, we're not attracting new ones into the profession. Now, depending who you speak to, on which day, they'll give you a different view on that, but I can tell you at the coalface of working with this on a daily basis, attracting new entrants and then retaining them in the profession is an issue.” There is also the question of how the profession can stay relevant in the age of digitalisation, artificial intelligence and blockchain, among other emerging technologies. Bashier believes that the regulators and industry bodies should play a role in addressing some of these challenges, adding that there’s a need for consensus and common objectives among audit stakeholders. “This profession has stood the test of time and served the world well over centuries, so we need to ensure we keep it relevant. All the mentioned parties have a role to play in taking the profession forward.” he opines. One of the ways of “unshackling” auditing would be to accredit more professional bodies (currently, the only accredited professional accounting body in South Africa is SAICA) and to understand that the profession needs to integrate with other skillsets to remain relevant.

Adapting academia

Prof Philna Coetzee, Associate Professor at Tshwane University of Technology (TUT), who helps head up research in the institution’s auditing department, says that universities need to adapt the way they prepare students for the workplace to avoid becoming outdated, moving from “lecturing” towards “training”, prioritising critical thinking skills. She also believes the focus may need to shift from quantity to quality in terms of turning out graduates who can add real value in the workplace. “We have these big classes at universities – sometimes 300 students in a class – and there’s no way you can interact with each person then,” she says. “We keep saying that the profession requires scarce skills, but I question whether that’s true. Many accountants and auditors are still struggling to find jobs. Maybe we should be focusing on quality, rather than quantity, the way they do in other professions.” As an example, she cites UP’s physiotherapy department, which has an intake of only 20 students per year.

Prof Philna Coetzee Portia Mkhabela

“All of those people find jobs when they finish their qualifications and enter the workplace,” says Philna. In her own work, she consistently engages with practitioners in the industry to understand the skills gaps they are dealing with in placing young professionals, using their feedback to help shape curricula. “I ask them, ‘What do you need from graduates? What skills are you looking for? What are the problems you have?’ and then we work with them to understand how we can deliver these things through our programmes,” she explains.

Good stories to be told

While there are many challenges facing the accounting and auditing profession, Buhle Hanise, President of the African Women Chartered Accountants (AWCA) and CFO of Beijing Automotive Group Company (BAIC) South Africa, believes that good progress has been made in transformation, and that it’s important to highlight success stories to continue this important work. This is one of the reasons that AWCA works to identify and acknowledge women through its Woman of Substance and AWCA Recognition Awards, including awards such as Audit Partner of the Year and Tax Specialist of the Year. The Woman of Substance award celebrates women (in any sphere) who have achieved remarkable accomplishments, while the AWCA Recognition Awards are specifically for women in the accountancy profession. “There are so many black women doing wonderful work, but they are sitting in their corners, focused on that work, and not getting the spotlight,” says Buhle. “But receiving a nomination or an award doesn’t just affirm the work that they do and motivate them to continue with it; it also encourages others. It gives young women role models and the confidence to also make their mark.”

The awards also help AWCA to raise funds for the bursaries it offers to young black women who wish to study accounting – something that has always been core to what AWCA does. And Buhle says that as the organisation celebrates the milestone of 20 years since its founding in 2002, there is a drive to “get back to basics” on the back of poor exam results over the past few years (the SAICA Initial Test of Competence qualifying examinations) and the challenges that COVID-19 wrought. AWCA is therefore refocusing on building a support system of sisterhood for women at every level of their careers.

“We understand that many companies have been through the hardest two years of their existence,” says Buhle, who joined BAIC – a Chinese-based multinational – in January 2020, shortly before the pandemic saw the country locked down. “But one thing I have going for me is that I’m Miss Positivity,” she says, laughing. “I will look for the good. And something I have learnt from working for a Chinese company is how they focus on what they can do, rather than dwelling on the bad.” l