Industry bodies combine powers to counter misconduct and foster accountability

27 November 2018

Authored by: Ragiema Thokan-Mahomed, Legal, Ethics and Compliance Executive at the South African Institute of Professional Accountants (SAIPA)

Recently, the South African Institute of Professional Accountants (SAIPA) signed a groundbreaking memorandum of understanding with five other professional bodies to effectively close a loophole that allowed professionals with multiple memberships to evade the consequences of misconduct.

The other signatories to the memorandum include the Institute of Internal Auditors SA (IIA SA), the Institute of Risk Management SA (IRMSA), Chartered Secretaries Southern Africa (CSSA), the Institute of Directors in Southern Africa (IoDSA), and the Association of Certified Fraud Examiners (ACFE). Together, these organisations represent over 44,000 of South Africa’s company directors, company secretaries, internal auditors, accountants, fraud examiners and risk management professionals.

In the wake of revelations of corruption in government and business since last year, complaints against professional accountants have increased by 150%. This is understandable as the public has become acutely aware of the impact of corruption and are more likely to investigate courses of action available to them. This is true not just of accountants but many professionals in positions of authority, including business directors, company secretaries, corporate investigators or managers.

An integrated disciplinary solution

One means of resolution is to approach their professional body, which typically implements an investigative and disciplinary process based on internationally prescribed standards. SAIPA, for example, adheres to the framework of the International Federation of Accountants (IFAC), of which it is a voting member.

However, as a result of specialisation, many professionals belong to several associations, therefore holding more than one professional designation. In the past, if they were expelled from a particular association for misconduct, they could continue practicing under an alternative designation, thereby evading the full consequences of their actions. Now, those days are over.

In terms of the agreement, if a complaint is received against a professional who holds designations associated with several of the signatories, the relevant professional bodies will take a unified approach to investigate and resolve the charge. A lead investigator shall be nominated from among the parties and the final judgement shall be binding across all participating bodies in as far as their codes of conduct determine.

Swift justice

The goal is that such cases will be addressed more swiftly, efficiently and cost effectively but, most importantly, that their effect will be complete and justice will be rightly served, all in the interest of the public.

This is yet another step SAIPA has taken to combat non-compliance with laws and regulations (NOCLAR) in its efforts to restore faith in the accounting profession and protect the public interest. The implications of this initiative are profound, promising a unified front against corruption by putting the very careers of wrongdoers at risk. It is also a valuable extension to SAIPA’s own rules that require the names of members struck from its roll to be made public and a letter of good standing to be obtained for applicants already associated with another body.

Better legislation required

Yet, more needs to be done. Currently, no legal constraints exist to practicing accounting. Anyone, regardless of qualification or intent, can hang out their shingle and call themselves an “accountant” or, for those who presume to know better, “a professional accountant”. As a result, there is no way to estimate how many accountants there actually are in South Africa or the magnitude to which these unregulated practitioners contribute to NOCLAR. This is a grave injustice to the reputation of the profession and the public interest.

It is critical that new laws are promptly enacted to compel anyone practicing accounting to join an appropriate professional body, like SAIPA. SARS already enforces such a requirement to ensure that tax practitioners are suitably qualified and professionally traceable, thereby protecting taxpayers from harm. Demanding the same of accountants should be a standard condition.

Right now, it is left to organisations to decide if they will risk hiring or doing business with unregulated accountants, and forego the assurances provided by a professional designation, like Professional Accountant (SA), and the protection offered by initiatives like the collaborative agreement mentioned above. SAIPA’s designation is backed by a prescribed study path, a three-year practical learnership, a Professional Evaluation of applied competence and ethics appreciation, a strict code of conduct and disciplinary process, and continuous professional development programmes (CPD). All that is missing is sweeping legislation to ensure that South Africa enters a new era of ethical accounting.