Author(s):

• Lize-Marie Sahd (School of Accountancy, Stellenbosch University)
• Riaan Rudman (School of Accountancy, Stellenbosch University)

Keyword(s): Auditing; professional competencies; case study; experiential learning; assessment

Abstract: The international business landscape is changing and the expectations of the competencies required from auditing and accounting graduates by employers and professional bodies have evolved: graduates are expected to have both professional and technical skills. Experiential learning techniques are generally considered effective to develop and assess both technical and professional skills. Tertiary institutions (hereinafter, ‘universities’), however, have been slow to change and predominantly tend to employ traditional teaching models (for example: passive lecturing, short focused scenarios, etc.) for auditing and accounting modules. Experiential learning techniques, such as extensive case studies (with unstructured and longer scenarios as well as ambiguous and contradicting information), are utilised to a limited extent. The delay in adopting new teaching models is perhaps partly driven by the fact that professional examinations still rely on traditional assessment methods. Universities tend to focus their teaching and assessment on achieving a high pass rate in these professional examinations and consider the development of the required professional skills as an afterthought. The study investigates South African trainee accountants’ perceptions of the usefulness of case studies in developing and assessing professional skills as well as the perceived benefits and constraints of using case studies as auditing and accounting assessment tools. A questionnaire is distributed to trainees with work experience and that have been exposed to both traditional and experiential learning techniques, such as case studies. The findings of the study reveal that case studies address the shortcomings of traditional assessments and also highlight potential inadequacies in current graduates’ skill-sets.

Author(s):

• Jenna Weir (Department of Business Management, Stellenbosch University)
• Nadia Mans-Kemp (Department of Business Management, Stellenbosch University)
• Suzette Viviers (Department of Business Management, Stellenbosch University)
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Keyword(s): Board composition; board committee composition; independence; tenure; race; gender; age

Abstract: The composition of top corporate structures can have a considerable impact on corporate governance. Moreover, it increasingly draws the attention of practitioners and shareholders. As such, the authors examined the composition of boards and board committees which comprised of a sample of the largest companies listed on the Johannesburg Stock Exchange during the period 2011 to 2016 (King III regime). While previous South African authors focused on race and gender diversity, this panel study centred on the status (independence), human capital (tenure, highest qualification, occupational background) and demographics (race, gender and age) of 1 600 directors. The majority of the directors were independent non-executives, typically over the age of 50 and highly educated. The average tenure increased over the study period. The study revealed several areas of board composition which require enhancement, particular independence of audit committee members and the tenure of the remuneration committee members. To address these concerns, companies should broaden the local talent pool by developing promising, diverse board candidates. The shareholders are also urged to consider the respective board composition aspects thoroughly before (re)selecting their representatives.

Author(s):

• Gauda J Maseko (School of Accounting Sciences, North-West University)
• Merwe Oberholzer (School of Accounting Sciences, North-West University)
• Susanna L Middelberg (School of Accounting Sciences, North-West University)

Keyword(s): Accountability; student debt; credit management, institutional theory; demographic environment

Abstract: Although free education is available for qualifying students, South African universities are still confronted by enormous student debt. The purpose of this article is to establish selected Universities of Technology (UoT) students’ perspectives of accountability for debt in the context of the institutional theory. In total, 1382 students at five of the six UoT completed a developed  questionnaire. Exploratory factor analysis was first applied to a group of students’ perception of debt. Thereafter, an analysis of these factors’ mean was conducted to determine how these perceptions relate to their family income and other demographic variables. The article contributes towards the literature and confirms that students are distressed by debt and compelled to manage academic and financial challenges.

Author(s):

• Kevin Ramsarghey (Mangosuthu University of Technology, Department of Accounting and Law)
• Stanley G Hardman (Durban University of Technology, Research Associate)

Keyword(s):Accountability; corruption; ethics; mismanagement; reputation

Abstract: The Auditing profession has been dominated globally and locally by what we knew as the Big Five auditing firms until the collapse of Enron which led to the demise of Arthur Andersen, the auditors of Enron. Auditing firms and its auditors have been implicated in fraudulent transactions, negligence and dishonest practices. The focus of this paper is to highlight the role of the Auditing profession’s responsibility in terms of accountability. The method of data collection included document analyses of case studies implicating chartered accountants and auditors involved in fraudulent transactions. The findings reflect that fines and disciplinary action against auditing firms and auditors should be reviewed because these are currently not austere enough to dissuade fraudulent transactions.

Author(s):

• Kgobalale N Motubatse (Department of Auditing ,Tshwane University of Technology)
• Collins Ngwakwe ( Turfloop Graduate School of Leadership, University of Limpopo)

Keyword(s):Public sector; irregular expenditure; consequence management; governance; internal control

Abstract: This study examines three factors associated with irregular expenditure in South Africa’s public sector. Despite improvements in public sector supply chain policies, the South African Auditor-General’s report reveals
substantial amounts of irregular expenditure by public sector entities, in billions of Rand each year. Therefore, this paper aims to analyse how contractors’ relationships with government officials, uncompetitive tender processes, and internal control deficiencies relates to the occurrence of irregular expenditure by provincial governments. The study adopted a quantitative approach and data was gathered from the South African Auditor- General’s reports from the nine provinces for the period 2012 to 2018 respectively. A panel regression analysis revealed that the three independent variables (close relationships with government officials, uncompetitive tender processes, and internal control deficiencies) are positively related to the irregular expenditure of public funds. The positive regression coefficients indicate likely average increases of irregular expenditure in the billions of Rand associated with percentage increases in the three independent variables. The paper recommends the following amendments to enhance policy: fairness of tender processes to inculcate competitiveness; and improve internal control systems. This paper contributes towards previous models by including consideration of close relationships with government officials and uncompetitive tender processes in the previous modes of irregular expenditure. Further research in the application of this model and to expand the time series of observation is recommended.

Author(s):

• Varaidzo Denhere (School of Accounting, University of Johannesburg)
• Tankiso Moloi (School of Accounting, University of Johannesburg)

Keyword(s): Audit firms; client acceptance; engagement risk assessment; engagement risk factors

Abstract: This study endeavoured to identify engagement risk factors which should be assessed by Zimbabwean audit firms before either accepting clients or rejecting them. The objective was achieved through relevant literature followed by interviews conducted with managing audit partners and chief risk officers from a sample of Zimbabwean Audit Firms. The interview participants had to identify potential engagement risk factors and confirm factors relevant to the Zimbabwean Audit Firms identified from the reviewed literature. Engagement risk factors were collated and listed from the reviewed literature to guide the interviews. The interviewed participants had to indicate, based on their daily operations and experiences whether they either agreed or not agreed with the factors. Certain participants consented to have their responses audio recorded which was transcribed, while detailed field notes were taken from those respondents who did not grant consent. A thematic analysis was conducted to analyse the gathered data from the interviews. The results revealed that the underscored engagement risk factors included the integrity of the client and its directors; fees; and auditor independence. The benefits of this study include both the small to medium and big audit firms which could consider the list of engagement risk factors specific to Zimbabwe during the client acceptance process.

Author(s):

• Preshantha Naidoo (School of Accountancy ,University of the Witwatersrand)
• Samantha E Gomez (School of Accountancy ,University of the Witwatersrand)

Keyword(s): Non-governmental organisations (NGOs); auditor; challenges; South Africa

Abstract: Non-governmental organisations (NGOs) are prominent in South Africa considering the social needs of the population. Donors who contribute to these establishments expect NGOs to be transparent and accountable regarding the disbursement of funds and whether these are expended in line with the its designated purpose. Stakeholders (including donors) rely on external audit teams to provide reasonable assurance of this financial information. The objective of this study was to identify external audit challenges experienced when performing NGO financial audits in South Africa. A qualitative methodology in the form of conventional content analysis was adopted for this study. Detailed interviews with a sample of South Africa’s external audit managers and partners (with experience in the NGO sector) enabled the researchers to identify the challenges NGOs experience during external audits. The findings of this study highlight seven external audit challenges which include the pervasive effect of the lack of skills of the NGO finance staff on the audit and the lack of reliable audit evidence of its going concern status. These pose serious challenges to the external auditors appointed to NGO audits. The auditors believe that the challenges can be alleviated by providing an additional supplementary practice aid to the existing audit standards to assist them when completing the NGOs audit.

Author(s):

• Relebogile Mashile (School of Accountancy, University of the Witwatersrand)
• Yaeesh Yasseen (School of Accountancy, University of the Witwatersrand)
• Waheeda Mohamed (School of Accountancy, University of the Witwatersrand)
• Elmarie Papageorgiou (School of Accountancy, University of the Witwatersrand)

Keyword(s): Challenges; continuing professional development (CPD); IES 7; professional accountants; South Africa

Abstract: The purpose of this study was to investigate the challenges encountered by South African professional accountants in maintaining their professional competency requirements of the International Education Standard 7 (IES 7), which was issued by the International Federation of Accountants (IFAC). In South Africa, currently, there are two Professional Accounting Organisations (PAOs) which are direct members of the IFAC namely: South African Institute of Professional Accountants (SAIPA) and the South African Institute of Chartered Accountants (SAICA). A quantitative and descriptive approach was adopted. A survey study of 121 respondents was conducted which highlighted the attitudes and perceptions of South African professional accountants on the effectiveness of Continuing Professional Development (CPD) practices in South Africa. The overall conclusions are that professional accountants in South Africa can demonstrate the required level of competence which is maintained by the current CPD structures and that more focus should be placed on incorporating the development of professional skills and ethical conduct in current CPD structures to promote the social status of the profession. There is limited research relating to the exploration of the challenges encountered by accounting professionals within a South African context. The results of this study may provide South African regulators, professional accounting bodies and policymakers with valuable insight into the usefulness of current CPD structures from the accounting practitioner perspective which may prompt the formulation of strategic changes aimed to enhance CPD practices in South Africa. This is particularly important considering the current negative perception of the accounting profession as a result of recent corporate scandals. A recommendation for future research is to investigate the benefits of voluntary CPD in South Africa for professional accountants who do not belong to the IFAC and establish how CPD may act as an integral part of lifelong learning on professional accountants in a non-mandatory setting.