Johannesburg - The South African Institute of Chartered Accountants was harshly criticised on Tuesday night for not taking action against members who were involved in state capture allegations and in audit firms that produced inaccurate reports.
Speaking in Sandton during the Courageous Conversations dialogue, former finance minister Trevor Manuel accused SAICA and other organisations of keeping tainted members, an act which he said tarnished the reputation and credibility of the profession.
“There is a long list of people, some who have actually been convicted for crimes other than malfeasance itself and still retained the membership while they stayed in prison. There is something with the institution that allows that membership because it is incapable of acting against such individuals,” Manuel said.
Last year, global auditing firm KPMG came under fire last year after it was revealed that it reported no regularities in Gupta companies for almost a decade, despite red flags of money laundering, a move which saw senior executive resigning after the revelations.
The company also raised no red flags about the VBS Bank’s financial woes, which has since been placed under curatorship by the South African Reserve Bank.
Another auditing firm, Nkonki Inc, has been embroiled in a reputational storm after it emerged that Gupta associate Salim Essa had funded its buyout by chief executive Mitesh Patel.
Nkonki – which has been viewed as a pioneering black auditing firm, has since been dumped by reputable institutions including the Office of the Auditor General.
Earlier this year, South African retailer Steinhof was also embroiled in an accounting scandal that wiped out 96% of its share price, including around R24 billion belonging to the Government Employees Pension Fund.
Manuel said SAICA had to develop strict and clear rules by which members had to abide and order to bring back the reputation within the profession, including those that related to the rotation of auditing firms and those that related to disclosures of the operation of firms.
Manuel is part of President Cyril Ramaphosa’s envoy which has been appointed to go around the world to woo investors to invest around R100 billion into the country over the next five years.
“The first thing investors want is numbers. They can’t trust our numbers,” he said.
Deputy Auditor General Tsakani Ratsela said recent developments within audit firms had made it difficult for chartered accountants to defend the credibility of the work they did.
She said the profession had to be defended through taking tough action against those who had brought it into disrepute.
“Government actually spends a great deal of money supporting chartered accounting in its development projects. I am troubled that our profession could betray the confidence that government has put in it and that it could betray the dreams and aspirations of young people who want to be chartered accountants. When we do these things we start tainting that,
“I think that all of us must guard with our lives if we must. SAICA and all the players in the profession need top actively defend the profession and not engage in a defensive posture, that says ‘it is not us’. Own the problem and take responsibility. I am not sure how to convince South Africans about the merit of trust in the work that we do,” she said.
Former Steinhof chief executive Markus Jooste and former Eskom chief financial officer and alleged Gupta enabler Anoj Singh are among a number of professionals who remained members of SAICA despite their scandals.