Tag: financial reporting

The municipal skills shortage has reared its nasty head again. This was identified  by the Auditor General (AG), Ms. Tsakani Maluleke, who briefed parliamentary committees on the 2019/20 local government audit outcomes and the COVID-19 relief funds expenditure in a session on 22 June 2021.

The South African and other global economies have fallen victim to corporate failures that resulted in devastating effects on investors and the public. When such corporate failures do occur, the role of the auditor is often brought under scrutiny; particularly as it relates to the role of the auditor in detecting fraud, resulting in an increased focus on the audit expectation gap.

Since 2017, the auditing profession has been plagued by high-profile corporate failures that have implicated auditors. As a result of state capture revelations, share price collapses, and corruption allegations, the South African public continues to question how audit can be relied upon to protect its investments.

There are numerous other variations and forms of the above concept, but one clear common theme is that materiality represents a threshold, a gate-keeper and a clear reference to a quantum above which more discretion and judgement may be required.

In March 2020, President Cyril Ramaphosa announced a 21-day ‘hard’ lockdown, later to be known as a level 5 lockdown. It certainly caused flutter in the financial markets, forcing almost the entire economy to cease operations and people to be confined to their places of residence.

We have noted with concern the Auditor General’s report of the audit outcomes for local government, which showed that only 8% of municipalities received clean audits for the 2018/19 financial year, despite R1.26 billion being spent on financial reporting consultants.

COVID-19 has taken the world by storm, so much so that plunges in global stock markets are making history in terms of the low levels being hit, as well as the speed at which the collapses are occurring. For the first time in history, the US oil prices fell below zero. From travel bans and cancelled sporting events to national lockdowns, COVID-19 has influenced global and personal realities.

The COVID-19 pandemic has had a global impact. The South African government has been applauded by the World Health Organisation for its quick response to curb the spread of the COVID-19 in its early stages, and prepare its health care system to better respond to the pandemic.

Considering the high profile scandals that have dominated news headlines in the last few years, from VBS Mutual Bank to Eskom, it does not seem unreasonable to say that South Africa may have a corporate fraud problem. What’s more, the accounting irregularities that led to shareholders being defrauded and losing significant shareholder value, may have been entirely preventable if the internal auditors had been more empowered, protected and held to the same level of accountability as external auditors, via appropriate regulation of the internal audit industry.

Running a business will likely be one of the most challenging things you’ll ever do. However, armed with the right advice and guidance, it can also be one of the most rewarding – providing a solid financial future for you and those you love.