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Johannesburg - Steps taken by the World Bank will help small businesses in South Africa, which are currently over-burdened by red tape and bureaucracy.
The new regulation, seen as having positive effects by industry experts, emanates from the World Bank Group’s second report on the Observance of Standards and Codes, issued at the behest of Finance Minister Pravin Gordhan.
The first report was issued a decade ago in 2003.
The chief executive of the Southern African Institute for Business Accountants, Nicolaas van Wyk, said: "The national development plan highlights the importance of small businesses and this regulation will go a long way towards protecting small businesses.
Fragmented
“The accounting profession should welcome the regulation proposed by the World Bank as it will set a standard and introduce accountability. The regulation will ensure that businesses paying for professional accounting services receive work of an acceptable international standard.”
Professor Dovhani Thakhathi, former dean of the University of Fort Hare and currently Saiba president, said: "The World Bank proposals seek to unify the regulatory model under which accountants operate by establishing a new regulatory authority.
"The World Bank analysis of the accountancy profession revealed that regulation of the profession is currently fragmented. Parts are regulated by a number of government departments including the departments of education, trade and industry and finance.
"Fragmented regulation is not an ideal model for reducing red tape, something that adds to compliance costs for business," noted van Wyk.
"Multiple regulatory models create confusion and duplication which, in turn, results in unnecessary costs that are pushed down to the business.“
Professional body
He said the report suggested that the role of the Independent Regulatory Board for Auditors be expanded to include the regulation of accountants and auditors – a significant departure from the scope articulated in the current Auditing Professions Act.
As a result, a new Accountancy Profession Act is proposed that will consolidate the regulatory reach of the IRBA to include accountants.
Van Wyk speculated that the World Bank proposals would see the IRBA or its successor body being required to accredit, register and monitor professional accounting bodies. All people providing services in accounting would have to register with an accredited professional body.
Van Wyk believed this would ostensibly improve the quality of the accountancy profession.
“It appears that the World Bank is in favour of similar models used in Australia and the United Kingdom,” he said.
Funding needs
"Businesses must prepare for the fact that their accountant may soon no longer be able to practise to their level of education, or rather, the lack thereof.”
Van Wyk concluded by highlighting an additional proposal, sure to elicit some controversy, relating to how the new regulator would be financed.
"The report suggests that government provides the bulk of the regulator’s funding needs as registration fees will only contribute a small portion.
"This model will ultimately see taxpayers forking out additional taxes to fund the regulation of the accounting profession. A possible alternative - and perhaps a fairer model - could be to implement a ‘user pays principle’.
"This model would see commercial enterprises contributing to the cost of the regulator. In this way, the independence of the regulator will be ensured and all regulatory oversight will be performed to the benefit of the business community.”
The new regulation, seen as having positive effects by industry experts, emanates from the World Bank Group’s second report on the Observance of Standards and Codes, issued at the behest of Finance Minister Pravin Gordhan.
The first report was issued a decade ago in 2003.
The chief executive of the Southern African Institute for Business Accountants, Nicolaas van Wyk, said: "The national development plan highlights the importance of small businesses and this regulation will go a long way towards protecting small businesses.
Fragmented
“The accounting profession should welcome the regulation proposed by the World Bank as it will set a standard and introduce accountability. The regulation will ensure that businesses paying for professional accounting services receive work of an acceptable international standard.”
Professor Dovhani Thakhathi, former dean of the University of Fort Hare and currently Saiba president, said: "The World Bank proposals seek to unify the regulatory model under which accountants operate by establishing a new regulatory authority.
"The World Bank analysis of the accountancy profession revealed that regulation of the profession is currently fragmented. Parts are regulated by a number of government departments including the departments of education, trade and industry and finance.
"Fragmented regulation is not an ideal model for reducing red tape, something that adds to compliance costs for business," noted van Wyk.
"Multiple regulatory models create confusion and duplication which, in turn, results in unnecessary costs that are pushed down to the business.“
Professional body
He said the report suggested that the role of the Independent Regulatory Board for Auditors be expanded to include the regulation of accountants and auditors – a significant departure from the scope articulated in the current Auditing Professions Act.
As a result, a new Accountancy Profession Act is proposed that will consolidate the regulatory reach of the IRBA to include accountants.
Van Wyk speculated that the World Bank proposals would see the IRBA or its successor body being required to accredit, register and monitor professional accounting bodies. All people providing services in accounting would have to register with an accredited professional body.
Van Wyk believed this would ostensibly improve the quality of the accountancy profession.
“It appears that the World Bank is in favour of similar models used in Australia and the United Kingdom,” he said.
Funding needs
"Businesses must prepare for the fact that their accountant may soon no longer be able to practise to their level of education, or rather, the lack thereof.”
Van Wyk concluded by highlighting an additional proposal, sure to elicit some controversy, relating to how the new regulator would be financed.
"The report suggests that government provides the bulk of the regulator’s funding needs as registration fees will only contribute a small portion.
"This model will ultimately see taxpayers forking out additional taxes to fund the regulation of the accounting profession. A possible alternative - and perhaps a fairer model - could be to implement a ‘user pays principle’.
"This model would see commercial enterprises contributing to the cost of the regulator. In this way, the independence of the regulator will be ensured and all regulatory oversight will be performed to the benefit of the business community.”
