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Solly Moeng: Here's how auditors can help rebuild SA

Apr 24 2019 06:02
Solly Moeng

Irrespective of who wins the 2019 elections, South Africa will still have a lot of work to do in the months – and even years – ahead.

This will be in order to regain its lost reputational confidence; to begin speaking in one voice and removing doubt where there are lingering questions about economic and political policy direction, among other things.

Many of these lingering questions being asked by people at home and around the world take away much-needed attention from interventions that actually do work.

It is therefore a crucial investment in the country's wellbeing to rebuild its brand and reputation.

Moreover, going by much of the discourse on various digital media platforms, including social media, there are still too many South Africans who seem to underestimate both the opportunity cost of what the country has lost over the past decade, on one hand; and, on the other hand, the seriousness of the task that lies ahead for us to rebuild.

Many discussions seem superficial and too focused on basic bread-and-butter issues. This is, of course, understandable in a country with massive unemployment and poverty levels, as well as a big, stubborn chasm between the relatively few rich and the majority poor.

Beyond the obvious

But our analysis of how we got here, and our journey towards a truly inclusive economy, must go deeper than the obvious.

By their very nature, country brands are complex. They’re shaped not by one thing alone, but by developments in politics, business, and in society, all of which form an intricate network of image influencers that can make or break reputations that have taken years to build.  

A major factor in South Africa's reputation has been the role played by the audit industry, which has a crucial function in the credibility of multiple sectors.

Like the country’s banking industry, which has for many years been praised for being strong and resilient – especially after it withstood the ravages that damaged banking systems in other parts of the world during the global economic meltdown of the late 2000s – South Africa’s audit profession was for many years considered to be professional, reliable, ethical, and globally competitive.

At least, this was the case until the recent state capture economy took hold. Stories came out about relationships with clients that compromised several hitherto strong audit brands and that led to uncomfortable questions about what was really occurring in that sector.

Fund managers and investors looking at South Africa from elsewhere must also have begun to ask questions about South African audit practices that they did not typically ask before.

The credibility of the audit industry has a far-reaching impact. For the country's long-term economic well-being, it must be restored. 

Lingering questions

Does the appetite to gain and retain clients at any cost still sit above considerations for general public interest?

If they don’t yet, should auditors learn to muster the gentle art of saying no and of walking away when lucrative clients ask them for help to do wrong or to look away from it, in exchange for contractual longevity?

What does the South African audit profession think about the need for rotation and, crucially, the separation of audit services from consulting services? What lessons have audit practitioners learned during the recent state capture economy?

Importantly, can the Independent Regulatory Board for Auditors (IRBA), whose mission is to "protect the financial interests of the South African public and international investors in South Africa through the effective regulation of audits conducted by registered auditors, in accordance with internationally recognised standards" be trusted to be an unshakeable buffer between public and investor interests one hand and, on the other hand, the business of audit firms, and now consulting firms?

In his keynote address at the 2019 Brand Summit South Africa, to be hosted on 6-7 June in Johannesburg, South Africa’s respected Auditor-General, Kimi Makwetu, will address the importance of values-driven and ethical leadership in managing public funds, as well as the role of the auditing profession in shaping the domestic and global image of South Africa.

There is a need for this profession and others to open up to a level of public scrutiny and to tell South Africans, who are still paying the massive opportunity cost of state capture, about what plans are being put in place so that auditors will never again be used by others to act against the interests of South Africa.

KPMG, which was one of the most visibly affected firms, has been leading the way in this journey to reputational recovery, but the road ahead for the entire profession is still a long one.  

When the audit profession finally gets it right, South Africa will be in a position to claim that it is on a credible recovery journey. 

* Solly Moeng is brand reputation management adviser and CEO of strategic corporate communications consultancy DonValley Reputation Managers. Views expressed are his own.

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