Publication Details

1. Political, social and economic reforms in South Africa

During the past three years, political, social and economic reforms changed the environment in which South Africans must operate, be they sportsmen, politicians or businessmen. These reforms demand adaptation and adjust-ment of many of the existing structures, including the very important restructuring that is now taking place within the accountants and auditors profession. The FAESA Project, already initiated in 1992, set the basis for meeting many of the new demands that are now being made on the accounting profession. The Public Accountants and Auditors Board is obviously busy in a very constructive way to adapt to the new South African environment.


One of the important recent developments in this process of reform is the rightful return of South Africa into African structures and organisations. As the political barriers to South Africa's full participation in the African development process disappeared, South Africa moved rapidly to join the more than fifty other countries on the African continent in their efforts to bring some economic vitality into what has become to be regarded as the economically dead continent. Since the election took place for the Government of National Unity in April 1994, South Africa has:


joined the Organisation for African Unity;

been readmitted to the United Nations Development Committee for Africa;

taken up a nominal investment in the African Devel-opment Bank;

joined the Southern Africa Development Community (SADC), and took responsibility for administering the Finance and Investment Protocol of SADC;

taken a leading role in co-ordinating bank regulation and supervision in the region through the estab-lishment of the East and Southern Africa Banking Supervisors Group (ESAF); and


joined the English speaking group of African coun-tries on the Executive Boards of the International Monetary Fund and the World Bank.

New opportunities for South Africa, and for South African professionals, to participate in, and to contribute towards, the economic development process in Africa, and particularly in the Southern Africa region, are being opened up on a regular basis. A few of these challenges that now present themselves to the auditing and accounting profession can be highlighted.


2. The World Bank's new initiative for capacity building in Africa

From its experience of the past, the World Bank has learned that economic development in Africa needs more than just financial assistance. Together with the African countries, the World Bank has over the past year concentrated on what can be done to raise the capacity of African countries to initiate, manage and monitor the economic development process.

In an interesting study recently released at the Annual Meetings of the World Bank and the International Monetary Fund in Washington DC, the following definition was given of capacity building. According to this Report, it must provide for:


"training, incentives, and learning by doing, to enhance human skills;

overhauling institutions and organizational structures; and

improving procedures and systems."

In a supporting Strategy and Program of Action, the important need for the building of capacity for auditing, accounting and financial management was stressed:

"A sound accounting infrastructure as well as appropriately trained accounting and auditing professionals are critical prerequisites for sustained economic growth. Progress toward the development of an ethical culture that emphasizes financial discipline, transparency, and accountability -- an important component of the enabling environment -- will continue to be retarded as long as capacity remains as weak as it is at present in this area.

"Strengthened financial accountability is, more-over, considered critical to maintaining or restoring public consensus on aid programs in donor countries in the post-cold war period. Perceptions of large scale diversion or in-effective use of resources due to poor systems of financial governance in recipient countries erode support in donor electorates."

This Report, prepared by the African Governors of the World Bank, made a few specific recommendations on what could be done to build more capacity in the accounting profession:


"National governments may find it beneficial to give greater support to the training of quality personnel in this profession.

Governments can also support the professions through the establishment of a legal framework which includes requirements for annual reporting as well as accounting standards to guide the practice of the profession.

National accounting bodies (professional associa-tions) must strive harder to play active and visible roles in the development of the profession. They can take on the responsibility of evaluating the appropriateness and relevance of existing accounting and auditing standards, and take the lead in adapting these standards to local conditions in light of the country's sociopolitical, economic and legal systems.


In collaboration with governments and the relevant public and private entities, these bodies should also institute appropriate mechanisms for monitoring and promoting compliance with the applicable accounting and auditing standards so as to protect the integrity of the profession and to enhance the emergence of financial discipline in the economy at large.

Concerted efforts involving national bodies and the international donor community could be made to mobilize grant funds to assist regional accounting bodies to develop regional accounting qualifications, accounting and auditing standards, and to assist the typically small and ill-equipped national accounting bodies to harmonize standards and education."


Indications are that the World Bank is serious to pursue and support this proposed programme for capacity building in Africa as part of its economic development assistance for the continent. I would like to encourage the Public Accountants and Auditors Board of South Africa to keep in contact with this World Bank initiative that will in the longer run benefit economic development in our region. The initiative holds a clear challenge for the accounting and auditing profession, also that of South Africa, to make an important contribution towards this programme.


3. Initiatives within SADC

A number of important initiatives were taken over the past year within the Finance and Investment Protocol of SADC for closer financial co-operation in Southern Africa. These include studies on the foreign investment profile of the region; the development of a SADC economic and finan-cial database; the development of financial clearing, payment and settlement systems; co-ordination of exchange control policies; and a common policy on money laundering and bank supervision.

At a meeting of the SADC Ministers of Finance in Swaziland in July this year, notice was taken of work being done by the Eastern, Central and Southern African Federation of Accountants (ECSAFA). ECSAFA had indeed been requested by the Ministers to keep the SADC Finance and Investment Sector informed of progress being made in the region with regard to accounting standards. This operation apparently already fits in well with the forementioned proposals for capacity building in Africa.

South Africa itself is now in the process of finalising legislation for a stricter control over money laundering in the country and is seeking the support of the other members of SADC to make a regional onslaught on this undesirable practice in the financial markets. Here also the accounting and auditing profession will be looked upon to provide needed support and assistance.


4. Concluding remarks

The task and the challenges for the Public Account-ants and Auditors Board are no longer restricted to South Africa itself, but have now obtained a much wider responsibility in light of South Africa's expanding role in Africa. Your Board can be proud of the high standards maintained in the past in the training of professionals, and in the promotion of a respected high ethical code of conduct in your profession. South African Chartered Accountants are in great demand in many other countries of the world, and in other related professions in South Africa. This explains, of course, why so many qualified Chartered Accountants leave the profession after their basic training.

I am sure that these standards and reputation will be maintained in the new environment in which you now have to operate, and that your long experiences of the past will serve South Africa, and indeed the whole of the Southern Africa region, well in the years ahead.

May this new building serve not only as a centre for the activities of the Public Accountants and Auditors Board in South Africa, but also for the contributions your Board will be making towards capacity building in Africa and, more particularly, in the expansion of closer financial co-operation in the Southern Africa region.

I now declare this building as officially opened.