SA's move towards a rules-based regulatory environment is of concern to the accountancy and auditing profession, the SA Institute of Chartered Accountants (Saica) says.
A round-table meeting of top executives in the accountancy and auditing industry agreed last month that the amount of regulations is further cause for concern.
WHAT IT MEANS
 Call for principles basis over rules basis
Standards should be modified for SMEs
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Though changes in legislation are necessary for post-apartheid SA to adapt to changes in global markets, an avalanche of laws over a relatively short time "could be overwhelming" for a profession stretched for specialist skills.
Leaders in the chartered accountancy profession also believe that the manner in which the regulations are being crafted needs to be reviewed.
They contend that a principles-based regulatory environment would be preferable to a rules-based one.
"We are not against regulations, but it is how the regulations are crafted that concerns us. We see SA moving towards rules-based regulations as opposed to principles-based ones," says Saica executive president Ignatius Sehoole.
Sathie Gounden, the CEO of black-owned Gobodo Chartered Accountants, agrees that regulations are not "necessarily a bad thing, provided the regulators stay focused on the important issues which need to be addressed and regulated and do not concentrate on irrelevant red tape, which becomes onerous".
Independent Regulatory Board for Auditors (IRBA) director for standards Bernard Agulhas admits that there may be overregulation, but says regulation is necessary to correct past mistakes, such as those that led to the Enron scandal in the US and other global corporate failures.
Ian Scott, senior partner at BDO Spencer Steward, says the frequent changes in the regulatory environment in the country are creating uncertainty in the accountancy profession.
Deloitte CEO Grant Gelink says that though the current economic climate presents exciting opportunities for accounting and auditing professionals, a plethora of regulations is increasing the workload of an already overburdened and understaffed profession.
PricewaterhouseCoopers CEO Colin Beggs says regulators are "doing a good job" and that the quality of audits coming out of SA has substantially improved and is on a par with other audits globally.
But regulators need to pay special attention to smaller practitioners, he says. Smaller auditing and accounting firms in SA feel that the big four firms continue to get the lion's share of business because of a perception among investors that audits conducted by smaller groups are inferior.
Victor Sekese, the CEO of black-owned firm SizweNtsaluba VSP, says "non-big four" auditing and accounting firms are as good as the big four.
He knows of only one "non-big four" firm auditing the books of a top JSE-listed company and its audit reports are no different to those handled by the big four. There is a need to disabuse the notion that small and mid-tier accounting firms are not as competent as their bigger peers.
Gounden says investors need to be informed that all auditors, irrespective of size, are subject to the same standards and requirements, particularly since SA has adopted International Financial Reporting Standards (IFRS) and International Auditing Standards (IAS) in their totality.
"As far as capacity goes, there is sufficient choice in the markets between small and midtier firms, but investor bias needs to be overcome in order to open up opportunities for smaller firms," he says.
Commenting on IFRS adoption in SA, Sehoole says there has been a complete alignment between SA Generally Accepted Accounting Practice (Gaap) and IFRS.
Auditor-general Terence Nombembe says there is a need to align public and private-sector auditing.
He also believes there is a need for accounting standards to be modified to take into account the unique needs of small to medium-sized enterprises.
Sehoole says the International Federation of Accountants' (Ifac's) developing nations' committee is working on ways to help members that do not comply with IFRS.
SA leaders of the chartered accountancy profession are satisfied with the role of Ifac in setting public-sector accounting standards, but feel that their organisation's annual budget of US$18m constrains it from executing some of its mandates.
They also feel that the role of an SA chief financial officer has changed from one of corporate policeman to general business and strategic adviser.
