South African Institute of Chartered Accountants: Wikis

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Accountancy
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Key concepts
Accountant · Bookkeeping · Trial balance · General ledger · Debits and credits · Cost of goods sold · Double-entry system · Standard practices · Cash and accrual basis · GAAP / IFRS
Financial statements
Balance sheet · Income statement · Cash flow statement · Equity · Retained earnings
Auditing
Financial audit · GAAS · Internal audit · Sarbanes–Oxley Act · Big Four auditors
Fields of accounting
Cost · Financial · Forensic · Fund · Management · Tax
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The South African Institute of Chartered Accountants (usually referred to as SAICA) is a non-profit organisation that represents the interests of the accounting profession. It provides a wide range of support services to its members enabling them to play a key role in developing the rapidly changing South African economy.

It is the only body responsible for conferring the designation CA(SA). Holders of the designation are known as CAs or Chartered Accountants. To practise as an auditor in South Africa, one has to be a CA (but not all CAs are necessarily auditors.)

Some CAs are also members of the IRBA - Independent Regulatory Board for Auditors, formerly known as PAAB (Public Accountants and Auditors Board).

Contents

History

The first professional institute for accountants in South Africa was the Institute of Accountants and Auditors, formed in the South African Republic in 1894 with a mere 65 members. A year later the Institute of Accountants in Natal was established. The need to regulate the profession lead to the further establishment of various provincial institutes. In 1904 the Transvaal Society of Chartered Accountants was established in terms of an ordinance which placed the profession in that province on a sound footing, and other provinces soon followed suit between 1905 and 1907. However, these steps to secure the standing of the profession also worked to separate it.

In a move towards standardization, the first articles of clerkship were instituted in 1905 and the first journal was published in 1909. Although it did not become a regular publication till 1954, the journal was the sole communication vehicle aimed directly at members and indicated a need for unification. From the earliest times attempts were made to form a national body. The first meaningful step took place on 6 May 1921 when the South African Accounting Societies' General Examining Board was formed to conduct the examination process on behalf of the societies. The second major milestone on the road to unification occurred in 1927, when the Chartered Accountants Designation (Private) Act was passed by parliament. The Act provided protection for the CA(SA) allowing only members of the then provincial societies to use it.

But world and local politics at the time hampered efforts towards forming a national body and it was only in 1945 that the Joint Council of the Societies of Chartered Accountants (SA), which provided a forum for co-operation between the societies, was formed.

In 1950 all theoretical teaching and examining was handed over to universities, but the profession retained the right to set the qualifying examination. The first CTA examinations were held in 1951. The Public Accountants and Auditors Act was also promulgated in 1951 and it brought into place the regulation of accountants and auditors in public practice. The General Examining Board continued to set the qualifying examination until 1957 when it was taken over by the Public Accountants' and Auditors' Board (PAAB).

In 1966 The National Council of Chartered Accountants came into being with its own small secretariat – a further step in the process for unification which was finally achieved in 1980 when the South African Institute of Chartered Accountants was formed with 9012 members.

1973 saw the enactment of a new Companies Act and with it the requirement of companies to present financial statements in accordance with generally accepted accounting practice. The profession, together with chambers of commerce and the Johannesburg Stock Exchange, formed the Accounting Practices Board to issue statements of Generally Accepted Accounting Practice.

An era of change

With the beginnings of globalisation, the profession internationally felt the need to work more closely together. This led to the creation of the International Federation of Accountants in 1977 and South Africa was one of the founder members. Although the first woman Chartered Accountant, Miss Elizabeth Kruger, qualified in 1917, it was not until 1977 that Wiseman Nkuhlu was admitted as the first black African Chartered Accountant.

The 1980s proved to be an era of change. While SAICA established numerous committees to improve its service to members and to set standards, the profession recognised the need to open the doors to more black and female chartered accountants. A committee, under the chairmanship of Brian Hawksworth, began to promote the need. In 1987 the CAs' Eden Trust came into being as a joint effort between SAICA, the PAAB and the Association for the Advancement of Black Accountants (ABASA) to provide bursaries and grow the number of black chartered accountants. The Eden Trust assisted over 100 black accountants to qualify. In 2004 its name was changed to the Thuthuka Bursary Fund and it was fully incorporated into the institute's Thuthuka strategy.

In 1999 SAICA took over the role of setting part 1 of the qualifying examination from the PAAB while PAAB took over the responsibility for setting auditing standards, and with this came more clearly defined roles for both bodies.

The future

The profession began a long process to revise the PAA Act in the early 1990s and this process will come to fruition with the promulgation of the Auditing Profession Act(Act 26 of 2005) this year.(The Act commenced on the 1st of April 2006). The process has been upset by a spate of international and local corporate failures, with the result that governments worldwide saw the need for regulation of auditors to be tightened up and became more involved in the process.

Another issue that requires the profession and SAICA's dedication is that of Transformation. The Thuthuka Project, an initiative to promote transformation in the profession, was launched in the Eastern Cape in 2002 and it was expanded to Limpopo and Kwazulu-Natal in 2004. This programme is providing education support to black learners and students and seeks to uplift communities while benefiting the profession. To regulate our efforts going forward, SAICA has now implemented a system whereby leadership issues are identified by the SAICA Board and delegated to the secretariat, so that each day we add a little more to our history.

Confusion often arises regarding the differing roles and responsibilities of The South African Institute of Chartered Accountants (SAICA) and the Independent Regulatory Board for Auditors (IRBA), previously the Public Accountants' and Auditors' Board (PAAB) This article attempts to clarify the respective roles of the two bodies.

SAICA is a non-profit, voluntary body that provides a wide range of services to its members and associates. It is controlled by a Board, elected by members through regional committees, and by bodies representing the Institute's other key constituencies such as commerce and industry, large practices, small practices and the Association for the Advancement of Black Accountants in Southern Africa (ABASA). The Board is the statutory body controlling that part of the accountancy profession involved with public accountancy in the Republic of South Africa.

It is important to stress that all entrants to the public accountancy profession are subject to consistent requirements. Following qualification, accountants entering public practice are required to register with the Board and are governed by its regulations. Those qualified accountants entering other disciplines who are members of a provincial society of chartered accountants, are not subject to the jurisdiction of the Board but are subject to the jurisdiction of the South African Institute of Chartered Accountants. The Board functions in terms of the Auditing Profession Act, 2005 (Act 26 of 2005). Its members are appointed by the Minister of Finance and not more than 40% of the members of the Board may be registered auditors.

The Board is partly funded by fees and levies payable by registered auditors and partly by the National Treasury. The Board reports annually to the Minister of Finance, who then tables the report in Parliament.

The mission statements of the two bodies highlight their differences. SAICA's mission is to serve the interests of the Chartered Accountancy profession and society, by upholding professional standards and integrity, and the pre-eminence of South African CAs nationally and internationally, through delivering competent entry level members, providing services to assist members to maintain and enhance their professional competence thereby enabling them to create value for their clients and employers, enhancing the quality of information used in the private and public sectors for measuring and enhancing organisational performance, running and facilitating programmes to transform the profession and to facilitate community upliftment and fulfilling a leadership role regarding relevant business related issues and providing reliable and respected public commentary.

The mission of the IRBA, on the other hand, is to protect the financial interest of the South African public and international investors in South Africa, through the effective regulation of audits conducted by registered auditors, and in accordance with internationally recognised standards and processes . This is achieved by providing the means and the regulatory framework for the education and training of adequate numbers of competent and disciplined accountants and auditors, to serve the needs of South Africa. The Board strives constantly towards the maintenance and improvement of standards of registered auditors. The Board protects the public who rely on the services of registered auditors and supports registered auditors who carry out their duties competently, fearlessly and in good faith.

In order to ensure that all members, associates and trainees comply with the high professional standards set, SAICA provides technical support, continuing professional education and disseminates and communicates the latest information on technical developments to its constituency.

One of SAICA's major objectives is to ensure that membership of the accountancy profession better reflects the population demographics of South Africa. To this end, the Institute has a number of initiatives in place designed to dramatically increase the number of chartered accountants from previously disadvantaged communities.

The responsibility for training is a shared one. SAICA is responsible for the registration of trainees and management of their training contracts, either in public practice or outside public practice. Trainees, who do not wish to follow the public practice route, may specialise in financial management and complete their training through an Approved Training Organisation (ATO) in commerce and industry. Approximately 35 ATOs have been approved by SAICA. The Institute sets and adjudicates the examination (QE1) and the financial management examination in QE2, for those trainees who have opted to take the financial management route. The IRBA exercises a monitoring role over the SAICA public practice trainee and QE1 examination processes.

The IRBA is also responsible for setting and marking the Public Practice Examination (PPE) for those trainees choosing the public practice route. Trainees may only write QE2 or PPE after they have passed QE1 and upon the completion of a minimum of 18 months of a three year training contract. After completing their training contract and passing both QE1 and QE2 or PPE, candidates are required to register with SAICA in order to use the prestigious Chartered Accountant (CA(SA)) designation.

The IRBA conducts practice reviews, investigations and disciplinary processes for registered auditors. Generally, an individual registered with the IRBA is also a Chartered Accountant registered with SAICA and therefore must comply with the Codes of Professional Conduct of both bodies. According to the Constitution and By-laws of SAICA, any alleged misconduct by a person who is a member of both bodies is dealt with by the IRBA, in the first instance. SAICA accepts the findings of the IRBA disciplinary process and imposes its own disciplinary sentences on those found guilty. Disciplinary matters relating to members not registered with the IRBA, and associates, are dealt with by the SAICA disciplinary process.

SAICA recognises that all chartered accountants do not wish to be in public practice, therefore it introduced its financial management route. These changes have increased entry points into SAICA.

Both the IRBA and SAICA play vital roles in the accountancy profession and economy of South Africa. In their new and complementary roles, they will continue to face the challenges presented to them and make a proactive and valuable contribution to the development of our country.

Mission

The mission of SAICA is to serve the interests of the Chartered Accountancy profession and society, by upholding professional standards and integrity, and the pre-eminence of South African CAs nationally and internationally, by:

  • Delivering competent entry level members
  • Providing services to assist members to maintain and enhance their professional competence thereby enabling them to create value for their clients and employers
  • Enhancing the quality of information used in the private and public sectors for measuring and enhancing organisational performance
  • Running and facilitating programmes to transform the profession and to facilitate community upliftment
  • Fulfilling a leadership role regarding relevant business related issues and providing reliable and respected public commentary.

Strategy

The overall objective is to promote sustainability and growth of the CA profession. The key strategic objectives are:

  • to improve the competitiveness of CAs;
  • to enhance the competitiveness of the CA(SA) brand;
  • to influence local and international agendas in areas relevant to the CA profession;
  • to run programmes to achieve transformation of the member base;
  • to make a distinct contribution to society in line with the corporate social responsibility.

The financial, internal business processes and organisation and learning quadrants are important as they provide the infrastructure and foundation that enables the objectives of members/stakeholders to be met.

Official Policies

  • "We committed to and support IFRS as issued by the IASB."[1]
  • "We do not concur with the suggestion that the standards should reject the stable unit measuring assumption."[2]
  • "Inflation-adjusted accounts in a low inflation environment insult the user"[3]

South African Designations

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CA (SA) - The Chartered Accountant

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Members of SAICA are entitled to use the highly regarded and prestigious designation CA(SA) after their names. The designation is associated with someone who has considerable expertise in the theory and practice of accountancy. The requirements for qualification as a Chartered Accountant are:

  • Education:
  • Completion of a three year training contract ("internship") selecting either of two routes:
    • Training Inside Public Practice ("TIPP"): "Articles" with a Registered Training Organisation (RTO), a firm of Chartered Accountants in public practice (such as Deloitte, PriceWaterhouseCoopers, KPMG, or Ernst & Young);
    • Training Outside Public Practice ("TOPP"): "Articles" with an Approved Training Organisation (ATO) in commerce and industry, typically at a large bank or corporate (excludes practice as an auditor).
  • Pass, in sequence, the two "board examinations" set by the IRBA. The Qualifying Examination (QE) has two parts, and the second may only be written after passing Part 1 and after the candidate has undergone at least 18 months' training:
    • the first in accountancy, auditing, tax and financial management;
    • the second in auditing for TIPP candidates, and in financial management for TOPP candidates.

AGA (SA) - The Associate General Accountant

AGAs operate in a broad range of varied work activities, most of which are complex and non-routine.

Core areas include:

  • Financial accounting and reporting
  • Managerial accounting and financial management
  • Taxation
  • Auditing, with specific reference to systems, internal auditing functions, internal control and corporate governance
  • Information technology

AAT (SA) - The Associate Accounting Technician

The range of an AAT's work will vary widely.

Generally AATs work in support positions and some of their key functions include:

  • Purchase accounting
  • Inventory control
  • Payroll accounting
  • Costing and budgeting
  • Sales accounting and credit control
  • Cash and banking
  • Ledger accounts and the preparation of accounts

AAT trainees are required to complete a training contract of at least two years and must pass an examination before they are entitled to use the AAT (SA) designation.

CPA

A South African Chartered Accountant, or CA(SA), is the equivalent of a United States CPA (Certified Public Accountant). However, the CPA designation also exists in South Africa. This qualification was previously designated CFA (Certified Financial Accountant). South African CPAs perform only accounting and tax work, usually for smaller entities, and may not perform auditing work.

A recent legal battle between SAICA and the CPA governing body: SAICA requested that the CPA designation be changed back to CFA (Certified Financial Accountant) because the "CPA" designation might create confusion to Americans who might believe that CPAs can act as auditors. Using the term CPA is also a contravention of the Audit Profession Act which states that only CAs may use the term "Public Accountant" or "Registered Auditor."

The eventual outcome of this dispute was that the CPA governing body changed its name to SAIPA, the South African Institute of Professional Accountants, and its members designation changed to Professional Accountant (SA) without a corresponding acronym.

External links

See also

References

  1. ^ [1] South African Institute of Chartered Accountants, Education and training > Discussion Forum > Small Practices > R57.984 billion real value destroyed by CAs in 169 JSE listed companies, 27th August 2008.
  2. ^ [2]South African Institute of Chartered Accountants, Education and training > Discussion Forum > Small Practices > R57.984 billion real value destroyed by CAs in 169 JSE listed companies, 27th August 2008.
  3. ^ [3]South African Institute of Chartered Accountants, Education and training > Discussion Forum > Small Practices > R57.984 billion real value destroyed by CAs in 169 JSE listed companies, 12th August 2008.

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