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CPA will force professional accountants to know the law

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With the introduction of the Consumer Protection Act (CPA), companies across the board are compelled to be more careful about the products and services they take to market.

Where advisory services are provided, professional accountants are expected to have a thorough understanding of the law – while also themselves ensuring that they don’t fall short of the requirements in their service delivery.
That’s according to Faith Ngwenya, technical executive at the South African Institute of Professional Accountants (SAIPA), who notes that attention to detail is required.
“This legislation effectively crystallises the rights of the consumer into law, providing any person with recourse should they not receive the right quality of product or service,” she says.
Ngwenya notes that Professional Accountants (SA) service clients who are both suppliers to their own customers on the one hand, and consumers in their own right.
“Clients rely on their accountants to provide them with information, demystify complex rules and Acts, as well as keeping them up to date with developments impacting on their businesses. That’s no different where the new law is concerned; your clients will look to you for clarification and guidance.”
The position of trust held by the Professional Accountant (SA) will be greatly compromised if the appropriate knowledge – and the advice which flows from it – is not present.
“This will not only result in mistrust in matters relating to the CPA, but could have a negative effect on the other services which are performed, since trust is intrinsic to the relationship between practitioners of this profession and their clients,” she notes.
In the event where specific insurance needs to be taken, clients are likely to seek the counsel of their accountant to ascertain and quantify potential risks faced.
“Cognisance should be taken of the following facts: the Act recognises consumer complaints and investigations require quick and effective resolution for both consumers and businesses. Sanctions for non-compliance include the imposition of a fine or imprisonment for 12 months, or in the case of disclosure of private information, imprisonment for 10 years,” says Ngwenya.
Furthermore, she points out that the Act makes provision for an administrative penalty not exceeding the greater of either 10% of the contravener’s annual turnover during the preceding financial year or R1-million.
“These are serious penalties, but there is more. The danger of suffering reputational risk can form an even greater incentive for businesses to ensure compliance.”
That’s on the one hand. On the other, she says the accounting firm and practitioners, like any other business, can be taken to the Commission for failing to deliver an appropriate quality of service.
“This raises the necessity for contracts between practitioners and their clients. Ensure that this document is in plain wording and explicitly states the nature of the services to be provided and their cost.”
It is important to note that the Act is designed to be accessible to all consumers to ensure that their rights are protected. As a reminder, Ngwenya notes who may lodge a complaint in terms of the CPA. This includes:
* Persons acting on their own behalf.
* An authorised person acting on behalf of another person who cannot act in their own name.
* A person acting as a member of, or in the interest of, a group or class of affected persons.
* A person acting in the public interest (in this instance such person can only lodge the complaint with leave of the Tribunal or Court, as the case may be).
* An association acting in the interest of its members.
“In short, it is a professional necessity that all practicing accountants familiarise themselves with this new law,” she concludes.