The South African Institute of Professional Accountants (SAIPA) has commended KPMG SA for its announcement that it will no longer offer non-audit-related services to its JSE listed clients.
This is according to Shahied Daniels, chief executive at SAIPA, who says: “We applaud the firm for making this difficult decision in the best interest of the public and contributing to the process of restoring confidence in the accountancy profession.”
Daniels also complimented KPMG Chairman Professor Wiseman Nkuhlu and CEO Ignatius Sehoole on their initiative. “Professor Nkuhlu promoted this concept of separating audit and non-audit functions, at SAIPA’s inaugural Accounting iNdaba in 2019, and his belief that the profession needs to be more public-centric, less client-centric,” he says.
Restoring confidence
Daniels believes that restoring confidence in the profession is a complex process that is still in its early stages. Accountancy – the body of duties accountants perform – has evolved into many specialised disciplines. Currently, auditing is the one under the greatest pressure to regain public trust. However, the accounting profession, a subset of accountancy, also needs to contribute to that goal.
The process should start with the preparers of financial statements and the CFO, extend to executive management, the audit and risk committees and internal auditors, and culminate with the external auditors. All these stakeholders must work as a collective and take full responsibility for the outcome of the audit opinion.
“So, it is not just one party working to restore confidence in the profession,” says Daniels. “It must be a unified progression with professional accountancy organisations, like SAIPA, playing a leading role.”
Separation of concerns
Daniels also believes that KPMG is right to separate its non-audit-related services from the auditing function provided to its listed clients because of developments in the industry.
Business advisory is rapidly evolving to become a unique and specialised competency within the accountancy stable. So much so that SAIPA has established a dedicated Centre of Business Advisory (CoBA) to equip the Professional Accountant (SA) to offer these advanced solutions to clients and employers.
“Business advisory services are becoming so common in organisations that it will soon be difficult for auditors to avoid giving assurance on their own firm’s work,” says Daniels. The Code of Ethics for Professional Accountants lists self-review as one of the main threats that accountants and auditors face.
Positive steps forward
Professional accountancy bodies are collaborating on several initiatives to ensure accountancy regains the unquestioned respect it once enjoyed.
One such initiative is the drive to encourage accounting firms, especially the larger ones, to adopt transparency reporting. While these disclosures are often internal, making them public would provide stakeholders with assurance of a firm’s integrity.
Another is that all professional bodies are taking a collective stand to ensure that accountants disqualified from one body can no longer seek membership with another, as was the case in the past.
Conclusion
Daniels encourages all firms and leaders in the accountancy profession to follow KPMG in its pursuit of restoring trust and confidence in the profession. “SAIPA will continue to drive this essential initiative and supports KPMG or any other company that commits to its achievement,” says Daniels.