Breast Cancer Awareness Month

Breast Cancer Awareness

As part of activities to mark this year’s Breast Cancer Awareness Month,Resource Alliance put together a seminar under the theme”Pink it with Resource Alliance ”
It was aimed at sensitizing employees ,clients and the general public about early detection, treatment, impact, and ways to prevent breast cancer.

Resource Alliance is a Consulting Firm that believes in women empowerment with 80% of its staff being female and 20% of its clients being female owned business. The remaining 80% of clients have approximately 30-40% employees being women.These are the relevant statistics that led to initiative of “Pink it with Resource Alliance”.

As a Consulting Firm we noticed that the health care expenditure of some of our clients at the end of the year is gradually increasing . Resource Alliance in hope to help clients manage increasing healthcare costs saw the need to organize this seminar to educate both employers and employees about breast cancer.

Once one has knowledge on the cancer it will be easier to detect at the early rather than waiting to pay huge sums of money for surgical removal,radiation therapy and chemotherapy if detected at a late stage.

The more you know the better decisions you can make about your care.

The project was led by Abena Oforiwaah Awuah,Consultant of Resource Alliance.In her address she indicated that in an environment of inflation and microeconomic challenges,Resource Alliance is focused on helping its clients secure cost efficiency in their business activities.She additionally highlighted that Resource Alliance is committed to doing such similar initiatives helping clients to manage some of its internal costs.

Breast

New audit standards more transparent

A report by the South African Institute of Chartered Accountants (Saica) provides an overview and analysis of the auditor reports for listed South African clients, which were early adopters of the new and revised auditor reporting and related auditing standards.
New audit standards more transparent

© Andriy Popov 123rf.com

 

 

Auditor reports have changed forever with the introduction of these new and revised standards of the International Auditing and Assurance Standards Board (IAASB), which have been adopted by the Independent Regulatory Board for Auditors for use by registered auditors in South Africa.

MORE TRANSPARENCY

“The auditor’s report is more informative and transparent about the audit that has been performed. It enables a better understanding by the users of financial statements of the auditor’s responsibilities, work effort and the outputs of the audit process as well as an enhanced perspective about the audited financial statements. The relevance and value of the external audit are enhanced by adding to users’ confidence in the entity’s financial reporting as well as the audit,” says Willie Botha, senior executive: assurance and practice at Saica.

Although the new requirements were only effective for financial periods ending on or after 15 December 2016, auditors had the option to early adopt the standards, and some have done so.

“Saica has prepared a report on the early adopters in South Africa, with a focus on entities listed on the Johannesburg Stock Exchange (JSE). The report includes an overview and analysis of the presentation and contents of the auditor reports that were issued, in the context of the key changes as required in accordance with the new and revised auditor reporting and related auditing standards,” he added.

KEY AUDIT MATTER

There were four early adopter audit firms in South Africa which issued auditor reports in relation to nine listed entities. The most prominent change with respect to increased transparency about the audit and enhancing the information value of the auditor’s report is the communication of key audit matter (Kam); those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period. A total of 30 Kam was communicated in the early adopter auditor reports concerned.

When investors and analysts (and other users of financial statements) are provided with more entity-specific and audit-specific information, it would provide a better context for understanding the overall message of the audited financial statements and the auditor’s report. The subject of the Kam reported varied and were specific to each entity. Common Kam related to the valuation/impairment of goodwill and intangible assets, the valuation of property plant and equipment, and deferred taxation and income tax.

“The early adopters have led the way and based on the analysis of their reports, the objectives of the IAASB in undertaking this project are well on their way to being achieved. The IAASB is planning a post-implementation review of the standards two years after the effective date (commencing in early 2019) and SAICA will continue to monitor and provide feedback regarding implementation in South Africa,” concluded Botha.

Tapping into financial data gives a business’ story meaning

Business giants like Raymond Ackerman and Christo Wiese may have been able to fall back on gut feel and instinct, but business leaders today need to fine tune this with financial data.

“The world of finance is more complex than ever and rapidly evolving rules and regulations mean that business leaders and entrepreneurs have to work harder to keep up,” says Mark Graham, associate professor in accounting at UCT, who runs the Finance for Non Financial Management programme at the UCT Graduate School of Business.There is a sophisticated spectrum of financial tools available to managers and entrepreneurs, all of which were non-existent 20 years ago. In theory, this should make it easier to do business but, says this does not necessarily follow.

Graham says that improvements in financial reporting mean that companies are able to tell a better story of their offering and operations. “More data means more knowledge, leading to better decision-making, strategising and planning.” However, he cautions, you need to know how to interpret this data or it will remain meaningless.

“If you know where to look, it is possible to read the financial health of your business like a book. Critically, you can also spot when the numbers are not adding up.”

THE NUMBERS DON’T LIE – OR DO THEY?

Changes in regulation are meant to make it more difficult for companies to pull the wool over the eyes of investors and stakeholders. Some recent important improvements include the fact that companies are now required to report on financial instruments like derivatives and exchange contracts, for example. The result is a much clearer picture of reported gains and losses and a much more accurate portrayal of a company’s financial standing.

And in January 2016, the International Accounting Standards Board (IASB) issued a new standard on lease accounting, which requires that every leased property or item (like an office building or even airplanes) be reported on as an asset on the statement of financial position. This means that any business, which uses an asset that they do not own, will need to determine whether or not the contract, which allows them to use the asset, contains a lease. This can have a significant impact on the way profits are reported on and, as a result, paint a much more realistic picture of how a business is operating.

THE LEISURENET EXAMPLE

Overstated revenues can be dangerously deceptive. There are many examples of companies that went belly-up after posting some spectacular revenues, says author and seasoned forensic accountant, Tracy Coenen, One of the best examples locally, is Leisurenet Ltd that was regarded as hugely successful company in the 1990s. The group comprised the Health & Racquet Club (which by 1999 was South Africa’s leading gym) as well as a number of smaller companies.

At the end of 1999, Leisurenet reported increased profits of 68% on the back of a revenue increase of 32%. Superficially, but in 2000 it imploded, resulting in one of the largest corporate collapses in South African history. It later became clear that the company was treating 75% of the revenue from a two-year gym contract as accruing in the first year, thereby overstating the profit of the company. It’s a trick known as “upfronting”; the practice of recognising revenue before it is properly earned.

…AND THEN THERE WAS TESCO

UK supermarket franchise, Tesco was similarly embroiled in a scandal in 2014 after it was revealed that they had overzealously recognised rebates from suppliers. While it is acceptable for suppliers to offer supermarket chains rebates that are conditional on achieving certain sales targets and for these to be reported as revenue, in Tesco’s case, the estimate of these rebates was found to be overstated by £263m. The company had to reverse this overstated revenue, causing a significant drop in profit and damage to its reputation.

According to Graham, there are two general approaches to manipulating financial statements. It can either be by inflating current period earnings on the income statement by artificially inflating revenue and gains or by deflating current period expenses. This makes the company look better on paper.

“The second way is to do the exact opposite, which is to deflate current period earnings on the income statement by deflating revenue or by inflating current period expenses. There are many reasons why a company may want to appear weaker than it actually is – for example, it may want to discourage a potential buyer. Similarly, all of the bad financial information surrounding the company in one period could be transferred to the current period when the poor performance can be attributed to the current macroeconomic environment.”

KNOWLEDGE IS POWER

A recent editorial in the Economist points out that despite the advance in rules and regulations and other financial tools, such ‘cooking of the books’ remains a serious challenge for business. Graham says that this means that it is vital that investors and stakeholders – including managers and business leaders – arm themselves with enough financial knowledge to be able to spot corporate fraud and put an end to it before it puts an end to the business.

This is one instance in which stakeholders can’t fake it until they make it. They need to learn the language of finance and find out what the numbers are trying to tell them.

The good news is that, the introduction of a uniform accounting regime around the world means that this language is now more consistent so a small investment of time can help give business leaders and entrepreneurs a basic map to the terrain. There are plenty of books and training courses available to support people on this journey he points out.

“It is a bit of a Catch-22. If you don’t know what you don’t know, you won’t know what is going on. And in the world of business, ignorance is not bliss – it is instead foolhardy and unnecessary,” he says.

How the right auditing can boost your supply chain

AN EFFECTIVE AUDIT IS WELL WORTH IT FOR SMALL AND MEDIUM-SIZED FIRMS – HERE ARE SOME POINTERS FROM BUSINESS OWNERS.

MAP THE PROCESS FROM START TO FINISH

 

“Auditing a small or medium-sized enterprise (SME) supply chain is about eliminating unnecessary steps. Map out the process from start to finish, and work out how you can get rid of as many middle bits as possible. The biggest barriers are almost always around software and data.

“As a general rule, the more information that there is about the steps in your process, the easier it is to judge which areas can be sped up,
and which will remove cost.

“Often, however, you will be dependent on suppliers to provide additional data, and as an SME, you may not have much clout over large suppliers. If so, try to organise some collaboration with other small companies using the same large supplier to encourage transparency, even if those other SMEs are your competitors.”

SET OUT THE KEY AREAS FOR DATA GATHERING

“Make sure that you capture audit data across the supply chain for key areas such as: performance (cost and operational), risk (fraud and ethical) and compliance (safety, technical and raw material).

“This will give you a fair picture of your supply chain performance, upon which you can then expand.”

DON’T MAKE IT TOO BURDENSOME FOR SUPPLIERS

“Avoid a tick-box exercise. Instead, employ a collaborative approach with all parties within your supply chain, with clear corrective action plans and milestones that are mutually beneficial. To nurture this, provide your trading partners with simple ways to provide accurate evidence of audits, including real-time images and issue logs.”

IMPLEMENT AN ELEMENT OF SURPRISE

 

“Whenever you audit a supplier, you should drop in unannounced; letting your supplier know that you’re coming gives them the chance to hide any evidence of poor workmanship, as well as brief staff on what to say if you speak to them.

“If you want to guarantee that every product in your supply chain is being manufactured to legal and ethical standards, you should also pay a visit to the subcontractors related to your main supplier. It’s time-consuming, but there really is no other way to get an honest picture of the entire supply chain leading up to you.”

TRANSPARENCY IS VITAL

“Shorter supply chains provide vital transparency, accountability
and control. We work with more than 43 producer groups in 14 countries, but our supply chain is deliberately simple: from supplier, to roaster, to customer. This allows us to ensure that the coffee that we source is 100pc traceable to each producer.

“A short and efficient supply chain has enabled us to remain flexible and responsive to demand across all levels of our business and day-to-day operations. Our total supply chain transparency is an important sales tool; our customers want to know exactly where our coffee comes from.”

CONSIDER HOW COLLABORATION CAN DE-RISK YOUR BUSINESS

“Long-term relationships with suppliers are crucial, linking an ethical and sustainable supply chain with the quality of your product.

“Between 2010 and 2014, there was a coffee-killing fungus outbreak known as leaf rust in Latin American coffee farms. We monitored development of the disease among coffee producers from whom we source. We were aware that reduced yields would directly influence the income of farm workers.

“We oversaw an innovative solution, creating a service facility for farmers that was applied by a team of trained workers to combat the rust. The initiative was a success – treated trees remained healthy with minimal losses across the supply chain – and wouldn’t have been possible without our auditing.”

REMEMBER: IT’S NOT NECESSARILY ABOUT CATCHING PEOPLE OUT

“SMEs are far more time-constrained than large organisations, so audits shouldn’t involve a 1,000-question assessment regarding their conformance to a range of industry standards. Instead, any procurement and compliance audit should think carefully about potential areas of weakness in their supply chain and focus on understanding these better.

“The aim should be to help SMEs improve practices in these areas, as opposed to catching them out.”

Auditing profession must look beyond the numbers for real transformation

“It is only when we look beyond the numbers, to initiatives that will eliminate any perceived negative experiences while creating an environment in which all young professionals are provided with opportunities to promote their retention in the firms, that we will see real transformation,” said Bernard Agulhas, CEO of the Independent Regulatory Board for Auditors (IRBA).

He was speaking at the parliamentary public hearings on transformation of the financial services sector, outlining the IRBA’s concerns around the slow pace of transformation in the profession.

MOVING BEYOND THE NUMBERS

He explained that transformation must move beyond numbers and begin to truly empower black accountants and black-owned auditing firms, which includes providing equal opportunities to access the audit market.

“Previously, the lack of progression of young black professionals to the highest level in audit firms has been explained by the assumption that many young black accountants complete their traineeship and leave auditing for more lucrative roles in government, the corporate sector or to explore entrepreneurial opportunities. This is frequently cited as a challenge for the sector in its transformation initiatives.”

The reality is, of the 4,283 registered auditors in South Africa, 74.8% are white and only 10.5% are black African. It is not just about increasing the number of black trainee accountants; it is about giving black accountants and auditors long-term prospects in the profession equivalent to that of their counterparts. It requires a cultural shift and a more inclusive approach which will provide black accountants with a positive experience at the firms and result in higher retention, Agulhas said.

BUILDING A MORE DIVERSE PROFESSION

High on the IRBA agenda is a desire to capacitate mid-tier and home-grown audit firms and build a more diverse profession with increased opportunities. Currently, exposure of black-owned firms to the auditing of JSE-listed companies is minimal, with up to 94% of the market capitalisation of the JSE being audited by the ‘Big Four’ audit firms comprising Deloitte, KPMG, EY and PwC.

“It is critical that our black-owned firms be given access to the same opportunities. We need to see them growing in scale and capability. This cannot happen unless we create the opportunity for them to have equal access to the markets. Of the 367 JSE-accredited auditors that sign off on around 300-odd JSE-listed companies’ financial statements, as few as nine black auditors have had the opportunity to do so, according to our research.”

TRAINING AND EDUCATION

The IRBA had been receiving feedback from trainees with regards to their firm experience. Trainees had been raising concerns relating to unfair discrimination in areas of performance appraisals and job allocation, and lack of cultural diversity within the firms, according to Robert Zwane, IRBA director: education and transformation.

These concerns had and still continue to have an impact on the number of trainees being retained in the auditing profession and therefore on the numbers of trainees that may enter the IRBA’s audit development programme (ADP), and eventually qualify as RAs.

STILL ROOM FOR IMPROVEMENT

“Consequently, in 2015, the IRBA commissioned research amongst trainees and recently qualified CAs, to attempt to quantify the factors driving and limiting professional advancement in auditing, which could inform the board’s strategic objective for addressing diversity in the field.

“A largely consistent experience and set of attitudes was reported by trainees and qualified professionals alike, across the diversity of the segment. So, no matter race, geography, or size of firm, the experience of trainees and recently qualified CAs was consistent with the view that race and gender transformation has been underway but that it still has room for improvement in the future.

“Racial transformation is seen to be reasonable while studying with seven out of 10 respondents noting equal opportunities. However, black professionals perceive less equality during traineeship and beyond,” he said

With regard to perceptions of racial equality amongst the trainees, 90% of the African respondents felt that firms should do more to promote racial equality and 36% of the same respondents reported that they had experienced some racism from management.

WORKSHOPS

The IRBA will produce a detailed report and intends to explore the results in a series of workshops with audit firms before the end of this year. These will be facilitated with audit partners and audit managers respectively to attempt to reach some working resolution as to how best to balance the expectations of partners and young professionals, with a view to increasing retention of talent, and particularly advancing black talent, within the firms and the profession.