What South Africa can learn from Namibia's leap forward in accounting regulation
Namibia is close to comprehensively regulating both accountants and auditors, something which remains a pipedream in South Africa. Zaa Nashandi, from Namibia's audit regulator, explains the lessons they've learnt.
Around two and a half million people live in Namibia, similar in population size to the Free State. Little over 100 Namibians are auditors in public practice. Namibia traditionally takes its lead from South Africa when it comes to audit regulation.
But now it hopes to replace the circa 1950s Public Accountants and Auditors Act, inherited from South Africa, with the Accountants and Auditors Bill.
"The biggest change the new Act seeks to introduce is the concept of comprehensive regulation in Namibia. The current Act only regulates auditors, not accountants," says Zaa Nashandi, head of the secretariat for Namibia's Public Auditors and Accountants Board (PAAB).
A final draft of the Bill currently sits with Namibia's Minister of Finance. Should it become law, it will achieve something that's still a pipe dream for big brother South Africa – comprehensive regulation of the entire accounting ecosystem.
Casting a wide net without snaring the dolphins
"We had intense disagreements on the definition of accounting services," says Nashandi.
In trying to create a law that regulates the whole accounting ecosystem – it's easy to cast too wide a net.
"We had parties such as stockbrokers and lawyers who felt that the definition was too broad in that it included some of their roles requiring them to register with the regulator. One of the compromises that we had to make was to provide exemptions.
"One of the automatic exemptions was for legal practitioners who carry out these tax services as long as they're registered with the Law Society in Namibia. Another one was for estate agents registered with the estate agent board."
Don't let a good corruption scandal go to waste
Nashandi explains that drafting the law started in 2016 and involved a lot of back and forth with stakeholders. However, as with State Capture in South Africa, scandals inside Namibia spurred on the reforms.
This year, a corruption trial for the Fishrot scandal kicked off in Namibia. This scandal first broke in 2019, involving an Icelandic fishing company and Namibian officials, including two former cabinet ministers.
The BBC describes Fishrot as a scandal where "... a number of prominent politicians and businessmen are accused of running schemes to get control of valuable fishing quotas, for example, those held by the [Namibian] state fishing company Fishcor. It is alleged that they then diverted them to the Icelandic fishing company Samherji in return for kickbacks."
Nashandi says, "I think recent scandals also helped to a large extent when we were reaching the finality of the drafting process with these scandals breaking out. It helped counter some opposition, particularly from the professionals who were against regulation. I think it confirmed that you needed to expand the net to include people who are part of these [problematic] transactions but walk away scot-free, and the attention is only directed to auditors."
The art of being practical
Nashandi is acutely aware of how the small size of Namibia's population affects what is possible.
"Even getting a retired auditor to sit on our structures is a big challenge because once we hear an auditor retired two weeks ago, by the time you catch up to them, they would have been appointed to a number of boards already."
"Currently, we have on our registry a total of about 115 auditors in Namibia," says Nashandi. "Of course, everybody knows everybody. So the definition of conflict [of interests], one has to really be careful that you don't define it too wide so that you end up not getting anybody to onto the [regulatory] structure.
