Home Accounting and Auditing Namibia leads SA in regulating the accounting and audit professions

Namibia leads SA in regulating the accounting and audit professions

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Namibia has decided to ditch its outdated legislative framework for the accounting profession – one it inherited from South Africa.

It recently decided to replace its 70 year-old Public Accountants’ and Auditors’ Act, under which the Public Accountants’ and Auditors’ Board (PAAB) was established.ro regulate public accountants and auditors. A separate act, Close Corporations Act -another inheritance from SA – regulated accounting officer.

It proposes replacing these with the Accountant and Auditors Bill, which is intended to achieve the following objectives:

  • Replace the PAAB with the Accountants’ and Auditors’ Regulatory Authority of Namibia (AARA).
  • Regulate the registration and minimum requirements of accounting technicians, accountants and auditors.
  • Make provision for an accreditation framework for the regulation of accounting technicians, accountants and auditors.
  • Prescribe an appropriate framework for the education and training of properly qualified accounting technicians, accountants and auditors as well as their ongoing competences.
  • Support the growth and transformation, advance the standing and effectiveness and promote the integrity of the accounting and auditing professions.
  • Empower the AARA to prescribe accounting standards and auditing standards which are internationally comparable.

A massively fragmented legislative framework

That’s the good news. The bad news is that SA is still lumbered with its fragmented and lopsided (in favour of CAs) legislation, where accountants are regulated under a scattering of laws:

  • The Independent Regulatory Board for Auditors (IRBA) Act, which governs auditors, and reports to the Minister of Finance
  • The Auditing Profession Amendment Bill, which gives more teeth to IRBA in enforcing regulations
  • The Companies Act, which governs aspects of the accounting profession
  • The Close Corporations Act, which governs accounting officers
  • And various other legislation such as the Lotteries Act, Auditor-General Act (governing the duties of the auditor-general), the Public Audit Act, the Municipal Finance Management Act and the Public Finance Management Act.

That’s an awful lot of legislation governing a profession numbering some 200 000 practitioners. And let’s not forget the Chartered Accountants Designation Act, which determines who can use the designation CA. Saiba has argued that this seemingly innocuous piece of legislation helps solidify the SA Institute of Chartered Accountants’ (SAICA) unhealthy grip on the economic life of the country and should be replaced with new legislation titled Accountants Designation Act. SAICA enjoys state protection afforded no other branch of the accounting profession.

Then there is the Financial Reporting Standards Council (FRSC) which deals with financial reporting standards and is answerable to the Minister of Trade and Industry.  Quite what the Minister of Trade and Industry is able to adjudicate on technical accounting matters has yet to be satisfactorily explained.

“There is no consistency in legislation governing the accounting profession in SA,” says Nicolaas van Wyk, CEO of the SA Institute of Business Accountants (Saiba). “This creates extra costs and results in differences of interpretation of financial statements, and differences in the manner in which they are prepared.

“Namibia has followed the European model of comprehensive legislation governing the accounting profession, rather than the fragmented system we have. SA is now falling way behind the rest of the world. We need consistency, and we need to stop giving preferential treatment to CAs.”

Both IRBA and the World Bank (Reports on the Observance of Standards and Codes, or ROSC) have recommended that SA adopt international best practices along the lines of Europe, the UK and now Namibia. These recommendations have gone nowhere. Former Finance Trevor Manuel had a chance to rope all the different strands of the profession under one umbrella after the Masterbond collapse when he ordered the drafting of the Auditing Profession Act of 2005. But no minister since has taken this issue with the seriousness it requires.

Nambia leads the way

Namibia has shown itself to be responsive to the needs of the accounting profession by adopting comprehensive legislation that will allow different branches of the profession to enjoy equal status, without favour to one branch only (for example, Cas).

There are some more practical benefits to this – investors and tax authorities will be able to read and understand the same accounting language. The public will have a standardised view of the corporate and economic landscape in which they live. Accountants will have greater certainty in what is expected of them, since they will operate under a clearly defined regulatory regime with consistent reporting standards. Universities and colleges will be able to standardise their curricula to turn out professional accountants that are better suited to the economic environment in which they find themselves.

Commenting on the proposed change in legislation, Saiba representative in Namibia, Lehana Nel, says: ”I want to applaud the PAAB for updating an outdated bill. Our profession needs to be legally regulated by an authority. This Act will not only regulate accountants and auditors, but all in our profession, more assurance for both the Government and the public.

“An appropriate academic framework for accountants and auditors sets the sustainable development path for the future, and we are dependent on this for public support and trust. As representative of SAIBA in Namibia. we are looking forward helping this bill through the stages, until gazetted.

To read more about the Bill click here