Muneer Hassan, Senior Executive at the South African Institute of Chartered Accountants (SAICA) spoke to AfricaMoney on the sidelines of a full-day seminar organized recently by the Mauritius Institute of Professional Accountants (MIPA). He noted that SAICA member firms generally lead the industry in adopting the highest professional standards, including trends such as integrated reporting, when these are merely industry buzzwords. Integrated reporting is essentially a composite representation of company performance, not only in terms of financial but also non-financial information such as sustainability statements, to help embed a long-term perspective into company decision making.
- The South African Institute of Chartered Accountants (SAICA) is the foremost accountancy body in South Africa and one of the leading Institutes in the world. What were the main achievements of SAICA in 2013 and what are your expectations from the institution in 2014?
First of all, just to tell you a bit about SAICA, we are the designated Chartered Accountant institute of South Africa. We have around 37, 000 members, of which approximately 30,000 are in South African and some 7,000 abroad. On our main achievements in 2013, SAICA is leading our members from the front, particularly in the space of integrated thinking and reporting. South Africa is endorsed by the integrated report and framework, and to boost that, we are doing our very own research on integrated thinking which will ultimately lead the way in the future. In terms of our vision of going forward as a premier accounting institute, we will be looking into how we can change our education model with regard to the chartered accountancy exams. The purpose of our research is to help align the chartered accountancy exams with the universities course curriculum, both when it comes to their teaching methods and also in terms of this new integrated thinking and innovation, going forward.
- The mission of SAICA is to serve the interests of the chartered accountancy profession and society, by upholding the highest professional standards. Where do you stand as of now on this paradigm?
We generally lead the industry in adopting the highest professional standards, so, for instance, when it comes to iForex for the currency markets, we were one of the first to adopt this golden standard for the foreign exchange accounting space. When it comes for iForex for SME standard as well, we adopted it well before it was mandated. Again, even with integrated reporting, I believe we were one of the first industry associations to lead in the space. Most of our companies are going through their fourth fiscal year of producing integrated reports already. So, as far back as 2011, when there was just talk about integrated reporting and thinking, our companies already took the firm initiative to adopt integrated reporting and start producing compliant reports, so I think we are always looking to lead from the front and to adopt sound principles that are coming out internationally from a standard perspective.
- According to its Annual Report 2013, SAICA’s trading activities, products and services suffered because of high-level of unemployment and difficult trading conditions. Can you please tell us how SAICA managed to successfully tackle these challenges?
We have seen the South African economy contract a bit and we have also witnessed intense competition in the market space. Overall, I think what we need to do is to come up the curve and innovate in terms of our product and services. We need to remain relevant for members, so, in the past, if we plied our members with a variety of services, is was broadly because they needed training and displayed a hunger for training. But, now, with the change in dynamics and from a tougher economic perspective, there is less money a company has to spend on its training budget. We, from SAICA today, are here to innovate. We need to become smarter, cleverer and come up with products that really benefit our members and which are going to make a difference to their lives.
- The month of July was christened the Savings Awareness Month and SAICA encouraged South Africans to continue saving. What were the tactics used by SAICA to encourage the people to save money?
To generate a broad awareness on the savings agenda, we put out media statements as well. We also encouraged savings from a government policy point of view that we are fully supportive of, which is that the savings generated will ultimately lead to sustainability in financing the economic development of the nation, and it will eventually take pressure off governments. Going forward, we have aligned our internal policies towards supporting government policies in terms of debt. In South Africa, we are going through a reform in retirement savings, where the government is encouraging savings early on in life. They are advising the youth that is not sustainable to start putting away money too late in life because ultimately people will then become dependent on the government in the absence of sufficient retirement savings. Thus, there is a big shift, one can even say, a paradigm shift, in terms of saving, and the policies around it.
- During the seminar, you spoke on Integrated Reporting. Could you please elaborate on the challenges linked to Integrated Reporting?
I think that integrated reporting is still quite new and comes with all the challenges of a new concept. By its very nature, anything new is difficult, as you are uncertain about how, and if, it is going to work. I think that integrated reporting is essentially about setting up a sound reporting framework, culminating in an integrated report. However, I do think that there is still a lot of uncertainty in terms of how to put the integrated report together. Accountants are so used to just putting a financial report together and it is an area we are comfortable with. We need to change our thinking and come out of our comfort zone because finances are only one aspect of an integrated report and it is much bigger than that.
- Is it possible to create a global language of financial reporting that can be applied on a consistent basis in every country of the world, developed and emerging economies alike?
I think standards are important and when we look at the aspects of iForex adoption in terms of accounting standards, it bears out that standards can be applied universally. I think, however, that integrated reporting is going to be a bit more difficult, as you cannot lay a fixed standard in effect. Instead, what the International Integrated Reporting Council (IIRC) is actually coming up with is a framework with principles. Integrated reporting has its own challenges as, in essence, it is principle based. We are seeing iForex moving to principles as well but I think standards are important to begin with, and if we can get a standard and a framework applied internationally and all companies adopt that, it would be easier for users of the report to understand it whether they are in Europe or Mauritius.
- Finally, please provide your insights on the way forward for SAICA.
From SAICA’s perspective, we have been a global leader and it is always difficult to keep up. If you want to lead from the front, you need to continue doing research in areas where others have not gone before. In a purely accounting aspect, you need to take the tough decisions in a financial statement when you have to, and that is the difference between a leader and a follower.
[Edited excerpts from an exclusive interview]
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