PRESENTATION TO MINISTRIES AND THEIR PARASTATALS PRESENTATION By Duncan Dankie Majinda CEO Botswana Accountancy Oversight Authority (BAOA) June, 2016
WHY ARE WE IN THIS MESS? INTRODUCTION CAUSES OF FAILURES REGULATION INTO PUBLIC INTEREST ENTITIES BOTSWANA CASE PERSPECTIVE (PIE) FINANCIAL REPORTING AND GUIDANCE ON MATCHING AUDITING FRAMEWORKS WHO IS THE PROFESSION? REGULATION WORLD STATISTICS OF CONCLUSION CURRENT PIE AUDITORS INDEPENDENT REGULATORS
WHY ARE WE IN THIS MESS? The Sarbanes – Oxley Act was signed by George W. Bush and became effective on July 30, 2002.
RESULTS OF THE POSTMORTEM OF THE CORPORATE SCANDALS IN THE USA Inadequate oversight over accountants lack of auditor independence Weak corporate governance procedures Conflict of interest Inadequate disclosure; Accountability and Transparency Executive oversight and executive compensation systems
SUMMARISNG THE CAUSES THREE MAIN CAUSES GREED, GREED AND GREED DESIRE TO BOOST THE BOTTOM LINE CONFLICTS OF INTEREST
PILLARS OF FINANCIAL REPORTING REFORM AND REGULATION STRONG LOCAL PROFESSIONAL ACCOUNTANCY BODY HIGHER EDUCATION PROFESSIONAL CPD PROCESSES CURRICULA EDUCATION INTERNATIONAL STANDARDS & AUDIT CERTIFICATION GOOD PRACTICE REQUIREMENTS CAPACITY COUNTRY LAWS & STATUTES COMPLIANCE PRUDENTIAL AND OTHER FINANCIAL REGULATORS REGULATORS MOUs Adapted from a World Bank Source
BOTSWANA CASE AN INDEPENDENT BOARD OF THE OVERSIGHT MONITORING OF CERTIFIED AUDITORS SETTING OF STANDARDS AND CODES MONITORING PROFESSIONAL ACCOUNTANCY BODIES LIKE BICA, ACCA, CIMA FINANCIAL STATEMENTS MONITORING OF PIEs PROMOTE HIGH STANDARDS OF CORPORATE GOVERNANCE
THE ACCOUNTANT GENERAL THE GOVERNOR OF BANK OF BOTSWANA (BoB) COMMISSIONER GENERAL OF THE BOTSWANA UNIFIED REVENUE SERVICE (BURS) THE CEO OF NON-BANK FINANCIAL INSTITUTIONS REGULATORY AUTHORITY (NBFIRA) THE CEO OF BUSINESS BOTSWANA THE CEO OF BOTSWANA STOCK EXCHANGE TWO EXPERIENCED PROFESSIONAL ACCOUNTANTS ONE ACADEMIC PROFESSIONAL ACCOUNTANT
PUBLIC INTEREST ENTITY LISTED ENTITIES ON A RECOGNISED STOCK EXCHANGE NON-BANK FINANCIAL INSTITUTIONS E.G. INSURANCE AND PENSION FUNDS BANKS AND OTHER DEPOSIT TAKING ENTITIES SIGNIFICANT ENTITIES IN THE CONTEXT OF BOTSWANA SECTION 56 – ENTITIES REQUIRED TO FILE THEIR FINANCIAL STATEMENTS AND REPORTS WITH A GOVERNMENT DEPARTMENT OR AUTHORITY.
SECTION 56 OF THE FINANCIAL REPORTING ACT, 2010. A Public Interest Entity or other Entity required under any enactment to file its financial statements or reports with a Government department or authority, shall also file a copy of the financial statement and report with the Authority.
PUBLIC INTEREST ENTITY continued SIGNIFICANT ENTITIES IN THE CONTEXT OF BOTSWANA Satisfy any two of the following: P300 MILLION ANNUAL REVENUE NUMBER OF EMPLOYEES 200 EMPLOYEES TOTAL ASSETS P200 MILLION TOTAL LIABILITIES P100 MILLION EXCLUDING EQUITY
Section 6 of the Financial Reporting Act, 2010 The Function of the Authority shall be to Register Public Interest Entities
What can go wrong? An irregularity A breach of any fiduciary duty An unlawful act or omission A Fraud A theft Professional Misconduct
Why Review A Public Interest Entity (PIE)? Ensure Compliance with International Financial Reporting and Auditing Standards Ensure Compliance with applicable legislation Ensure Compliance with best Local and International Practice in Corporate Governance
FINANCIAL REPORTING FRAMEWORKS TO BE AWARE OF . Full International Financial Reporting Standards (IFRS) IFRS for Small and Medium Enterprises (SMEs) GAAP in Botswana for entities not required to comply with IFRS International Public Sector Accounting Standards (IPSAS)
AUDITING FRAMEWORKS International Standard on Quality Control 1 (ISQC 1) International Standards on Auditing (ISA) International Standards on Review Engagements (ISRE) International Standards on Assurance Engagements (ISAE) International Standards on Related Services (ISRS) Internal Auditing Standards International Standards of Supreme Audit Institutions (ISSAI or INTOSAI GOVs)
WHO IS THE PROFESSION? ACCOUNTANTS BOTH PUBLIC AND PRIVATE SECTOR NON PUBLIC INTEREST ENTITY (PIE) AUDITORS PIE AUDITORS NON PIE AUDIT FIRMS PIE AUDIT FIRMS INSTITUTES (PROFESSIONAL ACCOUNTANCY ORGANISATIONS) NON AUDIT MEMBER FIRMS
GUIDANCE ON MATCHING REGULATED BY PAOs ACCOUNTANT S (INSTITUTES ) REGULATED BY PAOs OR INDEPENDENT NON PIE AUDITORS OVERSIGHT BODY REGULATED BY INDEPENDENT PIE AUDITORS OVERSIGHT BODY REGULATED BY PAOs (INSTITUTES) INDEPENDENT PAOs (INSTITUTES) OVERSIGHT BODY NON AUDIT MEMBER REGULATED BY PAOs FIRMS (INSTITUTES) ???????????? AUDITOR GENERAL REGULATED BY BAOA PIEs
INSTITUTES ARE STRUGGLING WITH PROBLEMS OF: COMPLIANCE WITH INTERNATIONAL EDUCATIONAL STANDARDS E.G. CURRICULA, PRACTICAL EXPERIENCE REQUIREMENT, CPD COMPLIANCE WITH CODES COMPLIANCE WITH ISA OF ETHICS COMPLIANCE WITH IPSAS COMPLIANCE WITH IFRS WEAK DISCIPLINARY AND CAPACITY CONSTRA INTS INVESTIGATION PROCESS AUDIT QUALITY REVIEW SYSTEMS
BUT GOVERNMENT HAVE PROBLEMS TOO BUT GOVERNMENT HAVE PROBLEMS TOO GOVERNMENT ALSO HAVE RESOURCE CONSTRAINTS FALSE CONFIDENCE IN THE ACCOUNTANCY AND AUDITING PROFESSION AND ITS ABILITY ACCOUNTANTS TOO POWERFUL A FORCE FOR GOVERNMENTS GOVERNMENT OFTEN REFER ORGANISATIONS LIKE THE WORLD BANK TO ACCOUNTANTS ON ISSUES OF ESTABLISHING AN INDEPENDENT OVERSIGHT
ASKING ACCOUNTANTS ABOUT AN INDEPENDENT OVERSIGHT IS LIKE ASKING PRISONERS WHETHER YOU SHOULD INCREASE SECURITY IN JAILS THE ANSWER IS OBVIOUS – LEAVE US ALONE GOVERNMENT SHOULD TELL THE PROFESSION WHAT TO DO ABOUT OVERSIGHT NOTWITHSTANDING THAT THE PROFESSION IS AN IMPORTANT STAKEHOLDER
CURRENT PIE AUDIT FIRMS PricewaterhouseCoopers Deloitte KPMG Ernst &Young Grant Thornton Mazars RSM Botswana IAMS
WORLD STATISTICS AUSTRIA ABU DHABI ALBANIA AUSTRALIA BELGIUM BOTSWANA CANADA BRAZIL BULGARIA CAYMAN ISLANDS CROATIA CHINESE TAIPEI CZECH REPUBLIC DENMARK DUBAI EGYPT FINLAND FRANCE GERMANY GIBRALTAR GREECE HUNGARY INDONESIA IRELAND ITALY KOREA JAPAN JERSEY LIECHTENSTEIN LITHUANIA LUXEMBOURG MALAYSIA MALTA MAURITIUS NETHERLANDS NORWAY POLAND PORTUGAL SINGAPORE SLOVAK REPUBLIC SLOVENIA SOUTH AFRICA SRI LANKA SPAIN SWEDEN SWITZERLAND THAILAND TURKEY UNITED KINGDOM UNITED STATES RUSSIA NEW ZEALAND
GLOBAL FIGURE FIFTY ONE (51) COUNTRIES. ALL REGISTERED WITH THE INTERNATIONAL FORUM OF INDEPENDENT AUDIT REGULATORS (IFIAR) AFRICA HAS FOUR (4) COUNTRIES REGISTERED WITH IFIAR
WHAT INFORMATION WE WANT FROM THESE MEETINGS Parastatals of Concern to the Ministry Parastatals of Concern to PEEPA Areas of Concern to the Parastatals Areas of Risk Priority Review List of Parastatals
WAY FORWARD - IDEAS Registration with BAOA in accordance with the Act When and How the Reviews are going to be conducted Reporting of Matters of concern Collaboration with PEEPA and other Regulators BAOA more like a Consultant than a watch dog
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