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The costly business of trying to get accountants of the right calibre

There’s tension between what the education system delivers and what accounting and tax professions require.

There have been plenty of discussions about the decline in the number of students taking and actually passing accounting and mathematics at school level in South Africa.

Yet people shy away from questions around the impact this has on the economy, which requires professional and competent accounting and tax professionals that can offer financial assurance in private and public sector entities.

National Senior Certificate (NSC) results in subjects such as accounting and mathematics are a major problem for universities, although most are loath to admit it.

Accounting is not a prerequisite for admittance to an undergraduate degree in accountancy.

Mathematics is the key – but last year only 28% of all learners who sat for the NSC exam took maths as a subject.

Read:
Why SA’s declining maths performance is worrying
Startling rise in chartered accountancy failure rates

Around half of them achieved 30% or more. To become a chartered accountant, a learner must achieve at least 60%.

Mandi Olivier, senior executive of professional development at the South African Institute of Chartered Accountants (Saica), says that while the basic education system has flaws and students exiting this phase continue to provide universities with challenges in preparing them for the accounting profession, much is being done to bridge the gaps.

Interventions

“There are a number of additional interventions, programmes and wraparound support initiatives that are offered at tertiary education providers which aim to improve graduation rates.”

Nicolaas van Wyk, CEO of the South African Institute of Business Accountants (Saiba), says there’s a tension between what the education system delivers and what the profession needs.

In response to this, professional bodies – Saiba included – are trying to obtain funding from state institutions such as the National Students Fund or sector training authorities such as the Finance and Accounting Services Sector Education and Training Authority (Fasset) to bridge the gap between what the schools generate and what the business sector requires, he says.

“This means taxpayer money is used for the third time to train the same person.”

Van Wyk says there’s a clear indication that the current system and spending (on education) is not delivering the required results. “As a society we have to – at some stage – address the real issues, which is a failing education system.”

Keith Engel, CEO of the South African Institute of Tax Professionals (Sait), says universities cannot make up for high school. To be a tax professional, a person must have a solid base in mathematics and English.

Analytical skills

“If you missed it in high school, you missed it … we see that when we are hiring people. They do not have analytical skills. You cannot really expect the employer to retrain high school skills.”

From a high school perspective, tax is not a subject at school. Economic and Management Sciences is really a mishmash of entrepreneurialism, accounting, economics and tax. “They [secondary schools] are trying to teach more subjects – superficially.”

Sait is working with technikons to train tax technicians to be work-ready. “At the end of the day people want to be employable.”

The South African Institute of Professional Accountants (Saipa) obtains funds from Fasset for its Project Achiever programme, with the objective of changing the learning process.

Most industry bodies expressed concern about the emphasis on the memorising of processes, formulas and solutions without focusing on critical thinking skills.

Prof Rashied Small, Executive: Education and Training at SAIPA, says the methodology they use focuses on reading with comprehension, critical and analytical thinking, and problem-solving.

SAIPA has developed a teaching methodology to assist accounting teachers in teaching learners about doing business rather than pure accounting. Again, Saipa is looking for funding to roll the programme out to secondary schools.

Last year the budget for spending on basic education was R262 billion – more than the combined budgeted spending for innovation, science and technology, police services, social security, agriculture and rural development and job creation (R246 billion).

Professor Amanda Dempsey, senior director at the School of Accounting at the University of Johannesburg, says they are not overly concerned about the drop in learners taking and passing accounting, but they are concerned about the lack of achievements in maths.

Changing world of work

The workplace has also changed over the years and universities have had to adapt to this challenge as well. Dempsey says it has been a learning curve for everyone. The university offers students a course on the fourth industrial revolution, and will be introducing a subject specialising in blockchain and how it is going to change the profession in the near future.

According to Small, the profession will use artificial intelligence (AI) to free accountants from routine and mundane work. The profession will need what he terms “real intelligence” (RI) to apply professional judgement when providing advice and support for businesses.

RI requires a sceptical mind that can interrogate the predictions and outcomes supplied by data and AI.

That is the calibre of accountants and tax experts SA needs.

 

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“28% of leaners”. Does anyone actually use spelling check software?

….well look at it another way ….”lean on me” aka….pass the responsibility to the “credible” colleague

“But it is telling that accounting is no longer a prerequisite for admittance to an undergraduate degree in accountancy.”

Has this been fact checked? I matriculated in 1991 and as far as I’m aware at that stage, one didn’t need to take accounting at school level to get into BComm CA. Maths, yes, but not accounting.

I understand the point of the article, re: schools not producing sufficient candidates to start their CA journey, but to imply that the university entrance criteria has changed may very well be incorrect.

I matriculated 82 without accounts and Stellenbosch was fine with doing CA.

btw, Stellenbosch covered the Grade 8 to Grade 12 Accounting syllabus before Easter and then started new stuff. No wonder kids in my matric class got such high marks for Accountancy, it was a joke subject at school!

Too true! I recently interviewed someone who obtained a BTech Taxation degree Cum Laude. In the aptitude tests he scored 25% in numerical ability for the whole test. Moreover, he completed less than 50% of all the questions. Goodness knows what these institutions of higher learning produce these days.

From which university? I would be surprised if it was from a Tuks, Wits, UJ, UCT or Stellies

Cape Peninsula University of Technology

Quite telling that you did not have UKZN on your list. Personally I always say that I studied at The University of Natal not UKZN.

Dear fellow South African: got four year degrees (B.Hons) from these presumed good institutions in employ – disasters many, successes few. Got to teach them to write a somehow remotely coherent email. Not all, there are the odd outlier but these are few and far inbetween. The tertiary institutions cannot fix lack of basics that should have been taught since the early grades.

The same can be said off some of the Chemical Engineers that qualified at Technikons.

I think by this day and age we don’t need human accountants… AI should be the backbone of auditing and accounting. This will create a system without feelings, objectivity should be end result… We need “accounting quants” like high speed trading is using in the stock markets…”Accounting Quants” could surely save the day.

….hm…. there is a caveat ….corrupt politicians won’t like that

Google “Long Term Capital Management”

The failure of the ANC-SADTU schooling system to produce trainable prospective accountants is indicative of, and a proxy for, its failure to produce educatable or employable matrics.

From an economy and employment perspective, the professions and other graduates are an elite, a privileged minority. Matric should be the doorway to a career for the majority, not a piece of toilet-paper.

Our firm specialises in Asset Management and Private Equity recruitment. For the last 2 years clients have been mandating us to find non-accounting finance professionals to join their investment teams because they no longer have confidence in the caliber of individual coming through the CA programme. Less to do with IQ, and more to do with EQ, maturity, and ability to make decisions. (Recent audit scandals haven’t helped their reputation either!).

Don’t hire, develop an algorithm…

ANC does not want critical thinkers. They want people with entitlement mentality with no regards for law and order. And use taxpayers money to do this.Result is clear-student burn schools and libraries and books and none is held accountable. The one who was jailed was made a victim and pardoned after huge hue and cry.

The accounting profession needs to take a hard look at itself in terms of:
1. How it mistreats trainee accountants – poorly paid, excessive & unnecessary overtime demands
2. Poor management & oversight = scandals that continue to be exposed
3. Toxic culture that results in the best CAs leaving the profession.

The UK is struggling to attract new trainees due to the poor image of the profession and is headhunting talent from SA, further weakening the skills pool locally.

Accountants + Lawyers = World problems

Bit off topic but philosophically I find it ridiculous that people need to study to be tax professionals. Such a grifter career. The tax code should be easy for ANYONE to understand. Add to this applying complicated tax code to Africa and you have a laughable scenario. Complicated tax does nothing for the development of business which Africa sorely needs. This is Africa not the West.

You are an idiot and showing your ignorance.

The Tax Acts are fairly complicated and if you fall foul of the Tax Administration Act, you’re toast.

Plus even the quite average taxpayer can do with tax advice and tax planning. Let me give you some examples;
1. an employee who receives a company car for both private and business use can claim a deduction for actual business travel. Sars has data to show that less than 15% of such taxpayers know this.
2. taxpayers who derive rental income often fail to claim all allowable expenses …
3. the advantages of company owned residential property … can release precious cash flow back to business owners.

Just try to resolve a tax query nowadays by yourself … you will come short.

Most people have simple tax returns. Now start adding tx free savings, rental income, cryptocurrency, foreign holdings, capital gains tax, travel and other allowances and I want to see how you cope on your own.

and I am not even going to get started on corporate tax … add a very combative SARS to the mix and you have a recipe for disaster to the tax paying public.

Awkward, yes, so you agree with me. Taxes are far too complicated. Please read comments slower before you reply.

You are fooling yourself. There are very heavy international hitters in South Africa, with dual listings in the LSE, the NYSE etc. there is nothing backward about our economy, it is quite robust and aggressive, just ask Massmart and Anheuser-Busch Inbev South Africa who thought that they would cream it but came very short.

Complicated tax is a necessity when dealing with individuals and corporates who do their best to diddle the Fiscus. Every time that tax loopholes are exploited, legislation has to be passed to counter it. One of the biggest problems is transfer pricing that international corporates take advantage of to minimize their taxes.

There is only one way to simplify tax. Change the basis of taxing income to taxing spend, that is by means of VAT. Change the VAT rate to 30% or more, introduce a sliding rate up to 50% on luxury goods,eg. vehicles over R500K, jewelry, travel tickets, VAT petrol etc. etc. etc.Then you wont need (as many) tax practitioners as they would only have to specialize on VAT and corporate tax.

Sars has created many tax criminals with its hard hitting attitudes. Changing from an income to an expenditure tax would simplify matters AND broaden the tax base. Still tax capital gains and dividends but up the rates.

It is good to see this honesty about what is going on in schools. We need to talk about it, and loudly so; and take action to tell the government to take a hike with its failed education and insist on freedom of curriculum! To much politics, too little education, and even less learning. And almost all forced in a communist style system of once size fits all, prescribed nationally.

The subject of Math has been the Achilles heel of the inclusive system of education in SA since day one. Attempts to adapt the teaching methods continue to challenge the best academic minds. But not any significant improvements happening. The common sense conclusion is not for discussion because it screams of political incorrectness. Accordingly there must be increased efforts to improve results by traditional means.

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