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“A university should be properly directing itself towards the higher level of pursuit. However, as infra dig as it is, it seems that the universities will have to try to fill the gap.”

A New Training Landscape

For some time the landscape for chartered accountants [CAs(SA)] has been changing. The breadth and depth of technical knowledge required has continually expanded, but the experience and exposure in training has progressively narrowed. The new Companies Act will also have a profound effect on the profession and thus on the training of would-be chartered accountants.

The 'Old Days'
In the not too distant past, during ‘articles', it was almost inevitable that an ‘articled clerk' would gain real exposure to a wide array of professional practice matters. At the end of ‘articles', a new CA(SA) would have gathered a wide and important exposure to business and financial matters at a high level, and would also have been able to deal comfortably with various mundane statutory filings.

It was almost inevitable that during the course of the training contract, an understanding of and a familiarity with a wide variety of business matters would have been obtained. In a real-life context, one would have actually encountered and had to deal with matters such as business acquisition and sale agreements, trusts, wills, tax structures and the like. In addition, inevitably one would have been exposed to preparation of provisional and annual tax returns for individuals, companies and trusts, and the routine filings with the (then) Registrar of Companies.

At the end of the training contract, one had built on the academic knowledge from university and was equipped actually to practise and work confidently as a CA(SA), at a high level of business.

Today
The current environment is rather different. For ‘trainees', not only is Training Outside Public Practice (TOPP) now permitted, but the Training Inside Public Practice (TIPP) is far more confined to a narrow focus.

Over time, auditing has become more and more confined to “pure” auditing, where the audit staff (and even the audit partners) are effectively discouraged from applying their minds to anything outside of the conventional audit sphere and encouraged (and in some cases even obliged by the practice) to use specialists for certain parts of the audit – even in relation to ordinary tax matters.

Recently qualified CAs(SA) will frankly advise that they have had little or no exposure at all (or certainly no meaningful exposure) to the types of matters referred to above (and even less chance of some exposure if they followed the TOPP route).

The future
The new Companies Act will mean that the vast majority of companies will be subject to neither audit nor review. As the market becomes acquainted with the new law, the small and medium sized professional practices will have few or no audit or review clients, and their mainstream income will be derived from consulting, tax compliance and statutory filings with the new Companies Commission (the old Registrar of Companies/CIPRO).

In fact, over the past decade or so, the proportion of fees attributable to audit in such practices has declined significantly. The intake by the small and medium sized practices of trainees has fallen over the past decade and is likely to reduce considerably over the next decade. There will be little need for a small or medium sized practice to employ CTA equivalents for the type of work the practice will perform.

The current training model and experience gained (in TIPP and certainly in TOPP) is such that the narrow focus is likely to continue.

A chartered accountant should surely have a breadth of knowledge of general business and financial matters at an appropriate level to be able to offer and deliver the kind of expertise expected of chartered accountants. A chartered accountant is, of course, over-qualified to perform the mundane task of completion of tax and other statutory returns, but certainly should know enough to be able to do so, and to be able to direct and supervise such processes.

The general high level experience and knowledge and the exposure to routine filings is not going to be obtained in TIPP or TOPP. So, where will this knowledge and experience come from? It is not the role of the universities to deal with these kinds of matters. A university should be properly directing itself towards the higher level of pursuit. However, as infra dig as it is, it seems that the universities will have to try to fill the gap.

It will be necessary to provide some formal education to ensure there is an appreciation and exposure to higher level general business matters (in the real world context and not the remote academic sense), such as:

corporate structuring;
the nature, content and import and effect of actual shareholders' agreements;
actual trust structures and trust deeds;
the nature and content of actual wills and their effect;
effecting practical security for debts and the enforcement thereof.

There is at present a degree of exposure in relation to certain of these matters within the ordinary academic course content. However, this is ordinarily far removed from reality and, importantly, lectured by those with little or no direct actual experience in any of these matters.

It is an open question as to how the practical knowledge will be conveyed and who will be able to perform this. Chartered accountants in the profession and in commerce and industry will have to assist if the object of practical exposure is to be achieved.

It will be an easier task for universities to introduce some form of a regulatory compliance module within the formal learning process, to cover the mundane (but not unimportant) matters, such as:
actual registration of taxpayers;
completion of actual IRP5 and PAYE returns;

actual registration for VAT and actual filing of VAT returns electronically;
actual filing of provisional tax returns for individuals, companies and trusts;
actual electronic filing of tax returns for individuals, companies and trusts;
actual lodgement of tax queries and objections (ranging from correction of simple errors to more sophisticated objections);
actual registration of companies electronically (including creation of Memorandum of Incorporation and Rules) filed with the Commission;
actual filing of annual returns electronically (including calculations of Public Interest Scores) with the Commission;
electronic rendition of ordinary statutory changes for a company with the Commission.

Without this gap in the training for prospective chartered accountants being addressed, young chartered accountants are placed in the embarrassing position of not being able to operate at the appropriate high level of business and finance, not having the required level of experience regarding basic corporate compliance matters and lacking a proper understanding to render advice or properly evaluate financial matters at the high level expected and demanded. asa

Prof Harvey Wainer CA(SA) is the Visiting Professor of Accounting at the University of the Witwatersrand and Chairman of the Financial Reporting Investigation Panel of the JSE.