2014 Anti-Bribery and Corruption Survey
ENSafrica recently conducted an extensive anti-bribery and corruption survey among their clients to gauge perceptions regarding corruption threats, as well as the levels of anti-bribery compliance amongst corporates in South Africa.
The results are staggering!
- Nearly 50 per cent of companies feel they are highly exposed to bribery in Africa.
- Close to 20 per cent of companies have experienced an incident of bribery in the past 24 months.
- Third-party business partners pose the greatest source of bribery risk to organisations.
- Less than 50 per cent of organisations surveyed have confidence that their anti-bribery compliance programmes identify and mitigate corruption risk.
- Less than 30 per cent of organisations feel they are well prepared to respond to a regulatory probe.
Having an effective anti-corruption programme is more important for companies today than ever before. Many companies are now recognising the potential reputational harm, economic costs, fines, penalties and potential criminal prosecution which bribery and corruption poses to their business. For years the United States was the only country that rigorously pursued the payment of bribes outside of its territorial boundaries through the Foreign Corrupt Practices Act (FCPA). More recently, the British government has also become a serious anti-bribery compliance enforcement role player through the UK Bribery Act of 2010.
In South Africa, the authorities have also introduced onerous anti-corruption requirements via Regulation 43 of the Companies Act 71 of 2008. Section 34 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 (PCCA) also imposes strict reporting requirements on persons holding positions of authority. It is imperative that companies understand and comply with these requirements.
Big investors in our corner
British billionaire Sir Richard Branson is making a foray into wine-making with the purchase of the Franschhoek wine farm Mont Rochelle Hotel & Mountain Vineyards. Not only does he plan a multi-million-rand revamp of the hotel, he also plans to invest in the vineyard and winery as work with a winemaker of international renown to create high-quality wines.
Branson is the second major foreign investor to see value of late in the food and wine region of Franschhoek in the Western Cape.
Over the past year, Indian billionaire Analjit Singh has bought three adjoining Franschhoek farms – Dieu Donné, Van Ortloff and Klein Dassenberg – for roughly R80 million. He also purchased a substantial stake in Platter’s 2014 winery of the year, Mullineux Family Wines.
The Athena Doctrine
John Gerzema and Michael D’Antonio
New York Times bestseller The Athena Doctrine shows why femininity is the operating system of 21st-century prosperity – how feminine values can solve our toughest problems and build a more prosperous future.
Among 64 000 people surveyed in thirteen nations, two thirds feel the world would be a better place if men thought more like women. This marks a global trend away from the winner-takes-all, masculine approach to getting things done.
Drawing from interviews at innovative organisations in eighteen nations and at Fortune 500 boardrooms, the authors reveal how men and women alike are recognising significant value in traits commonly associated with women, such as nurturing, cooperation, communication, and sharing.
South Africa’s richest people
|Johan Rupert and family||R82,35 billion|
|Nicky Oppenheimer and family||R72,60 billion|
|Christo Wiese||R34,67 billion|
|Patrice Motsepe||R29,26 billion|
|Koos Bekker||R14,09 billion|
|Allan Gray||R14,09 billion|
|Stephen Saad||R14,09 billion|
|Desmond Sacco||R14,09 billion|
Bruce Mackenzie appointed to IFRS Committee
Trustees of the IFRS Foundation has appointed Bruce Mackenzie CA(SA) to the IFRS Interpretations Committee for a three-year term with effect from 1 July 2014.
The Interpretations Committee is the interpretative body of the IFRS Foundation. Its mandate is to review widespread accounting issues that have arisen within the context of current International Financial Reporting Standards (IFRS).
The work of the Interpretations Committee is aimed at reaching consensus on the appropriate accounting treatment and providing authoritative guidance on those issues.
Bruce is a member of the IASB’s SME Implementation Group (SMEIG) and has been providing the comments from the South African viewpoint from the initial stages of developing the IFRS for SMEs through his participation at the APC.
Bruce also represents the South African standard-setter, the Financial Reporting Standards Council, at the IFRS Advisory Council.
SAICA APC’s views on the post-implementation review of the business combinations standard
In its submission on the post-implementation review of the business combinations standard, SAICA APC highlighted the challenges of applying the definition of a business within the different sectors and the usefulness of information provided by fair value measurements. The SAICA APC comment letter on ED 340 – Request for information: post-implementation review – IFRS 3: Business combinations can be downloaded from the SAICA website.
New revenue standard set to impact the revenue line of most companies
The new revenue standard (IFRS 15 Revenue from contracts with customers) that will remove inconsistencies and weaknesses in the previous revenue requirements, improve comparability amongst revenue recognition practices across entities, industries, jurisdictions and capital markets, and simplify the preparation of financial statements by reducing the number of requirements to which entities refer to, has been published. IFRS 15 will supersede IAS 18 Revenue, IAS 11 Construction contracts and other revenue related interpretations when it becomes effective in 2017.
The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following five steps:
- Identify the contract with the customer
- Identify the performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the performance obligations in the contracts, and
- Recognise revenue when (or as) the entity satisfies a performance obligation
IFRS 15 would also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements.
The sectors that will be more affected by the new revenue requirements include construction, telecommunications and entertainment and media.
IFRS 15 is effective for annual periods beginning on or after 1 January 2017. Earlier application is permitted.
IFRS 15 can be downloaded from eIFRS, the IASB press release can be found on the IASB website and the SAICA press release can be found on the SAICA website.
Amendments to IFRSs issued
The IASB has also published the following amendments to IFRSs:
- Clarification of acceptable methods of depreciation and amortisation – Amendments to IAS 16 Property, plant and equipment and IAS 38 Intangible assets and
- Accounting for acquisitions of interests in joint operations – Amendments to IFRS 11 Joint arrangements
The amendments are effective for annual periods beginning on or after 1 January 2016 with early application permitted. Visit eIFRS to access the amendments.
Catching up with white-collar crime
Although fraud and corruption have become endemic in the global economy, the odds are not always stacked in the favour of the criminals. Some encouraging trends indicate that while the battle is far from won, investigators and company watchdogs have some trump cards to play.
One is the increasing effectiveness of compliance mechanisms in exposing fraud, says Glenn Pomerantz, global head of forensics at BDO in New York. “Whistle blowing and accidental discovery are still the most common methods of detecting fraud but we are starting to see more discoveries through compliance processes.”
Some success is being reported at companies which require their employees to sign declarations that they are not participating in or aware of any fraud or corruption. “Employees tend to speak up at that time. We are finding that people who are not themselves committing fraud, but know of someone else doing it and are afraid to sign because of the possible consequences,” he says.
However, it would not be correct to say that compliance measures such as these are exposing white-collar crime on a grand scale. “Compliance is working slowly but it is working. It is an encouraging trend and I would call it somewhat effective,” says Pomerantz, who was in South Africa recently to meet with local BDO forensic team members.
He also notes that fraudsters are often their own worst enemies in that few know when to stop.
STC credits: use it or lose it
Secondary tax on companies (STC) was payable by South African resident companies in respect of dividends declared on/before 31 March 2012. STC was replaced by dividends tax on 1 April 2012 at a rate of 15 per cent on dividends paid by a company. When dividends tax became effective, many companies still held STC credits which arose when the dividends received in a dividend cycle exceeded the dividends paid in that cycle. Until 31 March 2015, companies may still use these credits to effectively reduce dividends tax which would otherwise be payable, if not for the credits available. With only nine months left to utilise any STC credits available, companies must ensure that they plan adequately and adhere to the specific requirements set out in section 64J of the Income Tax Act 58 of 1962 in order to maximise the benefits available in this regard.
Business breakfast with Gill Marcus
On 10 June 2014, SAICA held a well-attended business breakfast in Johannesburg with governor Gill Marcus and SAICA members for a discussion about South Africa’s economic outlook, key monetary policy issues and their impact on the business.
Despite the latest contraction, Gill Marcus said that recession is not likely yet. Even if the economy recorded zero growth in the remaining three quarters of the year, it would still achieve a positive growth of 0.8% percent for the year. She also confirmed that a 25 basis point adjustment is a possibility.
BOOK OF THE MONTH
A life of purpose: Wiseman Nkuhlu
While on Robben Island after being imprisoned by the apartheid government at the age of 19, the young Wiseman Nkuhlu had a dream that he would one day be the chief economist for the Organisation of African Unity (OAU), the forerunner of the African Union. In the society he had been born into, this was quite impossible.
Yet, in this book you’ll read about more than 60 years of remarkable achievements of this inspirational man – specifically becoming the first African chartered accountant.
It tells the story of a man who became one of the most influential South Africans of our time, playing key roles in academia, philanthropy, development, business and politics.
Available from all leading bookstores from mid-June 2014 at the recommended retail price of R260 (VAT included), or directly from KMM Review Publishing on
011 327 5171.