Sunday, September 20, 2020

Auditing firms cry foul over the proposed financial reporting bill

The Government is itching to ram through a financial reporting bill before the end of the year with a two-pronged view of widening the tax collection and getting auditors to play according to the role book.

The newly proposed bill will be overseen by a new parastatal to be named the Botswana Accounting Oversight Board that will take powers from the current Botswana Institute of Accountancy.

Auditors in the country who are already overwhelmed by the demands of newly passed Company’s Act are already complaining of the draconian penalties which are proposed under the draft bill.

Under the proposed bill, all auditors will have to ensure that they abide by set standards of practice outlined by the board before expressing their opinion on any financial report or face public humiliation and a possible fine.
But what is nagging the auditors at most is that the country is not well equipped in terms of human resources while at the same time the proposed bill, which is expected to be presented to Parliament by Finance and Development Minister, Baledzi Gaolathe, has onerous demands to ensure that even the small firms do have some quality assurance procedures that are appropriate.

“The board shall enter, in the register of auditors, the name of the registered auditor and such additional relevant information as it may require,” the draft report said, adding that all auditors will be required to renew their practicing certificates every year.

The very intrusive proposed legislation further states that: “The board may review the quality of audits of public interest entity, including the quality assurance procedures in place in the firm’s audit and assurance practices, before registering the name of the audit firm.”

The bill makes it clear that auditors have to free themselves from conflict of interest otherwise they will face the wrath of the law in an attempt to have proper disclosure in their financial reporting.

“The auditor shall carry out his function in full independence and shall not act in any manner contrary to any code of professional conduct and ethics adopted by the board or any professional accountancy body to govern the accountancy profession or engage in any activity that is likely to impair his professional independence as an auditor, whether independence in appearance or independence of mind.
“Where an auditor or auditor firm considers that it may have a conflict of interest or lack of professional independence in relation to an entity for which such auditor or audit firm has been engaged as an auditor, such auditor or firm shall withdraw from auditing such an entity,” the draft said.

Some auditors cried foul about the proposed bill saying that it seems to be one sidedÔÇöinstead of balancing the issues is more likely bent on punishing the auditing firmÔÇöespecially the small ones.

“The way it sounds is like it is only going to favour the big fourÔÇöinternational accounting and audit firm. What we would like to see is a situation where it would be partly owned by the members and government and agreed on the set standards or wholly owned by the private sector.

“It would be unfair for the big four to use tax-payers’ money to benefit alone out of the proposed changes. Or otherwise, it should be left to the private sector like other professional bodies,” one auditor said.
He asked: Why should we have the proliferation of parastatals?

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Sunday Standard September 20 – 26

Digital copy of Sunday Standard issue of September 20 - 26, 2020.