THE SOUTHERN AFRICAN JOURNAL OF ACCOUNTABILITY AND AUDITING RESEARCH Volume 4: 2003   Contents of this issue: Advancing or retreating in the quest to improve public accountability and government auditing? The South African Draft Public Audit Bill Auditing managerial performance Identifying risks in e-commerce payment security for use by the IS auditor Apartheid's influence on the demography of the South African chartered accountancy profession to 2001 Evidence concerning the presence of inherent internal control limitations in the South African government sector Accounting standard-setting in South Africa - past practices and proposed reform: Is public accountability strengthened? ABSTRACTS Advancing or retreating in the quest to improve public accountability and government auditing? The South African Draft Public Audit Bill (JD Gloeck) The Draft Public Audit Bill was developed to reform the public sector audit function and to repeal and amendment existing legislation in this regard. This article examines the effect the proposed legislation has on the public accountability framework and the quest to improve and strengthen the public sector audit function. The examination focuses on the independence of the Auditor-General as required by the South African Constitution. Major areas of concern are identified, relating to the Auditor-General’s provision of other services to institutions where audit work is also performed, involvement of private sector auditors in audits of the Auditor-General, the marginalisation of the Registered Government Auditors profession, and other shortcomings. The article cautions that the powers that necessarily have to be assigned to the Auditor-General in order to achieve the desired independence status need to be carefully controlled by a tight accountability framework, within which the supreme audit institution (Office of the Auditor-General) needs to operate. It shows that the Draft Public Audit Bill does not provide an adequate accountability framework for the Auditor-General and the functions this supreme audit institution performs. The article finally concludes that the Bill contains numerous provisions that will ultimately erode the audit independence concept. [ BACK TO THE TOP ] Auditing managerial performance (B Stobie) Recent legislation in the public sector in South Africa has rekindled the debate on the feasibility of auditors attesting to managerial performance by foisting upon them the responsibility to do that if they are doing assignments for the Auditor-General. This article examines the history of the debate on this issue and considers the matters that ought to influence the profession’s response to this development. A cautious approach is advocated. Identifying risks in e-commerce payment security for use by the IS auditor (P Bezuidenhout & JD Gloeck) The emergence and growth of business conducted through the Internet has given rise to numerous concerns. Both business and customers alike are facing additional risks in this environment. The Information Systems Auditor (IS auditor) plays an important role in contributing towards managements’ efforts to manage the electronic commerce (EC) environment and more specific Internet security and Internet payments. This article investigates the role of the IS auditor in the EC environment and seeks to contribute towards the development of knowledge on the topic by identifying, describing and discussing the major risks associated with EC payment security and Internet payment methods. This is the first of two articles on the IS auditor in the EC environment. The second article uses the risk model developed in this paper to develop a suitable audit approach for the IS auditor in the mentioned environment. Apartheid's influence on the demography of the South African chartered accountancy profession to 2001 (A Boshoff & A Carstens) The South African society was built on systematically enforced racial division. Apartheid laws aimed at separating Whites (the minority) and Blacks (the majority). As a result certain forms and levels of labour were reserved for Whites and separate educational facilities were provided for Blacks. Towards the end of the 20th century legislation removed racial segregation in South Africa. This paper investigates the impact of the aforementioned situation on the demography of the South African chartered accountancy profession to 2001; efforts made by South African professional accountancy bodies and training practices to develop and increase the number of Blacks in the accounting profession and the results thereof; obstacles encountered by Blacks in their advancement in the profession; and future plans and forces to redress the inequalities of the past within the profession. [ BACK TO THE TOP ] Evidence concerning the presence of inherent internal control limitations in the South African government sector (WJJ Botha) An effective internal control system is a fundamental success factor in both the private sector world of business and in the government sector. However, no internal control system is failsafe - internal control deficiencies and/or breakdowns do occur. A major reason for this is the presence of inherent internal control limitations - factors inherent in the concept of internal control and in the way internal controls function that represent risks to the effectiveness of the system. The objective of this paper is to present evidence concerning the presence of inherent internal control limitations in the South African government sector. The research objective is achieved by presenting empirical evidence relating to the completion of an evaluation form by 149 respondents from national government departments and 267 respondents from provincial government departments. The inherent limitations that consistently achieved the highest assessments across all the classes of respondents, i.e. those limitations that are most prevalent in the South African government sector, are: Lack of communication, people mistakes and management override. Conversely, the following limitations are least of a concern in most instances: Complexity, sabotage and game playing. It is imperative for management in the South African government sector to thoroughly understand their internal control systems, including the degree to which recognised inherent internal control limitations are present and the threat that such limitations pose to internal control effectiveness. Accounting standard-setting in South Africa - past practices and proposed reform: Is public accountability strengthened? (JD Gloeck) This article deals with various public accountability issues. It comments on the need for public accountability and briefly describes the concept. It then elaborates on an approach or conceptual framework for improving public accountability, particularly in developing countries. Once this framework has been set, the second part of the article focuses on accounting standards and establishes the relationship between accounting practices and the accounting standard-setting process. It highlights public ownership of a territory which is traditionally claimed by accountants and certain of their private bodies. An examination of the accounting standard-setting process in South Africa reveals deficiencies which impede the process from producing products that advance accountability and that are socially acceptable. The last part comments on reform initiatives as contained in the Proposed Financial Reporting Bill. These initiatives claim to advance and strengthen the accountability framework and to address "serious problems" associated with South Africa’s accounting standard-setting process and present accounting practices. The article concludes that serious reform is necessary to address the shortcomings identified. Contrary to institutional opinion, these reform initiatives will have to be directed not at those labeled to be guilty of creative accounting practices or non-compliance with GAAP, but rather at the accounting standard- setting process and the institutions that have arrogated this process to produce current accounting standards. The reform processes will have to be based on public interest perspectives that incorporate as the clearly stated objective the advancement of public accountability. [ BACK TO THE TOP ]
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