THE SOUTHERN AFRICAN JOURNAL OF ACCOUNTABILITY AND AUDITING RESEARCH Volume 6: 2005   Contents of this issue: Public sector accountability, NEPAD and Africa’s transition: a scorecard approach Decentralized local government in Bangladesh: myth or reality? Regulation of the auditing profession Identifying risks arising from employing wireless local area networks with reference to the King II Report of South Africa Fraud profiles of public sector institutions in South Africa Corporate social and environmental reporting as an effective mechanism to support social accountability in South Africa Audit committees in government departments: an internal audit perspective Audit risk revisited ABSTRACTS Public sector accountability, NEPAD and Africa’s transition: a scorecard approach (M Negash ) The 1990s witnessed a worldwide trend of ‘democratizing’ governance systems. The emergence of ‘new generation’ of African leaders brought both hope and despair. The continental and regional institutions were reconfigured to become instruments of reform. Hence, the New Economic Partnership for Africa’s Development (NEPAD) and the African Peer Review Mechanism (APRM) dominated the debate in Africa. Central to this debate is the concept of accountability. This paper uses a microeconomic (agency) framework and managerial accounting innovations to (better) understand issues of accountability in Africa’s public sector institutions. Noteworthy are the identification of the two-stage agency problem in public sector institutions and the development of a multidimensional scorecard for APRM. Decentralized local government in Bangladesh: myth or reality? (PK Panday) The main objective of this paper is to examine the current status of the local government system of Bangladesh. The main question that was asked whether successive government of Bangladesh used the local government as a mechanism to strengthen their political power base in the name to decentralization or not? From the findings it has been found that the objectives for which the decentralized local government introduced, were not realized and the governments failed to keep their commitment towards grassroots democracy and to devolve power to the people at lower levels to manage their own affairs. It has also found that every successive government of Bangladesh has used the local government bodies to strengthen their own political base in the rural areas, ignoring the principles and importance of decentralization of power to the local level. Decentralization is a word that has been used by different people to mean a good many different things. But what do we see in practice? Experiments with local government that end in chaos and bankruptcy; ‘decentralized’ structures of administration that only act as a more effective tool for centralizing power; regional and district committees in which government officials make decisions while the local representatives sit silent; village councils where local people participate but have no resources to allocate. Regulation of the auditing profession (EM Odendaal & H de Jager) The way in which the auditing profession is regulated is one of the factors adding value to, or undermining the value of the audit function. This article identifies the factors that are important to a regulatory system and evaluates the self-regulating structure of the auditing profession in terms of those factors. It appears that those elements that are important to a regulatory system are not adequately addressed by the auditing profession’s current regulations. The fundamental reason for this can be traced back to the composition and financing of the regulator. Identifying risks arising from employing wireless local area networks with reference to the King II Report of South Africa (B-L Ludik) The emergence of wireless local area networks, as an alternative to wired networks, introduced many exciting prospects and possibilities but also numerous concerns. Because of this management, auditors and information system auditors need to manage the control risk in a wireless environment. The aim of this article is to identify the increased risk of wireless communication (in contrast to wired communication) in a local area network that has been designed to the standards of the Institute of Electrical and Electronics Engineering 802.11. The article is limited to identifying risks that could have a negative impact on the information systems of the entity and the problem is considered from a management perspective. By examining the risks together with the standards governing those risks, the author will investigate how organisations in South Africa can in part comply with the King II report on risk management using COBIT as best practice reference. Fraud profiles of pulic sector institutions in South Africa (JD Gloeck & H de Jager) This paper examines the phenomenon of fraud in South Africa’s public sector, as represented by the various national and provincial departments, local authorities and public entities. A literature study on the subject provides the basis for the questionnaire design used to collect perception based data on fraud related subjects. The research supports the supposition that different fraud profiles exist between various groupings such as the nine provinces in South Africa, institutions ranked by size or according to the various spheres of government, as well as other criteria. The study contributes towards the identification of specific preventative and detective measures in the fight against fraud. It also provides an understanding of the general fraud profile of South Africa’s public sector. Corporate social and environmental reporting as an effective mechanism to support social accountability in South Africa (CG Mitchell, TR Hill & BS Stobie) This paper critically reviews Corporate Social and Environmental Reporting (CSR) as a mechanism for social accountability and change in South Africa. It looks at the principal-agent relationship between society and business, specifically looking at resource use and return to society, identifying areas of critical deficit, and argues that these should be better highlighted by CSR. The paper looks at stakeholder perceptions, and how individuals’ primary orientation as consumers, supports businesses’ modus operandi, and perpetuates continued low levels of CSR and social accountability, despite evidence of stakeholder expectations of greater CSR in South Africa. The paper concludes that only compulsory CSR standards, would result in comprehensive CSR disclosure and contribute to meaningful change. Audit committees in government departments: an internal audit perspective (DP van der Nest) The establishment of audit committees in South African national government departments is not only a legal requirement. These committees must perform certain activities as to be an accountability instrument in the department. Audit committees must perform functions relating to: Risk management; financial reporting oversight; internal control and corporate governance. This study evaluates the performance of audit committees with regard to the abovementioned categories, as assessed by the heads of internal audit of these departments. Audit risk revisited (B van Heerden) Audit risk as currently defined, does not conform to the general concept of risk. It refers to the probabilities of issuing inappropriate opinions without taking the consequences thereof into consideration. Once audit risk has been redefined, a whole new perspective of audit risk comes into play, making the newly formulated model of great significance. [ BACK TO THE TOP ]
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