BAOA keeps close eye on beleaguered KPMG
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The Botswana Accountancy Oversight Authority (BAOA) continues to monitor the South Africa situation involving auditing giant, KPMG, with keen interest following a well-publicised saga involving Gupta Group of Companies.
BAOA Chief Executive Officer (CEO), Duncan Majinda told this publication this week that there are notable occurrences including some key KPMG clients having migrated away from the KPMG client portfolio. “These included the South African Auditor General, in addition there are allegations of a possible loss of 400 jobs,” Majinda said.
“While the problem is localised in South Africa, there is a concern that global network could also be affected. Botswana is concerned that worst-case may reflect KPMG’s going concern status being threatened, potentially with a significant impact upon the country’s auditing landscape as KPMG audits about 70 percent of the commercial banks in Botswana.” Majinda indicated that another concern is that under normal circumstances, standard international practice has established the Mandatory Audit Firm Rotation which is now in progress in South African and other parts of the world.
“Under the circumstances, the KPMG situation could compromise the audit rotation and other aspects across all firms in Botswana, particularly that some decisions are taken at global firm level,” argued Majinda. The investigations in South Africa on the KPMG saga are still ongoing from various investigating authorities including the South African Audit Regulator, and Independent Regulator Board of Auditors (IRBA).
The results are expected in late November to December 2018 according to BAOA supremo. “Pending the outcome of the investigations, the Authorities in Botswana will rely on undertakings by the global firm which has instituted a regime of clinical internal control protocols at firm level,” he said. “These monitoring control ecosystems are aimed at the review strengthening of controls and governance frame works within the firm along the lines of King IV. We believe a set of remedial actions by the global firm have been introduced in the area of the audit quality control.”
PERFORMANCE OF LOCAL AUDITORS
BAOA has a broad mandate as an independent regulator of the accounting and auditing profession in Botswana and oversees among others; the auditors and audits firms; professional bodies like BICA, ACCA, CIMA; financial reporting of public interest entities and their corporate governance and, standards setting of auditing, financial reporting, accounting education and code of ethics. “In essence, the Authority has an across the board and the overall oversight of the entire accountancy profession in the country,” said Majinda.
“Our main interest is audit quality and the compliance with international standards on auditing and that the assurance they give on financial statements is credible and appropriate.” According the BAOA CEO, in summary, 70 percent of the auditors largely meet the required auditing standards while 30 percent require some improvement in their quality.
Majinda noted that auditors and audit firms that do not meet the expected standards lose their practising licenses, indicating that so far, three sole practitioners have lost their practising certificates since the Authority started its reviews in 2013. Interestingly, Majinda observed following an introduction of a new area in the mandate of the institution, regarding corporate governance and financial reporting monitoring, it has merged that private and listed companies, and banks perform significantly better than state-owned enterprises
DIFFERENTIAL PERFORMANCES BETWEEN PRIVATE AND PUBLIC SECTOR
According to Majinda, poorly constituted boards without requisite balance of knowledge, skills and expertise are the main problems of poorly performing entities. “The engine of a car is the most important component of the car without which it cannot operate. By the same token, in an organisation, the Board and executive management is the engine of the entity,” he argued.
“Private and listed companies have very strong boards constituted along best international practice through corporate governance codes like King III and King IV. Parastatals on the other hand are dominated by pre-determined ex-officio appointments so that if there is such a balance, it is by coincidence rather than design.” Majinda said committees such as Remuneration, Nominations, Risk are not common with parastatals.
He however said, other determining factor maybe the fact that these public institutions have different mandates, as some are commercially oriented while others are geared towards providing a public good or service where commercial initiatives are constrained through, for example, controlled prices and levies. “That notwithstanding, good corporate governance can be applied right across industries and sectors, public or private, profit making or non-profit making, to ensure efficiency, effectiveness and economy in doing business,” he insisted.
Majinda stated that entities that fall short of expected standards may end up losing their practising certificate. “For other entities the law provides for heavy penalties and the regulator can also report them to their corresponding regulators and shareholders,” he said. BAOA recently signed a Memorandum of Understanding (MoU) with Public Enterprises Evaluations and Privatisation Agency (PEEPA) and together they will agree a coordinated way of instituting performances monitoring and compliance controls.
Majinda said, as President Mokgweetsi Masisi and Minister of Finance and Economic Development indicated their expectation of BAOA in the inauguration speech and budget speech respectively, it is in the interest of the public public for the state-owned entities to perform to expected standards and achieve the objectives for which they were established. “The other expectation is that of proper accountability so that the true figure of taxes due to government are declared and paid. The expectations are, therefore, legitimate and subject to the availability of resources to implement them, the profession should react accordingly,” he said.
ON HAVING TOO MANY REGULATORS
There is believe that Botswana have too many regulators such that they end up of cancelling each other’s work therefore creating a duplication. Majinda however does not believe this is necessarily true, indicating that the occurrence is bound to happen where an institution is regulated by various regulators. Majind said, an example can be a listed bank with an insurance arm for its loan book and a pension fund.
“Since the bank is listed, the BSE will regulate it to ensure that it complies with listings requirent; the Bank of Botswana will regulate it to ensure compliance with the banks’s prudential requirement; NBFIRA will regulate its insurance and pension business and BAOA will regulate it to ensure compliance with financial reporting, auditing and corporate governance,” he argued. “By the virtue of its presence in all these sectors, this bank could find itself being subject to regulation by four different regulators.”
Majinda contended that while there is a potential albeit limited overlap in the regulators’ mandates, albeit in a limited number of cases, the regulators have signed MoUs to buttress the potential duplication effort.“The allegations of multiple regulation are by those entities that are active in many different sectors and therefore do not want regulation by many regulators, however, it is not possible for one regulator to take care of all these difference business segments.,” he said.
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ENVIRONMENT ISSUES: Masisi asks Virginia for help
President Mokgweetsi Masisi says the issue of sustainable natural resources management has always been an important part of Botswana’s national development agenda.
Masisi was speaking this week on the occasion of a public lecture at Virginia Polytechnic, under theme, “Merging Conservation, Democracy and Sustainable Development in Botswana.”
Botswana, according to Masisi, holds the view that the environment is fragile and as such, must be managed and given the utmost protection to enable the achievement of Sustainable Development Goals (SDGs).
“It is necessary that we engage one another in the interchange of ideas, perspectives, visualizations of social futures, and considerations of possible strategies and courses of action for sustainable development,” said Masisi.
On the other hand, dialogue, in the form of rigorous democratic discourse among stakeholders presents another basis for reconfiguring how people act on their environments, with a view to conserving its resources that “we require to meet our socio-economic development needs on a sustainable basis,” Masisi told attendees at the public lecture.
He said government has a keen interest in understanding the epidemiology and ecology of diseases of both domestic and wild animals. “It is our national interest to forestall the dire consequences of animal diseases on our communities livelihoods.”
President Masisi hoped that both Botswana and Virginia could help each other in curbing contagious diseases of wildlife.
“We believe that Virginia Tech can reasonably share their experiences, research insights and advances in veterinary sciences and medicines, to help us build capacity for knowledge creation and improve efforts of managing and containing contagious diseases of wildlife. The ground is fertile for entering into such a mutually beneficial partnership.”
When explaining environmental issues further, Masisi said efforts of conservation and sustainable development might at times be hampered by the emergence and recurrence of diseases when pathogens mutate and take host of more than one species.
“Water pollution also kills aquatic life, such as fish, which is one of humanity’s much deserved sources of food. In this regard, One Health Approach imposes ecological responsibility upon all of us to care for the environment and the bio-diversity therein.”
He said the production and use of animal vaccines is an important space and tool for conservation, particularly to deal with trans-border animal diseases.
“In Botswana, our 43-year-old national premier pharmaceutical institution called Botswana Vaccine Institute has played its role well. Through its successful production of highly efficacious Foot and Mouth vaccines, the country is able to contain this disease as well as supply vaccines to other countries in the sub-region.:
He has however declared that there is need for more help, saying “We need more capacitation to deal with and contain other types of microbial that affect both animals and human health.”
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Masisi saddened by deaths of elephant attacks
President Mokgweetsi Masisi has expressed a strong worry over elephants killing people in Botswana. When speaking in Virginia this week, Masisi said it is unfortunate that Batswana have paid a price with their own blood through being attacked by elephants.
“Communities also suffer unimaginable economic losses yearly when their crops are eaten by the elephants. In spite of such incidents of human-elephant conflict, our people embrace living together with the animals. They fully understand wildlife conservation and its economic benefits in tourism.”
In 2018, Nthobogang Samokwase’s father was attacked by an elephant when travelling from the fields, where he stayed during the cropping season.
It was reported that the man couldn’t run because of his age. He was found trampled by the elephant and was pronounced dead upon arrival at the hospital.
In the same year, in Maun, a 57-year-old British woman was attacked by an elephant at Boro and died upon arrival at the hospital. The woman was with her Motswana partner, and were walking dogs in the evening.
Last month, a Durban woman named Carly Marshall survived an elephant attack while on holiday in the bush in Botswana. She was stabbed by one of the elephant’s tucks through the chest and was left with bruises. Marshall also suffered several fractured ribs from the ordeal.
President Masisi Botswana has the largest population of African elephants in the world, totaling more than 130 000. “This has been possible due to progressive conservation policies, partnerships with the communities, and investment in wildlife management programmes.”
In order to benefit further from wildlife, Masisi indicated that government has re-introduced controlled hunting in 2019 after a four-year pause. “The re-introduction of hunting was done in an open, transparent and democratic way, giving the communities an opportunity to air their views. The funds from the sale of hunting quota goes towards community development and elephant conservation.”
He stressed that for conservation to succeed, the local people must be involved and derive benefits from the natural resources within their localities.
“There must be open and transparent consultations which involve all sectors of the society. It is against this backdrop that as a country, we lead the continent on merging conservation, democracy and sustainable development.”
Masisi stated that Botswana is open to collaborative opportunities, “particularly with identifiable partners such as Virginia Tech, in other essential areas such as conservation, and the study of the interplay among the ecology of diseases of wild animals and plants, and their effects on human health and socio-economic development.”
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Gov’t commit to injecting more funds in fighting HIV
Minister for State President Kabo Morwaeng says government will continue to make resources available in terms of financial allocations and human capital to ensure that Botswana achieves the ideal of eradicating HIV and AIDS as a public health threat by 2030.
Morwaeng was speaking this morning in Gaborone at the High-Level Advocacy event to accelerate HIV Prevention in Botswana. He said the National AIDS and Health Promotion Agency (NAPHA), in partnership with UNAIDS, UN agencies, the Global Fund and PEPFAR, have started a process of developing transition readiness plan for sustainability of HIV prevention and treatment programmes.
“It is important for us, as a country that has had a fair share of donor support in the response to an epidemic such as HIV and AIDS, to look beyond the period when the level of assistance would have reduced, or ceased, thus calling for domestic financing for all areas which were on donor support.”
Morwaeng said this is important as the such a plan will guarantee that all the gains accrued from the response with donor support will be sustained until the end when “we reach the elimination of HIV and AIDS as a public health threat by 20230,” he said.
“I commit to continue support efforts towards strengthened HIV prevention, accentuating HIV primary prevention and treatment as prevention towards Zero New Infections, Zero Stigma, Discrimination and Zero AIDS related death, to end AIDS in Botswana.”
He reiterated that government commits to tackle legislative, policy and programming challenges that act as barriers to the achievement of the goal of ending AIDS as a public health threat.
In the financial year 2022/2023, a total of 119 Civil Society Organizations, including Faith Based Organizations, were contracted with an amount of P100 million to implement HIV and NCDs prevention activities throughout the country, and the money was drawn from the Consolidated Fund.
Through an upcoming HIV Prevention Symposium, technical stakeholders will use outcomes to develop the Botswana HIV Prevention Acceleration Road Map for 2023-2025.
Morwaeng stated that government will support and ensure that Botswana plays its part achieving the road map. He said there is need to put hands on the deck to ensure that Botswana sustains progress made so far in the fight against HIV and AIDS.
“There are tremendous achievements thus far to, reach and surpass the UNAIDS fast track targets of 95%- 95%- 95% by the year 2025. As reflected by the BAIS preliminary results of 2021, we now stand at 95- 98- 98 against the set targets.”
“These achievements challenge us to now shift our gears and strive to know who are the remaining 5% for those aware of their HIV status, 2% of enrolment on treatment by those aware of their status and 2% of viral suppression by those on treatment.”
Explaining this further, Morwaeng said shift in gears should extend to coming up with robust strategies of determining where these remaining people are as well as how they will be reached with the necessary services.
“These are just some of the many variables that are required to ensure that as a country, we are well positioned to reaching the last mile of our country’s response to the HIV and AIDS pandemic.”