The national head of audit at AGSA believes new standard will encourage proactive quality management.
This Future of Audit Series interview is proudly brought to you by ACCA.
Bongi Ngoma, national head of audit at the Auditor-General of South Africa (AGSA), says that audit transformation in South Africa owes much to the “Amavulandlela” (trailblazers) of the profession. These include Professor Wiseman Nkuhlu, the first black South African chartered account (CA), Nonkululeko Gobodo, the country’s first black female CA(SA) and, more recently, Tsakani Maluleke, the country’s first female auditor-general – a great transformational step in the national audit office’s more than 110-years history.
On the back of a successful Future of Audit Series in 2021, ACCA has once again partnered with CFO South Africa to bring you a series of interviews that focuses on Audit Transformation, SMPs and important thought leaders in the audit space. Find out how the audit space can be transformed for a better future of audit.
Read all about the 2021 Future of Audit Series here.
She believes that audit transformation encompasses both the tools of audit and the impact audit has on the citizenry. Audit transformation therefore spans from evolving the profession to meeting the complex demands of the present while gearing up to be future-fit for unprecedented uncertainties.
“Accordingly, audit transformation is centred on sharpening the profession to support businesses to be more agile and responsive to modern-day challenges, but most importantly, to be effective, efficient and remain relevant in providing assurance that financial statements of these businesses are reliable,” says Bongi.
“Coupled with this, the concept of audit transformation is primarily focused on how our profession has evolved from the days of ticking with a green pen to the sophisticated audit tools we use in our day-to-day audit work that enable us to render high-quality and efficient services to our clients. The quality of the audit work has evolved from data mining to data analysis and to allowing audit professionals to make better use of their valuable time and digital transformation by extracting insights that will add value to the client.”
Within the AGSA, Bongi says, there’s a consciousness of building public confidence in the citizens of South Africa that their funds have been appropriately used by the government. “Generally, this calls for a greater scrutiny of all funds, requiring us to have a far greater reach when performing our audit procedures,” she says.
“The traditional selection of samples to test in these circumstances will not suffice and, therefore, our office has invested in a number of resources and tools that enable us to better respond to the mandate. To this end, I am pleased with the enhanced technologies and digital tools we have been implementing recently that allow our teams to better analyse the accounting data in our auditees’ records, even in a graphical manner, and focus our attention on risk areas, including fraud. We are building on these data analytics and bringing in information available from other relevant sources to enhance our responsiveness to matters of impact on the lived realities of South African citizens.”
Restoring trust by improving audit quality
In recent history, both globally and locally, the audit industry has suffered various reputational dents. The first step in addressing this, Bongi suggests, is “to regain this public trust by reversing the own goals we have conceded”.
She believes that the International Standard on Quality Management (ISQM) introduced by the International Auditing and Assurance Standards Board (IAASB) is a step in the right direction. The core objective of ISQM is to manage and monitor audit quality more proactively and holistically on a continuous basis, instead of reacting to quality issues after it had occurred. The new approach ensures that deficiencies are identified at an early stage and remediated timeously, thus maintaining quality at the desired level.
“Auditors sell trust, which contributes to investor and public confidence. Trust will only be created if the product is of the right quality, and the new quality management standards will go a long way in achieving that objective,” she adds.
“Another opportunity is knowledge and best practice sharing, as well as conscious, continuous capacity building,” she says. “The AGSA’s participation in structures such as the International Organization of Supreme Audit Institutions (INTOSAI), its continental chapter AFROSAI and local formations such as the South African institute of Chartered Accounts (Saica) support the industry to uphold a high work ethic of strong diligence and improves the capacity of its professionals.”
The role of the AGSA
The AGSA plays an invaluable role in facilitating the development and transformation of the local audit industry. With one of South Africa’s largest audit training programmes that employs more than 1,000 trainee auditors, Bongi says the national audit office is motivated by its commitment to sustain and grow the accounting profession and create diverse and competent leaders with integrity.
“We are extremely proud that for over 20 years, we have invested time and money to transform and professionalise the industry, and that those we have trained and qualified through our training programme go on to build successful careers in both the public and private sectors,” she says.
Following the introduction of the national audit office’s trainee auditor scheme in 1999, 30 chartered accountants CA(SA)s were developed and trained by the AGSA. Twenty years later, the numbers have increased exponentially to more than 2,000 CA(SA)s groomed through the AGSA’s young professional programme.
“Furthermore, through our enterprise and supplier development (ESD) programme, we introduce small audit firms into the mainstream economy. We nurture small audit firms and offer them capacity support to overcome barriers to entry and help them to comply with the stringent requirements of the auditing profession’s regulatory bodies,” Bongi explains.
“Through this initiative, we have facilitated entry into the industry, accelerated growth and ensured the sustainability of black- and female-owned firms, thereby transforming the auditing landscape. This initiative also affords more opportunities to young people striving to become CAs. We are delighted that this developmental project has started to bear the transformational fruits for which we set it up.”
The programme has grown quickly, from incubating two small firms in 2015/2016 to 27 firms in 2018/2019, with representation across all nine provinces. “In the 2018-19 financial year, the AGSA offered these 27 firms audit contracts worth R77 million – creating 160 employment opportunities in the process,” says Bongi.
“The programme also aims to turn beneficiaries’ businesses into professional firms. To this effect, we have invested R11.9 million since the pilot programme, R2.08 million of this in 2019 to 2020. The work allocation we provided to our ESD beneficiaries over the course of the programme also led to 12 of them expanding their footprint to other regions and opening 47 offices across the country. Of these 47 offices, 24 are now accredited by Saica to operate as training offices. In 2019-20, 11 firms graduated from the programme, opened new branches and created 81 jobs.”
She has a deep personal understanding for the need for mentoring and nurturing their dreams. “Coming from a humble background, I am intentional when it comes to creating opportunities for those who look up to me,” she says. “My message to the future professionals and young mentees is that they may not have the resources or luxuries around them, but they should have dreams and work hard to realise them.
“Most of us, as big sisters and brothers who have managed to be accomplished to this point in life, are always ready and eager to mentor young people who are yearning to develop themselves, to do even better than our generation. Our country awaits all of us, to contribute to the betterment of the lives of citizens by responding diligently to the generational task of our era.”