free market economy has been turned on its head over the past few months by the unprecedented intervention by its central banks to prevent a total collapse of leading financial institutions. Those drastic measures, uncomfortably reminiscent of a socialist system, raised serious questions about the state of present-day capitalism, which has always been held to be the antithesis of socialism.
The mess in which financial institutions have been dumped is largely the result of a lack of adequate regulations, which led to the creation of ingenious derivative instruments in the field of sub-prime mortgages.
By contrast, proper rules and regulations are, rightly, given much of the credit for SA withstanding the worldwide credit crisis relatively well. In addition to our banks, which are highly rated internationally for their healthy control measures, the quality and application of accounting standards have always been above suspicion. In fact, SA was one of the first countries to introduce the demanding new International Financial Reporting Standards (IFRS).
Furthermore, the training of chartered accountants in SA has always been impeccable – thanks not only to excellent training at our universities, but also because of the strict standards set by the SA Institute of Chartered Accountants (Saica). The recent reports about Saica threatening to strip the University of the Witwatersrand’s School of Accounting of its accreditation were disturbing as well as reassuring.
Reassuring, because Saica – in properly fulfilling its supervisory role – sends its training committee to universities every three years to make sure all its criteria are being met, and is now taking remedial steps.
Disturbing, because the main reason for Saica’s findings that the training at Wits – and, apparently, at other SA universities – doesn’t meet the required standards is a lack of resources. The department admits it doesn’t have enough staff, especially in the fields of tax, financial management and accounting. In addition, the department’s acting head apparently has no accounting background.
The lack of skills in this country is lamented often, like the refrains of sad ballads about lost opportunities. Though the first lines were undeniably written during the apartheid years, when inadequate education miserably failed large portions of our population, a topsy-turvy approach by the new regime since 1994 has had an equally negative effect.
An obsession with “empowerment” – which often resulted in the artificial promotion of select individuals – meant the essential upliftment of people through proper teaching – true empowerment – was neglected. That shortsighted approach reminds one of the self-destructive slogan of “liberation before education”, which produced a whole generation of uneducated young people.
If the new regime had made quality education a priority from the very beginning in 1994, there would now have been nearly a full generation who had received good education, SA’s skills levels would have been very different and we’d not currently be stuck with a shortage of 22 000 CAs.
One can only hope that the shocking findings at Wits will bring to their senses those in Government responsible for the critically important teaching portfolio so that they will realise that urgent action is required in order to prevent the country, already hopelessly inadequately equipped in fields such as healthcare and crime prevention, from losing its wellearned status gained through the application of high accounting and financial standards.