Avoid a Steinhoff moment

The Steinhoff accounting scandal is a cautionary tale for managers everywhere.

Mark Graham, an associate professor at the College of Accounting at the University of Cape Town, believes these types of disasters are less likely to happen if nonfinancial personnel are equipped to understand financial statements.

Do not let jargon and numbers scare ● you. “Finance is the language of business, so if more people understand it, more may expose possible problems, in the same way Eskom’s group executive for legal and compliance, Suzanne Daniels, blew the whistle on the Guptas’ involvement in state capture at the parastatal,” he says;

When you understand something, you ● do not have to rely on someone else to explain it to you and risk having them tell you only the parts that suit them;

Understanding the financials means ● you only can assess the health of an organisation; and

“Red flags” include high levels of debt ● or profits that seem too good to be true. “While debt is an important tool to help a company grow, excessive debt prevents them from being agile, because lenders often place restrictions on loans, locking companies into a path that might no longer be good for them.”