Business Day

Rethinking compliance


Strange times these. Just two years ago, SA had global top rank for auditing standards on the World Economic Forum global competitiv­eness index. A year back, the rank fell to 12th; now we are at 30th.

These ranks are all determined from the forum’s executive opinion survey, administer­ed by Business Leadership SA. The news is bad, but are we to believe that auditing standards collapsed only in the past two years? The stench of corrupt practice has been in the air for years. As Judge Hilary Squires reminded us in the Schabir Shaik case, it takes two to party and a third to sign off on the drinks, for which read the corpus of accountant­s, lawyers and auditors, of which we have a huge surfeit.

The point is this: the local executive opinion survey, as with those in other countries, is highly subjective and very much sentiment driven. Other rankings are based on quantitati­ve measures, for example the spend on research and developmen­t or tax rates. The huge gap between what until now was our leading index, namely auditing, and our dismal ranking for the quality of schooling has placed us as the outlier among the countries in the survey. Amazing: we have the worst schooling but the best auditors.

So now the auditors are up against the wall, with the players yelling at the umpires. Question is, who is actually parading naked? The complicity between player and umpire is the problem, and this across the board, with the spectre of perverse compliance lurking everywhere. Time for a rethink.

Prof Michael Kahn Via e-mail

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