Global financial reporting agenda set to change – how will South African companies be impacted?

From 2022, the global financial reporting agenda is set to change. This change comes as the global standard-setter, the International Accounting Standards Board (IASB), is embarking on its third agenda consultation. Much like the changes which were brought about by the second agenda consultation, the new global financial reporting agenda may result in a significant impact on how some transactions are accounted for and thereby impacting companies in various ways, writes Bongeka Nodada, SAICA Project Director for Financial Reporting.

Through this third agenda consultation, companies, auditors, regulators, and users of financial statements are provided the opportunity to drive the global financial reporting agenda. Consequently, this could improve financial reporting by companies.

This process is important to South Africa because the Companies Act 71 of 2008 requires some companies to apply the global financial reporting standards, International Financial Reporting Standards (IFRS).

Furthermore, the consultation process enables all the role players in the financial reporting ecosystem to influence the strategic direction and balance of the IASB’s activities, criteria that will be applied to assess which projects should be prioritised and advise the IASB as to which projects should be taken onto the global financial reporting agenda.

Current standard-setting activities entail the following: development of new IFRS standards, maintenance and major amendments to IFRS Standards; maintaining IFRS Standards and supporting their consistent application; developing and maintaining the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs); supporting digital financial reporting by developing and maintaining the IFRS Taxonomy; improving the understandability and accessibility of the Standards; and engaging with stakeholders. The global standard-setter is seeking views to determine how its resources should be allocated among the different activities.

Initial outreach activities conducted prior to the commencement of this agenda consultation identified a myriad of potential financial reporting projects that could be added onto global financial reporting agenda. These potential projects will either serve to address gaps that exist within IFRS Standards or enhance the reporting requirements. No doubt that, much like the major overhaul of the revenue, leases and financial instruments Standards which culminated from the second agenda consultation and which significantly impacted many companies in South Africa, some major projects taken onto the future agenda may have a similar effect on companies locally.

Projects which have been put forward thus far for consideration include accounting for cryptocurrencies, accounting for inventory, going concern disclosures and the accounting basis to apply when entity is no longer a concern, accounting for income taxes, accounting for internally generated intangible assets such as brands, and the statement of cash flows and its relevance for companies such as financial institutions.

Companies, auditors, regulators, and users of financial statements have until 27 September 2021 to provide input that will drive the financial reporting agenda for the five years commencing from 2022.

More information on the third agenda consultation can be obtained from the IFRS Foundation website.

Article published by SAICA | 14 June 2021

SARS makes changes for individual tax filing season as third Covid-19 wave hits South Africa

The South African Revenue Service (SARS) says that it is deeply concerned about the rise of Covid-19 cases in South Africa and that it is taking additional precautionary steps in response to the third wave of infections.

In terms of the Disaster Management Act, the South African Revenue Service (SARS) remains an essential service.

However, the tax collector said that it has always stressed the importance of balancing the continuity of this service with the risk of transmission. As such, it will be closing branches – but services and tax filing will continue.

The key things to note:
  • Tax filing season for individuals will still start on 1 July 2021;
  • Branches will be closed from 1 July 2021, with current plans to reopen on 16 August;
  • Individuals who are able to should do their tax filing through eFiling or the SARS mobile app;
  • Taxpayers who need assistance will receive it telephonically.

“With the rising case numbers and the onset of the third wave peak of the pandemic, we have decided to close our tax branches temporarily for physical visits from Thursday 01 July 2021.

“We are able to do so because the SARS digital platforms, as demonstrated during the peak of the second wave, allows taxpayers to continue to fulfil their obligations online,” it said.

Importantly, SARS said that the temporary closure of the tax branches will not affect the start of the filing season for individuals who traditionally file via eFiling or the SARS MobiApp.

These taxpayers are encouraged to continue doing so digitally, starting from 1 July 2021, it said. However, branch filing will not commence on this date.

“At this stage, we plan to commence physical branch visits on 16 August 2021, but will review this continuously. Taxpayers are advised not to come to a SARS branch. The branches will be closed until an announcement is made confirming the reopening date.”

During the branch closures, taxpayers who require assistance to file online will be assisted telephonically with the support of dedicated SARS staff, it said.

It added that all customs ports of entry will be open for frontline customs operations, but not for face-to-face client engagement other than for clearance and inspection purposes.

“In line with our stated commitment to modernise our systems and make it easy for taxpayers to meet their tax obligations, we continue our commitment to use technology to ensure continued service to taxpayers in a manner that ensures both the safety of our employees as well as taxpayers.”

SARS said that taxpayers can continue to make use of the following:

  • Bookings for virtual appointments may be made via the SARS website by following the link and sending an SMS to 47277 with the word “Booking” and your passport/ID No/Asylum permit No. and a SARS agent will contact you to arrange a booking on your behalf.
  • Taxpayers can use digital platforms by visiting
  • The SARS Contact Centre (0800 00 7277) will continue to service any queries from members of the public.

SARS said it will continue to monitor the evolving Covid-19 pandemic and keep all South African taxpayers informed of any changes to these arrangements.

Article published by Business Tech | 25 June 2021

The laws around overtime and working from home that every South African should know

While many South Africans have taken to remote working with enthusiasm, the question of when to switch off from work is looming large as the next big workplace challenge.

South African law has not yet developed to the extent that some other countries have, say experts at legal firm Bowmans.

The firm pointed to France and the French Labour Code which includes a mandatory obligation for employers with 50 or more employees to negotiate terms that regulate an employee’s ‘right to disconnect’.

It also regulates the use of digital tools, to ensure respect for rest periods and leave, as well as personal and family life.

“In South Africa, employees earning below the threshold set in the Basic Conditions of Employment Act (BCEA) have some protection from the ‘always on’ culture through limits on maximum working hours and overtime.

“However, more senior employees and employees earning above the earnings threshold do not. The gap in legal protections for the two different groups of employees is considerable.”

Below the earnings threshold

The current earnings threshold in the BCEA is R211 596.30 a year.

Subject to limited exceptions, the position of employees who earn less than this or are not in senior positions is relatively straightforward, Bowmans said.

“Employees who work five days a week, for example, may not be permitted to work more than nine hours in a day or more than 45 hours in a week.

“Accordingly, time worked in excess of this amounts to overtime, which can only be required by agreement and is statutorily limited to 10 additional hours in a week per employee.”

Ordinarily, employment policies also require employees to obtain pre-authorisation from their employers before working overtime, Bowmans said.

“Moreover, counting ordinary hours and overtime, such employees cannot be required to work more than 12 hours in a day.

“These employees, again subject to limited exceptions, are also entitled to a daily rest period of 12 hours from the end of work on one day to the start of work on the next, as well as a weekly rest period of 36 hours, which must include a Sunday, unless otherwise agreed.

“This means that any Sunday work must be by agreement.”

For employees who are entitled to overtime in terms of the BCEA, overtime rates are prescribed at 1.5 times the normal wage for time worked more than their ordinary hours or for time worked on Sundays (if employees ordinarily work on a Sunday) and double time on Sundays and public holidays (if employees do not ordinarily work on these days).

However, any work on a public holiday must also be regulated by agreement, Bowmans said.

Above the earnings threshold and senior managerial employees

More senior employees and those earning above the earnings threshold are in a different position as they are excluded from the BCEA provisions regulating maximum working hours and overtime.

These categories of employees may be required to be available after hours, on weekends and public holidays, without any expectation of additional remuneration, Bowmans said.

“This is often incorporated into their employment contracts, adding a further contractual obligation to be available beyond ordinary working hours if the operations of the business require it.

“Failure to comply with an instruction to work after hours may be a breach of the employment contract and could potentially result in disciplinary consequences for the employee.”

This is not to say the working hours of these categories of employees may be open-ended, Bowmans said.

“The BCEA, which cannot be contracted out of, requires employers to regulate the working time of all employees, including senior employees and those earning above the earnings threshold, from the perspective of health and safety and the family responsibilities of employees.

“Taking into account the potential adverse physical and mental health consequences that may arise from an always-on-culture, reasonable boundaries may be required when it comes to working hours of more senior employees or those earning above the earnings threshold.”

Bowmans said that the law does not guide as to what boundaries might be reasonable for the working time of employees in these categories, which largely leaves it to employers to self-regulate, depending on their environments and requirements.

Instead, the firm has outlined a few suggestions for employers to consider in setting working hour boundaries:

  • Set the tone from the top: leaders can demonstrate their own commitment to maximising productivity during ‘ordinary working hours’ by limiting communication with team members to these hours (except when the work is genuinely urgent).
  • Be clear about expectations: employers should clearly and frequently communicate the company’s stance as a productive organisation where work done during ordinary or core hours is the norm. Employers should encourage high productivity and responsiveness during these hours and make it clear that employees should switch off thereafter unless it is necessary to do otherwise.
  • Put processes in place to cater for urgent work and emergencies: each business unit or department should specify how it will deal with urgent after-hours work requests, including who should be contacted and how and what work can be considered urgent work. What is urgent may depend on the nature of the job and the level of seniority of the employee. For example, employees may reasonably, in certain instances, be expected to be contacted telephonically in genuinely urgent cases after hours.
  • Make time management a priority: if certain employees are habitually working overtime or after hours and on weekends, employers should interrogate the underlying reasons.  It may be that employees are working beyond core hours because they are not able to effectively manage their time. Alternatively, additional resources, such as another employee, may be required to handle the workload or there may be capacity issues.
  • Employers could also explore ways to disable push-notifications for emails after hours and on weekends and while on annual leave, allowing employees to switch off for a period and in this way minimising the ‘always on’ culture, which can be detrimental to their mental well-being and have an indirect, detrimental impact on the business of the employer in the long term.

Commentary by Melissa Cogger (senior associate) and Leila de Saude (associate) Bowmans South Africa.

Article published by Business Tech | 18 June 2021

4 major shifts driving the Future of Finance

The threat of a third COVID wave and stricter lockdown rules looms larger every day.

By now, everyone knows the precautions to take to prevent the virus’s spread. For the most part, these precautions are proactive, like wearing masks, sanitising hands, and staying home. But what about the next 12 months? And the next?

No one knows how long COVID will be around for. Overcoming the pandemic depends on individuals and businesses making wise, foresighted decisions to mitigate new waves, which suggests that merely being proactive is no longer enough.

So says Bronwyn Williams, economist and trends analyst at Flux Trends, speaking during a Sage Power Session on the Future of Finance. She adds that we need to start thinking further ahead, especially since some things have fundamentally changed and will never return to any sense of normal.

The more some things change, the more others stay the same

To get a better idea of where the world is headed, it helps to understand the deeper macro trends driving human behaviour, such as a desire to connect with other people and a desire to progress. These drivers will never change, says Bronwyn.

“Maybe going back to the workplace isn’t going to be nine-to-five, in your cubicle, like it was before. But that doesn’t mean that we’re going to stop connecting with each other in person. We’re still going to get together and break bread, it just won’t be as easy or as often as it was at the office.”

She adds that businesses need to shift their thinking and approaches when it comes to meeting humans’ need for connection and belonging, and starting with these four areas can have a massive impact.

Shift 1: From on-demand to anticipatory business models

People want things when they want them – not “sometime before 5 pm”. The lesson for businesses, says Bronwyn, is quite simple.

“It means that you have to meet your clients, suppliers, or whoever you’re dealing with in your supply chain at their point in need, at that point in time, rather than expecting people to come and find you or ask you for information.”

That’s right. Just as businesses were getting used to the idea of instant gratification, the on-demand economy comes along and demands even more. Now, business must move away from just-in-time operating models to anticipatory forms of service, where science, technology, and humanity combine.

Bronwyn uses the example of WumDrop, a last-mile, on-demand delivery and driver crowdsourcing service that lets users track their deliveries in real-time. It anticipates where you’ll be, and the driver meets you there. This service is made possible by WumDrop’s automation and optimisation software and is an example of how technology can connect people in exciting ways.

For the finance function to offer this level of service, it must shift away from retrospective data and start dealing with real-time data, says Bronwyn. Sage Intacct allows financial decision-makers to pre-empt and avoid mistakes and not just course-correct when things have already gone wrong.

Shift 2: From sustainability as an afterthought to a deal-breaker

COVID put sustainability in the spotlight. At the same time that the pandemic was spreading, so too were Australia’s wildfires and, for the first time, the United Nations recognised climate refugees coming out of that country.

When we talk about sustainability, says Bronwyn, it’s usually about reducing waste, consuming less, and ensuring we don’t overshoot our natural resource endowments. But that’s just one component; the other, she says, is about social sustainability.

“Imagine a doughnut with its two concentric rings,” she says, referencing Oxford economist Kate Raworth’s theory of doughnut economics. One ring represents a social foundation to ensure that everyone has access to life’s essentials. The other ring represents an ecological ceiling to ensure these needs are met within the planet’s means. Between these boundaries is a doughnut-shaped space that is both ecologically safe and socially just: a space in which humanity can thrive.

“Businesses are starting to realise that they can only thrive in a society that’s also thriving. More and more businesses are tying executive pay packages to sustainability targets. Environmental, social, and corporate governance (ESG) type business models and investment structures are gaining prominence. Companies refuse to work with organisations that don’t behave sustainably. Some banks won’t finance businesses they don’t deem to be operating sustainably. This is the biggest long-term shift we’re seeing, and there’s pressure to remain within that proverbial doughnut.”

Shift 3: From siloes to hyper-connections

The CFO’s role has evolved dramatically over the past year. No longer just the person who signs the cheques, senior financial decision-makers must embrace macro-level trends within their roles, so that they and their organisations are not swept away by change.

“If CFOs want to be proactive against change; if they want to anticipate opportunities and be forewarned against emerging threats; they must start looking outside of their individual and organisational siloes,” says Bronwyn.

This can be a challenge in enterprises that are set up for efficiencies in achieving a particular goal, she notes. And since organisations naturally silo, and humans automatically form cliques with people they get along with, breaking down siloes is easier said than done.

The consequence, however, is that businesses lose resiliency and the ability to spot emerging threats. But they can guard against the formation of siloes by connecting more nodes within and outside the organisation.

“Nodes are important from an organisational theory perspective. The more nodes, or connections, that you have across departments and at all levels of the organisation, the more resilient your network becomes. Every person, every node within your network, has a different perspective and sees the world in a slightly different way. That diversity is priceless,” says Bronwyn.

When it comes to recruitment, she advises that businesses aim for ‘3D diversity’.

“3D diversity goes beyond demographic scorecards and extends to hiring people with different viewpoints, experience, and backgrounds. You can have a demographically diverse team, but if they all studied the same degree at the same university, you’re not going to get that flow of innovation and ideas that you’re aiming for. You’re not going to spot emerging opportunities and threats as much as a team that has a more hybrid diversity.”

The flow of creative ideas depends on these connections, and organisations should focus on developing communication, leadership, and selling skills.

Shift 4: From fearing tech will replace us to embracing it to make us better

Webinar attendees were polled on the biggest challenges preventing them from embracing the Future of Finance. The majority (41%) selected “Identifying and selecting the best-fit technology for my business”.

Technology allows us to operate more efficiently by automating anything that slows us down or is seen as a cost centre in the business, says Bronwyn. And while she acknowledges that technology will always automate away tasks and that certain functions and jobs will disappear, it can’t automate away work entirely or our place as human beings in society.

“We might not have jobs as we know them today, but there is always space for people to add value through creativity, especially in terms of spotting the new. You cannot program the new or the next. Someone has to come up with the new service, opportunity, or idea; you can only automate what has gone before, which is why people are essential in an organisation that’s trying to build foresightedness.”

As team leaders, CFOs should work hard to remove any tasks that can be automated from their roles. When you’re not bogged down by the details, you get a bird’s eye view of what’s going on in your business and your industry. The further you progress within an organisation, the more you should be scanning the horizon for threats, blindspots, and opportunities.

“I always advise businesses to use technology to get rid of their pain-points – stuff you hate doing, the nonsense, the annoying work. There are indications that this wave of automation will displace and change the nature of work rather than replace humans altogether. The added value comes from the humans in your business. With the menial tasks automated, they can focus on the value centre tasks that are not easily automatable.”

She cautions, however, that anything that can be automated can also be replicated and commoditised. Businesses should never automate value-based functions because, once they do, those functions become commodities that anyone can copy.

“It’s hard to look beyond our immediate circumstances; there’s always something urgent that needs to be dealt with. But if we only focus on what’s urgent, we lose sight of the bigger picture, we lose foresight, and we lose the ability to anticipate problems before they happen.


Article published by Sage | 4 June 2021
Author: Tarryn Giebelmann

Consolidated Annual Financial Statements – A case for government?

The appendix to IFRS 10 defines consolidated financial statements as the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity. In simpler terms, a set of consolidated Annual Financial Statements (AFS) portrays the results of the entire group as if it were only one entity with one or more divisions, writes Milton Segal, SAICA Senior Executive: Corporate Reporting.

To this end, any transactions that are deemed intercompany are eliminated upon consolidation. These include intercompany loans, sales, purchase of assets, settlement of debt, etc. The methodology behind this, as noted above, is to allow only external transactions (those outside the group) to be portrayed within the consolidated financial results.

An interesting conversation ensued after the release of the Eskom financial statements during the week of 25 May 2021. The Eskom debt had decreased substantially by over R80 billion as compared to the prior period. There was praise in this regard, and indeed some good work has occurred. However, there were two main reasons why the debt had decreased.

  1. The stronger rand had a favourable impact on its foreign borrowings, creating a foreign exchange gain because of the loan, being a monetary financial instrument being restated to its closing rate.
  2. Eskom had received ‘funding’ in the region of R50 billion from government during the period. It used this funding towards reducing its loans. So the majority of Eskom’s debt reduction was not from cash generated through operations being utilised to offset debt, but rather shifting its debt from one organ of state to another.

Inherently then, some of Eskom’s debt was merely transferred to the taxpayer, as ultimately the revenue that government receives is through collection of taxes, a significant percentage of which comes from the South African taxpayer. The purpose of this is not to single out Eskom, but rather to use it as an example of an SOE.

Essentially then, from a state perspective, the above transaction was merely an ‘intergroup’ transaction if one considered the South African treasury as the ‘parent’ or controlling company. If South Africa was required to prepare a set of consolidated South African accounts, where treasury was the parent, all these interdepartmental, inter-state owned entities (SOEs) and reapportioning of budgets would simply be eliminated to depict the results as if South Africa was one entity as described in the opening paragraph.

If this was to occur, then we would get a very clear picture of how much pure revenue (read tax collections) the state earns versus how much it is expending and would produce a clearer ‘state’ income statement. Perhaps more relevant, and of more use to rating agencies and potential investors, would be the consolidated cash flow statement that would to all intents and purposes reverse the accounting entries and rather focus purely on the actual cash flows for the year, starting with the opening balance, ending with the closing balance and therefore reconciling the opening to closing balance, i.e. the cash movement for the year.

It is the author’s view that that would present a very meaningful representation of how the state’s cash flow was managed, and ‘users’ of these theoretical consolidated annual financial statements, which would include us taxpayers as stakeholders, could begin to unpack the true reality of genuine money collected by the state and paid outside of the state.

It is of course a theoretical discussion, as the various methods of accounting (Grap vs IFRS vs modified cash basis) would require significant adjustments to allow for one overall method of accounting that could be consolidated, and the exercise would be intense and the cost versus benefit analogy may just win the argument.

Yet, at the highest level, the state controls all its SOEs as it has power over the SOEs, it has exposure or rights to the variable returns and the ability to use its power to affect the amount of its (the investors’) return.

Could the theoretical application of IFRS 10 be the tool required to allow for deep analysis of the state’s genuine cash flows and financial performance and position?

With the poor financial position the South African Government finds itself in, with single-digit growth forecasts and spiralling debt, it could very well be the accountants who need to have the courage to lead the recovery process by producing international standards of reporting and analysis to promote strategic decisions and enable greater transparency.


Article published by Accounting Today | 31 May 2021

10 Steps To POPI Act Compliance Checklist

Almost all organisations are faced with the challenge of achieving and maintaining compliance with the Protection of Personal Information Act No. 4 of 2013 (POPI Act). This handy checklist provides a proven step-by-step forty-action-point approach to compliance.

1. Formalise your POPI Act compliance project

  1. Identify your relevant stakeholders
  2. Identify your project sponsor
  3. Identify your project manager
  4. Set high level scope, timescale, budget

2. Appoint an Information Officer

  1. Ensure alignment between your Promotion of Access to Information Act (PAIA) and POPI Information Officer (IO)
  2. Decide whether the CEO can fulfill the IO function or needs a Deputy/Deputies (DIO)
  3. Agree IO/DIO  roles and responsibilities
  4. Complete the formal appointment process

3. Perform a gap analysis versus the POPI Act

  1. Set interim and final targets for compliance with the POPI Act. This does not mean slavishly shooting for 100% regardless of costs and benefits!
  2. Engage with stakeholders in the assessment
  3. Use an evidence-based approach
  4. Use the assessments for ongoing compliance monitoring

4. Analyse what and how Personal Information is processed

  1. Use a broad definition of record types as per the POPI Act (e.g. CCTV, biometric)
  2. Look at various aspects as required by the POPI Act (including consent, purpose, source, sharing, destruction)
  3. Consider user rights and their management
  4. Think broadly in terms of the types of devices where data is stored – and represents a security compromise risk

5. Implement POPI Act compliance policies

  1. Review existing relevant policies
  2. Ensure your policies are reasonable and appropriate
  3. Make sure your policies are enforceable
  4. Design your Privacy Notices for diverse stakeholder groups

6. Review your web sites

  1. Develop your checklist of what to review
  2. Agree the rating scheme to be used
  3. Use the opportunity to implement “best practice” such as Cookie notifications
  4. Develop and implement your remediation plan

7. Update / create your PAIA manual

  1. Confirm your organisation needs a Promotion of Access to Information Act (PAIA) manual and by when
  2. Confirm whether you are a Public or Private Body as per the PAIA
  3. Review the proposed contents of your manual
  4. Ensure your PAIA manual follows the prescribed layout and includes the necessary details

8. Implement POPI compliant PI management processes

  1. Look at the PI lifecycle: including acquisition, processing, retention, and destruction practices
  2. Develop reasonable and appropriate measures to ensure ongoing compliance
  3. These could include self-assessments, health-checks, formal audits
  4. Develop your dashboard for compliance

9. Train stakeholders about their roles in POPI Act compliance

  1. Design training according to their needs
  2. Ensure you treat user education not as a once-off series of activities but part of an ongoing commitment
  3. Leverage diverse training methods, including self-study, online, classroom, audio and video
  4. Look to special needs such as the IO/DIO roles

10. Make POPI Act compliance  “Business-As-Usual”

  1. Recognise that POPI Act compliance will be the “new normal” and work that way
  2. Build compliance into your products, services and processes – adopt “Privacy By Design”
  3. Ensure ongoing monitoring of the data protection / POPI ecosystem – legislation, regulations, opportunities and threats
  4. Build POPI into your everyday operations – make POPI “Business-As-Usual”

Acknowledgement: checklist was developed by Dr Peter Tobin & Mr John Cato.
For more information and practical advice please contact the authors of this checklist who have the knowledge, skills and experience to support you in your journey to compliance with the POPI Act: Dr Peter Tobin or 083-922-3444 Mr John Cato or 083-726-9228 Or visit



EDGE Education is offering a FREE POPIA awareness course for anyone looking to understand this regulation better.
Use this coupon code YSXO5VOVZFPS0 and register to Learn More. Click here to register:

Blockchain is set to transform accounting. Here’s how.

Since Bitcoin first exploded onto the scene towards the end of 2017, blockchain has received quite a bit of attention.

But what are the real implications of blockchain for the accounting profession? While cryptocurrencies may have received most of the coverage and analysis as it relates to blockchain technology, the underlying technology itself may hold more significant potential for the accounting profession. In other words, the cryptocurrency market, platforms, and options may have brought the potential of blockchain to the attention of accountants, but understanding what choices are available is a vital first step toward realising its full potential.

Being able to understand, articulate, and communicate the key components of blockchain technology will allow accountants and CPAs to raise their work products and services to the oft-mentioned level of strategic partner.

What is blockchain and what makes it unique?

Blockchain technology has several qualities that set it apart from other market solutions, especially those using centralised ledger technology. At the core of the blockchain, ideally, are immutability, verifiability, instantaneous transmission of information, and the anonymity that can be granted depending on the organisation in question.

On top of these characteristics are specific use cases and implementation steps that are already differentiating blockchain from existing market options.

The following three implications and insights are not only exciting from a forward-looking perspective but, in fact, are already being implemented in the marketplace.

  1. First, and perhaps most importantly, is to understand that blockchain is not an accounting system, finance system, or bookkeeping platform. Any information can be batched and uploaded for approval by blockchain members, which take the form of computers or servers that have downloaded and installed the appropriate software. Blockchain platforms are cloud-based networks that allow people and groups to share, verify, and communicate information.
  2. Second, the actual approval process by which information blocks are added to previous blocks to form the blockchain can be customised depending on the needs of the organisations in question. That said, there are several options available for organisations and networks, including the Proof of Work methodology utilised by the most well-known blockchain platform that underpins Bitcoin.
  3. Third, and essential for the conversation as it relates to accounting and other financial services professionals, is that just because different organisations are part of the same blockchain network does not mean that all data is available for review by all members. Practically speaking, this means that if your firm has 20 clients as part of the blockchain network, you may be able to see different classes of information, but the 20 different clients do not have to have access to each other’s data. This differentiation, between what data is available in general, and what information is available for members to review, report, and analyse, leads to the next conversation that every accounting professional should be having.

Blockchain as a technology is often spoken about, especially in practitioner publications and conversations, as if it was just one option, tool, or application. This may make for simpler conversation and debate, but it demonstrates an imperfect understanding of how blockchain technology actually works.

Specifically, there are two broad categories that should form the basis for any comprehensive blockchain discussion: public blockchains and private blockchains.

Practical blockchain examples

So, what can blockchain do for you? What impact will it have on your practice? And how will it change the face of your profession?

With regard to accounting-specific software, there are three primary areas where blockchain will have the greatest impact.

  • The future of accounting is continuous

As it becomes more widely available (and secure), accountants will have access to – and be able to use – a larger amount of data, including financial and operational information. As it stands, organisations produce information in volumes that are practically inconceivable, but most accounting methods still rely on periodic examination and analysis. As information is secured, encrypted, and transmitted to network members, accounting professionals can provide real-time advice and guidance.

  • The way we audit will change

There will always be a need, and market expectation, for human oversight and review of automated processes. It is important to note that even as accounting becomes more automated and continuous in nature, periodic review and analysis of automated results will always be necessary. Even with this human oversight and occasional intervention, large chunks of the audit process will become significantly automated, augmented, or replaced entirely. Market evidence of these changes are already evident at larger firms, and all indications point to continued technology integration going forward.

  • New lines of service will become available

This is the most significant benefit that blockchain will provide to our profession. Increased access to your clients’ data and more efficient audits will pave the way for higher-value and more intelligent advice. This is where blockchain will help drive the change in the profession and enable you to provide true value to your clients.

Although blockchain may seem like a difficult-to-understand concept, it also presents an opportunity for CPAs and accounting professionals to embrace an innovative and disruptive technology.

The accounting profession will undoubtedly be impacted by changes in the corporate sector, particularly with regards to blockchain. Now that you have a better understanding of what blockchain is, you can concentrate on the three ways it will transform the profession and be ready for the changes ahead.


Article published by Sage | 21 June 2021
Author: Mongezi Lupindo

How accountants can help businesses through tough times

The dire need for frontline expertise from accountants to help businesses survive is critical, especially with companies having seen their cash reserves depleted over the past year. Most government support programmes have dried up, underscored with internal challenges.

According to Stats SA, the 2019 financial year saw the formal business sector generate a total turnover of R10.5 trillion, of which small businesses contributed R2.3 trillion. However, COVID-19 has placed many companies in distress, with many customers’ needs shifting, a surge in virtual collaboration, and the pandemic exposing weaknesses in processes and practices.

But how can an accounting practice offer support to its customers through this time of uncertainty?

Let’s consider some of the ways to help:

1. Review the business’ financial status

This could be an opportune time to sit with your customers and review their financial health. Look at their revenues, profits, and cash flows, and try to identify the trends observed at different points in the pandemic. Compare the numbers to previous years.

Review what happens to their sales, services rendered at various stages of lockdown, and how this impacts their ability to pay suppliers and debts?

2. Help customers with a recovery plan

Having reviewed your customers’ financial health, you could step in with some practical advice. Discuss where they can access finance to keep afloat if they have a gap in their working capital requirements. Help them identify areas where they could cut costs to free up cash flow.

Also, be ready to support customers who need funding in making grant or loan applications. You may need to provide key financial reports for them, for example.

3. Talk about the medium- to long-term vision

Most of us feel that the pandemic has changed our world for good, but we are not entirely sure which changes will be permanent or which will dissipate.

You can help customers analyse how trends such as providing online sales have affected their business and whether they can move permanently to more remote work to reduce operating costs.

For some industries such as home food deliveries, e-commerce and IT, the pandemic may have boosted rather than harmed their business. Here, accountants can help business owners review whether they have maximised the opportunities.

4. Communicate regularly

When the hard lockdown hit, everyone rallied together to share information and pitch in to keep their business, industry and economy going. At this stage, however, everyone is experiencing some pandemic fatigue. Yet the crisis isn’t behind us and many customers will appreciate it if you keep in touch with them. Some of the conversations you have could be more emotional than usual, but the need for pragmatic financial advice remains.

Supporting your customers

The need for a trusted adviser has never been more relevant than it is today. As your customers seek guidance during the continued crisis, offering support to help, their businesses keep moving is vital. Going the extra mile, you can help customers get through these strange times and position yourself as a trusted business adviser for the longer term.

Article published by Sage | 21 May2021
Author: Peterjohn Bishop

AI Bookkeeping: The future of accounting for business

Artificial intelligence is rapidly becoming a part of more businesses’ daily operations, with AI chatbots and product recommendation engines already in widespread use.

According to a study by Big Four firm PwC, 72% of business decision-makers say implementing AI lets their employees focus on more meaningful and creative work.

Major accounting firms have taken note, recognizing the potential of AI for the business accounting industry and pledging to invest billions of dollars in adopting and developing new AI and data analytics technologies.

The use of AI accounting automation isn’t limited to global enterprises: Some modern firms offer AI bookkeeping and accounting services that benefit businesses of all sizes.

So, what does the growth of AI mean for the future of businesses’ finances? How will the widespread adoption of AI transform the role of the finance professional for the better?

Faster processes and improved accuracy

One of the core tasks of traditional bookkeeping and accounting is manual data entry, which, when done by humans, is slow and prone to mistakes. Leveraging AI enables computers to complete tasks and make simple decisions with greater speed and accuracy than humans.

Within the accounting world today, AI is most commonly used to complete repetitive tasks, such as recording data, sorting transactions, reconciling accounts, inputting and matching data from scanned receipts and invoices to transactions, comparing employee expense reports against company policy, and tracking price changes from vendors and subscriptions.

With minimal human oversight, AI can complete these tasks with greater efficiency and accuracy, accelerating access to accurate data used to inform business decisions.

Finance professionals can take on a more proactive, strategic role in your business when manual data entry tasks are performed by AI. Your finance team will have more time to spend analyzing financial data, and building and updating financial models, and have a better line of vision to make proactive recommendations related to your business’ bottom line.

More timely reporting, and advanced financial insights

Traditionally, financial statements are delivered a few weeks after a month closes because of the time it takes to enter data, reconcile bank statements, and prepare the accounting records to create financial statements. Using AI considerably reduces the amount of time finance professionals need to perform the month-end close activities, in turn allowing them to finalize and deliver monthly financial statements in a more timely manner.

When used in conjunction with machine learning and natural language processing technologies, AI can even provide next-level insights into a business’s financial data automatically. The software can interpret the data and help explain the “how” behind the “what” so finance professionals and business leaders can proactively address potential issues or opportunities at a much faster clip.

Instant access to data and real-time financial insights could impact a business’ sales negotiations, hiring decisions, expansion plans, fundraising efforts, vendor partnerships, infrastructure investment strategy and so much more.

Encourages business growth

Using AI within your financial ecosystem unlocks access to more accurate and up-to-date information. But a secondary effect of AI is that it encourages business growth. With real-time access to accurate financial data, a business can move from reactive to responsive.

Instead of making changes at the end of the month, the end of the quarter, or end of the year, businesses can adjust at the moment. Using AI changes the way a business is run. The technology still needs human oversight and financially savvy team members to make high-level strategic decisions about finances. But you can make better decisions faster.

AI technology and the data it provides is becoming a cornerstone of how modern businesses operate.

And by creating a more efficient and strategic finance team and improving their access to data, AI also helps them gain the ability to more closely manage and control money. With that level of transparency and efficiency, businesses can cut costs where they’re inflated and save money. Estimates show that implementing AI within an accounting department can reduce costs by 80%.

The future of AI bookkeeping

While AI tools have become widely accepted in customer service and marketing, their application within finance and accounting is still new, but growing quickly. By some estimates, the AI finance software market will grow to $10 billion in the next few years. This expectation and customer demand is driving innovation and development to improve the technology and apply it to more and more complex tasks.

While some fear the AI technology and worry it will eliminate jobs, it can actually do the opposite. AI completes rote tasks and lets the humans get back to what they’re good at: strategic thinking, creativity and planning. Businesses will always need the critical decision-making capabilities of accountants and bookkeepers, whether they’re using AI technology or not. With strategic implementation, AI can benefit a company in any number of ways.

When you choose to implement AI technology within your finance department, you must do so with intention. AI-powered platforms are there to automate repetitive tasks, not solve big-picture problems. And it goes without saying that leveraging AI to manage elements of a business’ finances can pose risks if it is implemented incorrectly; it’s important to consider how your human finance professionals will work alongside AI to properly manage and maximize efficiency of both ends of the finance management spectrum.

New technology can be intimidating, but when it comes to AI in finance, the benefits far outweigh the costs. When correctly adopted, AI can benefit your finance team and entire company by saving you money, increasing efficiency, and providing access to real-time financial data.

Article published by Accounting Today | 4 June 2021
Author: Swapnil Shinde