Taking the guesswork out of the new Companies Act, the South African Institute of Professional Accountants has produced a handbook which provides complete support for accountants as they transition their clients to the legislation. Published by Juta and authored by independent writer and law professor Farouk Cassim, the book is titled ‘The Practitioners Guide to the Companies Act 71 of 2008’.
There is a definite and substantial requirement for guidance. “This goes beyond accountants and includes company directors, company secretaries and anyone dealing with company law. The Companies Act adopts a radically different approach, so a book of this nature is key to help people understand and apply the new concepts,” says Cassim.
In compiling the work, effort was taken to simplify the Act and avoid legal jargon. “The intention is to cut through the complexity and make understanding the principles straightforward and practical,” he notes.
Faith Ngwenya, technical executive at SAIPA explains the necessity for clear and concise understanding of the Act and its implications: “The changes in the Companies Act affect every practicing accountant and their clients; a thorough understanding of the sections affecting their area of business is non-negotiable.”
This is especially crucial, Ngwenya stresses, for those who have to date dealt only with the Close Corporations Act. “It is now mandatory for these accountants to understand the Companies Act, the Amendment to the Act as well as the Companies Regulations.”
The Practitioner’s Guide to the Companies Act 71 of 2008 demystifies the Act, unpacking sections which may appear daunting and presenting it all in an easy-to-read and understand guide.
Noting that the accounting field evolves constantly, with new legislation passed and revised almost annually and new systems frequently introduced, Ngwenya says every Professional Accountant, trainee and financial adviser has a duty to keep abreast of developments to remain relevant to their clients. “Doing so is no mean feat; however, SAIPA has worked to make the transition to one of the biggest changes in recent history as smooth and trouble-free as possible.”
She says that in addition to this reference work, SAIPA has designed workshops that are aimed at empowering members with the requisite skills relating to the Act, such is the depth and breadth of the changes. “The limitation with workshops is that they are held on a specific day. If you missed that seminar, there is no chance of recovering the information. The book encompasses everything presented at the workshops to provide a single source of reference for all Companies Act-related information.”
Briefly, Ngwenya says that the key changes which come with the new Act include a reduction in the differences between the Companies and the Close Corporations Act. Independence between the compiler and the reviewers of financial statements is heightened, and the Act introduces a new form of review. “The Independent Review is extensively covered in the Certificate E-Learning course being launched by SAIPA concurrently with the launch of the book,” she notes. SAIPA’s code of ethics stipulates that; ‘a member should not portray themselves as having expertise or experience that they do not possess.’ In keeping with the code SAIPA requires that any member undertaking an Independent Review must successfully complete the E-Learning course and receive a certificate, as a measure of competence in this new field.
Armed with the right information which they will get from these initiatives, Ngwenya says the new Companies Act presents new opportunities to the accounting profession. “It has the potential of making business administration and governance comparable with the best in the world. Given time and a transitional period, there is great merit which can result from this Act,” she says.
However, Ngwenya stresses that there has to be a paradigm shift in the minds of practitioners. “It is essential to properly prepare for the new world of business in which we find ourselves; embrace it and find the many positives that are enshrined in the Act. But most importantly, as practitioners we need to empower ourselves with knowledge to be ready for the changes.”
