The past, the present and the future of the
South African accounting profession
Marietjie Vercueil
Director: Altimax Training Academy (Pty) Ltd
Approximately fifteen years ago, during the late nineteen eighties and early nineties, only a few
individuals were recognised by the South African accounting profession. These individuals were all
Chartered Accountants (CAs) having completed articles at an auditing firm. Those who had studied
for a degree in Accounting, and had served articles, but had not completed the Qualifying
Examination had no professional institute to belong to. The same applied to individuals who
completed a period of practical experience with an organisation other than an auditing firm. As
such individuals still held tremendous value for the country’s business and financial sector, a large
number of these “homeless accountants” registered as Commercial and Financial Accountants
(CFAs), and went on to set up their own practices. These individuals were allowed to perform all
the functions of their CA colleagues, with the exception of the attest function for companies.
A further characteristic of the South African accounting profession at that time was its domination
by white males. Several factors rendered the accounting profession inaccessible to individuals of
colour. These stumbling blocks had already been highlighted by Dr Hennie van Greuning in his
doctoral thesis. Van Greuning’s endeavours in this area led to the formation of the Association of
Black Accountants in South Africa (ABASA). Van Greuning was at that time seen as “ahead of his
time” and “a prophet without honour in his own country”. The accounting profession now realises
that Van Greuning’s predictions have largely come about as he suggested they would.
The South African accounting profession could not remain unchanged by the 1994 elections and
the birth of real democracy in South Africa. Affirmative action followed as a result of a general
reassessment of the business and professional landscape in South Africa. The accounting
profession also had to re-look at their qualifications, and in response to the shocking situation,
undertook desperately needed action. A host of interventions were implemented to address the
urgent need for Black chartered accountants.
One of the South African Institute of Chartered Accountants’ (SAICA) major interventions that
succeeded, was the implementation of the Training Outside Public Practice (TOPP) program. This
was an alternative to articles of clerkship, an avenue where CAs could serve their practical training
in a corporate environment - a concept that some CAs found hard to swallow. Questions were
asked and eyebrows raised. “How can you train a CA other than in an auditing firm?” This new
program was implemented by some of the country’s leading corporate enterprises, including Anglo
American, Sappi, De Beers and the major banks.
Together with corporate articles came the now well-known pyramid of the profession. The
accounting profession was expanded to include two further tiers: Associate General Accountant
(AGA) and Associate Accounting Technician (AAT). The AGA and AAT levels were promoted as
well qualified support staff for the CA function within the enterprise. At that time it was stated that
these tiers within the South African accounting profession would be developed into proper
professional qualifications. That means that the accounting profession was to be developed into a
pyramid with the AAT function (bookkeeping function) being the most sizable, followed by the AGA
function (accountant), and lastly by the most specialised part of the profession, the CA function.
The following diagram illustrates this objective.
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This was indeed a very exciting development for the South African accounting profession. For the
first time the profession would have served the needs of businesses by working towards a
qualification and membership structure in line with the theories of famous management theorists.
Henry Mintzberg, for example suggested that any organisation could be analysed into five
components, according to how they relate to the work of the organisation and how they prefer to
co-ordinate.
The following three elements of Mintzberg’s model are of relevance to this discussion:
•
The strategic apex ensures that the organisation follows its mission and manages the
organisation’s relationship with its environment;
•
The operating core is directly involved in the process of obtaining outputs and converting
them to inputs; and
•
The middle line converts the desires of the strategic apex into the work done by the operating
core.
Applying Mintzberg’s model to the South African accounting profession and to a typical finance
function in an organisation, the pyramid development would have lead to:
•
The first tier qualification, CA, being able to fulfil the strategic apex role;
•
The second tier, AGA, being able to fulfil the role of middle management; and
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•
The third tier, AAT, acting as the operating core.
Indeed, the pyramid development would have ensured a well-balanced supply of qualified
individuals to the various accounting and finance functions in South African organisations. The
pyramid development would also have ensured that those individuals with an Accounting degree
and completed articles, but not having written the Qualifying Examination, were able to obtain a
professional qualification and a place in the organisational structure.
Several years later, however, so little progress has been made to develop the pyramid structure of
the South African accounting profession that the pyramid is actually upside down!
This diagram suggests that instead of the AAT level (operating core) being the most sizeable level,
followed by the AGA level (middle line) and then the smallest, CA level (strategic apex), it is exactly
the other way around!
The South African accounting profession still has to realise that the biggest need is not at the top of
the pyramid, but in the middle and at the base. In the author’s opinion, there is far too much
emphasis on increasing CA numbers, while the profession needs well trained support staff and
middle management who can perform accounting functions and assist the CA to do the job he/she
is qualified to do.
The need is in the “back office” where bank reconciliations, creditors and debtor reconciliations,
costings, variance analyses and tax returns are performed. There is a need for individuals who are
competent to do general accounting work accurately and with pride. It is also imperative that they
receive recognition for their prior learning and for the many years they have done an excellent job.
The author is further of the opinion that equity initiatives in the South African accounting profession
should, as a matter of priority, be focused on developing the lower tiers of the profession, instead
of focussing almost exclusively on the CA level. The profession may well be able to solve its equity
problems through capacity building within the sector instead of a quick fix at the top.
The South African accounting profession implemented a sudden drive to increase the numbers of
AGAs and AATs in 1998 / 1999. Unfortunately it appears that there was no real commitment from
those who had the power to ensure this objective was achieved. The CA level was and is still today
preached and promoted as the only worthwhile option for anybody who indicates an interest in
Accounting studies. The promotion of the other two qualifications has faded away. It appears as if
South Africa only needs CAs and that the rest are “not an issue”.
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If we have a look at the following SAICA membership numbers, we can understand the upside
down pyramid better.
Year
1998
1999
2000
2001
2002
CAs
17,671
18,344
19,099
19,875
20,903
AGAs
447
1,437
1,750
1,695
1,662
AATs
76
305
345
313
303
The graph below tells the story in no uncertain terms.
Total number of CAs, AGAs and AATs
25,000
Number
20,000
15,000
CA
AGA
AAT
10,000
5,000
1998
1999
2000
2001
2002
Year
The number of CAs is vastly more than that of the AGAs and the AATs, thus causing the upside
down pyramid and totally distorting Mintzberg’s theory of an operating core, middle line and
strategic apex.
Further analysis of the trends, by individual qualification, brought the following to light:
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Total number of CAs
Number
22,000
20,000
CA
18,000
16,000
1998
1999
2000
2001
2002
Year
Number
Total number of AGAs
2,000
1,500
1,000
500
-
AGA
1998
1999
2000
2001
2002
Year
Total number of AATs
Number
400
300
200
AAT
100
1998
1999
2000
2001
2002
Year
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The number of CAs has showed a steady increase over the past 5 years.
On the other hand, while the number of AGAs and AATs initially increased dramatically, little, if any
growth, has taken place in the numbers on an annual basis. The initial growth in numbers can in
both instances be attributed to the “grand fathering” process allowed for by both qualifications.
Both the AGA and AAT numbers have actually shown a decline in the last year! Very little of the
current numbers of AGAs and AATs can, therefore be attributed to a conscious effort by the South
African accounting profession to increase participation and development at these levels. That
emphasises the author’s earlier comment that the accounting profession still to a large extent only
promotes the first tier or top level qualification, namely the CA level.
There is not a quick fix for the shortage of accounting staff, but the South African accounting
profession needs to be much more practical in its approach. There are so many different avenues
apart from the traditional CA qualification.
There are huge skills gaps in the accounting profession at the middle line and operating core
levels. These gaps cannot be filled over night. The profession needs to train aggressively in the
work place. The gaps must be filled with graduates from skills programs that start addressing the
challenges. Universities should continue to educate those who have the ability to become CAs.
The need for support staff, however, has to be addressed in workplace training and through other
interventions.
Another very urgent accounting training need is for the South African government’s accounting
staff to be able to do accrual accounting. There are very large numbers of accounting staff in
desperate need for basic numerical and accounting skills.
There are excellent programs available for support staff. They simply need to be actively marketed
and promoted, starting at a school level. Just a small minority of privileged individuals can go to a
university for four years and become a CA. Yes we do need CAs, but why only promote that
avenue, while the country is also in need of thousands of supporting accounting staff?
The South African accounting profession needs training programs that lead to qualifications such
as the AAT. The AAT is an excellent hands-on program with a methodology called Competency
Based Education and Training (CBET). There are no entry requirements, other than an acceptable
level of numeracy and literacy, and the program combines theory with simulations and practical
work place experience. Trainees can do the program at their own pace and portfolios are
presented to prove their competence.
The South African accounting profession should promote accounting qualifications such as this,
and drive initiatives to set this imbalance right.
The author wishes to emphasise that the South African accounting profession must wake up to the
challenge and address the need for more general accounting and support staff. There is a shortsighted over-emphasis on the highest accounting qualification, causing a loss of perspective as to
where the need for skills really lies. The highly specialised skills of a CA cannot function to their
fullest potential if the accounting support staff are not competent. It is time that the South African
accounting profession takes a step back and looks at the bigger picture, and understands that the
cherry on the top should not be the biggest part of the cake.
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