The ever-changing business risk environment just got riskier – are businesses prepared?
According to a global survey*, sub-Saharan Africa has the most widespread fraud problems of any region in the survey. Not only was its overall incidence the biggest in the survey (77% of respondents said that their companies were hit), but it also had the highest regional figures for regulatory or compliance breaches (22%).
Says Tertia Barrett, Head of Sales and Marketing at CQS Technologies Holdings South Africa; “With most companies growing in complexity every year – critical internal policies, processes and reporting requirements need to be put into place as potential pitfalls or discrepancies can quickly magnify into major problems. As such, if we consider that breaches – specifically from a financial statement point of view – is on the rise, solutions that minimise these risks become ever more important.”
While the enactment of the New Companies Act stipulates that far fewer companies are required to carry out formal audits than in the past. Audits are a long-standing practice that provides a systematic and independent examination of data, statements, records and operations which companies use to identify any discrepancies and potential fraud. What’s more, every company is required to prepare important IFRS (International Financial Reporting Standards) compliant financial statements on an annual basis. And for the CFO, the preparation and submission of accurate and professional annual financial statements is a matter of paramount importance – as while in some cases the CFO is not directly involved in the process, they sign off the financial statements making them liable for inaccurate errors or wrongful reporting.
“The price of inaccurate financial statements is getting larger as headline-grabbing fines in both international and local media have clearly demonstrated,” adds Barrett. “Operational transparency has become critical for investors, shareholders and consumers alike – but often the level of detail and compliance standards can be daunting, especially in complex businesses. As such, to improve systems efficiencies and clean audits, technology is paving the way, where these systems are working smarter and faster than ever before – allowing them to work seamlessly with other “best of breed” systems.”
These programmes are designed to automate data gathering, exchange, analyse and provide links between lead schedules and the various statements. The process needs to be guided and assured by a software solution that is faster, more accurate and compliant with regulations – ensuring overall accuracy, transparency and accountability.
Continues Barrett: “CFOs are looking for a solution that not only guarantees reporting accuracy, but supports documentation transparency with built in audit trails to minimise risk. The solution needs to guide them on changing IFRS compliance requirements. Additionally, they seek solutions that will enable them to get it done, accurately, in less than half the time it used to – so they can focus on core business issues. Having the right system in place is key.”
“Regulatory pressure shows no sign of disappearing – and needs to be a prime issue on the agenda – to drive significant growth in compliance activity, which in itself is probably driving increased fraud awareness and detection. Making the decision of when and how to undertake audit and compliance procedures needn’t be a complex process, but it is one that needs to be done. Investing in the right technology can be one of the most critical aspects to do this and for businesses operating in an ever changing risk environment – surely it’s worth it?” concludes Barrett.
*2013/2014 Annual Global Fraud Survey, commissioned by Kroll and carried out by the Economist Intelligence Unit