In the current global landscape, trust between entities is scarce, and this sentiment extends to the dynamic between accounting firms and software vendors. A significant investment in a software vendor by an accounting firm places considerable control in the hands of the vendor, with the firm's operational smoothness, client service, and regulatory compliance hanging in the balance. This situation is further complicated in South Africa, which is experiencing a notable degree of governmental transition.
The governance and management structure of software vendors catering to accounting firms warrant close scrutiny. The question arises whether the local management of these vendors retains adequate control, or if the overarching strategies are dictated by a distant board of directors, possibly detached from the nuanced needs of the local market and businesses. The situation with Caseware, a prominent player in this field, underscores the potential pitfalls. As part of a large international conglomerate, Caseware's top management seemingly lacked alignment with the local user base's interests, leading to significant operational and compliance failures. The debacle with Caseware has exposed the risks of inadequate local oversight and the failure to meet the specific compliance and operational demands within South Africa. Caseware's attempt to retain its clientele for other offerings, such as time management and working papers software, raises questions about the firm's reliability and the prudence of continuing reliance on its products. The market upheaval caused by its earlier failures prompts a reevaluation of whether firms should maintain their engagement with Caseware until June 2025 or seek alternatives sooner. Accounting firms finding themselves in this quandary should consider other independent software vendors. However, caution is advised, as transitioning to a new vendor could lead to similar challenges if not managed with thorough due diligence and an understanding of the vendor's ability to meet specific local requirements. In conclusion, the selection of a software vendor in the accounting sector is a decision of critical strategic importance, necessitating a careful assessment of the vendor's management structure, local operational control, and alignment with the firm's specific needs and compliance obligations. As custodians of a profession that has withstood the test of hundreds of years, accountants have consistently adapted to technological advancements to meet evolving compliance demands. The question now is whether we have truly transformed to fulfill the multifaceted requirements of various regulatory bodies.
In the context of a medium to large tax practice, the traditional separation between company taxation functions, secretarial functions, trust administration functions and other regulatory functions is becoming increasingly impractical, time consuming and not cost effective. The necessity for shared data across these disciplines is now more pronounced than ever, highlighting the need for integrated technological solutions where data can be shared across all the functions. Key Reasons for Integrated Data Sharing: Tax and Secretarial Data Integration: The completion of corporate tax documents, like the ITR14, now necessitates access to extensive shareholder information which can be changing at any time. An integrated data system ensures that this data is readily available and accurate, streamlining the process and mitigating errors. Trust Administration Efficiency: Trust tax returns require detailed information about all participants, entities and individuals involved, necessitating a system where data such as IDs and tax numbers are easily accessible and reliably maintained. Regulatory Compliance: For accountable institutions, the complexity of FICA compliance has increased, necessitating robust data management to meet regulatory standards efficiently. All the data is based on the various disciplines run in the office. Beyond these necessities, an integrated data set enables us to: Produce a BO Organogram for the CIPC: Demonstrating the ownership and control structures required by regulators becomes straightforward with integrated data systems, ensuring compliance with the CIPC’s stringent requirements. What’s more where a shareholder changes it’s a simple matter of re-generating the Organogram. Sky Software offers the most integrated data system in RSA that will allow compliance with all the regulators. 18/10/2023 OUR RESPONSE TO THE CIPCS LETTER RESPONSE TO THE COMMISSIONERS LETTER - WE HAVE NO RESPONSE
Dear Commissioner, Thank you for your prompt response dated 03 October 2023 regarding our concerns on beneficial ownership. We appreciate the CIPC's commitment to the development of a beneficial ownership register and its alignment with the FATF requirements. We understand the importance of this initiative in the fight against money laundering and the financing of terror activities. To this end, we have made a study of beneficial ownership according to FATF as well as all your guidelines. However, our primary concern still remains the clarity and consistency of the guidance provided by the CIPC. While we acknowledge the efforts made by the CIPC in publishing guidance notices, FAQs, and hosting webinars, we believe there is a need for more specific and detailed guidance on certain aspects of the legislation. You mention that the CIPC cannot and should not provide legal advice in terms of beneficial ownership structures. We'd like to draw your attention to Section 188(2) of the Companies Act, where the CIPC is mandated to provide explanatory notices outlining its procedures, or a non-binding opinion on any provision in the act, or apply to court for a declaratory order. Given this mandate, we believe it's within the CIPC's purview to offer clearer guidance on the matter, and we expect you to do so. However, if the current stance persists, we'll be compelled to inform stakeholders that, without definitive guidance, it's unfeasible to accurately produce the securities register, with the inclusion of beneficial owners. Given the potential enforcement implications, we earnestly request clear and actionable answers. If indeed you do not know the answer, there is no reason why you cannot say so. On each and every attempt that we have tried to engage, you have failed to answer, causing a huge amount of wasted time and unhappiness. Prescribed Requirements: You mentioned that the CIPC is working with other regulators to develop the prescribed requirements as provided for in Section 50(3A)(b). Please indicate who the other regulators are so that we can have a better understanding of what is happening. We have no problem in engaging with anyone in order to resolve the impasse. We would appreciate a tentative timeline for when these requirements will be finalized and made available to stakeholders. Companies Act Regulations: While we note the guidance provided in Regulations 30 and 32, we believe there are still ambiguities that need to be addressed, especially in the context of practical implementation as no guidance is given. Information Sharing: We understand that there is no conflict in the Act regarding information sharing. However, we would appreciate further clarity on the conditions under which beneficial ownership information will be shared with law enforcement agencies and other regulatory authorities. Webinars and Guidance: While we value the webinars and guidance provided by the CIPC, we believe there is room for improvement in terms of the depth and specificity of the content. We would also appreciate more interactive sessions where stakeholders can raise questions and receive direct answers and not be fobbed off. CIPC Beneficial Ownership Register: We commend the CIPC's efforts in enhancing the Beneficial Ownership Register. However, we would like to know more about the upcoming enhancements and how they will simplify the filing process for corporate entities. In the light that we are all in the digital age, we would like to know when there will be engagement in updating the securities register and the BO register electronically from secretarial practitioners' systems, making the whole process easier. In conclusion, our primary objective remains to ensure that our stakeholders are well-informed and compliant with the legislation. We believe that with clearer and more detailed guidance from the CIPC, this objective can be achieved more efficiently. We look forward to continued collaboration with the CIPC and hope that our concerns will be addressed in future communications and guidance materials. Best regards, Mark Silberman Mark Silberman B.Acc. C.A.(SA) Director of Accfin Software Dear Commissioner and Others reflected in the email
I hope this email finds you well. I represent a significant number of stakeholders who utilize our company's software in their secretarial departments. Additionally, attendees of our webinars also look to us for guidance. Collectively, this encompasses thousands of companies. As stakeholders' our primary concern is that our regulators might proceed with the methods they've established, and in a span of three years, the FATF could potentially downgrade us. As stakeholders, we believe it's our duty to ensure that such an outcome is averted. There are a number of important issues relating to standard operating procedures which have been presented in the CIPC FAQs and webinars that appear inconsistent with the Companies Act and secretarial practice. It is our intention to address each one over time. In this communication, we will begin with Section 50 (3A) of the Companies Act. In today's environment, it is inconceivable that there exists such a divide between the laws set to be implemented and the actual practice on the ground. The Companies Act commission, along with other regulatory bodies involved, must be held accountable for allowing these inconsistencies to persist. Such discrepancies are costing our nation countless hours, translating to millions of wasted man-hours, which is detrimental to our productivity and efficiency. I am writing to seek clarification on certain aspects of this section, specifically regarding the documentation and disclosure of beneficial owners in the securities register. 1. Section 50 (3A) of the Companies Act Modifications: o We understand that companies not classified as "affected companies" are mandated to document specific details about the natural persons who are the beneficial owners in their securities register. o This documentation should adhere to the prescribed format, and companies are responsible for ensuring timely updates to beneficial ownership. 2. Integration of Beneficial Owners (BOs) into Securities Register: o The process of determining BOs can be intricate, especially when shareholders are entities like other corporations or trusts. This necessitates a comprehensive analysis to identify the ultimate individual beneficial owner. We've observed that deriving BOs from a securities register might require an organizational chart, like an organogram, to delineate the progression from the shareholders listed in the securities register to the BOs. 3. Ambiguity in the Act: o While the securities register is publicly accessible, the original directive from the CIPC FAQs suggests that the Registers of Beneficial Owners are intended solely for governmental regulatory purposes. 4. Filing Formats: o As per the current mandate, are we still required to file a separate BO Register in a data format and a Securities Register in a PDF format? 5. CIPC Webinar Query: o In a recent CIPC webinar, when a question was raised regarding Section 50 (3A) of the Companies Act and its implications, the presenter's response was to "refer to the legislation" without providing a direct answer or clarification. We would appreciate further insight into this specific legislative provision and its interpretation. 6. Request for Policy Statement: o In light of the aforementioned concerns and ambiguities, we kindly request the CIPC to issue a clear and comprehensive policy statement on this matter to provide guidance and clarity for all stakeholders involved. There has been a noticeable tendency for the CIPC not to engage promptly or at all. This approach is contradictory to your mandate, especially concerning the introduction of enforcement compliance penalties. Your prompt response and guidance on this matter would be greatly appreciated. Surely, the CIPC was aware of the impending legislative changes in the Companies Act when formulating their FAQs. In light of this, we kindly urge the CIPC to align the FAQs with the stated policy to ensure consistency and clarity for all stakeholders. Our primary objective is to streamline processes, ensuring they are both efficient and cost- effective, while fully aligning with legislative standards. This communication serves as an indication of our future engagements, and we sincerely hope to remain involved and not be excluded from the ongoing processes. Warm regards, Mark 18/10/2023 RESPONSE TO LETTER FROM CIPCThis is a letter I received from the chief legal officer of the the CIPC. My response to the letter received is Red. I never received a response.
Mark Silberman Accfin Software Companies and Intellectual Property Commission E-mail: mark@accfin.co.za Dear Sir RE: BENEFICIAL OWNERSHIP a member of the dtic group There is the question of what needs to be uploaded – registers and documents and how to deal with the data. If the CIPC obtains the data properly every BO link in RSA other than affected companies will be established. It is my belief that the CIPC has the best chance of getting this right. So why would they not do it correctly DIGITISATION Digital transformation is a necessity. Not a good-to-have, not a nice-to-have, but an imperative if you are going to keep up and win against the criminals. T. Raja Kumar, FATF President (2022-2024) at the FATF Conference on Digitalisation, June 2022. We refer to the abovementioned matter and in particular, your e-mail correspondence dated 11 July 2023 with attached “draft article”, the content of which was noted. The CIPC felt it necessary to respond due to factual inaccuracies within the document provided and to clarify any ambiguities that may exist. The General Laws Amendment Act, 2 of 2022 amended four key pieces of legislation, namely:- • Trust Property Control Act, 1988; • Non-profit Organisations Act, 1997; • Financial Intelligence Centre Act, 2001; and • Companies Act, 2008. Each of these pieces of legislation was amended to provide for beneficial ownership registers to be created and the requisite information submitted in terms of these registers applicable to the type of legal persons. The Regulatory bodies in terms of each of these legislationswere also provided with a mandate to collect beneficial ownership information (applicable to each Regulator) and to enforce compliance with the requirements. It is inconceivable and impractical to expect one Regulator to collect all beneficial ownership information in terms of juristic persons not administered by that Regulator in terms of their main legislation. The preamble of GLAA, 22 of 2022 explains it very clearly in each instance. I am familiar with each of these pieces of legislations, however the purpose of my response is to deal with the CIPC as they have the best chance of succeeding. Certain requirements for beneficial ownership transparency, were set down by the Financial Action Task Force (FATF) in their Mutual Evaluation Report of South Africa, and the beneficial ownership register of each respective Regulator in the area that they are responsible for, was developed and continues to be enhanced to conform to the FATF requirements. Agreed. The Department of Trade, Industry and Competition as well as the CIPC is committed to comply with the requirements in terms of beneficial ownership, in line with the mandate provided for in the legislation to establish and maintain a beneficial ownership register in terms of corporate entities regulated by the CIPC. I agree with this and that’s what my concerns are about as my document deals only with corporate entities. My draft document deals with the situation at the CIPC only as I am most concerned with the situation there. First of all if you say there are factual inaccuracies, however you neglect to say what they are. Please state what the factual inaccuracies are. My document was based on what I heard at your webinar for the first time contrary to what has been said before and contrary to the messaging we have heard. Based on this there is a problem with the CIPC messaging! Nowhere in your documentation prior to the webinar have we heard of the two items I mention below that you mentioned in the webinar presented. I have now seen the new guidance note on the situation where the BO register and data do not need to be filed where it is not required. There is still no official guidance on where it is not necessary to file a BO register and data other than an affected company. To say that the data is contained in the Securities register and is known info defeats the whole purpose of what FATF are trying to do. At this stage I am only concerned as to what should be filed at the CIPC and not other regulators. If the CIPC does this properly then it will have a huge impact on the grey listing requirements of the FATF. There are 2 aspects that must be addressed as follows which you have not addressed;- 1. Loading data which in our view is essential for the CIPC to provide data to regulators which is meaningful and to be cognizant of the links between Beneficial Owners and all other interests of the beneficial owner. An individual BO in one small company may very well be the missing link across all his or her BO interests which will not be seen if the data is not filed in an electronic format. By not doing this the CIPC is missing the most important opportunity. After sending this document I will give an example of what is missing if the data is not loaded in all other non-affected cases. 2. Loading Registers - we see this as two separate registers. The normal securities register which will also include those shareholders who have a beneficial interest in shares and a 2nd register which will include beneficial owners only to be used by regulators only. Registers without building the data wont be helpful at all. We are cognisant of the fact that beneficial ownership declaration structures may be very complex and cross-cutting over various data platforms (CIPC, DOJ, FIC, SARS, etc.) and steps have already been taken to put data-sharing agreements in place. I agree with this, however my issue raised was with trusts and the fact that you did not answer the question which I will restate here. So if one drills down from a company and one of the shareholders is a trust, how do we indicate the beneficial owner. Do we insert the trust name or do we leave it blank so that there is no trail to the actual real BOs. Please answer this. In your “draft article” mention was made of simple company structures and reference during the webinars presented made of “known information”. Known information refers to legal ownership information (shareholders, registered owners of property, etc.) and this is information which can be obtained, is available – in other words known. The whole purpose of beneficial ownership transparency is to assist law enforcement agencies to be able to access information, which up to now in many areas, has not been transparent and available. To clarify further, the legislation and subsequent amended Companies Act Regulations, clearly indicate that companies (that do not fall within the definition of an “affected company”) must include in its securities register “a record of each beneficial owner of the company” and further lists the minimum information of the beneficial owners required. I accept this principle, but you certainly cannot put BOs in the securities register as this is not for public consumption as the CIPC has stated. However, sometimes the true beneficial owners are far removed from what is contained in the securities register and in this case a 2nd BO register only must be uploaded (as I have already mentioned above) and if one looks at the two registers there could be no comparisonbetween them and the only way to get from the Securities register to the BO register is by organogram and this you have to do by drilling down through the entities and trusts. Corporate entities are invited to provide as much information on beneficial owners as possible, but at the same time practicality and best practice must be taken into account. Right now its to early to get to a best practice. Its companies like us and secretarial practices that eventually create the best practice and this is why there needs to be engagement because it is the stakeholders that have to comply. There is no question that stakeholders want to do the right thing and want to know that what they are doing has an effect. In terms of simple beneficial ownership structures, it may be simple to provide data on each beneficial owner through submission on the CIPC BO-Register, whilst such companies are still required to submit a securities register (with the BO information contained therein). The highlighted part above is clearly wrong and contrary to what has been said in the CIPC messaging. However the BO details should be entered into the self-contained BO database, surely? We have been told that the BO data is not to be made available to the public only the regulators so what you are proposing defeats the object of the exercise. Your webinar dealt with Known Information and the fact that you did not have to enter the shareholders in the BO database because they were on the securities register which is uploaded as a PDF file, is totally wrong and does not make sense! With more complicated ownership structures it may not be practical to submit beneficial ownership information on the Register and it makes more sense to source the information / data from the mandatory securities registers and beneficial interest registers, that must be uploaded. I agree this may be the case and to insert the BO information on the securities register which the CIPC will allow the public to look at is wrong and that is why there should be a separate BO register. Nevertheless a BO register without entering the data is in fact useless as how will it be used by other regulators. I do not see the way through converting all the information from a PDF file. I do not agree with the fact that its too complicated as there are principles involved and one can set rules to get to the end result! Another area of concern mentioned was the distribution of percentage of beneficial ownership and the difficulty to indicate same, specifically in terms of Trusts. Again, the legislation is very clear that beneficial ownership does not only include percentage requirements, such as in terms of shareholding, voting interests, etc. but that the exercise of control and/or ability to materially influence the management of a company, is also considered beneficial ownership. As mentioned earlier in this correspondence the system is being continuously enhanced to provide for every possible contingency, including beneficial ownership types which are not measurable in percentages. I agree with some of this, nevertheless trusts who complete the BO registers should have a good idea about percentage interests as they should be cognisant of what is in the trust instrument and agreements and who controls who. Simply by missing this step the CIPC is missing out on what all this is about, because we are told over and over again that the issues are with trusts. Accounting officers and trustees must determine the percentage factor as who else is going to do that. When it comes to voting only the percentage interest counts. The triangulation with the masters data or anyone else’s for that matter is not going to work. The level of faith that stakeholders will have in triangulation is nil. What we are proposing is a starting point for query or audit if the need arises and establishes the link in order to get to the warm bodies. If we don’t do this calculation how will we ever get to the warm body. Its best to put in a percentage even if the percentage is even among beneficiaries so that links can be establish and we reach a warm body. There are many instances in secretarial practice which are not legislated and every one knows what the practice is. This would be a simple matter for the CIPC or the minister to issue a regulation or guidance note. For clarity, we also suggest you have a look at the definition of beneficial owner, indicated in each piece of legislation amended by the GLAA, because the definition differs, depending on which juristic person type it applies to. I have done this and my views have not changed as in the case here I am dealing with the CIPC We, reiterate that the CIPC is continuously enhancing the established CIPC Beneficial Ownership Register to simplify filing of beneficial ownership information for corporate entities, as much as possible. Webinars, guidance notices, user guidelines and articles on the subject of beneficial ownership, are all tools used by the CIPC to assist corporate entities in meeting their compliance objectives in terms of beneficial ownership. The webinar that I attended indicated a totally different view of what we should be doing and I don’t accept that it provides clarity. We trust the above provides some clarity. Definitely not! If the CIPCs views have not changed then I expect a full engagement with all the role- players. Yours’ sincerely Lucinda Steenkamp Senior Legal Advisor: CIPCDeputy Information Officer: PAIA and POPIA 14/07/2023 19/1/2023 MY RESPONSE TO KONSISE BLOGAs a rule we don’t take issue with anyone or a competitor unless they take issue with us. Over the last 15 years we have never had an issue with anyone! So why do I have to waste my time writing an answer to a blog I came across on the Konsise website (who in fact are not competitive to Sky Tax) that I have to object to.
www.konsise.com/business-tax-software-south-africa-2023/ I came across a blog article written by Konsise called the 5 best tax management systems in RSA. I wrote to the company and asked them to remove the article on their website as I consider it disparaging. In fact I find the whole article wrong and factually incorrect. First of all we should not be viewed as a competitor with Konsise as our products are not competitive and are designed for totally different target markets with very different price strategies, Konsise being for the in house tax departments of large corporates and our product being for the tax practitioners accountants market. I would like to state that I am in no way disparaging the product Konsise as I am not in a position to do so. However based on their website and marketing material there are many features they don’t have that the tax professional market products do have. A simple question do they file individual tax returns and trusts or companies and do provisional tax filing? _____________________________________________________________________________ Dear Management of Konsise I note with disdain that you have mentioned our product Sky Tax in an article on your website. https://konsise.com/5-best-business-tax-software-in-south-africa-2022/#11-accfin- If you are going to mention us please ensure that you get your facts right. Your facts are wrong and disparaging. I respectfully request that you remove our name from that article immediately, or better still the whole article as you are not qualified to put out that content. Regards Mark _____________________________________________________________________________ This is the response received from the MD Dear Mark Lovely to hear from you, I hope you are enjoying the December holiday period. Our articles are written using a journalist who accesses publicly available information and customer feedback. Having reconciled, it is nearly identical to information sky tax writes about is own products. You have failed to specify any inaccuracies in the blog post, or what might be disparaging. In fact, the article is generally complimentary of sky tax, we omitted many of the negative customer comments as that isn’t the purpose of such an article. We won’t remove the article but shall correct anything that meets the objective standard of highly inaccurate and/or defamatory statements. Unless you provide greater specificity, I cannot act on such generality. We shall publish many industry related articles and you are always welcome to point out any inaccuracies that may creep in. Warm regards Philip _________________________________________________________________________________ My Response to Philip Tilman to sentence listed below “Our articles are written using a journalist who accesses publicly available information and customer feedback. Having reconciled, it is nearly identical to information sky tax writes about is own products. “ My Response If the above sentence is correct this Konsise response is nonsense! If this was written by a journalist, surely a journalist would make sure they would get their facts right and would be very happy to publish their name with what they have written. The article is full of generalised statements which I doubt a journalist would say. E.g the basic user interface is lacking. We would like to take this up with the journalist concerned to query where they got their information from and which part of our writings they reconciled with. It should be noted that there are many features that are not on our website. It is my view that this was written by a sales person and not a journalist who has no understanding of the market place comparing apples with oranges which is really not possible. What makes this even worse is the fact that the management of Konsise who allowed this article to be published, clearly do not understand the market place. There is no way that Konsise and the products aimed at the professional tax product can be compared, so why compare? Also why include an accounting product like SAGE in a tax review as this is ridiculous. So the reason is that they did this to show that they are the best in tax management where clearly they are not and are not in the market for tax professionals but want to be viewed as the best in this category. “Having reconciled, it is nearly identical to information sky tax writes about is own products.” Note the word “nearly”. So the assumption is that your journalist went through every webinar and marketing video and text to reconcile the article to what Accfin said, I think not! Let me point out that if I did a review of anyone’s product I would have the good manners and ethics and send it to the company concerned first to insure that my facts are correct to make sure I would never get myself into the situation that Konsise has got into. Konsise did not bother to do that! However I would not review anyone’s product because I would never be able to get all the facts. The Sky Software picture Published in the Konsise blog One of the most ridiculous aspects of this review is that Konsise published a picture of a debtors screen from 2014 for a tax product review in 2022. Surely a journalist would know better. Now come on how is this possible in a tax product review! Mistake To be clear Konsise is a product that is geared for corporate groups with a price that is far beyond the other products mentioned in the group and beyond what the professional tax practitioners can pay. Owing to this simple fact Konsise is not suitable at all for accounting firms that are tax practitioners. Mistake Sage is a fantastic accounting system and is not a tax management system at all so why include it in this so called review. Mistake The review fails to mention the fact that Accfin and Greatsoft not only supply Tax Management systems but supply full back-office systems for the whole accounting firm which makes them not comparable to Konsise. Why not mention this? Mistake The Konsise product is not built for tax professionals as it does not have the features of Greatsoft and Accfin. Sentence from MD Philip Tilman Email “You have failed to specify any inaccuracies in the blog post, or what might be disparaging. In fact, the article is generally complimentary of sky tax, we omitted many of the negative customer comments as that isn’t the purpose of such an article.” My Response The article is not complimentary, it is disparaging because of the generalities and the lies and the fact that the mere comparison is wrong. Disclose the negative customer comments you received so that we can verify. Who got the negative customer compliments, your sales person or the journalist. THE CONS IN KONSISE BLOG · Geared towards tax professionals, so Sky Tax is missing some features in-house finance teams would appreciate and expect such as peer reviews and deadline alerts · Basic user interface, lacking some essential features for corporates No free trial MY RESPONSE How does the writer know that there is no peer reviews and alerts. This is factually incorrect. Where did they get this information from! What does the writer mean by Basic User Interface and what are the features lacking. In regard to No free trial our user base and our users speak for themselves and owing to the sophistication of our product unfortunately free trials are not possible. Check out some of our positive user comments on the link below. https://www.accfinsoftware.com/case-studies.html BOTTOM LINE IN THE KONSISE ARTICLE Provides some useful features but lacks some of the features a business needs to properly manage the complexities and volume of corporate tax. MY RESPONSE Rubbish Philip I await your response! Tax Practitioners: Do You Know That You Need A Signed Mandate? - The mandate files can be downloaded from the link below.
https://accfinsoftware.lpages.co/accfin-sky-tax-mandate Introduction In my last tax webinar, 60% of the respondents in a poll advised that there was no signed mandate or engagement between their Tax Practice and their taxpayer clients! Tax Practitioners (TP’s) need to know that there is in fact no longer a choice in this as a properly worded mandate is absolutely essential and a condition of using the SARS e-Filing website, but the majority of TP’s have not even read the terms and conditions. It’s also a question of the TP limiting their risk exposure protecting them not only from SARS, but claims from their clients. Signed Mandate Having a signed mandate is a condition of making use of the e-filing system, either the website or through the software of an independent service provider. The purpose of having a signed mandate is to pass on the risk of tax return production from the TP to the taxpayer. https://www.sarsefiling.co.za/TermsCondtions.aspx The SARS e-filing terms and conditions says in the 2nd paragraph: - “THE RULES AS WELL AS THE TERMS AND CONDITIONS HEREUNDER ARE BINDING AND ENFORCEABLE AGAINST ALL PERSONS THAT ACCESS THE SARS WEBSITE OR ANY PART THEREOF. IF YOU DO NOT AGREE TO THE RULES AND THESE TERMS AND CONDITIONS, YOU MUST LEAVE THE THIS WEBSITE NOW AS FURTHER USE SHALL AUTOMATICALLY BIND YOU.” So, if you make use of the SARS e-filing website or a back-office system that uses the SARS e-filing website the TP is bound by the terms and conditions even if they have not read them. One of the conditions of the SARS e-filing terms and conditions - 5.4 says: “If the e-Filer is a registered Tax Practitioner or a person referred to in section 240(2)(d) of the Act, the e-Filer must obtain a written mandate from the taxpayer, which mandate must be provided to SARS and at a minimum –
What is meant by “must be provided to SARS”? Does this mean that the TP must submit (provided to) to SARS a mandate to cover all the services? This wording is confusing, because if this is the case then SARS should provide a facility for this, but they have not. I think what SARS may be trying to say is that the TP should have a signed mandate in possession which passes the risk of the return submissions back to the taxpayer when the TP files. It appears that this term also applies to a person mentioned in S240 (2)(d) of the TAA. S 240 (2)(d) Every natural person who provides the advice or completes or assists in completing a document solely-- to or in respect of the employer by whom that person is employed on a full-time basis or to or in respect of that employer and connected persons in relation to that employer; or under the direct supervision of a person who is registered as a tax practitioner in terms of subsection (1). The e-Filer referred to in clause 5.4 above who is the TP or a staff member under his or her control, undertakes to carry out the terms of 5.4 as mentioned above– Criminal Offence Now to add to the risk profile of a TP we have a change in tax law – S 234 of the Tax Administration Act. Non-compliance in regard to negligent procedures could be a criminal offence for the taxpayer. E.g., failure to advise SARS of a change in address or a clerical error on a return could result in a criminal record. Even where there is no wilful intent (which is required to prove a criminal act) a taxpayer could land up with a criminal record as now SARS does not have to prove wilful intent, the negligent act allows prosecution. Clearly the constitutionality of this has to be tested. TP’s need to think about this potential change in law and how it will affect the risk profile of their practice. Owing to the complications in tax law there are many issues that arise in tax return production where there is no wilful intent as the complexity of the tax law is beyond most taxpayers. So, imagine being a TP and your client gets arrested or is charged for a tax error which was your fault and you don’t have a signed mandate or engagement letter. The mandate is to protect you and is a method of passing the risk of providing tax services back to your taxpayer client and of course is mandatory in terms of the e-Filing Terms and conditions. The Mandate What must the mandate contain? For brevity the bullet points listed below are a must in a mandate but obviously there could be lot more: - Please be advised that South African Revenue Services (SARS) has now forced us to make use of their E-filing Services and we require your mandate for MY FIRM to register as an E-filer on your behalf. Once this is done the following additional terms and conditions in regard to E-filing shall apply:
We have designed a mandate template, which is used as an educational document and explains every aspect that the TP does for their taxpayer clients as clients don’t actually know what is involved in the complications of tax and do not understand when things go wrong or SARS wants a verification or an audit and what penalties should be paid. All this should be set up in the mandate letter so that there is some understanding by the taxpayer which will protect the TP against claims. A mandate can be set up to last for a couple years, perhaps up to three. Where there are changes in laws that affect the mandate it should be updated as soon as possible. Conclusion TP’s now face enormous risk and without a signed mandate they should not be filing any return and will have difficulty of proving that they have passed the risk of tax return production back to the client. https://accfinsoftware.leadpages.co/accfin-sky-tax-mandate/ The Banks need to play a bigger role where sustainable business have timing differences
I have been in business for some 30 years and I have never ever seen anything like this meltdown happen before, yes, we have had our ups and downs and of course the economy was in decline, but never a meltdown with such force. The steps that the President took was the right thing to do, it’s the only way to avoid the affect that this virus has had on the world. Time will tell if we have dodged the bullet. The problem with the timing of the lock-down is that there are unintended consequences, the most notable being the drying up of cash in the economy, especially for small and medium size because as all business is holding on to their cash resources because of the uncertainty while smaller businesses go to the wall. I direct this article to the banks and I do offer them some guidance if they will be gracious enough to at least take note. Banks have a very important role to play in saving South Africa. Unfortunately, they need to look beyond the bottom line, because if they don’t it will take us 15 to 20 years to come right. The government didn’t give instructions to the banks. First world economies have provided huge amounts of cash for the business world and to people who are going to be affected by this lockdown, unfortunately this will never be the case in our country as there is no money after 10 years of in-built stealing! We have to look at other sources. Already some of the billionaires have put up money and we must applaud them and be grateful. The most import thing is for business to keep jobs as best they can even if there are temporary layoffs. It therefore behoves all businesses to try and keep going if they have a chance of sustainability. So, who is in the position to help business in the formal sector the most! It’s the banks. There has already been a change in regulation of the amounts of assets they need to hold so that they can lend more and I appeal to them that this is their time! Unfortunately, banks manage their clients’ accounts by way of algorithm so it’s not what a senior banker says it’s what the computer says, and many sustainable businesses fail the algorithm test! In the past year’s banks have adopted a much tougher approach on the business world owing to the economy and of course this affected medium-sized and small business detrimentally. There are basically 3 business type situations that I wish to set out other than essential service business which remain open; -
How does the bank make the determination to grant the help needed to bridge the timing difference? They have the big data; the algorithms and they must bring in a team of skills which are surely available to help to make those sustainable businesses that are worth saving survive. This will be extremely beneficial to the future of this country and of course the banks. This does not mean that banks should rescue businesses that are not sustainable and which are held together by the emotions of their proprietors. If there is no hope, the businesses must be liquidated together with some SOE’s as well. There is no point in throwing good money after bad, the lockdown is just making the inevitable happen sooner. 16/3/2020 THE CIPC CHECKLIST PART 1What is all the fuss about? The CIPC changed the requirements of the Compliance checklist on the 6th March 2020 which became compulsory for all companies to complete starting on 1 January 2020.
By: Mark Silberman B.Acc. C.A.(SA) Accfin Software (Pty) Ltd The CIPC in its latest notice has suspended companies who are not audited or whose financials are not independently reviewed from doing the checklist, it appears because of all the complaints. The checklist requires directors to confirm if they have complied with 24 sections of the companies act, by ticking Yes, No or N/A. e.g. Have you complied that with S4? Why are there so many complaints about a form that should take less than 10 minutes. Why has the company secretarial community fussed about the compliance checklist for small companies? Is this because they have not complied with company law provisions or because they think it’s too much work. Don’t professionals want to earn fees? The new companies act has made many things easier and has reduced auditing for smaller companies. It is also more flexible for different types of companies with custom-built Memorandums of Incorporation or MOI’s. Most companies in South Africa don’t need to be audited because they have a low Public Interest Score which is calculated on set criteria contained in the company regulations, mostly based on size. Some companies volunteer to be audited or financiers insist that they are audited. The act has modernised many things and has provisions that try and protect all stakeholders in a company, not only shareholders but employees and creditors. There are also provisions that protect minorities against abuse. It’s not perfect but certainly better than we have had before. Corruption is endemic and has been carried out by everyone, government, big business and of course small business. In order for our country to grow and create jobs, corruption has to be stamped out. I don’t have to tell about the effect of corruption on all citizens, we see it daily in South Africa. Let me be clear, it does not matter what type of company you have, the companies act applies to your company no matter how small or how large. Let’s deal with the situation before we knew about the compliance form checklist. The new 2008 Companies Act which came into being on 1 May 2011, the provisions of which are quite easy to read and easy to understand. Before the compliance checklist, directors should have still understood the companies act and should have made sure that their company was compliant according to the companies act, and if they were not able to, they should have sought the help of their accountants or the accountant’s secretarial practitioners. Good company secretarial practitioners made sure their clients complied. Let’s take this a step further, during this prior period (before 1 January) did accountants not advise their clients accordingly about company law? Did they not advise them about a distribution when one took place? Did they know what a distribution was? Did they not advise them about a share register that they didn’t have and did they not help them fix it? What did they do about directors’ debit loans, did they just leave them because they did not think it was a distribution? What was the position where there was a fundamental transaction and the fact that a small private company could be defined as a regulated company? Did they not know these facts and ignored their compliance responsibilities? It seems that many of them did know about all these things, that is the only explanation that I have for this furore. The point I am making is what is the big deal about doing a check list to test a company’s company law compliance that would take less than 10 minutes, or is it because the accountants and secretarial practitioners did not do their jobs for smaller companies? It can only be a big deal if there was no compliance in the past as no one was checking. The real issue is that the compliance form is just the tip of the iceberg and points to various aspects of company law that no one knows about. For more information, visit: www.accfin.co.za Tel: 0861 ACCFIN (0861 222 346) / +27 11 262 4033 THE CIPC COMPLIANCE CHECKLIST
The new companies act has made many things easier and has reduced auditing for smaller companies. In fact, most companies in South Africa don’t need to be audited. The act has modernised many things and has provisions that try and protect all stakeholders in a company, not only shareholders but employees and creditors of which SARS is one. There are many provisions that protect stakeholders and minorities against abuse. It’s not perfect but certainly better than we have had before. Reading all the articles on SAIBA and Accounting Weekly about the CIPC compliance checklist and the negative comments by various parties and why suddenly this is a huge problem 6 months after the compliance notice was published. Why now? I believe that many of the complainants do not understand the issues involved. First of all, let’s get to the facts in South Africa! Corruption is endemic and has been carried out by everyone, government, big business and of course small business. In order for our country to grow and create jobs corruption has to be stamped out. This article deals with what has arisen with the CIPC Compliance checklist and the negative publicity. In short this is what has been published by various sources which I summarise for convenience: -
It’s true that there is a lack of company law knowledge in the accounting profession. I know this for a fact as I have been teaching company law to company Secretarial Practitioners and Partners in accounting firms for the last 15 years. Directors of companies and small companies know even less. Facts are facts and we need to deal with this lack of knowledge and come to grips with it. THE SITUATION BEFORE THE COMPLIANCE CHECKLIST WAS INTRODUCED Let’s deal with the situation before we knew about the compliance form checklist. The new 2008 Companies Act came into being on 1 May 2011 the provisions of which are quite easy to read, there are courses and there are very good textbooks that tell you what these provisions are. So, before the compliance form, directors should have still understood the companies act and should have made sure that the company was compliant according to the laws. The law is the law and needs to be carried out. If the directors did not know about a compliance issue, they relied on their accountants and the company secretarial practitioners who do the company secretarial transactions anyway. Good company secretarial practitioners made sure their clients complied. So, during this period did accountants not advise their clients accordingly about the law. Did they not advise them about a distribution when one took place? Did they not advise them about a share register that they didn’t have and did they not help them fix it? What did they do about directors’ debit loans, did they just leave them because they did not think it was a distribution? What was the position where there was a fundamental transaction and the fact that the company could be defined as a regulated company? Did they not know these facts and ignore the compliance responsibilities? Many of them did know about all these things. By now you are starting to understand where I going with this! WHATS ACTUALLY CHANGED NOW THAT THERE IS A COMPLIANCE CHECK LIST So, what’s changed now is that we now have to answer a checklist to indicate if we have been doing our jobs and complying with the law since 2011 which we should have been doing anyway. Now suddenly there is over-regulation, interpretation issues and moaning about all kinds of things because accountants or directors responsible did not do their jobs in the first place or did they, and they are now moaning about a form that has to be filed, a form that if they did their jobs properly by making sure company secretarial transaction were taken care of would take 10 minutes or less for most companies. The compliance form is the CIPC’s right to ensure that compliance takes place. Many companies in South Africa if they don’t have a company secretary certainly the bigger ones employ the company secretarial department of the accounting firm to carry out the company secretarial duties and they know if there is compliance or not. We have to do this anyway so why are we complaining about a form that helps us comply, helps the community and helps South Africa. THE ARTCLES TALKS ABOUT SMALLER COMPANIES We are talking about smaller companies which may not be a concern because it won’t cause the economy to go into a decline as it is not systemic. Of course, it will cause decline, one company at a time. If one job is lost because of non-compliance or if a creditor loses money because of non-compliance then there is a problem and it needs to be addressed. Have you noticed that company insolvencies are on the increase? What about a distribution that is missed and the company is liquidated and the directors are sued by a shareholder or creditor, who is to blame? Sorry it can’t be the accountant who compiled the accounts because he did not do a compliance form an he was not even aware of a distribution! The compliance checklist is an opportunity to learn and correct what is wrong and make small business a better place. OVER-REGULATION AND INVESTMENT IN SOUTH AFRICA In the Accounting Week article, it mentioned that “overregulation flies in the face of government’s plan to turn the economy around”. This is absolute nonsense in regard to this matter as this is not over-regulation as this is a check to make sure that we are running our companies compliantly which we should have been doing anyway since 2011. What does this say for the accounting profession if we are complaining about this? The compliance checklist itself should attract more investment into South Africa as investors want to see that their investments are safe and won’t be subjected to abuse by crooked directors. THE CORE OF THE ARGUMENT IS SMALL BUSINESS Let’s get to the core of what the argument is. It looks like bigger companies are going to have to do this checklist anyway and we might get a pass on smaller companies that are not audited. This is wrong as the companies that are not audited are precisely the companies that we need to do the compliance check list for as these companies don’t know any better and don’t know the law and need their accountants to help, but may not be getting any help at all. Let’s take a smaller company as an example, the ones that are going to get a pass on this. Say a small company starting to grow, there are no secretarial transactions and there are no distributions during the course of the year. They keep a share register but there is no movement. In order to comply with most of the questions on the questionnaire the accountant does it in about 5 minutes – what’s the big deal and they even charge for it! Where is this over-regulation? THE QUESTION OF RISK There is a question of risk and the directors are in fact responsible so we need to do what we do in the tax environment and pass the risk back to the directors and this can easily be done by a standard mandate that all the directors sign. In fact, if you do the company secretarial work you should have a mandate signed specifically for the secretarial work which will include the compliance form. Saiba’s principle concern is that it will raise the costs for small businesses. Sure, it will, companies will pay a fee of at least R750 per annum to ensure that they comply and make them safe. CLAIM OF R1,2 BILLION IN FEES TO ACCOUNTANTS There must be a serious question over the amount claimed as a cost to the country. I refer to SARS 2019 statistics that states that expected company tax returns are 991,207 of which 814,151 returns have been assessed. Now we have been told that CC’s out number companies by 8 to 1. This means that there are only 110,135 company returns which includes all size companies. CC’s don’t do the checklist. Let’s say that 80% of these companies are small companies. This means that the compliance checklist only applies to 88,108 companies. Say the fee is R750 per checklist per submission which comes to R82 million charge to the economy. This is nowhere near R1,2 billion. Whatever the fees charged it does create jobs in the profession teaches accountants and directors about company law and improves compliance in the country. SAICA SAYS THE CHECKLIST HAS INTERPRETATION PROBLEMS Let’s say you need to answer the question “did the company comply with Section 4”. Section 4 deals with the solvency and liquidity test which is triggered by distributions of the company. This mean that the filer has to know what the distributions are. They are clearly visible in the act. If one knows the companies act there is no interpretation required. I can deal with many of the other questions on the same basis. The CIPC can improve the checklist by having sub questions, like did the company pay a dividend, do a buyback etc. I guess there will be complaints about this because of the extra time. I would be in favour of this as it makes everything very clear. OSIDON SAYS THEY GOT AN EMAIL ABOLISHING THE COMPLIANCE CHECKLIST FROM THE CIPC Since when does the CIPC publish a notice through an accounting firm? SAIBA in an Official Notice says – “Until we have a final notice from the CIPC we urge members to obtain an instruction from their clients on whether to submit the current Checklist or postpone submission until more clarity is received.” The important point here is that the list should be done. CONCLUSION I believe that I have dealt with some very valid points based on my experience and the knowledge that I have of company law and would implore the CIPC not to backtrack on something that I believe is extremely important to this country and the economy and is important to them as they would not have implemented this in at all in the first place if they did not think it was important. If one looks at the proposed new companies act amendments the new provisions takes compliance even further. That’s a discussion for another day. Mark Silberman 23 February 2020 https://vimeo.com/388816345 |
Unit 201 2nd floor, 1410 Eglin, 14 Eglin Road, Sunninghill Sandton 2191
Telephone 0112624033 Fax 0112624036 sales@accfin.co.za support@accfin.co.za info@accfin.co.za |
|
30/3/2024
0 Comments