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Non-compliance: a reality in South Africa. What are the implications for SAICA members and the public at large?

Last Updated Thursday, August 23, 2018 2:20:31 PM

Johannesburg, 23 August 2018 – What to do when you know what you know and you know it is wrong?

The SAICA Code of Professional Conduct (the Code) has, since 2006, set out certain fundamental principles that members and associates (accountants) should adhere to. The principles are integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. With regard to professional behaviour, accountants are specifically required to comply with relevant laws and regulations and avoid any conduct that discredits the accountancy profession.

Then, with effect from 15 July 2017, SAICA incorporated the Non-Compliance with Laws and Regulations (NOCLAR) provisions into the Code. The NOCLAR provisions specifically provide guidance to members and associates on how to deal with instances of non-compliance with laws and regulations that come to their attention. For example, any unethical or unlawful behaviour that they become aware of that have been committed by a client (for accountants in public practice) or by their employing organisations (for accountants in business) or by those charged with governance (e.g. the directors of a company), by management or by other individuals working for or under the direction of a client or the employing organisation, as applicable.

Although the Code has always set certain standards for members and associates, the introduction of the NOCLAR provisions seems to have created a new and intense focus on the accountant’s role in either being perceived as curbing or being complicit in this non-compliance.

With the influx of questions from members and associates and interest from the public, on the accountant’s role in non-compliance, the changes to the Code to include NOCLAR could not have come at a more optimum time. The public is tired of corruption and lawlessness and is looking to someone to do the right thing and a return to basic principles and values, including complying with laws and regulations. With NOCLAR, there is also a greater focus on corporate citizenry and whistleblowing, and a realisation that the accountant can play an important role in ensuring greater accountability within the accountancy profession, as well as by influencing the behaviour of organisations with respect to compliance with laws and regulations, and the fight against fraud, corruption and money laundering that often stem from acts of non-compliance.

The objective of the NOCLAR provisions in the Code is to get the right people to do the right thing in relation to instances of non-compliance or suspected non-compliance. Therefore, in a company, the right people are the management as well as those charged with governance, i.e. the board of directors. The Code sets out the steps that the accountants should follow in order to alert their clients or management of non-compliance or suspected non-compliance to laws and regulations to enable them to rectify, remediate or mitigate the consequences or deter the non-compliance. If the accountant has escalated the non-compliance or suspected non-compliance to the right people at the client or employing organisation, the accountant still needs to determine whether further action is needed in the public interest. This further action should be determined after considering a range of factors, including the appropriateness of the response of management or those charged with governance.  This further action could include the reporting of a matter to an appropriate authority under certain circumstances, despite a legal obligation to do so. This disclosure only becomes a consideration in cases that the accountant determines that the NOCLAR or suspected NOCLAR would or could cause substantial harm for the client or employing organisation, investors, creditors, employees or the general public.

The focus on the accountant to enable their client to do the right thing and to get the client to comply potentially has a huge impact on the client’s stakeholders, which include investors, creditors, employees and the general public. This in turn leads to accountants acting in the public interest. Getting your client to do the right thing ultimately leads to the public benefiting in taxes being paid over, tenders being awarded to competent suppliers who do not overcharge, compliance with laws and generally people doing the right thing.

However, in some instances it is not always easy to do the right thing. For example, take the case where the accountant’s client did not want to deduct the correct tax from their contractors. The accountant informed the client, but the client opted not to respond appropriately to correct the non-compliance concerned. The accountant has a dilemma: do they resign and hope they will find another client to put bread on the table? Or take the example of the BBBEE consultancy where certain clients were involved in fronting, according to their interpretation of the legislation. If the accountant reports this to the relevant authorities, they might not work again.

Ultimately, the NOCLAR provisions aim to influence the behaviour of accountants, which in turn will influence the behaviour of their clients and employing organisations. It is hoped, for example, that non-compliant clients who are not willing to respond appropriately in addressing instances of non-compliance should no longer receive services from accountants. The NOCLAR provisions call for appropriate behaviour from accountants, their clients and their employing organisations alike.  This is a classic chicken and egg scenario. If you don’t pay a bribe then people will not ask for a bribe, if you ask for a bribe then someone will pay; there are always two parties involved in this type of non-compliance.

It takes moral courage to do the right thing. Chartered Accountants in particular, and their clients and employing organisations, and people doing business in general usually know what the right thing is, but sometimes there is a thin line between what you are asked to do by your client and compliance with relevant laws and regulations. Take for instance a scenario where the client just won’t pay the staff’s pension fund contributions this month, but next month he will catch up. Do you as the accountant look away or do you as the client ask the accountant to look away? These are the tough questions we need to address and insist on ethical behaviour by all involved.

Part of the obligation under the NOCLAR provisions is that SAICA expects accountants to do the right thing and get their clients and employing organisations, as applicable, to do the right thing and therefore comply with laws and regulations. Once you know, for example, that a client is non-compliant with laws and regulations, SAICA and the public expect you to do the right thing. Your SAICA-trained conscience can never allow you to “unknow” what you know, and should prompt you to take the appropriate steps in accordance with your professional responsibilities. The NOCLAR provisions aim to establish an environment where there is an increased likelihood that non-compliance will not occur or that it will be rectified on the basis that doing so is in the public interest.


The South African Institute of Chartered Accountants (SAICA), South Africa’s pre-eminent accountancy body, is widely recognised as one of the world’s leading accounting institutes. The Institute provides a wide range of support services to more than 46 000 members and associates who are chartered accountants [CAs(SA)], as well as AGAs(SA) and ATs(SA), who hold positions as CEOs, MDs, board directors, business owners, chief financial officers, auditors and leaders in every sphere of commerce and industry, and who play a significant role in the nation’s highly dynamic business sector and economic development.

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