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Accountability and judgement – Two of the most significant competencies required for this new world

Last Updated Sep 2020

By Milton Segal, SAICA Senior Executive: Corporate Reporting

Johannesburg, 10 September 2020 - The core of the accounting profession is embedded in its very name – ‘account’. The word has multiple meanings all surrounded by one common theme. As a verb, ‘to account for’ means to give a reason or explanation for something.  An analytical context is portrayed from this statement as the process of giving reason suggests a methodology and logical thought process required to be able to analyse an occurrence or transaction and explain why it occurred, writes Milton Segal, Senior Executive: Corporate Reporting at the South African Institute of Chartered Accountants (SAICA).

Closely linked to this interpretation of ‘account’, is the concept of “keeping record of” something. Traditionally, a core function of an accountant is to keep an accurate record of an event, a transaction or an occurrence for historical or record keeping purposes. By linking the two concepts above, one can identify not only the accuracy required for the record keeping, but the pervasive competencies required to be able to explain or rationalise the transaction. Clearly then, the role of an accountant is more than a traditional record or books of account keeper – commonly known as a book keeper.

But accountants are more than that.

An adjective routed directly from the word ‘account’ is ‘accountable’ or ‘to have accountability’. The term ‘accountability’ implies being answerable and/or responsible for your actions and decisions – this implies a future context. The decisions one takes now not only have an immediate effect or impact, but quite possibly future consequences which can be both intended and potentially unintended. To be able to rationalise or give reason for something as well as to be responsible for the potential future consequences requires an individual with both immediate accuracy and attention to detail; to have the analytical ability to justify or rationalise it, as well as having foresight to take cognisance of or map out future consequences.

This combination of both administrative, technical and non-technical competencies is a unique and skilled combination required to then fulfil the term ‘accountant’.

Possibly the most important characteristic of a chartered accountant is that of judgement. By this we refer to as the ability to apply one’s mind and rationalise a host of possible outcomes and make an informed opinion of the best or most practical or meaningful outcome and decision.

A chartered accountant (CA) is an individual who encompasses the qualitative and quantitative characteristics described above and belongs and subscribes to an institute and that institute’s charter. This charter typically prescribes a set of regulations and a code to which the member must adhere to, failing which the member may be removed for non-compliance. There are also various international standards that a CA must adhere to.

For example, the International Financial Reporting Standards (IFRS) are written predominantly as principle based standards. Standards that provide a framework and a methodology that requires a CA to make informed assumptions and judgements in order to account for the economic reality of transactions in accordance with these prescribed principles and guidelines. Inherent in the ability to apply judgement, is the consideration of the impact that decisions may have on all related stakeholders.

Judgement and its required methodological approach is perhaps in this modern era of artificial intelligence and robotics, as important, if not more important, than it was in 1894 when the first Chartered Accountant was accredited, or even in ancient times when accounting records were found to have been carved into clay tablets in Egypt and Mesopotamia. Judgement requires the analysis of probable outcomes and is, indeed, a balancing act. For example, a decision to employ someone for a service or rather outsource/contract the service has immediate consequences.

At face value, one could compare the expected salary versus the cost of the consultant’s fee and perform a simple cost comparison analysis. However, a deeper analysis could compare the benefits of having an extra resource on hand, such as synergistic benefits and the potential to expand or influence, versus the additional underlying costs such as leave pay, sick leave, skills levies, extra office space, potential travel costs etc.

An even deeper analysis would factor in citizenship, and the impact that the company may make on the new employee’s life. The employment may lead to one or more individuals with a permanent job, the ability for this employee to support his /her family and community. The ability for this employee to send his/her child to school, to procure school uniforms, for the child to grow and thrive while being educated. The opportunity for the child to learn a sport at school. Even the taxes that the employee would pay should lead to higher tax revenue collections for the state. This in turn would affect the ability for the state to afford more state schools, housing developments, healthcare, etc. Indeed, one decision can and will have a multitude of knock on effects or consequences.

A CA is highly trained in this regard. The technical skills are inherent; it is part of the training. As important, and in the authors’ opinion more important, is a CA’s ability to think rationally, logically and to problem solve using both physics, numerical reasoning and most importantly judgement. Judgement entails deep analysis of the impact on all stakeholders, not only on human capital. Judgement therefore requires an integrated thinking approach and indeed, leadership characteristics with confidence to be decisive and to seek resolve in an approach that has societal balance. In analysing impact, the concept of materiality is fundamental, and this assessment requires the consideration of both qualitative and as well as quantitative materiality.

This is a unique attribute or overall competence. There are few, if any, professions or professionals who can claim adherence to all of the required attributes above. It is for this reason that a high percentage of all South African company CEOs are chartered accountants and that even a higher proportion of all CFOs of JSE listed entities are chartered accountants.

In 2020, with the global economy left reeling from the devastating impact caused by COVID-19 and the associated lockdowns, there has arguably never been a more important time for leaders, both political and economic, to be accountable and use their judgement to balance the inevitable hard decisions that are being made and will have to be made in future. In this light, the chartered accountant has the unique opportunity and skills set to become the change maker as we work gradually towards a post COVID–19 recovery and focus on sustainability and growth, rather than just survival.


About SAICA

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 50 000 members and associates who are chartered accountants (CAs[SA]), as well as associate general accountants (AGAs[SA]) and accounting technicians (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.

Chartered Accountants are highly valued for their versatile skill set and creative lateral thinking, that's why all of the top 100 Global Brands employ Chartered Accountants.

SAICA Media Contacts

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