Entrepreneurship-a greener pasture for young people

Younger people naturally have a longer lifespan to spare, they have enough time to nature and pursue they passion, goals, and ambitions. The path of entrepreneurship is a “greener” one, it is quite contrary to looking for someone to employ you, and it grants you full control of your career. Through entrepreneurship young people can determine their own success.

Although it is quite tricky for young people to get their foot in their ideal career paths, the widened out financial aid of Small and Medium-sized Enterprises (SME) allows them to action their business ideas.

The global drive for economic recovery has placed a huge focus on supporting SMEs as a vehicle for job creation, economic stability and wealth creation. With globalisation creating internationally dispersed supply chains that benefit from easier and more cost effective logistics, and equally easier and more cost effective communications, ensuring that SMEs make the most of these opportunities is a promising area for policymakers to pursue.

The ACCA Global Forum for SMEs has been considering issues within SMEs for some time, in February 2014, the forum cited supply chain finance as one of the most promising tools for financing small businesses around the world, and noted the potential for further innovation in the sector.

According to SME’s, the main reasons for business failure are often cash flow related. Businesses of different magnitudes all need financial stability to operate sustainably.

Why now?

There has been a significant rise in the funding marketplace, the platform where willing lenders meet willing borrowers to close funding has been significantly active. This is a great opportunity for young people to commence and build their own empires, even in economically critical times.

50 Drivers of change & The 7th annual public sectors conference

The global economic and business landscape is changing with unprecedented speed and uncertainty. Accounting professionals will be expected to look beyond the numbers and collaborate, think, behave more strategically and lead in decision making.

 

There is global consensus that public sector finance needs to adapt in the face of a changing economic landscape. With modernising economies, digital influence and evolving economic sectors, Africa’s public sector finance is confronted by 50 key drivers of change.

 

These 50 drivers of change undertaken in a global study by ACCA (Association of Chartered Certified Accounts) will have the biggest impact on public sector finance leading into 2026. Financial skills not yet practiced will come into demand under requirement and forever change the face of the public sector accountant.

 

THE KEY FOCUS

Unpacking the study at the recently held ACCA 7th Global Public Sector conference in Johannesburg, industry guests and members showcased practical examples of how these 50 drivers of change will influence public sector finance. Manj Kaler, Head of Public Sector ACCA, gave insight into the drivers and by which order they will begin to influence finance industry.

 

Overarching the drivers and theme of the conference is the increase in demand for integrated reporting in the public sector finance.Integrated reporting will require accountants to shift away from financial analysis to business accountancy, focusing on swift action and financial literacy beyond a spread sheet.

 

The public sector is as complex as it is diverse” – Report: 50 Drivers of change in the public sector

 

Unpacking the above influencers, through a panel discussion, Bukkie Adewuyi – Director, Sizwe Ntsabula Gobodo, Xolisa Dlanga – Senior Financial Analyst, Office of the Accountant General and Martin Turner – former president, ACCA – focused on the importance of transparency and accountability. Citizens now demand accountability more than ever, with a strong focus on aligning public sector finance to presidential term successes. More so in Africa, governments are starting to feel the strain from public backlash from corrupt accountancy and mismanaged public sector finances.

 

CITIZENS AND INTRINSIC VALUE

Presenter Patrick Kabuya, Senior Financial Management Specialist – World Bank Group, highlighted two main goals for the Group particularly in Africa, they are; to end extreme poverty, and to promote shared prosperity. The rise in active citizenship in Africa reiterates these goals, holding intrinsic value to transparent and accountable public servants.

 

Sound management of our public finances is a cornerstone of our development plans.” – Pravin Gordhan – Minister of Finance

 

Countrymen and investors want change. Unpacking this social uprising and other drivers of change, the recent study by ACCA draws on Professor Mervyn King’s King IV principles of integrated reporting ; independence from political influence, performance targeting and variable remuneration based on outcomes.

 

ACCA surveyed over 1,000 senior executives, ACCA members and members of other professional accountancy bodies working in public sector organisations and carried out 12 in-depth round table discussions across 11 countries, including South Africa (around 300 participants) to populate the report.

 

The report is structured in two sections, the first introduces the ranking of 50 drivers of change (split into eight domains of relevance) that are expected to impact the public sector in the next five years and beyond. The second section assesses the impact of the drivers on the future public sector landscape.

 

KEY FINDINGS

  • The overall top, critical, driver of change is: level of economic growth, followed by: quality and availability of the global talent pool.
  • The public sector finance function is also experiencing challenges of its own from changes in technology to greater commercial focus and big data.
  • Professional accountants in the sector will need strong set of skills to meet the challenges including strong technical skills, communication skills, professional judgement, vision and leadership skills. Hence it is most important to invest in nurturing and training students.
  • The ability to make linkages, explore perceived economic growth strategies in order to realise visions and plans of national governments.

Read more on economic policies and public finance http://bit.ly/2o9xnl7

FUTURE LEADERS VS TODAY’S ACCOUNTANT

After the stock market crash of the 1940’s, businesses had to change to survive, and they did. Roaring through the 50’s business adapted, and so did the CFO. Business today has to evolve too in order to navigate through tough financial territory. In the aftershock of the 2008 global meltdown, it seems the local economy is struggling to find solace in a playing field marred by one downturn after the other. In an essence, it is a market filled with bears and few bulls.

The role of an accountant is changing too, moving out from behind office partitioning, to playing center field. The reality is that in order for companies to remain competitive, then every adaptive CFO has to step in and be the driver of change.

By hosting the “Future Accountants – Employer event” on the 14th September, ACCA aimed to drive this message of change amongst human resource professionals and shift focus on employment practices. The main message: HR specialists need to think ahead, and ensure that future CFO’s joining their companies are equipped for the progressively fastening rate of financial change.

Through a host of panel experts, the event unpacked ACCA’s recent report titled “Professional Accountants – the future”. The report, created through global collaboration, unpacks tell-tale signs of the future of accountancy and how HR could benefit from employing the “right type of accountant”.

RIGHT TYPE OF ACCOUNTANT

What will the right type of accountant be? Through the advent of the digital age, accountancy practice will be integrated into every aspect of the companies DNA and the accountant would be required to be equally available to dissect, analyse and drive decisions based on the information at hand. If the 24-hour drive-through revolutionised the takeaway industry in the 1980’s then the 24-hour accountant will do the same for the 2020’s.

In many countries, HR employment practices are already changing. Companies are realising the importance of hiring the future CFO opposed to the today’s accountant.

DRIVERS OF CHANGE

Tax, audit assurance, corporate reporting, strategic planning for better governance risk, financial management, and ethics were earmarked as the main drivers of change. Identified in the report, these drivers of change carry significant impact in employment practices in South African and abroad. Financial and business planning is becoming a global affair. Even if a company is solely based in South Africa, global effects can be far reaching.

Consider this as a well-established movement by ACCA, aimed to merge good corporate governance with credible employment processes, decreasing possible risk faced by employment practices” – Trudy Naidoo, Associate Director, Assurance, EY Inc. Africa

ACCA believes that now is the time to introduce companies to the benefits of employing globally relevant, integrated CFO’s. Through ongoing training initiatives and a strong focus on good governance, it is essential for CFO’s to evolve into digital aware, collaborative leaders. The future of business depends on it.

For further information on the ACCA Report “Professional Accountants – the future” please visit http://bit.ly/2cPNoGp

ACCA and GCRA Partner to Education 250 Learners

ACCA joins hands with the Gauteng City Regional Academy in the bid to challenge some pertinent issues that face the SA environment. The partnership seeks to make the best use of the online learning tool that has been developed by ACCA, commonly known as ACCA-X, for the transformation of the lives of youth that have matriculated but find themselves excluded from further education and training or employment for various reasons.

250 learners from the 5 corridors of Gauteng will be taken through the programme for a year commencing in April. The ACCA-X programme is the ideal starting point for future business leaders, accountants and entrepreneurs. It consists of four online learning modules designed to develop knowledge and skills, at foundation level, in financial and management accounting.

Upon completion of the four modules (Introductory and Intermediate Certificates in Financial and Management Accounting), learners will be equipped to perform a range of accounting administration roles within an accounting department of a larger organization or financial shared service center.

This programme comes just in time to deal with the shortage of accountants in the country and also to support the promotion of entrepreneurship in youth.  Details of the launch date are as follows:

Date: 31 March

Venue: University of Johannesburg (Auditorium room number to be confirmed)

Time: 9am -12pm

Event details: 100 of the 250 learners and their parents will be present, as well as the Gauteng MEC for Education and the ACCA Sub Saharan Markets director, Mr Jamil Ampomah.

Guest Blogger: Budget 2016 Summary – tax proposal

ACCA_ThinkAheadLogo2

 

Overview

Tax revenues in 2015/16 are projected to be R11.6 billion below the 2015 Budget forecast: corporate income tax collection is estimated to be R13 billion lower, value-added tax (VAT) R5.7 billion lower and personal income tax R1.9 billion lower. These lower revenue outcomes will be partially offset by an increase of R4.3 billion from customs duties.

 

Ensuring a sustainable tax burden

South Africa’s tax burden sits roughly between the average for developing and developed economies. While personal and corporate income taxes are relatively high, the VAT rate is lower than in most other jurisdictions, especially those with high levels of social spending.

 

Keeping the tax system progressive

South Africa’s tax system is highly progressive. Individuals below the age 65 whose annual taxable income exceeds R1 million pay 31 % of such income in tax, while those earning below R250 000 pay less than 15 per cent. Of the 13.7 million registered taxpayers, fewer than 1 million individuals contribute 64 % of personal income tax revenue.

 

The current tax mix suggests that there may be greater room to increase indirect taxes, such as VAT.  South Africa’s VAT rate lower than most countries.

 

Protecting the corporate income tax base

Increased focus on multinational tax avoidance and evasion, of particular concern are:

 

  • Unacceptable transfer-pricing practices, where the value or nature of cross-border transactions is manipulated to reduce overall tax liability.
  • Treaty shopping, where related companies in different countries establish a third entity in another location to obtain tax-treaty benefits.
  • Highly geared financing structures that reduce companies’ tax liabilities with excessive interest-expense deductions.

 

Additional steps have been taken by SARS to reduce such abuse are the following:

  • Improving the quality of information firms must provide to SARS, enabling it to identify aggressive or abusive tax-planning schemes.
  • Taking action on transfer pricing- Large multinationals will be required to submit reports for each country in which they do business to the tax authority where their head office is located this will be in line with country by country reporting. Tax authorities will share this information starting from 2018. SARS will have access to country-by-country information on all large multinationals operating in South Africa.
  • Enhancing rules on foreign companies controlled by a South African resident, so that a portion of profits earned by a South African-owned subsidiary operating in another country is taxed in South Africa if no meaningful economic activity took place in the other country
  • Introducing rules that limit excessive interest deductions- S23M

 

Voluntary disclosure

  • Voluntary disclosure rules will be relaxed for a period of six months, from 1 October 2016, to allow non-compliant individuals and firms to disclose assets held and income earned offshore.

 

Other

  • Review of employment and learnership tax incentives under way
  • Government to increase incentive for employer bursaries

Personal taxes

  • Primary rebate and the bottom three income brackets be adjusted by 1.8 per cent and 3.4 per cent respectively:
  • Primary (for all taxpayers) R13 257-R 13500
  • Secondary (aged 65 and over) R7 407 unchanged
  • Tertiary (aged 75 and over) R2 466 unchanged
  • Marginal personal income tax rates remained unchanged at 41%.
  • Tax free income threshold has been increased as follows:
  • persons under 65 years from R 73 650 to R 75000,
  • persons between 65-74 years from R114 800 to R116 150
  • Persons over the age of 75 years from R 128 500- R129 850

Employees earning R75 000 p.a. or less will not be subjected to PAYE.

  • Medical scheme contribution credits will increase from R270 to R286 pm for the 1st two beneficiaries and from R181 to R192 for additional members effective 1 March 2016. Please note employees are allowed to tax credits related to medical scheme contributions t for both monthly PAYE deduction and provisional tax purposes.
  • Retirement savings- From 1 March 2016, an important change to the tax treatment of contributions to retirement savings and how they are withdrawn at retirement comes was to come into effect, the proposal to annuitize the withdrawal from provident fund has been postponed to 1 March 2018. Cosatu lobbied for the postponement of the legislation.

 

Corporate tax

  • The corporate tax rate remained unchanged at 28%
  • Proposal to address double non-taxation in hybrid debt instruments- to eliminate mismatches associated with hybrid debt instruments where the issuer is not a South African resident taxpayer, this rules will be effective with effect from 24/02/2016.

 

Value added tax

The VAT rate remained unchanged at 14%.

 

Capital gains tax

Capital gains tax rates on the disposal of assets will increase with effect from 1 March 2016:

  • Individuals and special trusts-13.7% to 16.4%
  • Companies- 18.6% to 22.4%
  • Other trusts- 27.3% to 32.8

 

Other taxes

Transfer duty on properties above R10 million will crease from 11% to 13% from 1 March 2016

Analysis by Mpho Lefakane

Guest Blogger: A macroeconomic analysis of the Gordhan budget of 2016

joy

The most urgent economic question has been and possibly is whether the RSA sovereign debt is going to be designated junk status. The Gordhan budget of 2016 demonstrates the willingness of the republic to repay its debt beyond any shadow of doubt. This has been demonstrated by a modest but positive economic growth rate at an average of 1.8% p.a. in the next 3 years coupled by a reduction in the budget deficit of half a percent over the next 3 years on average. This demonstration has certainly reduced the threat of a downgrade; however it has not done away with it completely. From the start, it was never cast on stone that RSA was to be downgraded to junk status. However it was on a fast and slippery slope towards that status and the budget has certainly placed some speed breaks on that.

Our economy is stalling and the risk of a recession is still a reality as espoused by the Worldbank indicators of 2015/16. As a currency, the rand seems to be oversold and undervalued. The Gordhan budget has failed to address these two key fundamentals as it has not brought forward adequate austerity measures which would be reflective of a significant policy change on the part of government. In the absence of such policy change -the combination of muted global growth, low business level confidence, drought and persistently low resource prices will result in South Africa continuing to lose its attraction as a destination for capital.

A very positive approach in the Gordhan budget is the realization that when considering raising additional revenue for the republic, tax is not the only solution. Some key parts of the solution in his budget include expenditure cuts of approximately R8 billion p.a. over 3 years on average, curbing the size of the civil service (although there is no clear plan for how this is going to be achieved), having a growing economy at 1.8% p.a. on average over 3 years and creating jobs. When it came to the numbers, the only accounted for increase in revenue of R18billion is underpinned on an increase and introduction in levies. Levies in essence are an indirect tax as they still result in the increase in the cost of living for everyone.

In conclusion the budget is factually a very reactional statement which is not indicative of a major economic policy changes by the government of the republic. It has been well crafted to say the right words, terms and figures to avoid the downgrading of our sovereign debt to junk status. It is indeed a missed opportunity because of its short-termism, hollow but clever statements and primarily its speculative nature.

http://www.fin24.com/Budget/recession-risk-still-a-reality-expert-20160225