D.Comm. / Accurate, credible and reliable financial reporting is critical for the effective functioning of the world’s capital markets and the protection of the interests of stakeholders, who rely on such information for their decision making. All the well- known corporate collapses of the 21st century have in common fraudulent financial reporting, unscrupulous management practices and the fact that they all had audit committees consisting of well-known and respected people. This state of events highlighted the fact that audit committees should not merely exist as window-dressing, but should be effective in their functioning. Audit committees will thus only be of value if they are properly constituted, are functioning effectively and if their role is clearly understood by all the parties concerned. This study’s research problem was to analyse the effective functioning of audit committees in the modern business environment, and the study aimed to investigate the factors and events that impact on the development, status and effective functioning of audit committees at large listed companies in South Africa. This was done through a comprehensive literature study of the factors impacting on audit committees and the empirical testing thereof at the largest listed companies in South Africa. The study found that audit committees are well established, properly constituted, have the authority and resources to effectively discharge their responsibilities and consist of members who act independently and who have the right mix of appropriate experience, financial literacy and financial expertise amongst their members. The audit committee’s role was found to be generally well understood and supported by the board and the Chief Financial Officers. It was further found that the audit committees are effective in discharging their oversight responsibilities on the board’s behalf, with the only real exception being their effectiveness regarding IT-related aspects. However, audit committee reporting in annual reports was found to be of a poor standard and did not reflect the iii actual workings and effectiveness of the committee. It was also found that the audit committee’s perceived responsibilities are evolving and that audit committee members’ legal liabilities are increasing. The research findings make a valuable contribution to the existing body of knowledge on current audit committee practices and developments. The study also outlines new responsibilities for future audit committees, as well as aspects that should be addressed in future legislation, regulations, corporate governance codes and best practice standards for audit committees.

M.Comm. (Accounting) / The emphasis given to narrative disclosure in corporate reporting, both in South Africa and internationally, has greatly increased in recent years. A major example of this was the issuance of The Conceptual Framework for Financial Reporting (hereafter Conceptual Framework 2010) by the International Accounting Standards Board (hereafter IASB) in 2010. The Conceptual Framework was developed using the objective of financial reporting as a foundation (IASB, 2010a: par-OB1). In 2010, the IASB issued an International Financial Reporting Standard (hereafter IFRS) Practice Statement known as ‘Management Commentary – A framework for presentation’ (hereafter IFRS Practice Statement on Management Commentary). The IFRS Practice statement on Management Commentary defines management commentary as “a narrative report that provides a context within which to interpret the financial position, financial performance and cash flows of an entity. It also provides management with an opportunity to explain its objectives and its strategies for achieving those objectives” (IASB, 2010b: par-IN3).

Magister Administrationis - MAdmin / The future existence of municipalities is determined by their ability to remain financially sustainable. This study is significant as municipalities need to ensure that they are financially sustainable for the continued provision and maintenance of quality and affordable services to all the residents within their jurisdiction. The primary objective of the study was to assess the financial performance of the Cape Agulhas Municipality over a period of ten years. A secondary objective was to identify factors that constrain or facilitate improved financial management in municipalities and that may have an influence on their sustainability. The focus of the study was limited to financial management aspects of the Cape Agulhas Municipality from 2003 to 2014 and was conducted at a macro or strategic level. The research is a longitudinal qualitative study as this methodology was deemed as the best to undertake in a study of this nature. The data collection process comprised of open ended semi- structured interviews with senior politicians and officials in the municipality. Financial data from the annual financial statements and the Auditor General of South Africa over the period of study were evaluated and analysed so as to produce financial ratios and establish trends. The financial data was assessed against the financial health measures as identified by the National Treasury to determine the financial status of the municipality. Analysing the financial performance of the municipality produced information that can be used as an early warning system to mitigate further deterioration of the financial situation and inform future decisions in terms thereof. This study was useful as the findings may contribute towards effective municipal financial management and the financial sustainability of municipalities. The study makes the following findings and recommendations: The municipality experienced liquidity tensions from 2006. Although the payment ratio had been increasing over the last two years of the study, consumer debtors had been increasing and limited amounts were budgeted for the writing off of bad debt. Electricity tariff increases were significantly above the inflation rate, and salaries, wages and allowances were the largest expenditure item over the whole period of the study. In terms of provision for maintenance and repairs, these were less than half of the norm for most of the study period, and lastly the cash reserves were severely depleted from 2006 as they were used to fund long term capital projects. It is recommended that the municipality stabilises the decline in current assets and continues with the diligent implementation of its credit control policy, not only to maintain the positive collection rate but also to curb the increase in consumer debtors. In order to enhance the affordability of rates and tariffs the municipality must perform a cost analysis of all rates and tariffs to ensure that they are cost reflective. The organisational structure must be reviewed annually to verify that only critical and legislatively required posts are approved and budgeted for, as this is the largest expenditure item in the municipal budget. Furthermore, a comprehensive infrastructure maintenance plan must be developed to guide decisions when the budget for maintenance and repairs is considered, not only to ensure that this budget item is closer to the national norm but that it is spent on and tracked to infrastructure with the highest priority. The municipality needs to develop and approve a long term financial plan with its related policies to curb the further decline of its cash reserves and which includes a capital funding mix that is aligned to the useful life of the infrastructure to be financed.

Accountancy education in South Africa has been very controversial during the last few years and this controversy has led to objective self-examination by academics. It is acknowledged that there has been a substantial growth in the body of knowledge generally and that the accountancy profession has also been faced not only with a certain growth in the body of knowledge but also with a growth in society's expectations of the profession. These expectations could possibly include the expression of opinions on the fairness of profit forecasts and projected financial statements, including the underlying assumptions and opinions on management effectiveness. Possibly in order to accept greater responsibilities for the detection of fraud and the anticipated growth of society's expectations and greater utilisation of the computer, the future chartered accountant will be expected to be more proficient. This leads to the premise that a broader and less technique-oriented education is required for the future chartered accountant in South Africa. Developments overseas indicate that the profession in certain countries, plays a very active role in the final year of the accountancy education of its trainee accountants. In Australia the "Professional Year" is organised by The Australian Institute of Chartered Accountants. The candidates are evaluated on their performance during the "Professional Year" in assignments as well as their participation in classes, their attendance at the sessions and their successful completion of the final examination which is not regarded as a hurdle. In countries such as Canada and Scotland the institutes play an active role in promoting their own block-release courses. In Scotland the institute has its own lecturing staff, whereas in Canada in the province of Ontario, the Ontario Institute uses staff of the larger firms. In certain countries the final qualifying examination is intended to be difficult and case studies are used in the examination. In certain countries where the universities playa greater role in the educational process, the accountancy institutes are phasing out their own examinations. In other countries multiple-choice questions are set as a matter of expediency, where very large numbers of candidates are involved. In other countries, where the number of candidates is not too large, candidates do oral examinations and write theses as well. Complaints have been made about the length of the courses in South Africa, but in some countries accountants qualify between the age of 30 and 35 years. It is submitted that accountancy education in South Africa has been too technique-oriented and a happy medium between a conceptual and technique-oriented approach is required. University academics should play a more active role in research, and it is suggested that the Public Accountants' and Auditors' Board should give serious consideration to the possibility of reducing the number of contracting universities that are entitled to educate students for a Certificate in the Theory of Accountancy. The ultimate requirement for the profession is graduate entry, but in the interim entry standards must be improved and it is suggested that the profession create a trust fund utilising the Accounting Development Foundation, which could make bursaries available and thus make the profession more attractive to bright scholars. It is not envisaged that a detailed common body of knowledge should be prescribed, but more stringent conditions for the approval of contracting universities, should lead them to define the details themselves. This should not be stultifying, but should encourage research, which in the long run is in the interests of the profession. Communication between members of the profession and academics is essential to promote research and ensure the cross-fertilisation of ideas. It is also submitted that the final qualifying examination has had an undesirable effect on the teaching. This is because the proficiency of lecturers is generally measured by the success of the candidates in the final qualifying examination. A change in the format of the final qualifying examination is therefore imperative. A more case-study oriented examination is proposed. The value of the practical-experience requirement (articles) is questioned. It is submitted that for the practical ¬experience requirement to be meaningful, greater and more effective control of the quality of experience, to which the trainee accountant is exposed, is required. It is recommended that articles of clerkship or service contracts be dispensed with and that the training quotas of firms be more flexible, depending on circumstances. For the trainee accountant's experience to be meaningful it is necessary that his principal be kept up to date continuously with the latest developments which will result in greater emphasis being placed on required continuing education. The introduction of a quality review programme by the profession to improve the performance standards of its members is recommended. The abovementioned requirements, namely more effective control of practical-experience requirements, the introduction of a quality review programme and required continuing education as well as the fact that the decision making process in the accountancy profession is cumbersome and time-consuming necessitates a rationalisation of the controlling bodies in the profession. A questionnaire was designed to test the opinion of the respondents with regard to various controversial issues surrounding accountancy education. It appears that the profession does not want to accept greater responsibility for the possible extensions of the attest function and it can be stated that it favours the retention of the audits of private companies. It is thus obvious that certain changes are urgently required and the profession as well as academics will have to define its priorities very carefully. In the final analysis it must be borne in mind, that the profession must not overlook the public interest. / Thesis (DCom)--University of Pretoria, 2010. / Accounting / DCom / Unrestricted

The objectives of this study are to determine the effect on certain financial statement relationships of using the equity method to account for subsidiaries in lieu of consolidation and to gather evidence to suggest whether or not bond rating agencies take into consideration these effects in rating corporate bonds. Sixty manufacturing companies listed in COMPUSTAT as having a subsidiary accounted for by the equity method compose the experimental group. The remaining manufacturing companies in COMPUSTAT compose the control group. Computation of eight variables from COMPUSTAT provided data from the companies' original financial statements. Consolidating the subsidiaries of the experimental companies using annual 10-K data made it possible to recompute the same eight variables with these subsidiaries consolidated into the parents' statements. Comparison of the variables for the companies before and after consolidation revealed that five of the eight variables were substantially different and that the differences were statistically significant. Horrigan's multiple regression bond rating model provided indirect evidence to examine which method (equity or consolidation) bond raters use in their rating process. The model is a surrogate for the rating process. Use of the model necessitated calculation of two sets of regression coefficients—one using data in which subsidiaries were accounted for by the equity method and a second when the subsidiaries are consolidated. A derivation sample drawn randomly from both the experimental and control groups provided the data for computation of the coefficients. Comparison of predictions using the two sets of coefficients and validation sample company data revealed that the consolidated method data generated predictions in greater agreement with Moody's bond ratings than did the equity method data. The N-probit technique indicated that the predictions of Horrigan's model are not biased. The research suggests that bond raters find data based on consolidation of subsidiaries more important in their analyses than data based on the equity method. This suggests that the FASB should modify generally accepted accounting principles with regard to the equity method of accounting for unconsolidated, majority-owned subsidiaries.

Literature on financial statement analysis has been documented by various authors on how the performances of organisations can be measured using financial statement analysis as a tool. Most of the literature focused on what has been written in relating to organisations which are listed on the stock exchange. However, the same principles which are applied in evaluating the performance of large organisations can equally be applied to any organisation; this includes small and medium-sized enterprises operating in Namibia. Despite the fact that financial statement analysis is an important tool for evaluating the performance of organisations, no previous literature was found pertaining to the evaluation of the performance of Namibian small and medium-sized enterprises using this tool. This research will attempt to identify how management of Namibian small and medium-sized enterprises can effectively make use of financial statement analysis as a tool in evaluating the performance of the organisations in order to make correct strategic decisions that will benefit the SMEs.

Auditors perform a very important task within the context of the affairs of a company because financial reporting can only serve its purpose if stakeholders can rely on its accuracy and reliability. An auditor’s duty is to opine whether an entity’s financial reporting has been done according to the requirements of the law. The responsibility of reporting according to the law lies with an entity’s directors. Auditors cannot issue an absolute assurance as to the lawfulness and reliability of an entity’s financial reporting. However when it is subsequently discovered that the financial reporting was incorrect and that fraud has occurred auditors are often blamed and sued for enormous amounts of money for failing to detect material anomalies in the financial reports. These actions are based on the fact that auditors have a duty to exercise reasonable care and skill in the performance of their duties and through their failure to act as such, have caused financial harm to the clients or third parties. The fact that auditors are only required by law to exercise reasonable care and skill and perform an audit according to the standards of the reasonable auditor and not the most meticulous one, is often not regarded or is sometimes deliberately ignored. This clearly represents a problem in our law, namely that the presence of fraud in financial reports does not in itself suggest negligence on the part of the auditor but is apparently often perceived to do so. This research shows that the auditor’s duty of reasonable care and skill does not necessarily entail the duty to detect fraud. The elements of the duty of reasonable care and skill are identified from case law, legislation and international auditing standards. In order to limit the liability of auditors in general it is important to focus also on the elements of fault (negligence), wrongfulness and causation. This research shows that negligence cannot be established merely by the presence of fraud or material misstatements in financial statements. The responsibility for fair financial reporting lies with the directors. This research gives prominence to this fact which often seems to be ignored for convenience and in order to place the blame on the auditors. This research implicitly asks the question, why are auditors being held responsible for material misstatements in a company’s financial statements and not the directors? Guidelines for determining the extent of an auditor’s liability in this regard are formulated in this research.

This diploma work deals with Continuous audit of financial statements. The goal of this work is to describe chosen methods and procedures of this kind of audit. The first part of the text belongs to the description of laws and rules accordind to financial accounting and financial audit. Procedures and methods used in financial audit are described in the second part of the text. I was able to gain such a knowledge of these procedures and methods while working as an assistant of financial auditor in Cyech Republic. This work should be useful for anyone who is thinking about becoming a financial auditor, or an assistant.

The subject matters of this thesis are comprehensive processes of period-end closing and preparing financial statements, performed under the applicable law of the Czech Republic. The first part includes a theoretical framework, summarizing the key operations and procedures that need to be completed before closing the books. These processes include stock taking, analysis of accounts and operations relating to period-end closing, then gross profit / loss determination and finally, income tax calculation. This section is immediately followed by the process of preparing financial statements. The last section of the theoretical part describes the subsequent obligations relating to period-end closing and financial statements, such as audits, annual report or mandatory disclosure. The second part of the thesis describes practical application of the theoretical knowledge in a specific company.

The financial statements represent a comprehensive and standardized document including financial information about the company. The companies need to publish this document in the Collection of Deeds, and since the documents are submitted to the Collection of Deeds in electronic form and are subsequently freely available, any financial statements are generally available to a wide range of potential users. Users of the financial statements can be divided based on their relation to the financial statements and based on level of their knowledge of accounting. The confidence of users in information disclosed in the financial statements is higher, in case the financial statements were subject to audit. The user of the financial statements does not have a possibility of detailed verification of the information presented in it (he cannot inquire the management of the company, inspect the original accounting documents, etc.). In this case, the audit represents ensuring correctness of the information presented in the financial statements and also assurance that the financial statements were subject to the independent verification. These facts enhance the degree of confidence of intended users in the financial statements and this is also the purpose of an audit as defined by the International Standards on Auditing. In accordance with the International Standards on Auditing the auditor expects that the user of the financial statements has reasonable knowledge of accounting and is willing to study the financial statements with reasonable effort. Auditor performs his testing based on certain materiality level that does not have to agree to the materiality level of the user. The risk represents in this case the situation, when the materiality level of the user is lower than the materiality level determined by the auditor. The user of the financial statements has limited possibilities to verify the information in it, however, he is able to verify the link among information presented in different parts of the financial statements and confront the financial statements with other relevant information available. My dissertation consists from theoretical and practical part. In the theoretical part, there are possible verifications described that can be performed by the user of the financial statements and in the practical part, there are the mentioned procedures applied to financial statements of four domestic companies. The subject of my research was financial statements for the years 2006 to 2009. The aim was not only the identification of the risks in the financial statements from the users' point of view, but also monitoring of the development of financial statements in time. The subject of the dissertation was also the verification of the formal correctness of audit reports issued to the selected financial statements (I am registered as Czech statutory auditor by the Chamber of Auditors of the Czech Republic and therefore I am able to perform this verification). The subject of the dissertation was not the verification of the factual correctness of the audit report, this verification is in principle not possible without possibility to look into the audit file. During analysis of selected financial statements I have identified several areas that represent risk of misstatement in the financial statements from the users' point of view. It related mainly to going concern issues, issues relating to completeness of reserves and provisions and risk of possible overvaluation of finance investments and related receivables to subsidiaries. The user of the financial statements should for his better understanding therefore look for other information relating to the company from freely available resources and perform comparison with financial statements of other companies in the same industry. The risks mentioned above were not sufficiently commented in the notes to the financial statements and that subsequently gives a rise to questions on financial statements users' side and lowers his confidence in information presented in the financial statements. I think that there is a change in the audit approach necessary, it should not be enough just that the financial statements are free from material misstatement; the financial statements should not give a rise to additional questions from their users.