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NEWSNEWSLETTER OF THE BOTSWANA INSTITUTE OF CHARTERED ACOUNTANTS VOLUME 1 ISSUE 2 DECEMBER 2011

The Driving Forces

Behind the

BICA Qualification:

Botswana’s Own ProfessionalAccountancy Qualification

Botswana i n s t i t u t e

of chartered accountants ,

m i n i s t r y of finance &

development planning, the world bank, the

institute of chartered accountants in england & wales

and the tertiary education council

NEEWSLETTER OF THE BOTSWANA INSTITUTE OF CHARTERED ACOUNTANTS ISSUE 2 DECEMBER 2011 VOLUME 1 ISSUE

2

1

CONTENTSMission Statement

The BICA is universally recognized as the leading profes-

sional body in Botswana

especially known for:

* Inspiring business confidence and investment.

* Leading the profession in the private sector and

in government

* Delivering accounting and auditing best practice

* Providing a professional qualification recognized

internationally

Core Purpose Statement

To promote public confidence in the Accounting Pro-

fession and enhance Compliance with the International

Standards.

Core Values

In order to motivate the right behavior and culture that

will support the implementation of the vision and mis-

sion statement above, the following Core Values were

adopted:

· Integrity

· Excellence

· Ethics

· Independence

· Accountability

BICA Address

Plot 50374, Block 3, 2nd & 3rd FloorFairgrounds Financial CentrePrivate Bag 0021, Gaborone, BotswanaTel: (0267) 3972992, Fax: (0267) 3972982Website: www.bica.org.bwE-mail: bica@bica.org.bw

2011 BICA NEWS is published on behalf of the Botswana Institute of Chartered Accountants. No part of this work may be used in any form or by any means graphically, electronically, mechanically including photocop-ying, recording, taping, information storage or retrieval system – without permission from the institute except in accordance with the accountants act or laws of Botswana.

EditorsDuncan MajindaVijay Kalyanaraman

Editorial SupportOupa GaofiseRegina RamantebaAjay BhatnagarFeliaty Ndeke

Project ManagerRaymond Dube

Design & LayoutRaymond Dube

Sales & MarketingOupa Gaofise

PublisherPrint City

Printed byPrint City

Editorial Team

2. MESSAGE FROM THE PRESIDENT

4. THE EVOLUTION OF SMPs

8. FRAUD FOCUS: IDENTITY THEFT

10. SHORT STORY CORNER

11. INTERNATIONAL PUBLIC SECTOR

ACCOUNTING STANDARDS (IPSAS)

15. THE BICA QUALIFICATION

20. LEAKY BUCKET PART 6 HOW

MANAGEMENT POLICIES IMPACT

ON CASH FLOWS?

24. THE BICA QUALIFICATION TEAM

22. TAX PLANNING, TAX AVOIDANCE

AND TAX EVASION

28. LEAD THROUGH SERVICE

EXCELLENCE

PresidentMessage from the

Season’s Greetings to all mem-

bers and stakeholders. This

Newsletter comes at a time

when we all look back proudly at the year

gone past to recollect our achievements,

note areas for improvements and take our

resolutions and action plans going forward.

BICA has been on a roller coaster ride

over the last couple of months since the en-

actment of the Accountants Act 2010 and

the official launch of BICA in April 2011. The

BICA qualification took off as scheduled in

July 2011 with 60 registered students and

tuition provided by Botswana Accountancy

College and Botho College. It is my plea-

sure to inform you that our first results were

very encouraging, with 98% and 80% pass

rates registered for Principles of Taxation

and Law, respectively. I wish the students

the best in the coming examinations and

in their journey towards becoming the first

batch of students to attain the prestigious

Chartered Accountant qualification.

In the July 2011 newsletter, I updated

you on the latest developments in terms of

enactment of the Accountants Act 2010 and

Financial Reporting Act 2010. The Coun-

cil had to get into the grove right away in

terms of setting up the new Institute in line

with the requirements of the Accountants

Act 2010 and the Rules as approved by our

members at the AGM. We managed to get

the transition of members done smoothly

and the response from our members was

extremely good. Most of the members man-

aged to get the benefit of the transition,

even though some missed the opportunity.

Now that the transition is over, the next

ACAs will come on board in July 2014, our

first Botswana CAs.

In addition, several firms providing

professional accountancy services regis-

tered with BICA as member firms and the

list grows every month. I urge all firms pro-

viding professional accounting services to

register as member firms with BICA. It is ille-

gal to provide professional accounting ser-

3

I am not just a suit. At Grant Thornton, we don’t

hire suits.

We look for people who want to make a difference and not just being a number.

Authorised training employer of BICA

Contact us:E: info@bw.gt.com W: www.gt.co.bw

©2011 All rights reserved. Grant Thornton Botswana is a member firm within Grant Thornton International Ltd (Grant Thornton International). Grant

Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by the member firms

vices in Botswana without being registered

as member firm with BICA, and the penalties

are heavy.

Our twinning arrangement through

the World Bank with ICAEW ended in Sep-

tember 2011 and BICA is working towards

the extension of the twinning project so that

we continue to get the excellent support

from ICAEW. The BICA strategy is on the four

key pillars, namely Governance & Capacity,

Technical Standards – codes and procedures,

BICA Professional Qualification and CPD Pro-

gramme.

BICA has now over 1,200 members

between various categories and we are fast

growing to cross 2,000 members in 2012.

This growth and public expectations require

strong infrastructure to ensure continued

growth of the Institute. The Council re-

cently approved a human resource plan for

the Institute for a 2 year period 2011/12 and

2012/13. Recruitments are ongoing to fill the

respective positions.

The BICA team, through my experi-

enced Council members, and under the in-

spired leadership of CEO Mr. Duncan Majin-

da, along with support from the ICAEW, has

come a long way in addressing the capacity

constraints.

CPD continues to be a key focus area

for the Institute. CPD circulars have been

sent to all members. I urge members to

take these seriously and comply with the

requirements and submit their returns on

time.

BICA is committed to the growth of

the profession and acting as an enabling

link to increase business confidence in our

great profession. The BICA Council has em-

barked on an aggressive branding strategy

to reach across Botswana and has partnered

with Horizon Ogilvy as branding partners to

promote and spread the mission and vision

of BICA.

When we travel across Africa to at-

tend various events and conferences, it is a

great reassurance to observe that Botswana

is used as a role model and benchmark for

many positive aspects and it reflects well on

the hard work put over the years under the

leadership of our past Presidents and our

stakeholders.

BICA Council has been strengthened

further with the representatives from the

Government of Botswana and I take this op-

purtunity to welcome the representatives

into the Council.

Let me take this oppurtunity to thank

our tuition providers, Authorised training em-

ployers, examiners, moderators, ICAEW team,

BICA Secretariat and all our stakeholders for

enabling the take off. We will soar even high-

er with your continued support. Most impor-

tantly, I salute the Government of Botswana

and the World Bank for providing such great

support to the profession and the continued

support to address our ambitions and plans.

On behalf of the BICA Council, Secretar-

iat and myself, let me take this oppurtunity

to wish you all a very prosperous and healthy

2012 and a pleasant festive season.

Pula Pula Pula

MESSAGE FROM THE PRESIDENT

4

makes clear that smaller accountancy

practices need to address their skills

base, their working methods and their

referral models if they are to meet the

evolving needs of the SMEs that are

their lifeblood.

The study – The Role of Small and

Medium Practices in Providing Business

Support to Small- and Medium-sized

Enterprises, written by professors

Robert Blackburn and Robin Jarvis –

points out that accountants are still

SMEs’ most frequently used source of

advice. According to a study last year

by the UK’s Open University, trade

connections, the media, family and

friends are all important, but none

ranks as highly as the accountant.

SMPs are usually highly experienced

in dealing with SMEs and, as small

enterprises themselves, can empathise

with their clients’ resource constraints.

This contrasts with very large practices

where the focus is on large companies

and SME clients may have to deal with

several departments.

Building Trust

International Federation

of Accountant’s President

Robert L Bunting Says SMPs

Should Evolve to Satisfy

SMEs’ Growing Needs

Small- and medium-sized

practices (SMPs) today can

no longer rely strictly on

compliance work to pay

the bills. The reason why is simple: SMEs

(small- and medium-sized enterprises)

– the traditional client of the SMP –

increasingly need a broad range of

competencies beyond the core skill set

of the small practice. At the same time,

the threshold for mandatory statutory

audits has risen in some countries and

increases are under consideration in

many others.

A fast-changing and complex

regulatory environment means that

SMEs want their SMP to provide

proactive business advisory services.

SMEs need advice that will help them

generate business plans and financial

forecasts, identify and manage risk,

define and implement IT systems, and

value the business. SMPs must evolve

to meet these growing needs or face

dwindling clients and revenues.

A new study by the International

Federation of Accountants (IFAC)

The Evolution of SMPs

Robert L Bunting became president of the International Federation of Account-ants (IFAC) in November 2008. He is a partner at Moss Adams where he served as chairman and chief executive officer from 1982 to 2004. Moss Adams is a member of Praxity (formerly Moores Rowland International) where Bunting served as chairman from 1998 to 2004. From 2004 to 2005, Bunting was chairman of the Board of Directors of the American Institute of Certified Public Accountants (AI-CPA). Go to http://ifac.org/SMP for more about the SMP Committee.

THE EVOLUTION OF SMPs

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But the assumption that SMEs

nearly always choose an SMP is not

correct. A significant proportion of the

clients of large accounting practices –

the Big Four and second-tier practices

in most countries – are SMEs. These

are more likely to have the resources

and the benefits of economies of

scale to offer services and products

to meet their clients’ accounting and

other specialised support needs; in

fact, they often position themselves as

‘professional services supermarkets’.

Many SMPs actually use larger firms

to provide limited speciality services

to their SME clients or as a technical

backstop for their own client service

work. While compliance work will

remain hugely important for SMPs –

accounting services and tax are core

services at all levels in public practice

– technical competency and timely

delivery in compliance work build trust

and usually lead to requests for non-

compliance advice and support.

This is a time-proven formula driven

in part by the nature of most small

business owner-managers, many of

whom are determined to make all their

own decisions and avoid advertising

any managerial weakness. In this kind

of ‘fortress enterprise’ culture, many

SMEs do not request advisory services

until the expert has already provided

a specific demonstration of their

competency.

Becoming Knowledge Professionals

Business consulting services

represent a crucial growth area for

SMPs. As mentioned at the start, the

raising of the statutory audit threshold

has diminished a key revenue stream

for many SMPs and the market is

increasingly competitive. As a result,

if they are to thrive rather than merely

survive, SMPs must diversify and focus

on other advice requirements for SMEs

(or provide audit services to larger

companies).

They must develop their skills base

beyond bookkeeping, tax preparation

and audit. In short, they must move

from being accounting technicians

to knowledge professionals. So how

can SMPs overcome the unavoidable

resource constraints in-house and

provide a range of services to their

clients?

The most common model is to

expand the technical and soft skills of

existing personnel. Some accountants

can make the transition from ‘accounting

expert’ to management adviser through

experience and self development.

Others may need training or coaching

to grasp the necessary flexibility and

an understanding of the context and

cultural environment of the SME.

For example, accountants might

need to hone their interpersonal skills

or make time to discuss a client’s

succession planning (or other business

advisory needs). Another common

model is to focus on a specific industry

sector or speciality linked, for example,

to the music industry or environmental

legislation. This model usually works

best in large cities or where a particular

industry is highly concentrated. But

there have been successful cases where

SMPs are willing to travel further to

serve their clients.

A third model, which can be a

standalone strategy or one that

complements the first two, involves

the SMP participating in a high-quality

referral network. Before using one, SMP

owners should analyse the different

types of networks and carefully consider

how they will monitor service quality

and timelines for the clients they refer.

But referral networks offer SMPs many

potential advantages: they are an

effective way to satisfy the increasing

breadth of demands from SME clients.

They also offer the opportunity to gain

clients through referrals from other

network members or to win new ones

due to their more extensive service

capabilities.

Why SMEs Use SMPs

Competency: SMEs often lack the

full range of managerial expertise. Most

outsource their financial management

to SMPs with their required technical

competencies and expertise in statutory

audit and taxation.

Trust: As members of a regulated

profession with codes of conduct,

accountants enjoy ‘institutional’ trust.

Their provision of compliance services

wins them ‘competence’ trust.

Responsiveness/ proximity: SMEs

rate SMPs’ responsiveness to their

demands so highly that it can be

regarded as more important than

a qualification or competency. The

geographical proximity of SMPs to their

SME clients is also important. Many

owner-managers prefer face-to-face

meetings with their advisers, and value

ease of access.

The Role of Small and Medium

Practices in Providing Business Support

to Small and Medium-sized Enterprises

– by ACCA’s head of small business

Professor Robin Jarvis and Professor

Robert Blackburn of Kingston University

and published by IFAC –is available

for download at http://web.ifac.org/

publications/small-and-medium-

practices-committee/information-

papers-3.

This article originally appeared in the

ACCA’s Accountancy Futures.

A fast-changing and complex

regulatory environment means that

SMEs want their SMP to provide

proactive business advisory services.

SMEs need advice that will help them

generate business plans and financial

forecasts, identify and manage risk,

define and implement IT systems,

and value the business

THE EVOLUTION OF SMPs

6

Everyone wants to know:

how do entrepreneurs really

succeed? What is it that

catapults one of them, every now

and then, to greatness and financial

superstardom? What sparks that

immense capital accumulation? How

does it all come together?

Some people, mostly the type who

spend their lives on the outside looking

in, think they’ve got the answer. They

say it’s all about risk. They say big-time

entrepreneurs are bold gamblers. They

say the rich do things that would scare

most normal people away. They say big

success is a product of big risks.

Hang on. That’s not true at all. That’s

not even nearly true.

‘Let me tell you about the business

of risk,’ says BECI Marketing Manager,

Bonani Dube.

‘At BECI, we represent some of

Botswana’s most inspiring, hands-

on entrepreneurs – and let me

tell you: successful entrepreneurs

are extremely risk averse. They’re

conservative people. They minimise

their chances of failure. They don’t

do anything unless they know

they’ll win. So for them, it’s all about

avoiding risk,’ he explains.

Interesting.

Dube continues, ‘Rags-to-riches

entrepreneurs are good at shifting

the burden of financial risk onto other

people, or other organisations. They

always have a plan B if something

goes wrong – or if someone doesn’t

pay them. And that’s where we come

in.’

You see, BECI’s job, as a credit

insurer, is to insure all your credit

Playing with Fire

GROWING YOUR BUSINESS?Pay attention to this important advice from BECI.

GROWING YOUR BUSINESS

Advertorial:

sales and pay you out if one of your

customers defaults, doesn’t pay you

on time or doesn’t pay you at all.

He explains how credit insurance

works: ‘If you don’t have a credit

insurance policy, you’re running a risky

business. You’re exposing yourself.

You’re just assuming that everything

will be ok. And that’s not how smart,

successful, big-deal entrepreneurs

like to do business.

Dube says, ‘The truth is that

people who like risk tend to fail as

entrepreneurs. They’re not good at

drawing the line.’

And he has a point. Experience

has taught us that Botswana’s failed

entrepreneurs take on far too much

risk:

A written, clear plan for where ●the business needs to go is

essential. But many failed

entrepreneurs skip this step

Taking over an existing business ●is statistically a better bet. Most

failed entrepreneurs prefer to

start from scratch

Nine out of ten of Botswana’s ●fastest growing businesses sell to

companies. Failed entrepreneurs

tend to try market straight to

consumers

And the list goes on: they try to ●compete on price alone, they

under-emphasise marketing,

they don’t understand the

importance of financial

controls.

Dube concludes, with a smile.

‘Many of these risks reflect a lack of

preparation and foresight. At BECI,

our advice is this: Don’t play with fire.

Do what successful people do. Think

about risk, and think about it very,

very carefully.’

BECI Markerting Manager, Bonani Dube

8FRAUD FOCUS IDENTINY THEFT

Identity is defined as a set of

features and other characteris-

tics which uniquely describe an

object. Identity features can either be

tangible or intangible.

From human perspective, identity

comprises personal features and data

elements which, taken together, can

uniquely describe a particular person.

It is this uniqueness of personal data

which makes one’s identity an impor-

tant resource. The identity of people is

normally associated with their wealth,

lifestyles, and social status. Criminals

are aware that one of the most effective

strategy to evade the course of justice is

to change identity. Thus, the perception

of people towards a particular criminal

can change if the criminal successfully

change his name (which is associated

with crime) to someone else.

Banks, immigration, authorities

and law enforcement agencies need

one’s identity in order to make sure

that they are dealing with the right per-

son. The problem with human identity

is that it is documented in passports,

Omang, birth certificates, bank state-

ments, and other media. This makes

human identity prone to theft.

This article discusses identity theft

and explain why it is important for peo-

ple to safeguard their personal data.

Identity theft is a crime in which

FRAUDFOCUS

IDENTITY THEFT

a person wrongfully obtains and uses

another person’s personal data in some

way that involves fraud or deception,

for economic gain (Wells). The personal

data may include, name, address, date

of birth, Omang number, passport

number, credit card number and other

information.

How criminals use stolen identity

data

Once a person’s identity data is

stolen, the perpetrators can use it to

commit other crimes. For instance, if a

fraudster steals an Omang, or passport,

he can make minor alterations to the

victim’s image and use it to open bank

accounts, credit card accounts, Loan ac-

counts, utilities accounts, applying for

driving license, etc.

Case illustration

Here is an example illustrating how

serious identify fraud can be:-

When fraudsters steal personal

data (through omang, passport, etc),

they can use it to open a savings or

current account. Once an account is

opened, they make regular deposits to

the account for some time in order to

give the bank false security. They then

apply for huge loans or buy expensive

cars using the bank’s credit facility. They

even apply for credit card facility.

Once the bank gives them the

loans or credit card facility, the identity

thieves quickly withdraw all the money

from their account, utilize the credit

card facility to the maximum limit and

disappear. Investigations are then con-

ducted when the bank notice that the

loan and credit card accounts are not

being honored. To trace the culprit, the

banks rely on ‘stolen identity informa-

tion’, which the fraudster submitted.

The stolen identity information eventu-

ally leads the Police to an innocent per-

son who may be wrongfully arrested.

Profile of identity thieves

Although identity thieves can be

friends, employees, and relatives, most

of the fraudsters fall into one or more of

the following:

Illegal aliens needing new identi- ●ties to evade immigration authori-

ties or law enforcement agencies.

Former convicts who served time ●in prison and wish to conceal their

identity.

A university student looking for ●an easy way to work his/her way

Elliot Luka: FCCA; ACA;MBA;CFE

9

No. 1 F.C. of T v Commonwealth Aluminium Corporation

Limited (1980) 11 ATR 42, in Walpole, M (2001) Current

Issues in the Taxation of Intangibles. An Attempt to Tax

“Scotch Mist” ATAX Discussion Paper Series No 7

FRAUD FOCUS IDENTINY THEFT

through school. The most common

crime is where identity thieves use

someone’s certificates or degrees

to get jobs.

Criminals who want to launder ●money without trace.

Career criminals who want to rob ●banks and people

How identity thieves get information

from their victims

Here are some of the common

methods used by identity thieves to

get information from their victims.

Sorting through discarded rubbish ●in dust-bins.

Intercepting incoming or outgo- ●ing mail.

Using an accomplice within the ●organization. This method is com-

mon in financial institutions

Through certificates, diplomas, ●licenses placed on work place

walls

Soliciting information from victims ●through job application schemes

where applicants are given a form

to fill. The applicant is made to give

sensitive information in the form.

Using pretext calls where the ●fraudsters pretend to be a bank

manager wishing to ‘confirm’ some

information from the victim.

Preventing identity fraud

Some of the useful methods for

preventing identity theft include the

following

Before providing personal infor- ●mation, make sure the individual

or business requesting it has valid

reason for requiring the informa-

tion

Do not give identity information ●like Omang number, passport or

credit card number over a tele-

phone.

Never give identity information ●like passport number, account

number, on entry forms for ‘com-

petition’. Be suspicious if the com-

petition entry form ask for infor-

mation beyond your name and

contact address. Identity informa-

tion may be required only after

you have won the competition

and not before.

Keep your birth certificate in a safe ●place.

Close all unused credit card ac- ●counts. If possible make sure you

know your credit card account

number and the toll free telephone

number for your banker. This infor-

mation is needed when you want

to report stolen or lost card.

Avoid moving with a wallet full of ●credit or debit cards. Before set-

ting up for shopping, decide which

card to take. It is easier to report if

one card is missing rather than 6

cards from different banks!

Report to the police or relevant au- ●thorities immediately when identi-

ty documents are stolen or lost.

Next issue

The next issue will discuss Bribery

and Conflict of interest as two of the most

common types of corruption in both pri-

vate and public sector.

About Author: The author is an

expert in fraud Investigations and au-

dit solutions.

Elliot Luka; Email: CELL: 74119236

ifpa@botsnet.bw ; elliotl@bac.ac.bw

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For merchandise enquiries contact Pule Mogale at 3972992

10SHORT STORY CORNER

Soon the hat began to fill up. A lot more people were giving money to the blind boy.

That afternoon the man who had changed the sign came to see how things were.

The boy recognized his footsteps and asked, “Were you the one who changed my sign this morning? What did you write?”

The man said, “I only wrote the truth. I said what you said but in a different way.” I wrote: “Today is a beautiful day but I cannot see it.”

Both signs told people that the boy was blind. But the first sign simply said the boy was blind.

The second sign told people that they were so lucky that they were not blind.

Should we be surprised that the second sign was more effective?

Moral of the Story: Be thankful for what you have. Be creative. Be innovative. Think differently and positively. When life gives you a 100 reasons to cry, show life that you have 1000 reasons to smile.

Face your past without regret. Handle your present with confidence. Prepare for the future without fear. Keep the faith and drop the fear.

The most beautiful thing is to see a person smiling…

And even more beautiful, is knowing that you are the reason behind it!!!

“I am blind, please help.”

A blind boy sat on the steps of a building with a hat by his feet. He held up a sign which said: “I am blind, please help.” There were only a few coins in the hat.

A man was walking by. He took a few coins from his pocket and dropped them into the hat. He then took the sign, turned it around, and wrote some words. He put the sign back so that everyone who walked by would see the new words.

11

No. 2 Greenhill,C .R. & E.O. Herbolzheimer (1981) Control of transfer prices in international transactions: The restrictive business prac-tices approach. In R. Murray e,d., Multinationals beyond the market, 185-94. New York: John Wiley and Sons, in Al-Eryani, M.F, Alam, P & S.H.Akhter (1990) Transfer Pricing Determinants of US Multinationals. Journal of International Business Studies. Vol. 21 No. 3, pp.409-425.

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS)

Most central governments

in the world use a cash

based accounting sys-

tem, though increasingly states are

seeking to embrace accruals account-

ing to better understand their assets

and liabilities and to smooth cash flows

on capital investments. The emphasis

on the cash based system is both his-

toric and logical – the logic being in

relation to the usual mechanism for

disbursing government funds as an ap-

portionment through budgets of annu-

al tax receipts. Local arrangements have

in many cases led to the development

of hybrid systems which incorporate

some element of accruals accounting,

if only in respect of reporting long term

liabilities. But it is widely recognised by

states around the world that, while re-

specting local specifics and aligning to

annual budgets is important, the con-

sistent application of an accruals based

approach brings real benefit.

This article seeks to give a brief

overview of the International Public

Sector Accounting Standards (IPSAS),

which are an internationally recognised

mechanism by which governments can

standardise their accounting approach.

They are normally broken down into

two types:

Cash based: Set of principles and • good practice policies adopted by

public sector entities to bring con-

sistency to the cash accounting of

government entities.

Accruals based: Set of detailed • standards that provide a frame-

work for accounting for the specific

requirements of government enti-

ties, in a manner which is consis-

tent with private sector accounting

approaches.

In terms of sheer volume this split

is quite misleading: there is only one

cash based IPSAS, while there are thirty

one accruals based ones in the 2011

handbook. However, adoption of the

former is an essential first step for any

government planning to move to ac-

cruals based accounting; further, the

emphasis reminds governments using

their own disparate cash accounting ap-

proaches that there exists a framework

around which they can standardise

their current accounting practices.

IPSAS are intended to improve

the quality of general purpose finan-

cial reporting by public sector entities,

with the intention of allowing better

informed assessments of the resource

allocation decisions made by govern-

ments, thereby increasing transparency

and accountability. They are produced

by the International Public Sector Ac-

counting Standards Board, which is an

independent organ of IFAC and which is

constituted in a similar way, and issues

its pronouncements in a similar fashion

(using exposure drafts etc), to the more

familiar Accounting Standards Board.

IPSAS provide a framework for ac-

counting for public finances which is

convergent with internationally recog-

nised financial reporting standards. This

is because IPSAS are derived from IFRS

and represent an adaptation of these

standards to apply consistent prin-

ciples to the nuances of public sector

accounting. For this reason, the public

sector standards do not apply to Gov-

ernment Business Enterprises (GBEs, ie

parastatals), which are entities that es-

sentially operate within the private sec-

tor, though owned by organs of state,

and which apply IFRS. However, while

these entities themselves may produce

IFRS compliant accounts, a proper un-

derstanding of the whole activity of

government requires that their results

are consolidated within the govern-

ment’s financial statements. This is a

requirement even of the cash based IP-

SAS which has generally represented a

significant hurdle to full compliance for

countries which have decided to follow

that path.

The comparability between IPSAS

and IFRS serves several important pur-

poses, not least of which is assisting

users of the accounts by presenting

financial statements which are con-

sistent with more familiar company fi-

nancials. Another benefit which might

appeal to BICA members is that they

make it easier for accountants to move

between public and private sectors,

thereby helping spread best practice

across sectors.

A number of other benefits in the

full application of IPSAS have been

identified by The United Nations Gen-

eral Assembly, which adopted them in

2006 and noted the following:

transparency in respect of assets

and liabilities generally.

-

counting practices through the

application of credible, indepen-

dent accounting standards on a

full accrual basis.

-

tion about costs that will better

support results-based manage-

ment.

-

able equipment into the ac-

counting system, with resulting

improvements in the accuracy

and completeness of non-ex-

pendable equipment records.

-

parability of financial statements

as a result of the detailed require-

ments and guidance provided in

each standard.

IPSAS

Mark Sims ACA, CPFAMark works in the Advisory team at KPMG Bo-

tswana, where he specialises in public sector issues.

He is currently vice-Chair of BICA’s Public Sector

Committee.

12

A further benefit relevant to coun-

tries like Botswana which receive devel-

opment aid, particularly since such aid

is increasingly being channelled directly

through governments by donor agen-

cies, is the increased assurance which

compliance with IPSAS will provide. As

the traditional donor states struggle to

dig themselves out of recession it is likely

that the little development aid they are

able to provide will be directed to those

states in whose public finances they have

most confidence.

The East and Southern African Asso-

ciation of Accountants General member

states’ aims include adoption of IPSAS

and membership of this organisation

includes Botswana and extends widely

across SADC. Although Africa is not over

represented in the list of over 70 states

which are in the process of complying

with either cash or accruals IPSAS, South

Africa is relatively advanced

by global standards. This is

because they have devel-

oped their own set of accruals

standards which have been

approved as consistent with

IPSAS, while allowing for lo-

cal variation, and which have

been widely implemented.

IPSAS support effective

accounting for public funds,

assets and liabilities, but they

should be placed in the wider

context of supporting robust

public financial management

(PFM). A good PFM system is

defined by the Public Expen-

diture and Financial Accountability Sec-

retariat (PEFA) at the World Bank as “es-

sential for the implementation of policies

and the achievement of developmental

objectives by supporting aggregate fis-

cal discipline, strategic allocation of re-

sources and efficient service delivery.”

Aspects of such a system include:

Credibility of the budget - The bud-• get is realistic and is implemented

as intended

Comprehensiveness and transpar-• ency - The budget and the fiscal

risk oversight are comprehensive,

and fiscal and budget information

is accessible to the public.

Policy-based budgeting - The bud-•

get is prepared with due regard

to government policy.

Predictability and control in bud-• get execution - The budget is

implemented in an orderly and

predictable manner and there are

arrangements for the exercise of

control and stewardship in the

use of public funds.

Accounting, recording and re-• porting – Adequate records

and information are produced,

maintained and disseminated to

meet decision-making control,

management and reporting pur-

poses.

External scrutiny and audit - Ar-• rangements for scrutiny of public

finances and follow up by execu-

tive are operating.

The impact of effective application of

IPSAS would be far wider than in the

accounting, recording and reporting

aspects noted above. Implementation

of IPSAS would affect all the systems

and processes used to derive financial

reports for the year end, including for

example, not just developing systems

for the accurate valuing of property

and inventory (including the systems

for managing inventory, stock counts

etc), but the identification of sufficient

numbers of trained individuals to carry

out the property, equipment and work

in progress valuations required at year

end.

The World Bank says that “high-quality

financial reporting in the public sec-

tor is the basis for accountability and

transparency in PFM.” The financial

reports represent the outturn of the

budgetary process, whether or not

government has delivered the bud-

geted expenditure. In lieu of more so-

phisticated measures of performance,

this provides a basic measure of the

delivery of government policy. To put

it another way, effective PFM depends

on the consistency and direction which

IPSAS can provide to management of

underlying activities and to financial

reporting.

States across both the developed

and developing worlds are working

hard to identify means of demonstrat-

ing the effective application of public

funds in pursuit of objectives mandat-

ed through the democratic process, i.e.

election promises and party manifestos

and legislation. In the UK, for example,

where I trained, central

government has adopted

full accruals accounting in

accordance with an IFRS/

IPSAS compliant approach

called “resource account-

ing”. This allows depart-

ments to develop reports

which show how much

money have been spent

on a particular govern-

ment policy, like reduc-

ing the number of smok-

ing related deaths at the

Department of Health, or

increasing the number of

children passing literacy

and numeracy tests at the Department

of Education, and how that expenditure

relates to the results obtained.

While IPSAS may not be applicable

to government business enterprises,

the wider context of PFM within which

they operate can help us think usefully

about how GBEs report their activities

and are held accountable. Govern-

ments can require additional disclo-

sures which show how parastatals are

supporting the delivery of government

policy, much as government depart-

ments in the UK show how their activi-

ties contribute to the delivery of out-

comes.

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS)

The comparability between IPSAS

and IFRS serves several important

purposes, not least of which is

assisting users of the accounts by

presenting financial statements

which are consistent with more

familiar company financials.

13IPSAS

14

Deloitte (Botswana) was the first

organisation in Botswana to become

a Platinum Accredited Employer in

2007. Following a comprehensive and

detailed assessment in late 2010, the

Firm is proud to announce that it has

been re-accredited at the Platinum

level. Deloitte (Botswana) remains as

one of only 5 employers in the country

and less than 10% of employers globally

who have achieved this elite status.

The ACCA Platinum Approved

Employer status recognises the

Firm’s high standards of staff training

and development and gives formal

recognition that:

Deloitte (Botswana) is committed • to providing learning and

development opportunities to its

professionals at all levels.

Deloitte (Botswana) meets • global standards in learning and

development support.

To exemplify this, the Firm provides full

financial support to its trainees as well as

paid leave and the opportunity to attend

relevant courses. In the workplace, each

trainee is assigned a mentor who meets

regularly with the trainee, guiding him

or her along their learning pathway.

Deloitte (Botswana) continues to add

to the long list of employees who have

attained ACCA Associate Membership

with a further seven staff members

recently admitted to this qualified

membership of ACCA. The seven

(pictured below) gained their ACCA

qualification while working their way

“up the ranks” in the audit division

where they are now operating as senior

Deloitte (Botswana) Re-Accredited At Acca Platinum Status Level

Mrs Pragna Naik, Partner of Deloitte (Botswana), receives the Firm’s Platinum Approved Status certificate

from Mr Michael Gora, Country Manager for ACCA Zimbabwe.

Deloitte (Botswana)

meets prestigious

benchmark again

professionals.

The Firm’s new Associate ACCA

members.

Remarking on the achievements of

these seven employees, Max Marinelli,

Partner-in-Charge of the Deloitte

(Botswana) practice explains, “Our

commitment to the training and

development of our staff is just one of

the many ways that we invest in our

people. We provide a whole framework

of systems and processes that assist our

young professionals to acquire their

professional qualifications and gain

the necessary work experience to build

their skills and meet key accounting and

auditing competencies.”

Deloitte (Botswana)

realises the benefits of its

ACCA Platinum status

From left to right, front row, Boitumelo Maoketsa, Dimpho Thekiso, Gosegomang Modise

Back row, Goemeone Makgona, Ephifania Nkanga, Idah Nkoloi, Refilwe Tshepiso Tuelo

Our commitment to the training

and development of our staff is

just one of the many ways that

we invest in our people.

DELOITTE (BOTSWANA) REACCREDITED AT ACCA PLATINUM STATUS LEVEL

Advertorial:

15

The BICA QUALIFICATION

THE BICA QUALIFICATION

BackgroundThe Accountants Act No. 12 of 2010

passed in Parliament at its July/August 2010 session became effective on April 1, 2011 through Statutory Instrument No. 21 of 2011.

The Act, among other things, es-tablishes the Botswana Professional Accountancy Qualification, BICA, which is benchmarked against the Institute of Chartered Accountants in England and Wales (ICAEW), one of the world`s leading professional accountancy bod-ies. The BICA qualification, which is Botswana’s own professional accoun-tancy qualification, was launched on 29th April 2011, with its first intake of students in July 2011. The next intake of students will commence its studies in January 2012.

In this article we will attempt to explain the key elements of the BICA qualification.

Elements of the BICA qualificationThe BICA qualification has four es-

sential elements: exams, technical work experience, initial professional develop-ment and structured training in ethics. Students cannot qualify without com-pleting and passing all four elements.

Along with these four elements, BICA requires students to have:

a BICA training agreement; and ●six-monthly reviews throughout ●their training.

Students with other relevant quali-fications or previous work experience may be eligible for full or part credits at some of these elements.

BICA examinationsThe BICA qualification comprises

two stages - the Professional Stage and Advanced Stage. There are 15 exams al-together - 12 at the Professional Stage and 3 at the Advanced Stage (see the diagram below).

Professional StageThe Professional Stage consists of

knowledge modules which provide an introduction to the core concepts un-derpinning accountancy, and the ap-plication modules which demonstrate how a student can build on knowledge in practice.

Knowledge modulesEach knowledge module assess-

ment is 1.5 hours long and each exam will be e-assessed (computer-based), except for Principles of Taxation and Law which have paper-based exami-nations. Computer-based assessments can be taken at any time (subject to availability) at BICA-approved test cen-tres. Principles of Taxation and Law are examined twice per year through pa-per-based exams of 1.5 hours long each and are sat at BICA exam centres.

Application modulesThe Application modules are as-

sessed twice a year through paper-based exams of 2.5 hours long each and are sat at BICA exam centres.

The pass mark for the Professional Stage modules is 55%.

There are no regulations which stipulate the order in which students must attempt the Professional Stage modules. Accordingly, employers are able to design training programmes according to their business needs, sub-ject to modules offered by learning in-stitutions at any given time if students wish to study with an educational insti-tution.

Students are allowed a maximum of four attempts at each Professional Stage module.

The Professional Stage has to be completed first before a student can proceed to the Advanced Stage.

FTJ NdekeBAcc, MSc (Acctg & Fin), FCCA, FCA

Director, Training & Professional Development,

BICA

1 2 3 4 Exams TWE IPD STE 15 exams, including 450 days of technical Initial professional Structured the Case Study in work experience development training in ethics the final year of your within your period period of approved of approved training training

The four essential elements of BICA training

Management Information

Accounting Law Principles of Taxation

Assurance Business and Finance

ETHICS

Knowledge modules

Financial Management

Financial Accounting

Financial Reporting

Audit and Assurance

Taxation Business Strategy

ETHICS

Application modules

PROFESSIONAL STAGE

ADVANCED STAGE

Advanced Taxation Corporate ReportingBusiness Analysis Advanced Audit & Assurance

ETHICSETHICSETHICS

ETHICS

Case Study

ETHICS

Integrated ethics training throughout to support business decision-making

Work experience puts your learning into context

IPD – initial professional development enables skills progression in five key areas

BICA EXAMINATION STRUCTURE

1 Paper combining both 1 Paper combining both

16THE BICA QUALIFICATION

Some of the BICA students who enrolled in July 2011

Advanced StageThe Advanced Stage consists of

two modules and a Case Study.The two Advanced Stage modules

are assessed twice a year through pa-per-based exams of 3.5 hours long each and are sat at BICA exam centres. The two modules have four syllabuses but only two exams which comprise two sections, A and B, and candidates must achieve the pass mark in each section. Students can take the examinations in any order, with the exception of the Case Study. To attempt the Case Study, students must have begun the final year of their training contract.

Case StudyThe Case Study requires students to

apply a depth of technical knowledge, integration of learning from across the syllabus and a demonstration of strate-gic business skills. The Case Study lasts 4 hours and is sat at BICA exam centres twice a year.

The pass mark for the Advanced Stage modules and the Case Study is 50%.

Technical Work Experience (TWE) Each student must complete a

minimum of 450 days of TWE during the duration of the training agreement (this excludes exam days, holidays, courses, study leave, illness and office administration).

TWE is undertaking ‘real’ work of a financial, business and/or commercial

nature. It can include (but is not limited to) one of the following: Accounting, Audit and Assurance, Taxation, Finan-cial Management, Insolvency and In-formation Technology. Technical work experience can be in just one area but a variety of work experience allows stu-dents to gain breadth as well as depth of understanding.

TWE gives the students the oppor-tunity to:

apply the technical knowledge ●gained during their studies

develop their personal effective- ●ness

develop business awareness skills ●exercise professional judgement. ●

Students with previous work ex-perience or some other professional qualifications may be eligible for 12 months credit for prior work experi-ence and would be required to do 300 days instead.

Initial Professional Development (IPD)

Initial Professional Development is designed to help students integrate their exam studies, technical work ex-perience and the development of their professional skills.

The IPD scheme ensures students develop the added value skills that help set them apart as a chartered ac-countant. IPD focuses on five key skill areas:

ethics and professionalism ●

personal effectiveness ●technical and functional expertise ●business awareness ●professional judgement. ●

Students develop these skills through on-the-job learning such as discussions with more senior staff, shadowing, mentoring, events and in-house training.

Employers can use their own or-ganisations’ professional develop-ment scheme where it is accredited by BICA or students can follow BICA’s IPD scheme.

Structured Training in Ethics (STE)

The BICA qualification is unique in requiring sustained and compre-hensive ethics learning throughout the full length of a student’s training. The structured training in ethics (STE) programme is an online training and assessment package based on interac-tive case studies, scenarios and self-test questions. There are three stages to the STE programme which must be com-pleted throughout a student’s training.

The STE programme will enable students to:

identify and analyse ethical issues ●develop their knowledge and un- ●derstanding of ethical guidance

and theories

become familiar with the BICA ●ethical guidance

apply the fundamental principles ●

17THE BICA QUALIFICATION

and other guidance in a practical

way to resolve dilemmas.Training Agreement

To qualify as a chartered accountant all students must complete a training agreement with a BICA authorised train-ing employer (ATE).

The training agreement is a written and signed agreement between a BICA student and their authorised training em-ployer. It is very different to an employ-ment contract. It outlines the commit-ment made by the employer to provide high-quality training to the student, and the commitment made by the student to contribute to their employer throughout their training. The employment contract and the employment laws of the Repub-lic of Botswana will always supersede the power of the training agreement in rela-tion to matters of employment.

A training agreement must be for a minimum of 36 months and a maxi-mum of 60 months, unless the student is a member of ACCA, CIMA or CIPFA, in which case the training agreement can be for a minimum period of 24 months.

A student can study for the BICA qualification independently of a BICA Authorised Training Employer (ATE). However, to qualify and gain BICA mem-bership, such a student will need to suc-cessfully complete all the four essential elements of BICA training – exams, IPD, STE and TWE – and a period of approved training with an ATE. As an independent student, one can study and sit for all the BICA exams (except for the Case Study). Students can only apply for and sit the Case Study exam once they have begun the third year of their period of approved training.

Six Monthly Reviews BICA requires ATEs and their stu-

dents to meet at least twice a year to discuss the students` progress and de-velopment.

BICA MembershipStudents will be ready to apply for

membership of BICA once they have:

Successfully passed all the BICA ex- ●ams

Completed the Initial Professional ●Development (IPD) programme

Completed the Structured Training ●in Ethics (STE) programme, and

Completed the approved Techni- ●cal Work Experience (TWE) pro-

gramme.

BICA membership will entitle the students to use the letters ACA after their names.

Entry RequirementsThe following qualifications will be

accepted for entry to the BICA qualifi-cation:

2 A Level passes plus 3 GCSE pass- ●es at Grades A-C.

Certificate in Accounting and Busi- ●ness Studies (CABS)

Diploma in Accounting and Busi- ●ness Studies (DABS)

HND from the former Botswana ●Institute of Administration and

Commerce (BIAC)

International Accounting Techni- ●cian Qualification from BICA

Student of AAT who has achieved ●NVQ Level 3 Intermediate Stage

AAT Graduate ●CAT ●Any university degree recognised ●by the Institute as equivalent to a

degree from the University of Bo-

tswana

ACCA student – who has passed at ●least ACCA Part 1.

CIMA student – who has passed at ●least CIMA Certificate in Business

Accounting.

Member of ACCA or CIMA or any ●other IFAC recognised professional

accounting body.

Other professional and vocational

qualifications:

Associate of the:

Association of Business Executives ●(AMABE)

Association of Cost and Executive ●Accountants (ACEA)

Association of International Ac- ●countants (AAIA)

Association of Taxation Techni- ●cians (ATT)

Chartered Institute of Bankers ●(ACIB)

Chartered Insurance Institute ●(ACII)

Chartered Institute of Personnel ●and Development (AssocCIPD)

Chartered Institute of Taxation ●(CTA)

Institute of Actuaries (AIA) ●Institute of Chartered Secretaries ●and Administrators (ACIS)

Institute of Commercial Manage- ●ment (AMInstCM)

Institute of Financial Accountants ●(AFA)

Other qualifications that match A level standard may be considered on individual application to BICA.

Local Qualifications must be from Tertiary Education Council (TEC) approved institutions.

Exemptions or Credits for Prior Learning (CPL)

Exemptions or credits for prior learning (CPL) are available for the Pro-fessional Stage modules if one has an accounting or business related degree, AAT, CAT, or a professional accountancy qualification such as ACCA and CIMA. Exemptions for other relevant qualifi-cations will be determined on a case by case basis.

Becoming an Authorised Training Employer

An employer needs to meet the BICA Training Standards to start train-ing BICA students. This helps ensure consistency of support and training to BICA students across the whole spec-trum of employers.

There are five key principles to BICA Training Standards:

to operate with professionalism ●and commitment to BICA training;

to provide students with a suitable ●training environment;

to offer students appropriate su- ●pervision and support;

to offer students the opportunity ●for personal and professional de-

velopment; and

to offer students appropriate train- ●ing in professional ethics.

Becoming an authorised training employer (ATE) is a straightforward process. To become authorised to train BICA students, please download and complete the Register as a Training Em-ployer application form at www.bica.org.bw. Our Training and Professional Development staff will visit your office and help you through the process. They can be contacted on +267 3972992.

18

September

2011

President’s Cocktail

6

1

4

3

2

7

109

5

8

1. Finance & Admin Committee member Devaprasad Arakkal,

BICA President, Vijay Kalyanaraman and Public Sector Com-

mittee member Mark Sims.

2. The guests listening attentively to the President’s speech.

3. BICA members Ajay Bhatnagar, Sashi Kumar Velambath were

also in attendance.

4. Mark Sims, BICA Admin Manager Regina Ramanteba and

Chairperson of the Public Sector Committee Lily Matenge

sharing a light moment.

5. BAC’s David Cropper chatting to ACCA’s Mike Gora.

6. BICA members Peter Kesitilwe and Boemo Gaolathe.

7. BICA CEO Duncan Majinda kikstarting proceedings.

8. L-R; BICA members Cecilia Ramatlapeng, Mythri Sambasivan-George

and BIA ex-President John Stevens.

9. Ernst & Young Managing Partner Bakani Ndwapi, Duncan Majinda

and Ananth Ram of Botho College.

10. Some of the guests in attendance.

19

Globally connected

Locally relevant Always

extraordinaryAfrica is a complex continent. It

is multi-cultural, multi-lingual, geographically vast and steeped

in political history. It also has enormous potential and many

untapped opportunities.

KPMG has both the local skills and access to global

expertise needed to understand and operate seamlessly across the

continent.

We offer quality, consistent and efficient

services to all our local, national, regional and

multi-national clients.

For more information,

please contact us on +267 391 2400 or e-mail

enquiries@

kpmg.bw

kpmg.com/bw

© 2011 KPMG Botswana, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”),

a Swiss entity. All rights reserved. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International. MC7070

20

Most businesses are hanging

by the thread, with the

cash flows considered the

lifeblood of a business becoming tighter

by the day. Just when we thought we

should be popping the champagne

bottles as we believed that the world

was coming out of the economic ‘ICU’,

the situation worsened due to the fear

of a double dip recession.

Financiers know that they make

money from lending. However, this

is not the time especially lending to

businesses experiencing symptoms of

severe cash flow problems. Banks are

not available to give alms they are in

business.

Especially vulnerable in this

situation are the SMES as they normally

experience difficulties in accessing

finance in good times worse still in the

current bleak economic environment.

That begs the question,

where will cash come from?

Largely the answer lies in the better

management of working capital or

simply put going back to the basics

of cash flow management. It is at

this particular time that it becomes

imperative to seriously look at the

entrenched management policies and

procedures and analyse their impact

on the business cash flow and eventual

profitability.

In trauma cases, doctors fully know

that the priority in such situations is to

first and foremost stop the bleeding.

In this economic emergency

situation, the responsibility of any

management should be to stop the

cash haemorrhage. The management

must also identify the policies which

inadvertently could be contributing or

drilling holes in the business reserve

resulting in cash haemorrhage.

I thought in this edition, I should

look at two practices, self inflicted by

management but which affect the

customer who brings cash into the

business. I will focus on parking area

and managing the frontline staff.

Fortune 500 magazine, identified

three cardinal success factors for the

top managers in the world:

Car Parking

Let me start with focus on the

customer and see how this is reflected

in the policy regarding parking at

business premises.

If you have been a victim and

most of you have been, would know

how frustrating it is to struggle to find

parking space whilst all the available

parking slots are reserved for ‘directors,

managers...’. The customers who should

be bringing in money to pay salaries

for the directors...are denied parking

at the behest of the overzealous

security guards. Sometimes, these

customers are also threatened with

fines or having their cars clamped for

parking in ‘reserved’ parking slots. The

irony of this is that after the customer

finally finds parking space may be by

the roadside he enters the office to be

greeted by an emblazoned statement

that cynically says, ‘Our Customer First’

or ‘We Value our Customers’. If only

managers realised who pays their

salaries, holidays and the other fringe

benefits, who do you think would have

exclusive parking space?

The situation above shows that

there is a clear disconnect between

management and the customers who

are the reason for being. It is time to look

at this policy and realise what impact it

has on our customers who bring in cash

into the business. Does your policy

encourage customers to come to you

or does it chase them away?

Frontline Staff

I recently went into a public toilet at

the Oliver Tambo International Airport. I

received a welcome from a cleaner that

LEAKY BUCKET PART 6

Author: J.M. Pongaponga (FCCA,FCA, MBA) – Managing Consultant, Celavie Business Consultancy

HOW MANAGEMENT

POLICIES IMPACT ON

CASH FLOWS?

Contd on Page 22

THE LEAKY BUCKET SYNDROME PART 6

22

made me think about the joy of doing

what one enjoys. As I entered the toilet,

this guy with a broad smile said to me,

‘ welcome to my office sir’. I said wow...

It reminded me of

Marcus & Buckingham

who said, ‘there is

nobility in every role’.

To what extent do

management policies

go to show that the

front line who are

effectively the face of

the organisation are

made to feel important and dignified.

How much time do we personally

spend to ensure that our faces are

presentable in public. How many times

have you ‘fallen’ for someone because

of their pretty face?

The front line staff represent that

face. ‘Do you know Margaret...? Which

Margaret...? I mean the cleaner. Oh...

is that her name?’ Many of us would

identify with this situation. Now, if the

front line staff are not given recognition,

what does that do to their feeling of self

worth? Self motivated

front line staff will go

out of their way to

serve customers with

zest and vim. These

front line staff control

the experience of

the customer from

start to finish. The

customers who are

better cared for are bound to return

and do business with your organisation,

bringing in cash...the life blood of your

organisation.

Isaac Newton said ‘If I have seen

further it is only by standing on the

shoulders of giants’. These front line

staff are giants on which to build your

organisation. How feeble should the

knees of your front line be? To succeed

in the ever competitive economic

environment requires commitment to

taking care of employees who take care

of the customers.

As the world enters into the fearful

period of economic uncertainty, it is just

fair that you look at your organisation

critically and analyse whether your

management policies regarding

customers and employees are drilling

holes causing cash haemorrhage in

your bucket and thus threatening your

survival.

Author: J.M. Pongaponga (FCCA,FCA

Bots, MBA) – Managing Consultant,

Celavie Business Consultancy Sources

– Kaiser K and Young D : Harvard

Business Review, May 2009

Break All The Rules(2001)

In this economic emergency situation, the responsibility of any management should be to stop the cash haemorrhage. The management must also identify the policies which inadvertently could be contributing or drilling holes in the business reserve resulting in cash haemorrhage.

Contd from Page 20

THE BICA QUALIFICATION TEAM

Behind every successful proj-

ect or huge endeavor is a

powerful and coordinated

project team. The BICA qualification

project has been an unparalleled suc-

cess, and tribute should be paid to the

project team and the very supportive

stakeholders.

Right from the beginning, the

Minister of Finance and Development

Planning, Hon. O.K. Matambo, had a vi-

sion of the project succeeding even at a

time when the Institute itself had some

running were expedited. BICA is grate-

ful for the role the Executive Secretary

of TEC, Dr Molutsi, personally played in

this regard.

The heads of accredited tuition

providers Botswana Accountancy Col-

lege and Botho College, Mr. Michael Le-

solle and Mrs. Sheila Raja Ram, respec-

tively, provided the required leadership

to ensure that the BICA programme

commenced as scheduled in July 2011.

The Council of the Institute led by

its President, Mr. Vijay Kalyanaraman,

and the Chief Executive Officer, Mr.

Duncan Majinda, with the support of

the past presidents of the Institute and

various Committees of Council were

also pivotal in ensuring that the project

was a success.

One can say without a shadow

of doubt that the project would have

been doomed without the tremendous

support from the Institute of Chartered

Accountants in England and Wales.

Please join me to salute the proj-

ect team. What a team!!!!

doubts mainly because of the magni-

tude of the project and the resources

implications. The Minister fought tooth

and nail in Parliament to ensure the Ac-

countants Act 2010, and its sister Act -

the Financial Reporting Act 2010, were

passed in record time.

The Ministry secured some fund-

ing from the World Bank and also facili-

tated the engagement of the Institute

of Chartered Accountants in England

and Wales as the twinning partner for

the Institute to ensure that the new

BICA qualification could be of the high-

est possible standard. The Ministry fur-

ther persuaded Parliament to provide fi-

nancial support to the Institute to build

its capacity. BICA and the accounting

profession in general is grateful for the

phenomenal role the Ministry, and Hon

Matambo in particular, played in en-

hancing the BICA Secretariat`s capac-

ity.

The Tertiary Education Council

(TEC) ensured that the required approv-

als for the BICA Qualification to start

THE BICA QUALIFICATION TEAM

Duncan Majinda, BICA CEO

MAAT, MBA (Finance), FCCA, FCA

‘YOUR COMPETITIVE ADVANTAGE’

24BICA SPORTING & SOCIAL EVENTS

2525BICA SPORTING & SOCIAL EVENTS

IFSC Career fair 2011...BICA OUTREACH PROGRAM:

26

The time of National Budget

announcement by any

Minister of Finance in

any country creates an

atmosphere of mixed expectations

both in the pre and post budget

announcement. The expectations

range from that of trepidation to hope.

The fears are that the Minister would

focus on increasing direct and indirect

taxes. The hopes are premised on the

anticipation that the Minister ought

to be conscious of the socio-economic

challenges that business and ordinary

people would be grappling with at any

given point in time. It is indeed that

time of the year when any Minister of

Finance experiences one of the most

torrid times in their tenure as they get

both salutary praises and condemning

criticisms about the budget policies/

propossals.

One of the most critical components

of the budget is to look at fiscal policies-

tax reforms being on the top of the

agenda in as far as the fiscal aspect

of the budget is concerned. Ministers

of Finance the world over have to

find ways and means of financing the

recurrent budget expenditure and tax

is one of the easiest ways of doing so.

Easiest in the sense that one cannot

choose whether or not to pay tax-we

all have to pay tax if we are gainfully

employed and/or are carrying on trade

as envisaged in the tax laws of the

country. The reader should be aware

that when the Minister announces a

budget one of the main focus areas

is on enhancing the administrative

capacities of the revenue collection

arm of the government-in our case

the Minister would seek to improve

the revenue collection capabilities of

Botswana Unified Revenue Services

(BURS). World-wide today’s tax

practitioners face enormous challenges

as governments formulate policies that

are aimed at broadening the revenue

base. In the same vein businesses

face similar problems especially in the

highly emotional and charged area of

tax evasion and tax avoidance.

From a tax planning vantage point

the solution is to seek the expert

advice of competent tax advisors who

will explore the various alternatives of

minimising tax exposure within the

confines of the tax laws of the country.

The advice is not to confuse tax evasion

for tax planning. Tax planning is

legally permissible and tax evasion is

legally undesirable and attracts severe

penalties.

Tax avoidance and tax planning

The distinction in the tax law

between tax evasion and tax avoidance

and between legitimate tax planning

and undesirable tax avoidance could

be analysed in terms of whether or not

they confer the rights to legitimate tax

TAX PLANNING,TAX AVOIDANCE ANDTAX EVASION

From a tax planning vantage point the solution is to

seek the expert advice of competent tax advisors

who will explore the various alternatives of minimising tax

exposure within the confines of the tax laws of the country.

AT A GLANCESimon Goude

TAX: PLANNING, AVOIDANCE, & EVASION

27

planning. The following distinction is

critical:

Tax evasion is the deliberate

escaping from tax which is properly

chargeable. It attracts various levels of

penalties. The Commissioner General

has extensive powers given to him

by the tax laws and can invoke the

relevant provisions of the Acts(Income

Tax or VAT) in the exercise of powers

conferred to him under those Acts.

Tax avoidance is a result of some act

by which a person so arranges his affairs

in such a manner that he is liable to pay

less tax than he would otherwise have

paid but for the arrangement. His or

her activities constitute legitimate tax

planning or mitigation, except so far as

they are curtailed by anti-tax avoidance

provisions, in which case they become

undesirable tax avoidance and the tax

authorities may set aside or disregard

such an arrangement or scheme. The

taxpayer’s right to seek to avoid tax

, by lawful means, that is , to reduce,

minimise, mitigate, nullify or simply

defer a liability to pay tax is found in

many judicial precedents. There is

abundance of decided cases where

taxpayers have paid less tax than they

would have otherwise paid thanks to

the careful tax planning of an astute tax

practitioner.

The reader must bear in mind that

although tax avoidance is at law legal

many tax regimes provide for anti-

tax avoidance provisions in order to

counter undesirable tax avoidance

schemes or arrangements designed to

avoid paying tax.

A detailed discussion on tax

planning, tax avoidance and tax evasion

will follow in future articles.

About the author

Simon Gonde is a Tax Manager in

the tax division at Deloitte & Touché

(Botswana). He has extensive practical

and theoretical knowledge in the tax

laws of Botswana, South Africa and

Zimbabwe. He is a member of C.I.S

(Zimbabwe) and Botswana Institute of

Chartered Accountancy (BICA) and also

holds an MBA qualification. In addition

he is a holder of a post graduate

qualification in Strategic Tax from the

University of South Africa (UNISA). He

can be contacted on sgonde@delotte.

co.za or telephone (+267) 395 1611 or

cell (+267) 74 13 94 58.

1APR

11 - 31 MAR12

TAX: PLANNING, AVOIDANCE, & EVASION

28

Living in a global village has created

competition in all aspects of life and or-

ganisations have not been spared from

the competition. In order for an organi-

sation to be successful, it needs every

advantage.

Quality and price are important to

business success, but satisfied clients

are the life source of all businesses.

Happy (hence likely to be loyal) clients

will choose your products or services

over a competitor’s even if there is no

difference in quality and the price is a

little higher. This kind of loyalty increas-

es profitability and improves an organi-

sation bottom line.

In order to satisfy clients, one

needs to be closely in touch with them

so that they are aware of the client’s ex-

pectations.

How do you determine ifclients are satisfied with your business?

In short – ask them! When you are in

touch with your clients, you are likely to

know areas in the value chain in which

you are falling short and need to im-

prove.

Information can be obtained us-

ing a client survey. Compile a short

questionnaire (3 or 4 questions), make

copies and place these at your service

points. Assign a junior staff member

to ask every client that gets served to

complete the form and to place the

completed form in a sealed container.

Another possibility is to obtain tel-

ephonic feedback similar to the above

from clients that make purchases above

a certain limit or clients who give your

business value above a certain limit

whose contact information you have.

This is done so as to determine

your position in service delivery as per-

ceived by your clients and then assist in

launching relevant actions to address

areas of weakness.

There are two more ways of evalu-

ating client satisfaction namely:

• Complaints received in re-

spect of service delivery and

• Items returned due to defects

and substandard functioning.

If you implement a process of tracking

you will be able to identify trends and

areas with shortcomings.

Suggestions on how to keep clients

satisfied:

• Be friendly towards clients

• First impressions matter -

- Business premises must be

well kept

- The appearance and clothing

of staff must create a positive

image

- If in retail business, delivery

vehicles must be clean.

• Staff members must be adequately

trained to provide truly good ad-

vice and solutions to clients’ prob-

lems, questions and needs. Staff

members are the frontline people

responsible for satisfying clients.

In fact, to clients they are your or-

ganization. For that reason it is

not surprising that client’s satis-

faction suffers when staff mem-

bers are dissatisfied. When staff

members are satisfied, there is

less turnover, which means they

are more likely to possess experi-

ence that makes them better able

to satisfy clients. Also when cli-

ents deal with the same people

over time, they are more confident

that the organisation will consist-

ently meet or exceed their needs.

• Staff members must take responsi-

bility for helping clients “on behalf

of” the business as a whole. As

indicated above, training is impor-

tant and it is through training that

staff members should be made to

understand their role in service

provision so as to avoid such things

as for example:

- “This is not my depart-

ment……….”

- “I am new here…..” or

- “The system is down………..”?

• Promises to clients must be

kept

• There must be focus on the

details of the business

• There must be some reaction

to messages and clients must

be kept informed on the

progress made in respect of

enquiries and requests

Good communication must • be maintained between the

business and clients

Remember that a satisfied client is one

of the most powerful marketing aids at

the disposal of any business.

Theme:How to determine client satisfaction?

Lead through Service Excellence

LEAD THROUGH SERVICE EXCELLENCE

FCCA, ACACompiled by Leggy Bojosi

29