ADCORP HOLDINGS EMPLOYMENT QUARTERLY SEPTEMBER 2010

CA TRAINING IN SOUTH AFRICA

 

 
 

Willem van der Post

The South African landscape for training chartered accountants (CAs) is plagued by a significant shortage of suitable prospective candidates at entry level, and a training regime that is constantly challenged by the need to stay relevant.

A brief overview of the road to qualifying as a CA

In order to become a chartered accountant, the journey towards qualification has two distinct phases. The first is the predominant academic phase, completed at university, whilst the second phase is the predominant practical phase, completed at a training institution. A quick review of the training model clearly illustrates that the combination of financial skills, business acumen and team-playing roles that CAs are exposed to during training positively predisposes them to growing economic activity.

Consequently, once qualified, a vast array of employment opportunities is available to CAs. Typically, audit training institutions will retain between 10% and 20% of newly qualified CAs, depending on the economic climate and the growth of their business. A large portion of newly qualified CAs will find their way overseas to participate in secondment programmes, or will utilise their internationally sought-after financial skills to facilitate travel around the globe. Some will enter the corporate arena and pursue financial manager roles, whilst others will involve themselves in operational business leadership. Others still become entrepreneurs, academics, teachers; the list really is infinite.

In other words, CAs contribute to the country’s strategic economic growth by either starting new businesses, bringing efficiencies into existing organisations, playing a role in financial education, or accumulating additional skill sets abroad, which can then be shared and cross pollinated locally.

The first phase (training at university)

A scholar will decide, through a variety of interventions and influences that he/she wants to become a chartered accountant. Currently, there are 13 universities that are accredited by the South African Institute of Chartered Accountants (SAICA) to which such an individual can apply to in order to pursue obtaining an accredited BCom Accounting (CA stream) degree. Upon successful completion of the undergraduate degree at a sufficient performance level to gain acceptance into an accredited CTA (Certificate in Theory of Accounting) course, the next step in the university phase is to complete the CTA. Different universities will term this qualification differently: qualifications range from Hons BCom Accounting, BAcc Hons, PGDA, etc, but essentially the successful completion of the CTA represents admittance into the professional exams – cornerstones of the next phase of the journey towards qualification.

The second phase (training in practice)

After successful completion of the CTA, candidate chartered accountants will commence an accredited training contract with a firm or an organisation that has the ability to provide adequate exposure and training to meet the SAICA competency framework. The contract lasts for 36 months and during this time trainee accountants have to complete two exams, commonly referred to as part one and part two of the board exam. Part one is predominantly technically focused whilst part two is more focused on testing practical aspects. Should a candidate successfully complete both board exams, and accumulate a portfolio of evidence that bears testimony to the successful mastering of the prescribed comprehensive competency framework, the training organisation’s training officer can certify successful completion of the training programme, after which the candidate is eligible to register as a South African chartered accountant.

The supply/demand imbalance

Currently, the South African Institute of Chartered Accountants lists more than 750 training offices at which candidate CAs are able to complete the training programme. Included in this number are the big four accounting-and-audit firms. The aggregate intake needs of all players in the market exceeds 3 500 per annum.

When one compares this annual graduate intake need to the aggregate national yield from accredited universities, it is clear that the demand by far outweighs the supply. To mitigate the shortage in supply, many training offices take on board students that are not yet in possession of a CTA. The idea is to allow these students time to complete their academic studies, whilst at the same time mastering the competency framework in practice. Results show that this approach has a low success rate as very few students who attempt to pass the challenging CTAs qualification have been able to do so faced with the demands on their time as a working professional. Consequently, the supply/ demand imbalance continues.

Are there enough students interested in becoming a CA?

The number of students that commence studying towards qualifying as chartered accountants are sufficient. In fact, the capacity of many universities exceeds 100% as regards first year CA-stream student numbers. If the number of candidates that enrol for CA-stream studies were undiluted by the end of CTA, more than sufficient numbers of CA candidates would be eligible to train and ultimately qualify.

However, the attrition rate of CA-stream students at university level is very high. On average only one out of five students that start will successfully pass through university within the allotted timeframe.

Of course, there is natural attrition in the number of university students as some students realise that this pursuit is simply not their calling. However, the degree of complexity of the course content together with its volume accounts for most of the total drop-out numbers; most students are simply not passing all of the required academic modules to progress. A variety of opinions exist about the route cause of the drop-out rate. A prevalent theme cites inadequate schooling foundation as the systemic cause of high failure rates. The suggestion is that the effects of poor standards of secondary schools echo into the tertiary education level, ultimately contributing to the loss of potential qualified CAs.

Whatever the cause of university level attrition, enhanced university throughputs at uncompromised academic standards will serve greatly in alleviating the supply/demand crisis faced by training institutions and indeed the economy.

Sustainability challenges

With the global business environment constantly changing, the two phases of the training journey have distinct sustainability challenges.

The first phase (training at university)

Attracting the best professionals to train future professionals through current university infrastructure is complex. Particular nuances of individual universities aside, the essence of the sustainability-challenge is that remuneration and promotion structures are not conducive towards luring highly paid professionals from the corporate arena into the academic field to teach. Philanthropic professionals with a flair for teaching are scarce, and universities are constantly faced with the loss of quality staff to more lucrative corporate promotion and pay patterns. Progressive leadership will be required to ensure the sustainability of the world renowned South African university CA-training standards and structures. It will require bringing goal congruency to this phase of the qualification journey; the critical need for professional teaching abilities and reward systems to keep professionals on campus.

The second phase (training in practice)

In addition to the fluid dynamics inherent to the business arena, a variety of other factors compound the sustainability challenge to training of professionals.

Firstly, a potpourri of generations converge in the practical training phase of a candidate CA’s journey, which means that baby-boomers, Generation Xers, Generation Yers and, soon, also Digital Natives will constitute the members of client service delivery teams. Variety in communication methodologies, differences in the hierarchy of needs, unreconciled perspectives on work-life balance and the pronounced importance of flexibility in work arrangements are but a few of the modern-day training environment realities. Failure to recognise and actively manage these dynamics will negatively impact training institutions’ abilities to adequately prepare young professionals for future economic leadership.

Secondly, a strong focus on transformation as regards the CA qualification will present a major challenge to organisations that have not yet developed sustainability strategies in this regard.

In addition, the pace of technology evolution together with the volume of regulatory and technical changes associated with doing business in South Africa challenge training firms to provide CA candidates with appropriate skill sets with which to enter the business arena.

We live in times characterised by constant change and variety in challenges. Our desire to proactively deal with this environment will determine our ability to continue to produce world class financial leaders.