Transforming the accounting profession

BLACK economic empowerment (BEE) in the accounting profession has received a major boost following the merger of two of SA?s biggest black accounting firms, SizweNtsaluba VSP and Gobodo.

The two firms unveiled their merger agreement yesterday, making the new merged entity the fifth-largest accounting firm, overtaking Grant Thornton in terms of size and revenue.

The firm, to be known as SizweNtsaluba & Gobodo, will have a staff complement of more than 800 , and fees of more than R400m.

Nonkululeko Gobodo, executive chairman of SizweNtsaluba & Gobodo, says: “The accounting profession needs another big player other than the big four (Deloitte, PwC, KPMG, and Ernst & Young). We intend multiplying the firm in terms of number of staff and revenue within a short space of time. It will be the new house for black professionals.”

Victor Sekese, CEO of SizweNtsaluba & Gobodo, says: “We are currently playing in the same space as the ?big four?. We are an audit firm accredited by the JSE, the New York Stock Exchange and the Luxembourg Exchange.”

The firm is also expanding its footprint across Africa and has ambitious plans to broaden its base internationally, says Mr Sekese.

Both firms are rated AAA for their broad-based black economic empowerment (BBBEE), which equates to a level 2 contributor status under the Department of Trade and Industry codes. “Our aim is to get a level 1 status,” says Mr Sekese.

The merged firm?s partnership is 82% black.

Mr Sekese says that about a year ago the two firms set out a process to develop a growth path while preserving what was best for them.

He says that an integration committee has been put together to iron out the intricacies of merging .

This includes such matters as the location of company headquarters, staff integration and rationalisation, branding, company name and stakeholder communication. The merger will be effective on June 1.

Both firms have been in operation for at least 25 years and historically operated as small firms from Johannesburg and the Eastern Cape. They made the transition to medium-sized accounting firms because of the BEE policies that were introduced by the government after 1994.

“This happened mainly because of the courage of the late minister Stella Sigcau, who gave black firms the audit of Transnet,” says Ms Gobodo.

“More government entities opened up to black firms from then on. They were then exposed to the audits of SAA, Telkom and Eskom, among others.

“The auditor-general also opened up opportunities to black firms,” says Ms Gobodo.

All these developments enabled black accounting firms to expand, she says. “We were able to open offices in all the provinces and take on more trainees ? thereby contributing to the development of chartered accountants.”

She says the merger will give the firm scope to expand its capacity. “It enables us to realise our dream of establishing a big, black firm. It also enables us to facilitate the consolidation of black firms.”

Grant Gelink, CEO of Deloitte, says: “It?s good to see another significant player in the market. It will undoubtedly increase competition, which must be welcomed, and hopefully also lead to everyone raising their game.

“Another positive factor is that it will also improve employment in the market as they take up a larger and larger number of trainees. This is a growing field and more companies are recognising the need for professional services firms of a certain size and stature.”

“The merger is good for competition in the profession,” says Suresh Kana, CEO of PwC.

Mr Kana says that all the accounting firms are competing for the same pool of black talent.

“It is a free market. Young people must decide as to who offers them the best proposition,” says Mr Kana.

Bernard Agulhas, CEO of the Independent Regulatory Board for Auditors, says that transformation in the auditing profession has remained a challenge in the short and the medium term.

“The merger creates opportunities to provide a platform to grow capacity among black auditors, and we support the visionary initiative of the two firms.”

On September 15th, 2009, posted in: Latest News by
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