COVID-19 IMPACT ON AUDIT AND FINANCIAL REPORTING NEWSL… · BOTSWANA ACCOUNTANCY OVERSIGHT AUTHORITY Newsletter ISSUE #3: August 2020 COVID-19 IMPACT ON AUDIT AND FINANCIAL REPORTING

BOTSWANA ACCOUNTANCY OVERSIGHT AUTHORITY Newsletter

ISSUE #3: August 2020

COVID-19 IMPACT ON AUDIT AND FINANCIAL REPORTING

COVID-19 Impact on Audit & Finance

The Impact of COVID-19 on Audit and Financial ReportingThe global economy has had a significant shift as a result of COVID-19. There has been a significant impact on global financial markets and the level of uncertainty about the outlook for many companies has increased. The way in which audit firms carry out the audit of companies has been significantly affected by COVID-19, considering limited access to company sites. There would therefore be need to develop alternative audit procedures to gather sufficient, appropriate audit evidence.

Entities being audited are revisiting their financial reporting processes, disclosures in financial statements and their ability to maintain operations in the foreseeable future as a result of COVID-19.

BAOA would like to emphasise that the current situation should not undermine the delivery of high-quality audits and Financial Reporting. Public Interest Entities and Auditors should continue to comply fully with required professional standards.

The effects of COVID-19 may differ from country to country, so group auditors will need to consider this in their risk assessment to ensure that the work of the component auditors meet

the requirements of standards and that audit evidence obtained is sufficient and appropriate to base the group audit opinion on. Continues on page 05

To Protect Public Interest in Botswana through Oversight and Regulation by Developing, Promoting and Implementing Credible Financial Reporting.

Enhanced International Confidence in Financial Reporting, Audit and Corporate Governance through Exceptional Technical Skills and Expertise.

PRINCIPLEDWe act in an ethical, just and honest manner at all times.

AGILITYWe provide service delivery with agility, innovation and technological approach.

KNOWLEDGE AND LEARNINGWe maintain leadership in knowledge and understanding so as to advance quality and ethical standards in all aspects of reporting, audit and corporate governance.

INDEPENDENCEWe promote autonomy of the authority and freedom of interference in the activities of the organisation.

INSIDE Insurance Contracts

Audit Practice Reviews

Ephifania Nkanga Profile

Editor’s Notes

The Botswana Accountancy Oversight Authority (the Authority) is an entity established through the Financial Reporting Act, 2010 (the Act), as the independent oversight body of the accounting and auditing profession; to regulate the reporting of financial matters of Public Interest Entities (PIEs) and the corporate sector.

Its objectives include standard setting, financial reporting monitoring, audit practice reviews, corporate governance reviews, enforcement of compliance and oversight over Professional Accountancy Organisations and the education and training of professional accountants in Botswana.

The Authority continues to note and observe a worrying trend in the form of Public Interest Entities (PIES) failing to prepare their financial statements and reports on time and as prescribed by their governing constitutions and statutes. This amounts to the breach of the Financial Reporting Act, 2010 as such failure results in PIES not filing financial statements and reports with the Authority as the Act prescribes.

The Authority takes this opportunity to warn Public Interest Entities to desist from this unfortunate malpractice and emphasize the importance of observing all statutory timelines and constitutional obligations.

Section 55 of the Act, states that “where any public interest entity or other entity is required to prepare any financial statement or report under a particular enactment, it shall ensure that the financial statement or report is in compliance with the –

i) Financial reporting requirements of any other relevant enactment;ii) Financial reporting standards issued by the Authority under section 52;iii) Rules made under the Financial Reporting Act, 2010;iv) Codes, rules or regulations of the Authority with the ultimate objective of protecting the interest of the public and investors”.

The Act further prescribes punitive penalty regimes to curb this malpractice. A fine can be individually imposed on the PIE and its contracting stakeholders including its employees, board of directors and/or auditors.

For the purposes of this communication, a PIE is defined in terms of Section 22 of the Act and Regulation 3 of the Financial Reporting (Public Interest Entities), 2016 (the Regulations), as:

a) any entity that has issued equity or debt securities for public subscription, and which is listed in a stock exchange;

b) any bank, deposit taking institution or other similar institution that is subject to supervision by Bank of Botswana;

c) any insurance company, pension and provident fund, collective investment undertaking and any other similar institution that is subject to supervision by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA);

d) any entity which, at the end of the preceding financial year, exceeded at least two of the following thresholds:(i) annual revenue of P300 million;(ii) 200 employees;(iii) total assets of 200 million; or(iv) total liabilities of 100 million, not including shareholder’s equity.

(e) In addition, Section 56 (5) of the Act, states that “where a public interest entity or other entity files any annual financial statement or report with any Government department or authority, the entity shall also file a copy of the financial statement and report with the Authority, in such manner as may be required in the rules”.

For more information visit www.baoa.org.bw and for media enquiries contact:

Oupa GaofisePublic Relations [email protected]

Botswana Accountancy Oversight AuthorityPrivate Bag 0056GaboroneTelephone: 3919735Email: [email protected] 54357, Varsha House, 10th Floor, CBD, Gaborone.

WARNING - FAILURE BY PUBLIC INTEREST ENTITIES TO PREPARE FINANCIAL STATEMENTS AND REPORTS ON TIME

3

The Oversight

The BAOA Editorial team is excited to bring you the revamped bumper edition of ‘The Oversight’, an informative newsletter that gives the reader a window into the arduous but welcome challenge of financial reporting, audit, and corporate governance landscape in Botswana.

Since the Authority is the custodian of financial reporting, audit, and corporate governance through the Financial Reporting Act, 2010, it naturally follows that we should communicate with our stakeholders through this platform on these pertinent economic issues.

Issue 3 of ‘The Oversight’ comes at a very challenging time in the history of humankind brought about by the unprecedented Covid-19 pandemic. The challenges that have been brought about by this pandemic have called for a paradigm shift in how individuals, corporates, countries, and regional and international economic blocs conduct their daily affairs. While some individuals, body corporates and even countries had to be rudely awoken from their deep slumber, a few were already ahead in as far as adopting new business practices, especially embracing the 4th Industrial Revolution as far as ease of doing business, is concerned.

‘The Oversight’ explores the new world order by delving into such areas as Business and Accounting considerations –

Covid-19 by Audit Committees and the Chief Finance Officers. The impact of Covid-19 on Audit and Financial Reporting is discussed as is the Dissecting of legal complications post Covid-19 and the 4th Industrial Revolution. True to our mandate, we offer our avid readers and stakeholders a glimpse into the Summary of findings under Audit Practice, Corporate Governance as well as Financial Reporting Monitoring Reviews, with the hope that such transparency would lead to an improvement in those three critical areas. Other news of events and activities at the Authority are also shared herein.

This is a page turner that aims to resource all our stakeholders, from insurance entities to Audit Committees, Chief Executive Officers, Chief Finance Officers, Auditors, Accountants, and the general public.

With every edition we have the reader in mind, as such we will be hoping for feedback in whatever shape or form to keep our newsletter vibrant and relevant, so feel free to contact [email protected] to assist us in continuously improving our offering to you. You are encouraged to visit our website www.baoa.org.bw for more news and updates. In conclusion, the Editorial Committee is gratified towards the BAOA Management and Staff for making publishing of this publication possible. The same gratitude is extended to our stakeholders for BAOA’s achievements and challenges mirror their achievements and challenges.

‘The story is truly finished – and meaning is made – not when the author adds the last period, but when the reader enters’, Celeste Ng.

Enjoy! Thank you.

Oupa GaofisePublic Relations Officer

Editor’s Note

The Editorial Committee does not guarantee the accuracy of statements by contributors or accept responsibility and liability to any person for loss or damage suffered as a consequence of reliance on the information herein. E & OE.

Users are encouraged to seek further authoritative guidance and advise as may be necessary.

EDITORIAL COMMITTEE

• Boitumelo V. Raditladi

• Ephifania Nkanga

• Motlatsi Mmusi

• Patrick Jansen

• Thapelo Otukile

• Oupa Gaofise

4

The Oversight

It is my great pleasure to present to you yet another enlightening issue of our classic Newsletter, “The Oversight “, which comes out at a time that we have seen the whole world being brought to its knees by a small microbe called Covid-19. In the past century, we have heard of pandemics which have devastated the world with an estimated number of more than 50 million people losing their lives, but, to our generation, this has always sounded like a folktale, as we never imagined that this could be repeated in our lifetime. Yes, you are not hallucinating, the Coronavirus pandemic is here full force. No one has been spared; we have all been humbled.

The highest impact of the pandemic started in the first world

in Europe, particularly, Spain, Italy, the United Kingdom, and

to a lesser extent, Germany, and France. This was followed by

record breaking infection and death statistics in the Americas,

particularly, the USA and Brazil. Economically, the impact has

been devastating, with the global economy expected to

contract by a whopping six percent in 2020 according to the

OECD Report released in June 2020. The same Report warns

that the recovery is going to be slow and uncertain and that

this could be exacerbated by the anticipated second wave

of the contagion.

For Botswana, a lot has already been said about the

economic impact of the Coronavirus, but I am concerned

by the eminent impact on GDP in the coming years with all

of the country’s major sources of revenue affected, namely

diamond sales, tourism, beef, and tax revenues, to mention

but a few. We have also had a few scares by threatened

strikes by truckers and fuel shortages.

Closer home, with the profession, we have received several

requests by certified auditors for the postponement of audit

practice reviews due to lockdown disruptions. So far, we have

considered these requests favourably and rescheduled the

reviews to future mutually convenient dates. We have also

seen the Company Intellectual Property Authority (CIPA)

extending the company re-registration deadline to December

2020. We hope that other regulators will also be lenient with

their clients in terms of meeting deadlines. However, we hope

that these dispensations extended by regulators would not

be abused.

We have also seen changes in the way of doing business

in Botswana, with technology at the forefront. Virtual

meetings have become the order of the day because of

social distancing protocols. We have already held many

important international meetings, virtually, and I see this trend

continuing into the future even post Covid- 19. With respect

to audit and financial statements, we expect to see lots of

issues of material uncertainties related to going concern,

resulting in emphasis of matter paragraphs and complex

Covid- 19 disclosures.

This issue of The Oversight also includes technical updates

on the impact of Covid-19 on audit and financial reporting,

insight into the long-awaited Standard on Insurance

Contracts (IFRS 17), and a summary of Audit practice reviews

and corporate governance review findings.

As stated in my opening remarks, this issue is rich in technical

content and also other relevant information for our

stakeholders. Please relax and enjoy your reading.

Duncan Dankie MajindaChief Executive Officer

CEO’s Desk

5

The Oversight

Audit & Financial Reporting

The Impact of COVID-19 on Audit and Financial Reporting

The global economy has had a significant shift as a result of COVID-19. There has been a significant impact on global financial markets and the level of uncertainty about the outlook for many companies has increased.

The way in which audit firms carry out the audit of companies has been significantly affected by COVID-19, considering limited access to company sites. There would therefore be need to develop alternative audit procedures to gather sufficient, appropriate audit evidence.

Entities being audited are revisiting their financial reporting processes, disclosures in financial statements and their ability to maintain operations in the foreseeable future as a result of COVID-19.

BAOA would like to emphasise that the current situation should not undermine the delivery of high-quality audits and Financial Reporting. Public Interest Entities and Auditors should continue to comply fully with required professional standards.

Auditing and Accounting Considerations

Auditor’s risk assessment

Auditors may need to revisit their risk assessment and assess how their planned audit approach would addressed the new or revised risks that have arisen because of COVID-19. The level of professional scepticism would need to be increased in a number of areas depending on the nature of the business.

Audit Evidence

Auditors need to ensure that sufficient, appropriate audit evidence is gathered to support audit opinions issued.

All areas making use of assumptions as audit evidence will need more thorough scrutiny and challenging of the assumptions and input data.

Group AuditsThe effects of COVID -19 may differ from country to country, so group auditors will need to consider this in their risk assessment to ensure that the work of the component auditors meet the requirements of standards and that audit evidence obtained is sufficient and appropriate to base the group audit opinion on.

The Auditor’s responsibilities relating to Going Concern

Some entities may never recover from the effects of COVID-19 especially the undercapitalised businesses. Auditors should assess the ability of the companies to raise capital through, for example, shareholders and banks to ensure the going concern principle is still applicable. The audit opinion and robust disclosures should reflect any such concerns.

Impairment of non-financial assets (including goodwill)

Key issues to consider include:• Goodwill impairment - allocation of goodwill to various

cash generating units depending on the specific effects of COVID-19 business disruptions and prospects for recovery - IAS 36.

• Property, Plant and Equipment (PPE) - some items of PPE may need to be impaired owing to non-utilisation or reduced capacity.

• Intangible assets - the carrying amounts need to be re-evaluated.

• Investment properties - companies in the property

6

The Oversight

sector especially hotels need to be assessed if they have a realistic chance of recovery as the tourism sector has been significantly impacted, particularly if the lockdown continues for a protracted period.

VALUATION OF INVENTORIES

• Extended lockdowns by countries may result in a higher incidence of expired products being carried in inventory.

• The unexpected shutdown may result in some raw material wastages especially work-in progress at the time of shut down.

Financial Instruments-Allowance for expected credit losses

Financial institutions account for the bulk of financial instruments globally. Many companies are already taking drastic steps to cut costs including laying off staff until the situation improves. This inadvertently will affect loans repayments by borrowers. Greater emphasis should be placed on current and forward-looking information than historical data which is the emphasis in IFRS 9 after the 2008 credit crisis.

• Credit impaired loans - Auditors and Client Finance personnel should be more critical of 12 Months credit losses. In addition, incidences of impaired loans will increase (Stage 3 loan advances). This will affect income as the calculation of interest income will be based on the amortised cost carrying amount as opposed to being based on the gross amount.

• Regulatory capital compliance - increased impairments may ultimately affect the regulatory compliance of financial institutions as the impairments eat away the capital base.

Fair value-based measurements (IFRS 13)

• Level 3 and Level 2 valuations will need greater scrutiny to ensure that they are supported by robust assumptions and supporting data.

• Level 1 valuations should focus on post balance sheet events (IAS 10) since most stock markets globally have had significant declines which can only be reflected through enhanced post balance sheet disclosures.

Events after the end of the reporting period

The state of the companies after the reporting date will need to be carefully evaluated than ever before as some

entities with earlier year ends might have significant issues such as impairment and going concern problems after COVID-19 took over the whole world.

Restructuring costs and Provisions

Some entities will be forced to restructure and /or retrench staff resulting in significant provisions for restructuring. Auditors need to be alert to such possibilities for all their clients.

Insurance/Reinsurance Companies

Auditors of insurance companies need to be alert to the following:

• Claims - consider whether the client has insured natural disasters such as COVID-19 and the significance of the claims to the business.

• Insurance policies - with job losses, the significance of insurance policy lapses needs to be evaluated.

CONCLUSION Management and the auditors need to ensure that relevant COVID-19 disclosures are made in the financial statements, so that users of the financial statements are properly informed about the company’s prospects and how they might be affected, recognising the high degree of uncertainty.

It might be necessary for entities to arrange with their regulators such as the Botswana Stock Exchange (BSE), Company Intellectual Property Authority (CIPA), Non-Bank Financial Institutions Regulatory Authority (NBFIRA), Bank of Botswana (BoB), and the Authority (BAOA) to reschedule their reporting deadliness to delay penalties kicking in.

This communication is purely highlighting areas of focus in an evolving audit, corporate governance and financial reporting environment occasioned by COVID-19. The areas highlighted above should not be considered to beexhaustive.

Technical Department April 2020

Audit & Financial Reporting

Continues from page 5

7

The Oversight

IFRS 17 -Insurance Contracts - Focus areas for Chief Finance Officers & Chief Executive Officers (Short term insurers)

SNAPSHOT OF THE PREMIUM APPLICATION APPROACH (PAA)

This article serves to support the efforts of entities as they

prepare by highlighting some of the key focus areas which

we believe the leadership of these entities need to be aware

of and possibly track. The analysis below applies more to short

term insurers.

The Premium Allocation Approach

Short term insurers may choose the option to use a simplified

model for measuring a group of insurance contracts called

the premium allocation approach. This is an option to the

more complex general measurement model / Building Block

Model which life insurers and similar long term insurance

groups of contracts will use. Below is a summary of the areas

which we believe the Chief Finance Officers and Chief

Executive Officers should focus on and monitor on an ongoing

basis, though it is not exhaustive. IFRS 17 does not specifically

distinguish between long term insurance contracts and short

term insurance contracts. The major distinction is on the ability

by short term insurers to choose to use the simplified premium

allocation approach to measure insurance contracts which

option is almost non-existent for long term insurers. We start

with a diagrammatic snap short of the premium allocation

approach.

Assess Eligibility for PAA

Aggregate Contracts

Analyse Contracts

• No material difference with general measurement model

• Contracts less than one year

• Portfolio (similar risks,managed together)• Groups (3 groups)

• Combine • Separate

PREMIUM ALLOCATION (APPROACH)

Revenue(Passage of time or incurred insurance service expenses)

Liability(a)Remaining coverage

(b)Incured claims(fulfilment

Cashflows)

• No time value of money.

• May not capitalise acquisition costs.

• No onerous assessment, unless facts and circumstances.

• No CSM.

By: Innocent Munjanja

Introduction

The effective date for the implementation of IFRS 17 Insurance Contracts (IFRS 17) has been moved by the International Accounting Standards Board (IASB) to periods beginning on or after 1 January 2023 from the initial date of 1 January 2021. While this gives entities more time to prepare, we believe the shifting of the implementation date should serve as a warning to entities that there is a lot of work on the horizon. BAOA as the local standard setter for Botswana is championing the implementation of IFRS 17 by affected entities. As part of that process, we have started discussions with various insurance companies to establish their implementation status and strategy/roadmap.

8

The Oversight


1. ELIGIBILITY TO USE THE PREMIUM ALLOCATION APPROACH (PAA).

Groups of insurance contracts qualify to use the premium allocation approach if and only if:(a)Use of the premium allocation approach would produce an insurance contract liability for remaining coverage that is not materially different from using the general measurement model; or (b)All the contracts in the group have a coverage period of one year or less.1

When assessing (a) above, the entity would not use the premium allocation approach if it expects significant variability in the fulfilment cashflows.2

The leadership of the entity should review if all their groups of insurance contracts qualify for the premium allocation approach as required by IFRS 17 as some may not qualify.

2. INSURANCE CONTRACT ANALYSIS

Insurance Contracts under IFRS 17 will need to be analysed for different aspects and there are two ways in which contracts can be analysed: (i) Combining contracts: a set or series of insurance contracts with the same or related counterparty may achieve or be designed to achieve an overall commercial effect. Such a set or series of contracts may be treated as a whole.3

(ii) Separating components of a contract: An insurance contract may contain one or more components which when separated, will be accounted for within the scope of another IFRS, for example, some contracts will have investment components which are distinct and when separated will be accounted for under IFRS 9 and some will contain promises to transfer distinct goods or non- insurance services which when separated will be accounted for under IFRS 15.4

Entities need to set up a process that ensures that contracts are combined and separated according to the criteria noted in IFRS 17.

3. AGGREGATION OF CONTRACTS

Once insurance contracts have been appropriately separated into their various components and merged as appropriate, the next stage is to aggregate the contracts. Two levels of aggregation are required, starting with establishing portfolios of contracts and then splitting the portfolios into a minimum of three groups as follows:(a) Portfolios Identify portfolios of different insurance contracts.

Insurance contracts will fall into the same portfolio if they have similar risks and are managed together.5

(b) Groups Once different portfolios have been identified, IFRS 17

requires each portfolio to be divided into a minimum of three different groups which are essentially profitability

groups:(i) A group of contracts that are onerous on initial

recognition(ii) A group of contracts that at initial recognition

have no significant possibility of becoming onerous subsequently (in their lifetime)

(iii) A group of remaining contracts in the portfolio.6

However, for short term insurance contracts that apply the premium allocation approach, the entity shall assume no contracts in the portfolio are onerous unless facts and circumstances indicate otherwise both at initial recognition and subsequently.7 This is an important because under the general measurement model for long term insurance contracts, all insurance contracts are required to be subjected to an onerous assessment at initial recognition and subsequently at each reporting date. All losses on onerous contracts are written off to profit or loss immediately in the reporting period in which they are identified.

For the purposes of grouping contracts, an entity shall not include contracts issued more than one year apart in the same group. 8 The implication of this requirement is that the composition of portfolios and groups of insurance contracts are not reassessed in subsequent years and will need to be maintained for the lifetime of the groups until the group is derecognized(cohorts). Consequently, each financial year will have its own set of portfolios and groups and these are never mixed with portfolios and groups recognised in subsequent years. This stage is critical because it involves assessing all groups of contracts for profitability at initial recognition. This is still a requirement under the premium allocation approach.

4. INSURANCE REVENUE UNDER THE PREMIUM ALLOCATION APPROACH

Under the premium allocation approach, revenue recognition is simpler. Revenue is the amount of expected receipts allocated to the period based on either of the following:(a) The basis of passage of time or(b) The basis of expected timing of incurred insurance service expenses.9This is significantly different from the general measurement model for groups of long term insurance contracts which measure revenue as a sum of, among other items, contractual service margin allocated to the period, insurance service expenses incurred and risk adjustments.The entity needs to decide the basis of allocating premiums to various reporting periods.

5. INSURANCE CONTRACT LIABILITY

At the end of each reporting period, the insurance contract liability will be a sum of the following two components:

(a) Liability for remaining coverageThe insurance liability for remaining coverage under the premium allocation approach is simplified with no elaborate modelling for future expected costs10. Liability

IFRS 17 -Insurance Contracts - Focus areas for Chief Finance Officers & Chief Executive Officers (Short term insurers

9

The Oversight

for remaining coverage is the entity’s obligation to investigate and pay valid claims under existing insurance contracts for insured events that have not yet occurred (unexpired portion obligation)

(b) Liability for incurred claimsThe liability for incurred claims is the entity’s obligation to investigate and pay valid claims for insured events that have already occurred including those claims that have not yet been reported.This comprises fulfilment cashflows related to the entity’s obligations for insured events that have already occurred including those claims that have been incurred but not reported (see below for further discussion).

6. LIABILITY FOR INCURRED CLAIMS AND NON-FINANCIAL RISK ADJUSTMENT UNDER THE

PREMIUM ALLOCATION APPROACH

The liability for incurred claims is measured at the fulfilment cashflows for incurred claims. The entity is not required to adjust future cashflows for the effect of the time value of money and financial risk if those cashflows are expected to be paid or received in one year or less from the date the claims are incurred.11 With respect to the non-financial risk adjustment, fulfilment cashflows include the effect of the non-financial risk adjustment. Note that, while the effect of the time value of money is exempted under the premium allocation approach, the non-financial risk adjustment has not been exempted. An entity is required to calculate the non-financial risk adjustment of a group of short term insurance contracts12.

7. SUMMARY OF SIMPLIFICATIONS OF THE PREMIUM ALLOCATION APPROACH

The following are other simplifications of the premium allocation approach:

(a)Insurance revenue and the insurance liability for remaining coverage are calculated based on premiums(b)No requirement to assess if groups of insurance contracts are onerous at initial recognition and subsequent to initial recognition unless facts and circumstance indicate so.(c)no requirement to calculate contractual service margin and amortise it over the life of contracts(d)The time value of money and the effect of financial risk may not be adjusted for both in the insurance contract liabilities and liability for incurred claims that will be settled within one year.13

(e)Acquisition cashflows may be expensed in the year that they are incurred if the entity chooses to do so14

(f) Only assess (subsequent to initial recognition) if groups of contracts are onerous if facts and circumstances indicate so15.

NB: Under the premium allocation approach, only two situations is an entity required to calculate fulfilment cashflows in a similar way to the general measurement model for long term insurance contracts (a) if a contract is onerous16 and (b) in calculation of the liability for incurred claims17. In these

two cases, there is need to calculate the non-financial risk adjustment.

8. ACCOUNTING

While there are no major differences between IFRS 4 and IFRS 17, the accounting function still needs to understand the new terminology and various simplifications available to be able to record transactions properly and deliver the required disclosures that are compliant with IFRS 17. We would like to point out that some groups of contracts in some short term business entities may not qualify for the premium allocation approach because, for example, their coverage periods exceed one year.

9. TRANSITION PROVISIONS AND COMPARATIVE INFORMATION

9.1 Transition choicesThe transition requirements of IFRS 17 gives insurers three choices: (a) Full retrospective application (b)modified retrospective application and ((c) Fair value. While the full retrospective approach may be very difficult to achieve for long term insurers, it is a practical choice for short term insurers since most contracts will be less than 12 months and data for the comparative period maybe available. The modified retrospective approach has a list of allowed modifications which try to achieve the closest result to full retrospective approach without undue cost or effort. Under the fair value approach, an entity determines the contractual service margins or loss component at date of transition for a group of contracts based on the difference between the fair values (mostly using IFRS 13) of the group and fulfilment cashflows at transition date. The key issue is for the entity to assess availability of historical information and decide on which approach to take.

9.2 Comparative information on transitionAn entity is required to present three balance sheets in the year of initial application, being balance sheets for the year of initial application, the immediately preceding year and the beginning of the preceding year. This requires a lot of work for insurers.

10.CONCLUSION AND IMPLEMENTATION DATE

These notes have been prepared based on the premium allocation approach (see eligibility criteria). The implementation date is now revised to financial periods beginning on or after 1 January 2023 as at the date of writing this article

Disclaimer: The information and expressions of opinion contained in this presentation are not intended to be a comprehensive study, nor to provide actuarial advice or advice of any nature and should not be treated as a substitute for authoritative guidance from IFRS 17. BAOA accepts no responsibility or liability to any person for loss or damage suffered as a consequence of their placing reliance upon this article. Readers are encouraged to seek more authoritative information from IFRS 17.


IFRS 17 -Insurance Contracts - Focus areas for Chief Finance Officers & Chief Executive Officers (Short term insurers

10

The Oversight

Introduction

The effective date for the implementation of IFRS 17 Insurance Contracts (IFRS 17) has been moved by the International Accounting Standards Board (IASB) to periods beginning on or after 1 January 2023 from the initial date of 1 January 2021. While this gives entities more time to prepare, we believe the shifting of the implementation date should serve as a warning to entities that there is a lot of work on the horizon. BAOA as the

local standard setter for Botswana is championing the implementation of IFRS 17 by affected entities. As part of that process, we have started discussions with various insurance companies to establish their implementation status and strategy/roadmap. This article serves to support the efforts of entities as they prepare by highlighting some of the key focus areas which we believe the leadership of these entities need to be aware of and possibly track. The analysis below applies more to long term insurers.

By: Innocent Munjanja

IFRS 17 INSURANCE CONTRACTS-FOCUS AREAS FOR THE CHIEF FINANCE OFFICERS AND CHIEF EXECUTIVE OFFICERS (LIFE INSURERS)

IFRS 17 -Insurance Contracts

SUMMARY OF WHAT YOU NEED TO KNOW UNDER IFRS 17 INSURANCE CONTRACTS)

Aggregate Contracts

FulfilmentCashflows

Analyse Contracts

• Combine• Separate (IFRS 9, IFRS 15)

• Model future estimated cashflows• Select discount rate(time value and financial risks)• Present value of probability weighted cashfows• Determine non-financial risk adjustment

• Portfolios(similar risks & managed together)• Groups (3 groups)

CONTRACTUAL SERVICE MARGIN /(Onerous Contracts Loss)

Coverage Units, Quantity of Benefits

11

The Oversight



1. INSURANCE CONTRACT ANALYSIS

Insurance Contracts under IFRS 17 will need to be reviewed with a view to combining certain contracts and or/ separating certain contracts into its different components:

(i) Combining contracts: a set or series of insurance contracts with the same or related counterparty may achieve or be designed to achieve an overall commercial effect. Such a set or series of contracts may be treated as a whole.1

(ii) Separating components from an insurance contract: An insurance contract may contain one or more components which when separated, will be accounted for within the scope of another IFRS, for example, some contracts will have investment components which are distinct and when separated will be accounted for under IFRS 9 and some will contain promises to transfer distinct goods or non-insurance services which when separated will be accounted for under IFRS 15.2

Entities need to set up a process that ensures that contracts are combined and separated according to the criteria noted in IFRS 17.

2. Aggregation of contracts

Once insurance contracts have been appropriately separated into their various components and/or merged as appropriate, the next stage is to aggregate the contracts. Two levels of aggregation are required, starting with establishing portfolios of contracts and then splitting the portfolios into a minimum of three groups:

(a) Portfolios Identify portfolios of different insurance contracts.

Insurance contracts will fall into the same portfolio if (a) they have similar risks and (b) they are managed together.3

(b) Groups Once different portfolios have been identified,

IFRS 17 requires each portfolio to be divided into a minimum of three different groups:

(i) a group of contracts that are onerous (loss making) on initial recognition;

(ii) a group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently (in their lifetime) and

(iii) a group of remaining contracts in the portfolio.4

IFRS 17 notes that contracts cannot be grouped together if they were issued more than one year apart5. The implication of this statement is that these portfolios and groupings are done once for each reporting period and will need to be maintained for the lifetime of the groups (cohorts). Consequently, each financial year will have its own set of portfolios and groups of insurance contracts

and these are never mixed with portfolios and groups of insurance contracts from subsequent years.

This stage is critical because it involves assessing all groups of contracts for profitability at initial recognition. The process involves modelling future estimated cashflows (fulfilment cashflows) and deciding whether contracts have an unearned profit (contractual service margin) or onerous (loss making) at initial recognition. For onerous contracts, a loss is recognised immediately in profit or loss. For the other two groups which are not onerous, a contractual service margin representing the future unearned profits on the groups of contracts is quantified and recognised as a liability (see contractual Service Margin recognition below). The contractual service margin will be released(amortised) to profit or loss as the insurance company discharges its obligations under the contracts over the lives of the related groups of insurance contracts. The contractual service margin is technically where the allocation of future annual insurance profits will be made through periodic releases during a reporting period (see below).

Again, this process is critical and requires meticulous record keeping and tracking and updating estimates of future cashflows of the various groups and portfolios of insurance contracts until they are derecognised. We emphasize that the composition of portfolios and groups of insurance contracts are not reassessed in subsequent years6, hence insurance contracts from different financial years should not be mixed.

3. Modelling for fulfilment cashflows

Fulfilment cashflows refers to the total of the following for a group of insurance contracts:

(a) present Value of estimated future cash Inflows(b) present Value of estimated future cash Outflows(c) risk adjustments for (i) Financial Risks (if not already

factored for in (a) and (b) above and (ii) Non-financial risk.7

The process will involve the following key steps;(i) Defining contract boundaries correctly before

assembling the cashflows related to the groups of contracts8

(ii) Forecasting huge amounts of cashflow data over the lives of different groups of contracts

(iii) Modelling probability distributions for the cashflows and calculating weighted averages of the cashflows above

(iv) Modelling an appropriate discount rate that complies with IFRS 17 (top-down approach or bottom -up approach) and discounting all the forecasted cashflows9

(v) An appropriate quantification of non-financial risk adjustment determined. There is not much guidance available.

12

The Oversight

4. Contractual Service Margin recognition

The contractual service margin represents the unearned profit the entity will recognise as it provides services in the future for a group of insurance contracts. It is recognised as part of the insurance liability or asset10.

By definition, the contractual service margin at initial recognition of a group of insurance contracts equals the fulfilment cashflows such that at that date, there is no income or expenses. In short, at Initial recognition, fulfilment cashflows equals the contractual service margin. The exception to note is that of onerous contracts-if a group of insurance contracts reflect a loss on initial recognition, then no contractual service margin is recognised, and the total loss is recognised in profit or loss immediately.

The concept of contractual service margin is a key feature of IFRS 17 and is totally new to the industry. Every reporting period, a certain amount of contractual service margin representing the insurance services provided (or obligations discharged) by the entity to its policyholders during the reporting period is released (amortised) to profit or loss. The release of the contractual service margin to profit or loss is determined by the number of coverage units which in turn is determined by the quantity of benefitsprovided under the group of contracts.11 The two concepts of coverage units and quantity of benefits are not clearly defined in IFRS 17 and they are left to the entity’s judgement. This is probably one of the most difficult areas of the standard.

The leadership of the entities need to make sure that there is consensus with the Actuarial team over the two concepts of coverage units and quantity of benefits since this is an area of significant judgment by the Actuarial team and a key driver to the release of unearned profits.

5. INSURANCE CONTRACT LIABILITY

Subsequent to initial recognition, the insurance contract liability in the balance sheet will be a sum of the following:

(a) Liability for remaining coverage (will be measured as the sum of fulfilment cashflows and contractual service margin Future service at year end) and

(b) Liability for incurred claims12

Once the modelling process for fulfilment cashflows, adjustment for non- financial risks and contractual service margin is complete, the computation and various reconciliations for the liability for remaining coverage at the end of each reporting date will be fairly less complex to prepare.

The finance team needs to be aware of all the reconciliations and disclosures required by IFRS 17 in preparation for financial reporting.

6. COORDINATION OF ACTUARIAL FUNCTION WITH ACCOUNTING FUNCTION

The output from the actuarial projections noted above for fulfilment cashflows, risk adjustments and contractual service margin will ultimately need to be recorded in the ledger. Consequently, a close working relationship between the accounting function and the Actuarial function becomes a key feature of IFRS 17. The accounting function needs to understand fully the requirements of IFRS 17 to be able to deliver the required disclosures

7. TRANSITION PROVISIONS AND COMPARATIVE INFORMATION

7.1 Transition choicesThe transition requirements of IFRS 17 gives insurers three choices: (a) Full retrospective application (b)modified retrospective application and ((c) Fair value. The full retrospective approach is unlikely to be a favourite for many long term insurers because it requires insurers to apply IFRS 17 as if IFRS 17 had always applied and derecognise all existing balances that would not exist if IFRS 17 had always applied. The modified retrospective approach has a list of allowed modifications which try to achieve the closest result to full retrospective approach without undue cost or effort. Under the fair value approach, an entity determines the contractual service margin or loss component at date of transition for a group of contracts based on the difference between the fair values (mostly using IFRS 13) of the group and fulfilment cashflows at transition date. The key issue is for the entity to assess availability of historical information and decide on which approach to take.

7.2 Comparative information on transitionAn entity is required to present three balance sheets in the year of initial application, being balance sheets for the year of initial application, the immediately preceding year and the beginning of the preceding year. This requires a lot of work for insurers

8. CONCLUSION

These notes have been prepared based on the general measurement model for insurance contracts with a coverage period of more than one year which would primarily be life insurers.

Disclaimer: The information and expressions of opinion contained in this presentation are not intended to be a comprehensive study, nor to provide actuarial advice or advice of any nature and should not be treated as a substitute for authoritative guidance from IFRS 17. BAOA accepts no responsibility or liability to any person for loss or damage suffered as a consequence of their placing reliance upon this article. Readers are encouraged to seek more authoritative information from IFRS 17.



13

The Oversight

Summary Of Audit Practice Reviews

INTRODUCTION

One of the major mandates of the Authority is to undertake audit practice reviews of Certified Audit Firms and their Certified Auditors. Audit practice reviews are performed in accordance with the Financial Reporting Act, 2010, Section 57.

Audit practice reviews consist of a firm (quality control) review and a review of selected assurance engagements carried out by each firm’s Certified Auditor.

A firm review consists of an examination of the six elements of a firm’s system of Quality Control Policies and Procedures, namely: Leadership Responsibilities for quality within the firm; Relevant Ethical Requirements; Client Acceptance & Continuance of client relationships and specific engagements; Human Resources; Engagement Performance; and Monitoring. The aim of the examination is to ensure that the system conforms in all material respects to the requirements of the International Standard on Quality Control (ISQC)1.

An engagement review aims to obtain reasonable assurance that audit engagements are performed in accordance with the applicable Assurance Standards; International Financial Reporting Standards; Code of Ethics; and applicable Laws and Regulations, and that engagement partners issue reports that are appropriate in the circumstances.

In terms of its audit practice review mandate, the Authority is responsible for Certified Audit Firms and Certified Auditors of Public Interest Entities (PIEs). However, the Authority has a Memorandum of Understanding with the Botswana Institute of Chartered Accountants (BICA), which requires that the Authority undertakes audit practice reviews of Certified Audit Firms and Certified Auditors of Non-Public Interest Entities until such a time that the legislation is changed to give the Authority the responsibility to undertake reviews of all Certified Audit Firms and Certified Auditors in Botswana.

The Authority has adopted a three-year review cycle, which requires that all Certified Audit Firms and their Practitioners be reviewed within the three-year cycle period. The Authority completed its first audit practice review cycle on 31 December 2017 and the second cycle commenced on 01 January 2018.

This report discusses hereunder the results of the reviews for the year 2019 and the second cycle to date (2018-2019) in summary.

PROCESS OF APPROVAL OF AUDIT PRACTICE REVIEW REPORTS

After carrying out an audit practice review, the Technical Department prepares and submits audit practice review reports to the Audit Practice Review Committee, a subcommittee of the Authority’s Board, for their consideration.The Authority revised the Audit Practice Review Methodology during the year and the revised methodology became effective on the 01 September 2019. The Audit Practice Review Methodology is available on the BAOA website at this link: http://www.baoa.org.bw/?q=node/114.

Ten of the twelve Certified Audit Firms with a total of eighteen Certified Auditors were reviewed under the old audit practice review methodology while the remaining two Certified Audit Firms with a total of five Certified Auditors were reviewed under the revised audit practice review methodology.

Final results of audit practice reviews are determined in terms of predetermined criteria applicable to the audit practice review cycle. The APRC’s final decision on a Certified Audit Firm or Practitioner would be one of the following:

OLD AUDIT PRACTICE REVIEW METHODOLOGY

• Satisfactory, meaning that the next audit practice review will be carried out in the next cycle;

• Unsatisfactory, meaning that some matters still require attention before a satisfactory result can be achieved and a follow-up audit practice review will be scheduled; or

• Referral to the Enforcement Committee, which could then attract possible sanctions by the Committee

Revised Audit Practice Review Methodology (Effective for audit practice reviews commencing on or after 01 September 2019)

Risk

> Low

> Medium

Low risk. Review in the next cycle.

High risk to Very High risk. Refer to Enforcement for final decision (re-review or immediate strike off)

Review in the next cycle if the weighted rating is Low risk to Medium risk

ORRe-review and / or refer to Enforcement if the weighted rating is Medium risk to High risk.

> High

Overall Rating Consequenece

14

The Oversight

Audit practice review reports for Certified Audit Firms and Certified Auditors of Public Interest Entities (PIEs) are examined by the APRC, who then recommends a course of action to the Authority’s Board.

In respect of Certified Audit Firms and Certified Auditors of Non-Public Interest Entities, the APRC examines audit practice review reports prepared by the Technical Department and recommends a course of action to BICA, through the Authority’s Board. BICA then makes the final decision and informs their members accordingly.

With regard to Certified Audit Firms and Certified Auditors of Public Interest Entities, the Authority has adopted a developmental policy which requires that a Certified Audit Firm or Certified Auditor will be deregistered if they are re-reviewed:

• Two times in a row, with no prospect of making minimal improvements to attain the required performance standards in the short-term; or

• At first or second review, where it is determined that the performance is so bad that continued practice of the firm or practitioner could seriously harm public interest or the interests of those who rely on the reports of the Certified Firm or Certified Auditor.

• In respect of Certified Audit Firms and Certified Auditors of Non-Public Interest Entities, BICA has adopted a three-strike rule, which requires that a Certified Audit Firm or Certified Auditor be deregistered if their performance in an audit practice review is unsatisfactory three times in a row.

2019 AUDIT PRACTICE REVIEWS

Overview of Audit Practice Reviews

In the current year, the Authority reviewed a total of 12 Certified Audit Firms with a total of 23 Certified Auditors. These comprised 6 Certified Audit Firms of PIEs with a total of 14 Certified Auditors, and 6 Certified Audit Firms of Non-PIEs with a total of 9 Certified Auditors.

Of the 12 audit firm reviews undertaken during 2019, 4 (33%) Certified Audit Firms of PIEs attained a “Satisfactory” / Low

to Medium risk rating while 2 (17%) Certified Audit Firms of PIEs and 6 (50%) Certified Audit Firms of Non-PIEs attained an “Unsatisfactory” / Medium to High risk rating. There were no practising certificates revoked for any Certified Firm in 2019.21 firms were reviewed in the second cycle to date. 4 (19%) Certified Audit Firms of PIEs and 2 (10%) Certified Audit Firms of Non-PIEs attained a ‘Satisfactory’/Low to medium risk rating; 12 (57%) Certified Audit Firms of Non-PIEs and (3) 14% Certified Audit Firms of PIEs attained ‘Unsatisfactory’/ Medium to High risk rating. One of the Certified Audit Firms of Non-PIE obtained unsatisfactory results three times in a row and its certificate was revoked in 2018 in line with the BICA three strike rule.

Of the total 23 Certified Auditors reviewed in 2019, the performance of 10 (44%) Certified Auditor of PIEs were rated “Satisfactory or low to medium risk” while the performances of 4 (17%) Certified Auditors of PIEs and 9 (39%) Certified Auditors of Non- PIEs were rated “Unsatisfactory or Medium to High risk”. There were no practising certificates revoked for any Certified Auditor in 2019.

For the second cycle to date, out of the 36 Certified Auditors reviewed, 11 (30%) Certified Auditors of PIEs and 5 (14%) Certified Auditors of Non-PIEs were rated “Satisfactory or low to medium risk” while 5 (14%) Certified Auditors of PIEs and 15 (42%) Certified Auditors of Non- PIEs were rated as “Unsatisfactory or medium to High risk”.

Overall, the quality of the firms’ system of quality control (firm reviews) and Engagement reviews is of concern to the Authority as only 29% of the Certified Audit Firms reviewed to date were rated satisfactory / low to medium risk while 71% were rated unsatisfactory / medium to high risk and 44% of the Certified Auditors reviewed were rated as ‘satisfactory’ / low to medium risk while 56% were rated as unsatisfactory / medium to high risk (see Table A below).

A clear distinction can be noted for small audit firms (Certified Auditors of Non-PIEs) which continue to record a high number of unsatisfactory / medium to high risk ratings when compared to the “big” audit firms (Certified Auditors of PIEs). Small audit firms find it difficult to resource their practices with adequately competent staff and engagement quality control structures to cope with the ever-changing audit and International Financial Reporting Standards (IFRS) landscape



15

The Oversight

Table A: Summary of Firm and Engagement Review Results for Certified Auditors of Public Interest Entities and Certified Auditors of Non-Public Interest Entities

2019

DESCRIPTIONSCERTIFIED AUDITORS

OF PIE

CERTIFIED AUDITORS

OF NON - PIE

TOTAL

NUMBER OF FIRMS 6 6 12

Total Number of Partners 20 9 29

Total Number of Attest Partners Reviewed 14 9 23

Total Number of Attest Clients 877 193 1070

Total Number of Attest (Assurance) Engagements Reviewed 20 15 35

Total Number of Engagement Review Findings 96 189 285

Findings per Attest Partner(average) 7 21 12

Attest Partner Rating:1. Satisfactory / Low to Medium Risk2. Unsatisfactory / Medium to High Risk

104

09

1013

Total Partners 14 9 23

Total Number of Firm Review Findings 13 31 44

Findings per Firm(average) 2 5 4

Firm Rating1. Satisfactory / Low to Medium Risk2. Unsatisfactory / Medium to High Risk

42

06

48

Total Firms 6 6 12

Second Cycle to Date

CERTIFIED AUDITORS

OF PIE

CERTIFIED AUDI-

TORS OF NON - PIE

TOTAL

7 14 21

22 20 42

16 20 36

947 448 1395

24 37 61

141 456 597

9 23 17

115

515

1620

16 20 36

18 75 93

3 5 4

432

212

615

7 14 21

The Authority is a member of the International Forum of Independent Audit Regulators (IFIAR) and, therefore, participates in the Survey of Inspection Findings in which member countries are required, among other things, to classify findings into audit practice review/inspection themes provided by the IFIAR. All findings arising from both the firm and engagement reviews have been classified into the IFIAR Inspection Themes. The detailed analysis is found in the Summary of Common Findings for the year ended 31 December 2019 in the BAOA website.

Firm Reviews

All the key elements of each firm’s system of Quality Control Policies and Procedures were reviewed on a sample basis and were then compared to the standard requirements of ISQC 1.

All deviations from the requirements of ISQC 1 were noted as “findings” and were allocated to their respective ISQC 1 element.

13 (30%) of the 44 total findings for 2019 were for Certified Audit Firms of PIEs, the remainder of 31 (70%) were for Audit Firms of Non- PIEs. A total of 93 findings have been noted in the second cycle to date. These are made up of 18 (19%) contributed by Audit Firms of PIEs and 75 (81%) by Audit Firms of Non- PIEs.

Themes which emerged with a higher contribution to the total findings were Engagement Performance, Monitoring and Relevant ethical requirements.



16

The Oversight

a) Engagement Performance

Firms are required to establish policies and procedures designed to provide them with reasonable assurance that engagements are performed in accordance with professional standards and applicable legal and regulatory requirements, and that the firm or the engagement partners issue reports that are appropriate in the circumstances.

The Engagement Performance theme made the largest contribution to the total findings; 45% in 2019 and 50% in the second cycle to date. Certified Audit Firms of Non-PIEs accounted for 39% of the findings, while Certified Audit Firms of PIEs accounted for the remainder of 6% in 2019. In the second cycle to date 45% was contributed by Certified Audit Firms of Non- PIEs and 5% by Certified Audit Firms of PIEs.

b) Monitoring

Firms are required to establish a monitoring process designed to provide them with reasonable assurance that the policies and procedures relating to the system of quality control are relevant, adequate, and operating effectively.The Monitoring theme accounted for the second highest contribution to total findings; 21% in 2019 and 19% for the second cycle to date. Certified Audit Firms of Non-PIEs contributed 14% of the findings compared to 7% contributed by Certified Audit Firms of PIEs in 2019. In the second cycle to date, 15% was contributed by Certified Audit Firms of Non- PIEs and 4% by Certified Audit Firms of PIEs.

c) Relevant Ethical Requirements Theme’s contribution

Firms are required to establish policies and procedures designed to provide them with reasonable assurance that the firm and its personnel comply with relevant ethical requirements.

This theme accounted for the third highest contribution to total findings; 16% in 2019 and 13% for the second cycle to date. Certified Audit Firms of Non-PIEs contributed 9% of the findings compared to 7% contributed by Certified Audit Firms of PIEs in 2019. In the second cycle to date 10% was contributed by Certified Audit Firms of Non- PIEs and 3% by Certified Audit Firms of PIEs.

Engagement Reviews

During 2019, a total of 35 engagement reviews under the responsibility of 23 Certified Auditors across 12 Certified Audit Firms were carried out. A total of 61 engagements under the responsibility of 36 Certified Auditors across 21 Certified Audit

Firms have been undertaken in the second cycle to date.All deviations from the requirements of applicable Assurance Standards, International Financial Reporting Standards; Code of Ethics; and applicable laws and regulations were noted as “findings”. Each engagement finding was allocated to the IFIAR themes.

96 (34%) of the 285 total findings for 2019 were for Certified Auditors of PIEs, the remainder of 189 (66%) were for Certified Auditors of Non- PIEs. A total of 597 findings have been noted in the second cycle to date. These are made up of 141 (24%) contributed by Certified Auditors of PIEs and 456 (76%) by Certified Auditors of Non- PIEs.

Engagement files reviewed continue to show significant deficiencies mainly in the following themes: ‘Adequacy of Review and Supervision’ with 56% and the ‘Adequacy of Financial Statement Presentation and Disclosures’ with 14%.In the second cycle to date, most of the findings related also to the two themes with 59% under the ‘Adequacy of Review and Supervision’ theme, split between Certified Auditors of PIEs with 12% and Certified Auditors of Non-PIEs with 47% and 13% under the ‘Adequacy of Financial Statement Presentation and Disclosures’ theme, split between Certified Auditors of PIEs with 4% and Certified Auditors of Non-PIEs with 9% respectively.

CONCLUSION

The Authority wishes to emphasise that the primary objective of audit practice reviews is to raise the standard of audit and protect public interest. For that reason, the Authority’s audit practice review reports are proactive and forward looking, contain detailed recommendations and guidance to enable audit practices to improve their performance and overall standard of audit, where such need has been identified. Based on the developmental approach adopted by the Authority, deregistration of an audit practitioner or firm is a last resort.

It is evident based on the audit practice reviews carried out to date that audit firms need to improve their systems of quality controls, particularly the quality of the work performed, and evidence obtained to support the audit opinions issued.The Authority noted that most findings identified during the reviews are recurring. Firms are therefore required to ensure that all deficiencies identified during a firm or an engagement review are addressed throughout the entire firm, i.e. where improvements are required, these should be addressed by all audit teams across the firm on all of their audits.



17

The Oversight

FCCA, FCPA, BAcc CHIEF REVIEWER

Ephifania or Ephi as she is affectionately known among her colleagues, serves as a Chief Reviewer, a position she has held for almost a year now. Ephifania is an esteemed professional accountant who holds a Degree in Bachelor of Accountancy from the University of Botswana and is a Fellow member of both Association of Chartered Certified Accountants and Botswana Institute of Chartered Accountants with over 10 years post qualification experience.

She has 8 years’ of experience in external audit across various industries acquired with Deloitte (Botswana), one of the big four audit firms in the world where she left as an Assistant Audit Manager. In 2013, she joined Botswana Accountancy Oversight Authority (BAOA) as a Senior Reviewer, being one of the pioneers of the Authority.

Role of a Chief Reviewer

The mandate of BAOA is to protect public interest through Audit Practice Reviews, Financial Reporting Monitoring and Corporate Governance reviews. As a Chief Reviewer, Ephifania is at the helm of the Technical team responsible for implementing this mandate. She oversees execution of the BAOA’S strategy on strengthening financial reporting, corporate governance and independent audit regulation in Botswana.

Her life in the office during any given day involves review of audit firms’ Quality Control processes, to ensure their compliance with International Standard on Quality Control 1 (ISQC 1); review of assurance engagements to ensure compliance with the International Standards on Auditing (ISA); review of audited financial statements of Public Interest

Entities to ensure compliance with International Financial Reporting Standards (IFRS) or relevant financial reporting framework and review of Public Interest Entities’ Corporate Governance structures to ensure compliance with the King III Code or any equivalent corporate governance code.

Apart from professional standards compliance reviews, Ephifania is also responsible for enforcing the Financial Intelligence Act, 2019 through anti- money laundering inspections in the audit environment.

As part of the Executive team, she assists the Authority’s Board in delivery of their role in Audit Practice Review Committee, Financial Reporting Monitoring Committee and Standard Setting Committee.

Challenges that come with the Role

Given her vast experience, Ephifania notes that someone in her field needs to stay relevant, keep up to date with the international standards that change regularly. The role involves dealing with experts in the auditing and accounting field and therefore one needs to be at the top of their game. Practice what you preach, she highlights, the Authority has to be the benchmark in terms of compliance with all that it expects entities and auditors to comply with.

Professional challenges

In her own words;

Talent – There is no question that accounting professionals are needed and are in demand. It is therefore difficult to find professionals who meet the minimum requirements of this role, considering the level of expertise required.

Emerging technologies – These are altering the financial reporting environment substantially, and this change is accelerating. As a regulatory body, we have to be alert to the impact of technology on the accounting and auditing environment and therefore have to maintain a very high level of professional skepticism when carrying out our reviews.

Business continuity - Recently, we found ourselves on lockdown due to the current ongoing Covid-19 pandemic and had to be dependent on technology for every task. It has become more critical as an organisation, to have a proactive plan that would be able to deal with and mitigate risks associated with such disruption of operations.

In conclusion, the primary objective of the Authority is developing, promoting and implementing credible financial Reporting, Corporate Governance, Codes and Standards in Botswana, to Protect Public Interest. The Authority, therefore, has the best interest of the accounting and auditing profession at heart.

Ephifania Nkanga Profile

18

The Oversight

EXECUTIVE SUMMARY

This Survey was conducted in November 2019 and the results were compiled and analysed during the month of April 2020. The survey targeted all PIEs and PIE Auditors. The purpose of this survey was to establish the level of awareness and satisfaction by the Authority’s Stakeholders.

The survey had a low response rate, out of a population of 100, only 6 participated. The Authority made a decision to analyse and publish the results, nonetheless. We committed to a plan to conduct a similar survey soon.

The questionnaire had two parts: the awareness questions and the satisfaction questions. A 1 to 5 scoring matrix was used on satisfaction questionnaires. To come up with a Satisfaction Index, we applied the weighted average to the individual question results.

The survey reported that the average level of awareness was 100%. It further reported an average index of 3.29 for Stakeholder satisfaction. This is an indication that Stakeholders are generally satisfied with the level of service vis a vis the Authority’s mandate; however, Stakeholders highlighted some dissatisfaction in some areas, details are highlighted in the report.

STAKEHOLDER AWARENESS SURVEY

AWARENESS QUESTIONS

1. Are you aware of the existance of the Botswana Accountancy Oversight Authority (BAOA/Authority) ?

YES NO Total# %Aware % of Not Aware

6 0 6 100% 0

Very Poor Poor Fair Good Excellent Total# %of Satisfied %of Not Satisfied Index

6 0 0 3 1 4 100% 0


0 0 0 3 1 4 100% 0

Poor Unsatisfactory Fair Good Outsatnding Total# %of Satisfied %of Not Satisfied

0 1 0 5 0 6 83% 17

Yes No Total# % Of Responsible for PIEs % Of Not Responsible for PIEs

1 1 2 50% 50%

YES NO Total# % of Briefed % of Not Briefed

6 0 6 100% 0

YES NO Total# % of PIE % of NON-PIE

4 2 6 67% 33%

YES NO Total# % of Registered % of Not Registered

4 2 6 67% 33%

YES NO Total# % of Reviewed % of Not Reviewed

4 2 6 67% 33%

2. Have you ever been briefed by management on the mandate and services of the Authority?

6. How would you rate our services?

7. How do you rate your confidence in the service provided by the Authority?

9. How do you rate the Authority’s Service?

8. If your entry is an Audit firm, are all your partners responsible for PIEs registered with BAOA

Aware of BAOA existence

4.25 Satisfied with service



Some Partners are not responsible for PIEs

CONCLUSIONS

CONCLUSIONS

Briefed by BAOA Management

Mostly PIES, some are Auditors

Already been reviewed by BAOA

All Registered

3. Is your organization a Public Interest Entity (PIE)?

4. Is your organization registered with BAOA as a (PIE)?

5. Has your organization been reviewed by the Authority before?

Stakeholder Awareness Survey

SATISFACTION QUESTIONS

19

The Oversight

CONCLUSIONS



0 1 1 3 1 6 83% 17


0 1 1 3 1 6 83% 17


0 0 3 2 1 6 100% 0%


0 0 3 2 1 6 100% 0%

Never Seldom Occasionally Frequently Very Frequently Total# %of Usage %of Not Using

1 2 2 1 6 83% 17%


0 1 2 2 1 6 83% 17%


3 1 1 0 1 6 33% 67%

Yes No Total# %of Awareness of Mandate %of Not Awareness of Mandate

5 1 6 83% 17%

10. How do you rate the Authority’s Awareness?

11. How do you rate the Authority’s Reach-Out?

12. How do you rate the Authority’s Stakeholder Engagement?

13. How do you rate the Authority’s Communication Process?

16. How Often do you utilize the following BAOA’s financial Reporting Regulations?

17. How Often do you utilize the following BAOA’s financial Reporting Regulations?

18. How Often do you utilize the following BAOA’s Website?

14. Do you believe you have enough information about BAOA’s Mandate and Service to be able to apply in your business?

3.67 Awareness Satisfactory

3.67 Reachout Satisfactory

3.67 Stakeholder Engagement Satisfactory

3.83 Communication Process Satisfactory

3.33 Utilising the Financial Reporting Act

3.50 Utilising the Regulations

2.17 Not Utilising the BAOA Website

Aware of Mandate of BAOA


0 2 1 2 1 6 67% 33%

15. How do you rate the level of awareness on the existence of the Authority?

3.33 Aware of existence of BAOA


20

The Oversight

MAIN FINDINGS

Figure 1: Are you aware of the existence of BAOA?

Overall Awareness of BAOA existence

Aware Not Aware

100% of Respondents indicated that they were aware of the existence of BAOA.

Mandate awareness

Communication Process satisfactory

Stakeholder Engagement Satisfactory

Reachout Satisfactory

Awareness Satisfactory

Satisfied with Service

Awareness and Satisfaction

75% 80% 85% 90% 95% 100% 105%

When asked to rate various aspects of engagement with the Authority, Respondents indicated that they were 100% satisfied with communication process and stakeholder engagements. Other items scored about 83%.

SUMMARY

The overall stakeholder survey index applied to satisfaction questions was 3.29 out of a possible index of 5. This is an indication that, Stakeholders are generally aware of the Authority’s mandate and the level of engagement is satisfactory.

The Stakeholders were particularly satisfied with:1. Stakeholder Engagement and scored 100%;2. Communication Processes and scored 83%;3. Reach-out and scored 83%); and4. The Authority’s service and scored 83%.

Area of Concern was low utilisation of Communication tools. The Authority should ensure that our communication tools especially the Authority website are revamped to appeal to the Stakeholders as a communication tool.


3 0 1 2 0 6 50% 50%


2 1 3 0 0 6 50% 50%


2 1 3 0 0 6 50% 50%

Yes No Total# % Adequate Communication % Of inadequate Communication

5 1 6 83% 17%

Average Index 3.29

19. How Often do you utilize the following BAOA’s Annual Report?

20. How Often do you utilize the following BAOA’s Pamplet?

21. How Often do you utilize the following BAOA’s Meeting?

22. Do you feel the Authority uses adequate and efficient communication tools to interact with stakeholders?

2.33 Fair Utilising of Annual Report

2.17 Fair Utilising of Pamplets

2.17 Fair Utilising ofMeetings

BAOA uses efficient Communication tools



21

The Oversight

Guidelines On The (Covid-19)

1. INTRODUCTION 1.1 An outbreak of a coronavirus type disease named

COVIC-19 first took place in Wuhan, in the Hubei Province of China, but has now spread across all continents. As a result, the World Health Organisation (WHO) on the 11th March 2020, declared the Coronavirus disease (COVID-19) a pandemic.

1.2 As a result of the declaration, the Botswana Government has released its latest Public Notice through the Government Gazette, dated the 4th May 2020, (herewith attached on the COVID-19), which the Authority has adopted and will fully comply with.

1.3 It is against this background that the Authority is taking pre-emptive, preventative and precautionary measures, in terms of the disease, as well as external/internal travel by its stakeholders, and has thus developed Guidelines to be followed by all.

1.4 The Guidelines will be referred to as Guidelines on the Coronavirus Outbreak (COVID-19) 4th May 2020.

2. DEFINITION OF TERMS

2.1 Authority: Refers to the Botswana Accountancy Oversight Authority.

2.2 Coronaviruses: A group of viruses including those that cause common colds, Mers, Sars etc, the latest being COVID-19.

2.3 External Travel: Travel to any destination outside Botswana.

2.4 Internal Travel: Travel between COVID zones in Botswana.

2.5 Private Travel: Non-work-related travelling not associated with employment and undertaken by any Employee for their private benefit.

3. PURPOSE

3.1 The purpose of these Guidelines is to ensure the safety of the Authority Employees and stakeholders, as well as the avoidance of potential risk exposure to the virus, looking at the speed at which the virus is spreading globally.

3.2 The Guidelines also cover restrictions on external and

internal travel by its employees and other stakeholders that impact heavily on service delivery.

4. SCOPE

The Guidelines shall apply to all employees of the Authority and to all stakeholders who may visit the Authority premises or required to physically deal with the Authority Employees from time to time.

5. GUIDELINES

5.1 Establishment of the Crisis Management Committee

a) the Authority has set up a Crisis Management Committee that will be closely monitoring the situation to respond appropriately to curb any adverse effects that the COVID-19 may pose for its employees;

b) the Crisis Management Committee will provide regular updates to Management and Employees when necessary; and

c) the Crisis Management Committee comprises

22

The Oversight


Motlatsi Mmusi, Boitumelo Raditladi, Patrick Jansen and Ephifania Nkanga.

5.2 Travelling on Duty

a) All external travel has been cancelled until further notice;

b) Employees and the public at large should postpone all non-essential travel between COVID zones until further notice; and

c) The Authority shall cease to host all visitors from outside the country with immediate effect.

5.3 Private Travel

a) Employees are advised to inform any member of the Crisis Management Committee prior to engaging on private travel within the country.

b) Employees who tested positive and are therefore on official forced quarantine will be entitled to sick leave;

c) Employees on quarantine, must immediately inform any member of the Crisis Management Committee who must inform the Human Resources Manager for resource planning and allocation;

d) Any Employee who tested positive must immediately inform any member of the Crisis Management Committee; and

e) Employees will be required to produce an official certificate of fitness following completion of the quarantine period to the Human Resource Manager.

5.4 Office Cleaners in the Authority should:

a) Regularly and thoroughly disinfect and sanitise door handles, keyboards, work surfaces, including meeting rooms and receptions on an on-going basis;

b) Wash and sanitise hands thoroughly before making and serving refreshments;

c) use hand gloves when cleaning and collecting rubbish; and

d) Be cognisant of signs of respiratory infection and seek immediate medical attention.

5.5 Official engagement outside the Authority Premises

The Technical Department Employees should ensure that clients such as audit firms and Public Interest Entities meet the minimum requirements recommended by health authorities before any visits could be undertaken.

5.6 Maintenance of Register and Temperature Recording

a) The Authority maintains a register containing personal details, contact details and temperature records of all persons accessing the Authority’s premises. This register is placed at the reception and will be maintained and updated by the Receptionist on a daily basis until further notice; and

b) Anyone with body temperature of 37.4 degrees celsius and above will not be allowed access into the Authority’s premises.

6. SAFETY TIPS TO EMPLOYEES

6.1 Employees should observe and adopt the following:

a) Hand sanitizers will be placed at all entrances and strategic places of the Authority offices. Employees are required to sanitise their hands as they enter and leave the premises and other strategic places within the premises;

b) Adopt a no handshake or hugging protocol. Other non-contact physical forms of greeting should be adopted, such as bowing, waving etc;

c) Avoid touching your eyes, nose and mouth, which may expose one to the virus;

d) Avoid sitting next to people with clear signs and symptoms of common colds, such as sneezing and coughing;

e) Adopt to sneeze or cough in a flexed elbow or tissue;f) Persistently and thoroughly practice proper hand

hygiene by washing hands with soap and clean water for about 40 seconds;

g) Employees are advised to seek medical attention if they experience symptoms of a cold;

h) Avoid crowded and public gatherings, events and celebrations; since the larger the number of people, the higher the risk of contracting the virus. Government advises that gatherings should be limited to 50 people at funerals and religious gatherings; 25 people at banks, restaurants, supermarkets, pharmacies, post offices, Government service departments and memorial services; and 10 people at sporting events, conferences, wedding celebrations, music concerts, parties, cinemas and any other place not mentioned above;

i) Maintain a distance of 1-2 meters between individuals in all places; and

j) Employees shall wear a cloth face mask or home-made item that covers the nose and mouth or other


23

The Oversight

appropriate item that covers the nose and mouth when in public place.

7. GUIDE TO OTHER STAKEHOLDERS

7.1 Clients are encouraged to avoid visiting the Authority premises to submit registration forms and to continue using emails to submit their registration forms.

7.2 Clients who require information about their registration should contact [email protected] or telephone 3919735 or visit our website www.baoa.org.bw.

7.3 Contractors’ works in the Authority premises are suspended until further notice.

8. REVIEW

The Guidelines shall be reviewed from time to time, as the Authority deems appropriate to ensure Employee safety and protection.

9. DECLARATION

Employees and Stakeholders shall declare their travelling and exposure status by completing the declaration forms administered by the Crisis Management Committee.

10. AUTHORISATION

These Guidelines were approved by the Chief Executive Officer at Gaborone, Botswana.

Duncan Dankie MajindaChief Executive OfficerDate: 14.05.2020



24

The Oversight

Employee Engagement Survey

EXECUTIVE SUMMARY

Engagement in a workplace is a critical yard stick for the success of every organisation. As Employees engage in their work, employee performance increases and are most likely to stay longer with the organisation. Employee engagement also impacts the overall performance of an organisation; therefore, a highly engaged work force helps an organisation to achieve its critical success factors.

This Survey was conducted in December 2019 and the results were compiled and analysed internally during the month of February 2020. The results from the survey suggest that the Authority has an engaged human capital, workforce that is proud to work for the Authority and that is self-motivated. The results also highlight areas of concern, which the Authority should address in a planned and systematic manner.

The questionnaire had three parts; the engagement questions; the engagement drivers and the satisfaction questions. A 1 to 5 scoring matrix was used, and its descriptors shown in the table below:

To come up with an Engagement Index, we applied the weighted average to the individual question results.

Legend

Score Description

Unhappy

Happy

Very happy

1 - 2

3

4 - 5

Number of Participants TOTAL #STAFF

AVERAGEINDEX

%AVERAGE

INDEXFINDINGS

% of Unhappy Employees

% of Happy Employees

% of Very Happy Employees

1. I am proud to work for BAOA

26 4.35 87% PROUD 0% 0% 100%0 0 0 17 9

Strongly Disagree

Disagree Neither Agree nor Disagree

Agree Strongly Agree

2. I would recommend BAOA as a great place to work

26 4.00 80%GREAT PLACE

4% 23% 73%

Number of participants

0 1 6 11 8

Strongly Disagree



3. I rarely think about looking for a job at another organization

26 3.15 63% STAY 23% 42% 35%


1 5 11 7 2

Strongly Disagree



4. I see myself still working at BAOA in two years’ time

26 3.85 77%

WORK FOR

BAOA IN FUTURE

4% 31% 65%


1 0 8 10 7

Strongly Disagree



5. BAOA motivates me to go beyond what is expected of me

26 3.69 74%MOTI-VATED

15% 12% 73%


2 2 3 14 5

Strongly Disagree



AVERAGE 3.81

SUMMARY OF RESULTS

A. Engagemant Index Questions

25

The Oversight



AVERAGEINDEX

%AVERAGE

INDEXFINDINGS




1. My job provides me with a sense of meaning and purpose

26 3.69 79% SENSE OF MEANING 8% 12% 87%

0 2 3 15 6

Strongly Disagree



2. I have the freedom to choose how to best perform my job

26 3.69 74% AUTONO-MY 15% 19% 65%


0 4 5 12 5

Strongly Disagree



3. I feel challenge and stretched in my job in a way that results in personal growth

26 3.69 74% GROWTH 19% 4% 77%Number of participants

0 5 1 17 3

Strongly Disagree



4. Most days, i see positive results became of my work

26 4.12 83%

POSITIVECONTRI-BUTION

TO MAN-DATE

0% 8% 92%


0 0 2 19 5

Strongly Disagree



5. BAOA motivates me to go beyond what is expected of me

26 3.85 77%SENSE OF BELONG-

ING8% 19% 73%


0 2 5 14 5

Strongly Disagree



AVERAGE 3.86 77%

B. Engagemant Driver Question

Picture: BAOA staff attentively listening to instructions from the Wellness Day Facilitator.


26

The Oversight


AVERAGEINDEX

%AVERAGE

INDEXFINDINGS




1. I have received the training I need to do my job

26 3.50 70% TRAININGRECEIVED 15% 23% 62%

0 4 6 15 1

Strongly Disagree



2. I have the tools and resource needed to do my job well

26 3.88 78%TOOLS

AVAILABLE TO WORK

8% 4% 88%


0 2 1 21 2

Strongly Disagree



3. My supervisor treats people with fairness and respect

26 4.00 80% FAIRLY TREATED 4% 23% 73%


0 1 6 11 8

Strongly Disagree



4. Most days, I see positive results became of my work

26 4.15 83% UNDERSTAND EXPECTATION 0% 8% 92%


0 0 2 18 6

Strongly Disagree



5. My supervisor gives me regular feedback on how I am doing

26 3.77 75%REGULAR

SUPERVISOR FEEDBACK

12% 23% 65%Number of participants

1 2 6 10 7

Strongly Disagree



6. There are oppotunities for my own advancement in this organisation

26 3.31 66%ADVANCEMENT OPPORTUNITIES

AVAILABLE31% 8% 62%


3 5 2 13 3

Strongly Disagree



7. We work effectively across Departments and Sections

26 3.27 65%INTER

DEPARTMENTAL SUPPORT & TEAMWORK

23% 31% 46%


1 5 8 10 2

Strongly Disagree



8. This organisation communicates well with all employees about what is going on.

26 3.00 60%GOOD

COMMUNICA-TION

31% 31% 38%Number of participants

2 6 8 10 0

Strongly Disagree



AVERAGE 3.61 72%

OVERALL AVERAGE ENGAGEMENT INDEX 3.76

C. Satisfaction Questions



27

The Oversight

GRAPHICAL ANALYSIS OF THE RESULTS

The graph below reflects the average index distribution. Majority of the scores fall within the 3-5 range. The overall average index for the Authority is 3.76 reflecting 75% overall engagement index. This is a relatively good score.

PART A: The questions under this category are focused on how engaged an Employee is:


MOTIVATED

WILL WORK FRO 2 YEARS

STAY WITH BAOA

GREAT PLACE

PROUD

16

14

12

10

8

6

4

2

0

% of Results

Overall Engagement Index Distribution

0% 20% 40% 60% 80% 100% 120%

Index

Num

be

r of E

mp

loye

es

1 2 3 4 5

PART B: The questions in this category are focused on the drivers of engagement. That is what drives an employee to be engaged and satisfied.

SENSE OF BELONGING

CONTRIBUTION TO MANADATE

PERSONAL GROWTH

AUTONOMY

SENSE OF MEANING

% of Results

0% 20% 40% 60% 80% 100% 120%


28

The Oversight


PART C: The questions in part C determine the employee’s level of satisfaction in relation to the Authority’s working environment.

COMMUNICATION

INTER DEPT SUPPORT AND TEAMWORK

ADVANCEMENT OPPORTUNITIES

FEEDBACK FROM SUPERVISOR

SUPERVISOR EXPECTATION

FAIR TREATMENT

RESOURCES AVAILABILITY

TRAINING RECEIVED

% of Results

0% 20% 40% 60% 80% 100% 120%

SUMMARY

The overall engagement survey index is 3.76 out of a possible index of 5. This is an indication that, Staff is happy and engaged.The Authority scored high on:1. Staff being proud to work for the Authority (100%);2. Motivated Staff (85%);3. Staff contributing positively to the mandate (100%); and4. Sense of belonging and sense of meaning (92%).

Employees believe that they have a positive contribution to the overall achievement of the Authority’s Mandate. Employees feel they met their Supervisors expectation. Employees believe that they are treated fairly, and the resources and tools are adequate for them to achieve their work objectives.

Areas of Concern were:1. Communication with a score of 69%;2. Lack of advancement opportunities with a score of 69%;

and3. Interdepartmental support and teamwork with a score of

77%.

Employees feel that the Authority does not communicate well with them on new developments. Employees believe that the opportunities to advance within the Authority are limited. Employees also feel that there is no support and teamwork between departments.


29

The Oversight

Sustainability Accounting

INTRODUCTION

Sustainability accounting and integrated reporting are concepts that emerged from the developments in accounting over the years. These concepts were addressing the various stakeholder requirements of non-financial information in addition to the financial information. The traditional financial accounting focused on disclosing only financial information. The increased understanding that financial information does not sufficiently discharge organisational accountability to members of society resulted in the call for sustainability accounting and integrated reporting.

SUSTAINABILITY ACCOUNTING (SA)

Sustainability accounting is a subcategory of financial accounting that focuses on the preparation and disclosure of non-financial information about the organisation’s performance. (Source: Wikipedia).

Sustainability accounting and reporting is more focused on activities that have a direct impact on the society, environment and economic performance of an organisation. Therefore, this is a tool used by organisations and its stakeholders to assess and measure the level of disclosures on social and environmental information. (corporate social responsibility reporting and social and environmental reporting)

Stakeholders need information on how the organisation’s activities impact the society (social) and the environment in which they operate in.

INTEGRATED REPORTING (IR)

The International Integrated Reporting Council defines IR as a process founded on integrated thinking that results in a periodic integrated report by an organisation about value creation over time and related communications regarding aspects of value creation.

Integrated reporting is about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment (social and economic), lead to the creation of value over time.

SUSTAINABILITY ACCOUNTING - ELEMENT OF INTEGRATED REPORTING

The primary objective of integrated reporting is to report how organisations’ operations impact the society and the environment they operate in and vice versa. It is also meant to explain to providers of capital how an organisation creates value over time. It is explained that organisations that adopted integrated reporting are generally aware of the impact of their operations in the society and environment and are therefore more likely to allocate their resources (capitals) strategically to create value in that environment for the long-term hence achieving sustainable development.

Sustainability accounting is an element of integrated reporting because a comprehensive integrated report connects how the financial resource (capital) and others including social, are managed and utilised to create value for both the organisation and the environment it operates in. it is expected that the value created translates to sustainable development.

In the recent history, providers of financial capital started viewing the organisations that produce integrated reports as sustainable and are more likely to invest in such organisations.

Sustainability accounting and integrated reporting enhance transparency, accountability, and credibility of organisations.

By: Motlatsi Mmusi

SUSTAINABILITY ACCOUNTING AND INTEGRATED REPORTING IN A NUTSHELL

30

The Oversight

Those Charged with Governance (TCWG) are the person(s) and /or organization(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity. The tone set by the Board to respond to the effects of COVID -19 and plans towards recovery will be critical to set the roadmap for executive management.

A lot has changed since COVID-19 was declared a world pandemic by the World Health Organization (WHO) in January 2020. TCWG have a significant role to play during and after COVID-19. As BAOA, we have drafted some suggestions on areas of emphasis for TCWG during and after COVID-19. Some of the areas that would need to be considered include but are not limited to the following:

1. STAKEHOLDER MANAGEMENT

Identify key stakeholders such as Botswana Stock Exchange (BSE), Company Intellectual Property Authority (CIPA), Non-Bank Financial Institutions Regulatory Authority (NBFIRA), Bank of Botswana (BoB) and BURS and manage their various expectations (possibility of late reporting to avoid suspension from listing and /or penalties, Regulatory capital constraints), Shareholders (drop in earnings and loss of investments value). A communication strategy on the best way to communicate with each stakeholder will need to be developed.

2. GOING CONCERN RESPONSIBILITY

The Board has the ultimate responsibility over going concern of the entity.

a. Frequent business updates. The Board is urged to have more frequent meetings (including teleconference meetings during lockdown) to get updates about the performance of various business units with a view to assessing the going concern status of each business unit and suggesting action plans to address going concern issues.

b. Revised budgets. Both capital and operating expenditure budgets may need to be revisited and re-prioritised

c. Cash flow projections. Formal cash flow and other business continuity related projections may need to be prepared to support the going concern assessment

d. Business impact assessment. A formal business impact assessment should be presented to the Board to ensure that TCWG have a full appreciation of the effects and

can make informed decisionse. Supply chain management assessment.This is critical as

survival of most businesses depend on a smooth supply chain function. Prolonged disruptions can affect going concern even of well capitalised businesses. Since this is a global problem, supply chain alternatives may not be easy to come by.

3. FUNDING CONSTRAINTS

Companies are urged to renegotiate repayment terms with their financiers to avoid breaching loan covenants. For example, some banks internationally are giving their clients 6 months moratoriums on loan repayments in view of COVID -19 challenges to businesses and individuals.

4. IMPAIRMENTS OF ASSETS

Significant impairments of financial instruments and other non-current assets such as goodwill, intangible assets and inventories need to be thoroughly reviewed and challenged by the Board. For Financial Institutions, the expected loss models and the various loss provisions and the future outlook will need closer scrutiny. Loss of value of security over financial assets will increase impairments. The Board is urged to take an early inventory of financial assets that are more susceptible to COVID-19 and do an evaluation of the impact.

5. POST BALANCE SHEET EVENTS

Significant and robust disclosures are expected especially loss of values for such assets marketable securities post year end. The board has to be aware of the clear distinction of which events are adjusting and non- adjusting events according to IAS 10.

6. AUDIT PROCESS MANAGEMENT

COVID-19 and the associated national lockdowns have resulted in some audits being postponed or slowing down. The result is that Auditors will be under a lot of pressure when the situation stabilises. The Board needs to have discussions with Auditors on how the assignments will be carried out.

7. RESTRUCTURING

The Board will have to consider restructuring possibilities and the funding model of such things as staff retrenchments.

AUDIT COMMITTEES AND CHIEF FINANCE OFFICERS-BUSINESS AND ACCOUNTING CONSIDERATIONS-COVID-19.

Audit Committees & Chief Finance Officers

31

The Oversight

Audit Committees & Chief Finance Officers

8. EMERGINGRISKSANDLIFEAFTERCOVID-19

The Board needs to stand ready to revise their strategic plans to manage the aftereffects of COVID -19. Emerging risks need to be identified and risk registers updated together with responses to the risks.

9. STAFF WELFARE

Undoubtedly, some of staff members will be negatively affected through, for example, loss of family members and loss of income through retrenchments. Counselling arrangements and other similar support initiatives may be necessary.

10. OPPORTUNITIES IN ADVERSITY

Consider new opportunities that could come from the aftereffects of COVID -19 and how the business can exploit these.

11. INTERNAL CONTROL ENVIRONMENT (INTERNAL AUDIT AND IT CONTROL ENVIRONMENT)

The lockdown and its effects may potentially have weakened the internal control environment. Operating with skeletal

staff could expose some businesses to undesirable effects of the breakdown of the internal control environment such as fraud. This is worsened by the absence or limited function of the internal audit function to provide the assurance the Board needs.

12. GOVERNMENT AND LABOUR LAWS

The Board needs to be adequately updated on any government pronouncements and related laws as some of the pronouncements have far reaching consequences on the business. Care should be taken to make sure that all decisions taken are within the confines of the law including labour laws. The COVID-19 situation is evolving daily, and Governments are forced to make impromptu pronouncements to deal with the crisis.

The Authority would like to emphasise that the ultimate responsibility of running the company and preparation of financial statements lies with Those Charged with Governance. It is therefore their responsibility to ensure that the Corporate Governance and Financial Reporting requirements are still met under the circumstances.

Technical Department March 2020


32

The Oversight

The Parliamentary Committee on Statutory Bodies and State Owned Enterprises paid the Authority a courtesy visit during March 2020 to forster a mutual working relationship and explore technical capacity building initiatives for its members.

As a Structure charged with examining the accounts of any company where Government is a shareholder, statutory bodies, any body corporate or state enterprise as may be directed, the Committee found it fit to reach out to the Authority in order to effectively carry out its oversight mandate.

This was to be expected as the Authority is an entity established through the Financial Reporting Act, 2010 (the Act), as the independent oversight body of the accounting and auditing profession; to regulate the reporting of financial matters of Public Interest Entities (PIEs) and the corporate sector.

Led by its Chairperson and Member of Parliament for Mmadinare, Honorable Molebatsi Molebatsi, the Committee posited that in order to effectively carry out its responsibilities of making state entities and other body corporates accountable to the nation, they needed a partner with the requisite technical capacity. “To this end we saw it fit to approach BAOA for we recognise the oversight role you have been playing over the years. Your expertise will come in

handy as we look to capacitate our Committee to effectively provide the much needed jurisprudence and oversight”, he said matter of factly. He expressed that when everything had been agreed upon, a Memorandum of Understanding (MoU) would suffice to seal the partnership.

For his part, BAOA Chief Executive Officer, Duncan Majinda, gave an insightful one hour presentation on the mandate of the Authority, a gesture that was well appreciated by the visitors as it offered a further window into the affairs of the Authority. On the partnership, he remarked that the Authority was humbled by such a gesture and further emphasised its readiness to partner with the Committee for the improvement of the accountancy and auditing landscape through oversight.

“This is a welcome development. We are ready than ever before and as soon as it is convenient for all parties, we shall draft the terms of reference and sign the MoU to operationalise such a relationship”, he said.

Majinda further underscored the importance of formalising relationships through an MoU as it amongst others provides a platform for dialogue and information exchange, training and research between parties in matters of mutual interest.A virtual presentation was subsequently done by Majinda to the rest of the committee on 29th June 2020.

Stakeholder Engagement: BAOA Meets Committee On Statutory Bodies And State Enterprises

PARLIAMENTARY COMMITTEE ON STATUTORY BODIES AND STATE-OWNED ENTERPRISES LOOKS TO BAOA FOR STRATEGIC GUIDANCE

Picture: BAOA and the Parliamentary staff during a presentation hosted by the Authority.

By: Oupa Gaofise

33

The Oversight

Summary Of Findings - Corporate Governance Reviews

2019

Theme FINDING AS PER INTERNATIONAL FINANCIAL REPORTING STANDARDS(IFRS) 2019

Primary financial statements

IAS 1: Presentation of financial statements

• Material differences between primary financial

statement balances and notes;

• Non-disclosure of required financial statement line

items;

• Inadequate or Inconsistent use of information in the

financial statement which may be misleading;

• Information presented not relevant, reliable,

comparable and understandable;

• Subsequent reclassification of other comprehensive

income not disclosed;

• Items for depreciation and amortisation not disclosed;

• Shares not disclosed as “no par value shares”;

• Capital risk management not disclosed;

• Dividends per share not disclosed.

3 7 12 9 24 55

Non-current assets presen-tation and disclosure

Inadequate disclosure of:

• IAS 16: cost model carrying amounts for PPE assets held

at valuation, Inadequate disclosure on depreciation;

• IAS 40: direct operating expenses, rental received,

disposal proceeds and valuer information for

investment property not disclosed;

• IFRS 5: non-current asset held for sale: Facts and

circumstances leading to the disposal.

1 - 1 - 24 26

Current Assets presentation and disclo-sure

• IAS 2: Disclosures on circumstances leading to

inventory write downs and amount of inventory

expensed during the year

• IAS 2: Non-disclosure of carrying amounts of the

encumbered assets

- - - 1 3 4

Income taxes IAS 12-Non-disclosure of:

• Tax portion relating to other comprehensive income;

and

• Withholding tax on dividends.

- 1 - 1 4 6

Accounting policies

IAS 8-Accounting policies:

• Standards, amendments & interpretations to existing

standards not yet effective not disclosed;

• Non-disclosure of accounting policies on a material

balances;

• Disclosure of “boiler plate/irrelevant accounting

policies; and

• IAS 8: Assessment of possible impact of the new

standards not done.

1 2 1 1 9 14

Reg

ula

ted

by

BSE

Reg

ula

ted

by

BoB

Reg

ula

ted

by

NBF

RA

Sig

nific

ant

Ent

itie

s (D

ete

rmin

ed

by

the

Min

iste

r)

Para

sta

tals

(St

ate

O

wne

d E

nte

rpris

es)

TOTA

L N

UM

BER

OF

FIN

DIN

GS

Below is the summary of common findings noted in Financial Reporting Monitoring for the 2019 financial year:

SUMMARY OF FINDINGS FOR FINANCIAL REPORTING MONITORING

34

The Oversight

2019


Leases IAS 17: Inadequate disclosures of:

• Minimum lease payments;

• significant leasing arrangements;

• Lease period for operating lease not disclosed.

- - - 2 10 12

Income state-ment presen-tation and disclosure

Non- disclosure of:

• IAS 19: Defined contribution expense;

• IFRS 15: Contract assets, contract liabilities and

performance contracts obligations;

• IAS 7: Interest paid/received in the statement of

cashflows;

• IAS 7-Foreign exchange rates are not disclosed in the

statement of cashflows;

• IAS 20: Nature and extent of government grant; and

• IAS 36: Inadequate disclosures on impairment of assets

and impairment on goodwill.

2 2 1 4 8 17

Related party disclosures

• IAS 24: Incorrect/inadequate disclosures of related

party balances and transactions, Terms and conditions

of related party outstanding balances, key

management remuneration.

1 - 2 3 5 11

General deficiencies in disclosures

• IFRS 8: Inadequate disclosures on factors used to

identify reportable segments

• IAS 26: Inadequate accounting and reporting on

retirement benefit plan on the financial statement

• IAS 32: Financial liabilities and assets should exclude

tax, Non-financial assets disclosed as part of financial

assets

• IAS 38: Useful lives or amortisation rates relating to the

asset not disclosed

3 1 - 2 4 10

Financial Instruments Disclosure

IFRS 7-Inadequate disclosures of:

• Collateral held not described;

• Financial assets and financial liabilities as per the

categories issued by IAS 39;

• Effect of market risks on equity;

• Summary quantitative data for liquidity risk, currency

risk, credit risk and market risk;

• Ageing of financial assets; and

• Management of interest risk arising from interest

bearing financial instruments .

- 4 4 3 6 17

Reg

ula

ted

by

BSE

Reg

ula

ted

by

BoB

Reg

ula

ted

by

NBF

RA

Sig

nific

ant

Ent

itie

s (D

ete

rmin

ed

by

the

Min

iste

r)

Para

sta

tals

(St

ate

O

wne

d E

nte

rpris

es)

TOTA

L N

UM

BER

OF

FIN

DIN

GS



35

The Oversight

2019


Valuation Inadequate disclosures of:

• IFRS 13: Level 2 and Level 3 information;

• IFRS 7: Fair value of financial assets and financial

liabilities;

• IFRS 9 Measurement categories and carrying amounts

of financial instruments; and

• IFRS 2 Fair value and weighted average exercise price

of share options outstanding during the period

- 1 3 4 11 19

Events after the reporting date

IAS 10: Events after reporting period- Date of approval of annual report not disclosed

- - - - 3 3

Total number of findings 11 18 24 30 111 194

Total Entities analysed 1 2 2 3 11 19

Average finding per class of PIE 11 9 12 10 10

Percentage of findings per class of PIE 6% 9% 13% 15% 57%

Reg

ula

ted

by

BSE

Reg

ula

ted

by

BoB

Reg

ula

ted

by

NBF

RA

Sig

nific

ant

Ent

itie

s (D

ete

rmin

ed

by

the

Min

iste

r)

Para

sta

tals

(St

ate

O

wne

d E

nte

rpris

es)

TOTA

L N

UM

BER

OF

FIN

DIN

GS

There were fifty - five (55) findings relating to presentation of financial statements, out of a total of one hundred and ninety-four (194) which constituted twenty eight percent (28%) of the total findings. It was observed that majority of the entities did not pay attention to detail in the presentation of their financial statements resulting in inconsistencies, which may mislead the users of the financial statements. Inadequate disclosures relating to non-current assets was another area of concern, having the second highest number of findings at a total of twenty-six (26) or 13% of the total findings. The entities failed to address the disclosure requirements relating to Investment Property (IAS 40) and Property, Plant and Equipment (IAS 16) just to name a few.

Table above demonstrates a trend in the average number of findings per entity and per class of PIE. Most of the categories have an average of eleven (11) findings per entity. Entities regulated by NBFIRA are slightly higher at twelve (12) and entities regulated by BoB are on the low at nine (9) findings per entity. The average number of findings per entity increased from 8 in 2018 to 11 in 2019. There is no consistency as to which type of PIEs are performing badly in financial reporting monitoring reviews, as some of the parastatals’ financial statements were good and some of them were poorly done as evidenced by non-compliance in IFRS by two (2) parastatals.



36

The Oversight

2019

Theme Findings as per King III Code Principles and recommended practices

Compliance Code disclosure

No statement of compliance with a corporate governance code such as King III or similar code

1 1 1 2 11 16

Ethical Lead-ership and Corporate citizenship

Recommended practice 1.3.8: effective monitoring of ethics 1 1 2 - 10 14

Board and Directors

Principle 2.1: The Board should act as the focal point, and custodian of, corporate governance

1 1 1 2 5 10

Recommended practices 2.16.9 & 2.17.5: There were no documented succession plans for the role of the Chairman, CEO and senior executives

1 2 2 3 8 16

Recommended Practice 2.17.4: No performance review of the CEO - - - - 1 1

Recommended practice 2.18.5: Membership of the Board not according to recommended best practice, that every board should have a minimum of two executive directors

- 2 2 3 6 13

Recommended practice 2.18.9: There was no disclosure of the assessment of the independence of the independent non-executive directors of the Board

- - - - 2 2

Recommended practice 2.18.10: the policies on removal of directors not according to recommended best practice.

- 1 2 2 10 15

Recommended practice 2.19.4: the board had not made full disclosures regarding individual directors

- 2 - 2 10 14

Recommended practice 2.2.1: Corporate strategy not approved 1 - - 1 1 3

Principle 2.20: the induction of and ongoing training of directors 1 - 1 2 4 8

Principle 2.21: the company secretary not according to recommended best practice

- 1 1 - 1 3

Principle 2.22: Evaluation of the board, its committees and individual directors not performed and no disclosures in the integrated report

1 1 2 3 10 17

Recommended Practice 2.23.1: No approved terms of reference of committees

1 - - 1 3 5

Recommended practice 2.23.6: No established risk; nomination and remuneration committees

1 - 2 2 3 6

Principles 2.25 & 2.26: The policies and disclosures of remuneration of directors and certain senior executives not according to recommended best practice

1 2 2 2 10 17

Remuner-ation of directors and senior Executives

Principle 2.27: Shareholders had not approved the company’s remuneration policy before implementation

- 1 1 1 42 7

Audit Committees

Recommended Practice 3.1.5: No evidence of meeting between audit committee and auditors without management

- - - - 2 2

Reg

ula

ted

by

BSE

Reg

ula

ted

by

BoB

Reg

ula

ted

by

NBF

RA

Sig

nific

ant

Ent

itie

s (D

ete

rmin

ed

by

the

Min

iste

r)

Para

sta

tals

(St

ate

O

wne

d E

nte

rpris

es)

TOTA

L N

UM

BER

OF

FIN

DIN

GS

Below is the summary of common findings noted in Corporate Governance for the 2019 financial year:

SUMMARY OF FINDINGS FOR CORPORATE GOVERNANCE REVIEWS



37

The Oversight

2019


Recommended practice 3.1.4: the audit committee should meet as

often as is necessary to fulfil its functions but at least twice a year.

- - - - 1 1

Principle 3.2: Membership of the Audit Committee does not consist of independent Non-Executive Directors in entirety or required skill

- 1 2 1 2 6

Principle 3.6: The audit committee should satisfy itself of the exper-

tise, resources and experience of the company’s finance function

- 1 1 2 10 14

Principle 3.10: The Audit Committee’s report to the Board and shareholders on how the Committee has discharged its duties not evident on the annual report

- 1 - 1 8 10

Governance of Risk

Recommended Practice 4.1.2 No comment of the effectiveness of risk management in the integrated/annual report

- - 1 1 4 6

Principle 4.5: the risk assessments procedures not performed on a continual basis.

- 1 1 1 5 8

Governance of information technology

Recommended Practices 5.1.2 and 5.1.4 No approved IT charter, IT policies and internal control framework

1 - 2 3 6 12

Compliance with laws, rules, codes and standards

Recommended Practice 6.4.1 No approved legal compliance framework

1 1 1 1 7 11

Recommended Practice 6.4.5: No disclosure on the integrated report of the existence or non-existence of details of material or often repeated instances of non-compliance with laws, rules, codes and standards

- - 2 2 7 11

Internal audit Principle 7.1: The board had not ensured that there is an effective risk based internal audit

- - - - 1 1

Recommended Practice 7.1.3 internal audit charter not approved - - - 1 2 3

Principle 7.3: Internal audit had not provided a written assessment of the effectiveness of the company’s system of internal controls and risk management

- - - 1 - 1

Recommended Practice 7.4.3: The audit committee should ensure that the internal audit function is subjected to an independent quality reviewRecommended Practice 7.5.5: The Chief Audit Executive should develop and maintain a Quality Assurance and Improvement Programme (QAIP)

- 1 1 1 11 14

Principle 7.4.5: The audit committee should be responsible for the appointment, performance assessment and dismissal of the Chief Audit Executive.

- - - - 1 3

Principle 7.5.2 The internal audit function should report functionally to the audit committee.

- - - - 1 1

Recommended Practice 7.5.4. internal audit skills and resources not adequate

- - - - 9 9

Reg

ula

ted

by

BSE

Reg

ula

ted

by

BoB

Reg

ula

ted

by

NBF

RA

Sig

nific

ant

Ent

itie

s (D

ete

rmin

ed

by

the

Min

iste

r)

Para

sta

tals

(St

ate

O

wne

d E

nte

rpris

es)

TOTA

L N

UM

BER

OF

FIN

DIN

GS



38

The Oversight

2019


Governing stakeholder relationships

Recommended practice 8.2.6 no disclosure of stakeholder dealings

and stakeholder management

1 1 1 1 2 6

Integrated reporting and disclosures

Recommended Practice 9.1.3: Integrated report (annual report) not prepared timely

- - - 2 2 4

Principle 9.3 sustainability disclosures not adequate - 1 1 - 3 4

Shareholder compact

Compliance with PEEPA guidelines: There was no shareholder compact

- - - - 5 5

Total findings 13 26 31 46 198 314

Total Entities 1 2 2 3 11 19

Average findings per class of PIE 13 13 16 15 18

Percentage of findings per class 4% 8% 10% 15% 63%

Reg

ula

ted

by

BSE

Reg

ula

ted

by

BoB

Reg

ula

ted

by

NBF

RA

Sig

nific

ant

Ent

itie

s (D

ete

rmin

ed

by

the

Min

iste

r)

Para

sta

tals

(St

ate

O

wne

d E

nte

rpris

es)

TOTA

L N

UM

BER

OF

FIN

DIN

GS

Key:

BoB: Bank of BotswanaBSE: Botswana Stock ExchangeSOE: State Owned Entities / Parastatals

The corporate governance review findings analysis above shows a similar trend of State-Owned Entities (SOE) performing poorly. More than 50% of the findings were coming from SOE, with the rest of the findings spread between other PIE categories.



39

The Oversight

The high level understanding of the 4IR concept is that it is solely concerned with automation. Automation, is thus, the key concept in issues of 4IR.

I will make a compendious treatment of the other three industrial revolutions to show the automation paradigm shift. In issues of KBE, the key concept is monetisation of knowledge. It is a paradigm shift from creating economic value from resources and time to creation of economic value from knowledge. Understanding the key concepts will assist policy makers in deciphering the murky waters of 4IR viz-avis KBE. This article focuses on 4IR with the hope that it will generate interest in further reading on KBE.

In his book The Fourth Industrial Revolution, Klaus Schwab, the founder and executive chairman of the World Economic Forum, the International Organization for Public-Private Cooperation, recognises four distinct periods of industrial revolution, including the current Industry 4.0. The first Industrial Revolution was a paradigm shift from mainly manual labour in agrarian communities to mechanisation. This era started in 1765 with the introduction on steam engines. Mechanisation helped in Agriculture but shifted the backbone of production from it. With mechanisation came an increase in extractive industries such as coal mining, transportation, textile manufacturing, warfare technologies, etc. Mechanisation reduced labour conscription but improved output and created new opportunities for those who could acquire the skills of operating machinery. In this era, the Engineers made things work. The second Industrial revolution can be summed up as the era of science and mass production.

It started almost a century after the start of the first Industrial revolution, around 1870. This is about the same time when Louis Pasteur introduced the process of pasturisation which allowed milk to be stored for much longer durations and improved productivity in the silk industry and it’s the same epoch when use of vaccines made a firm footing. The Scientists created things and made things work. With the benefit of mechanisation from the first revolution and the embrace of science, the economy could afford mass production because the muscle to produce and the science to create and store for much longer durations were there. This is the era when Guglielmo Marconi, Alexander Graham Bell, Thomas Edison, and their contemporaries extended the reach of the day to day activities of their time through technology, thereby reaching more masses.

The third Industrial Revolution, Industry 3.0, just as 2.0, starts a century later in 1969. This one cannot be summed up in one or two words, it can only be characterised because it created technology that created new use cases which by themselves can in turn characterise the revolution. In this revolution, the transistor replaces the vacuum tube in electronic circuits.

This caused a major disruption as we then transitioned from analog to digital circuits which then quickly find their way into Integrated Circuits (IC) which quickly transform into Very Large Scale Integrated Circuits (VLSI) and then we, within the same century, get System On Chip (SOC). These advances in technology created new use cases of consumer electronics such as computers and entertainment devices, GPS, GSM, telecommunications infrastructure such as the automated

The 4Th Industrial Revolution

By: Patrick Jansen

This article makes a brief treatment of the recent concept of the Fourth Industrial Revolution. The advent of the Fourth Industrial Revolution, aptly termed 4IR or Industry 4.0 coincides with the advent of the Knowledge Based Economy, KBE. There is a lot of confusion around these two concepts primarily because of the coincidence in their advent which has led to their interchangeable usage despite the vast difference.

40

The Oversight

exchanges, switching infrastructure and the orchestration of these brought us the Internet which, in turn, created even more use cases and repurposing of technology. In this era, computers became smaller, more powerful, more affordable and more user friendly, permeated the consumer market and became part of many other systems, including buildings, vehicles, tractors, etc. It is very imperative to realise that most of the technology that creates confusion in Industry 4.0 is in fact Industry 3.0 technology. This was the era of smart things.

The Fourth Industrial Revolution, 4IR, Industry 4.0, starts now, where the currency of the now will remain in effect for the next five years. There is still some ambiguity in whether we are in the revolution or we are still yet to enter the revolution. However, one thing that remains clear is that the technology of the third industrial revolution has become pervasive or ubiquitous to the extent that what people perceive as new or innovative today is the new reality, which is still evolving nonetheless, where technology works with reduced human intervention. The current era can also be distinguished from the previous through the velocity, scope and systems impact of transformations. This revolution, as a result, can be summed up as the era of automation. Technologies from previous industrial revolutions are orchestrated to create automation of current human activities and creation of new activities. The key agents of this transformation are robotics (including drones), Field Programmable Gate Arrays (FPGAs) function, Programmable Automation Controllers (PACs), Sensors, virtual reality and artificial intelligence, interoperability, information portability, and communication networks. In 4IR, we have robots and drones which are essentially actuators.

Autonomous actuators, just like human beings, require some modicum of logical thinking which is provided through PACs, some repurpose capabilities which are provided through the

FPGA function in PACs, some learning and growth function through artificial intelligence and they generally need a sense of their ambience which they gather through sensors such as location, thermal, touch, perception, etc. They also require the ability to gather new information through data networks hence the need for portability of information, high speed networks such as 5G and they should be addressable hence the need for an extensive adoption of IPv6. During my university days, we programmed Xilinx FPGAs on demo boards to build systems but today the things require to have the FPGA function so that they can be re-programmed on the fly and perhaps, scary as it seems, reprogram themselves with new capabilities. In this era, Things Think and they Act.To bring Industry 4.0 into sharp focus we can recap with a quick overview of labour transformations in agriculture. Before Industry 1.0, families were required to be large to accommodate the requisite labour on farms which were the primary producers. Industry 2.0 reduced that through merchanisation. Industry 3.0 allowed farmers to have self-steering tractors, which is often confused as Industry 4.0 technology. In industry 4.0, it would not be farfetched to have autonomous tractors that self-drive, position the seed deposit an appropriate amount of fertilizer and later on drive-by just to monitor the health of the plants.

Industry 4.0 will, following the same trends, disrupt the labour market leading to displacement of workers by machines. According to the economists Erik Brynjolfsson and Andrew McAfee, this could yield greater inequality as automation substitutes for labour thereby exacerbating the gap between returns on capital and returns on labour. On the other hand, the displacement of labour by machines may lead to safer and rewarding worker friendly jobs in the same mould as replacement of manual labour in mines by mechanisation. Workers must be ready for retooling when 4IR takes foot.

The 4Th Industrial Revolution


41

The Oversight

Auditors’ Compliance Obligations

The Financial Intelligence Act, 2019

The Financial Intelligence Act (FI Act) and Regulations (FI Regulations) were re-enacted for the primary purpose of combatting the money laundering, the financing of terrorism and proliferation as well as other related activities.

The FI Act and Regulations were re- enacted in 2019 for alignment with international standards. The amendments widened obligations for specified party, introduced stringent penalties for non-compliance, and broadened certain definitions such as suspicious transaction and prominent & influential persons among other changes.

Specified Parties as defined by the FI Act include all Auditors as regulated by BAOA.

Obligations Imposed on Specified Parties/Auditors by the FI Act

Governance – Auditors should designate an adequate Anti-Money Laundering/ Counter Financing of Terrorism and Proliferation (AML/CFT&P) Compliance function and officer(s) (AMLCO) proportionate to the size and risk level of an entity. To enable the successful oversight of the AML function, the AMLCO must have sufficient independence from the business lines to prevent conflicts of interest and unbiased advice and counsel. They must also timely access to customer identification records. Audits should be conducted to evaluate the effectiveness of the function, including where external auditors are used.

AML/CFT&P Risk Management System & Controls – Auditors should conduct institutional risk assessment, understand their risk and determine the level of controls to be implemented which should include AML/CFT&P policies, systems, internal procedures and rules. These must be provided to the Supervisory Authority on request.

Training – Auditors should on an ongoing basis train their staff members on AML/CFT&P. The training content should emphasise obligations under the FI Act, Regulations, and identification of financial offences.

Due Diligence – Auditors should conduct due diligence when establishing a business relationship or conducting a transaction with a customer or where there is a suspicion of financial offence. They must maintain strong processes for identification and verification of their customers/business partners/beneficial owners and Ultimate Beneficiaries in regard to Legal Persons. Processes and/or systems to screen business relationships for prominent & influential persons, high risk persons, businesses & Jurisdictions. Customer Identification and Verification (CIV) should include proof of addresses, sources of income and wealth should be in place.

Transactions & Monitoring – There should be ongoing due diligence to monitor and understand business relationships to guard against and report United Nations Security

Council (UNSC) sanctioned persons/jurisdictions, suspicious or uncharacteristic transactions and activities. Enhanced due diligence must be conducted for beneficiaries of life insurance services and for cross boarder correspondent banking.

Prohibitions – Auditors must not: - maintain accounts in a false name.

- establish or maintain a relationship with a shell bank.

- establish or maintain a relationship with a terrorist or a member of a terrorist group.

Reporting – Auditors must maintain reporting line for all Cash Transactions (CTR) and Wire Transfers (WTR) of equal or above P10, 000, as well as Suspicious Activity Reports (SAR) and UNSC/ International Criminal Police Organisation (INTERPOL)sanctioned persons/jurisdictions with the Financial Intelligence Agency (FIA). CTR and STR should be done no later than 5 working days of suspicion through a GoAML system..

Record Keeping – Auditors should develop strong and accessible record keeping systems and processes to retain records for at least 20 years from a transaction is concluded.

Proliferation Financing (PF)PF is identified as one of the financial offences in the FI Act. Proliferation is explained as the manufacture, acquisition, possession, development, export, transhipment, brokering, transport, transfer, stockpiling or use of any arms of war or NBC weapons in contravention of the Arms and Ammunition Act, Nuclear Weapons (Prohibition) Act, Biological and Toxin Weapons (Prohibition) Act or Chemical Weapons (Prohibition) Act;

Auditors should familiarise themselves with the UN sanctioned persons and jurisdictions and to be critical of their clients’ business relationships with any person or jurisdiction included on the list. Any suspicious transactions should be reported to the BAOA or FIA or any competent Authority.

Auditors’ Compliance Obligations in Terms of the Financial Intelligence Act, 2019

42

The Oversight

BAOA Team Building Session

Success in building high performing teams in any organisation has huge benefits for the business, its customers, the teams and for each team member. To achieve success in team building, it is important to have concrete focus on the objectives and goals, as well as on the benefits.

Team building is, however, a process that takes place over time. The process starts where there is a group of people and a leader and ends where there is a high performing team, that is highly motivated to perform better, who have well developed processes and systems to organise their workload, and who gain immense satisfaction from their shared achievements.

The overall objectives of team building sessions are to achieve this high performance and to develop the group through the various stages of development until it achieves high performance.

However, like any process, there are different stages with different objectives and goals at each stage. The first stage of team building is the Forming Stage, where the objectives have to be achieved before the group can move to the next stage. The second stage is the Storming Stage, where some of the initial objectives will continue and other new ones introduced to further develop the team. When the teams have worked through the Storming Stage, they will then move to the third stage referred to as the Norming Stage and finally to the High Performing Team Stage.

The Authority embarked on its Forming stage on the 4th October 2019 at Blue Tree, facilitated by Skill Builders Botswana. The objectives were to bind the BAOA employees, so that they get to know each other and begin having a sense of team; align them to their shared purpose, goals and targets; as well as establish a

Picture: BAOA staff posing for a group picture after a succefull Wellness Day.

By: BOITUMELO V. RADITLADI

BAOA UNDERTAKES ITS FIRST TEAM BUILDING SESSION

43

The Oversight

positive team culture, the beliefs, values and norms of behaviour. The session involved fun activities that helped employees see each other in a different light and allowing them to connect in a different setting.

Individual psychometric assessments were done for all employees and the results were shared confidentially with each member. Further to that, psychometric assessments and evaluations for the team were also done and discussed together with the advantages, risks, and recommendations.

At the end of the session a number of advantages of the BAOA Team were identified and discussed and appreciated by the team. It was recommended that the Team improve on the communication aspect, paying special attention to the frequency, mode and timeliness of such communication. It was an enjoyable day with the Team looking forward to the next session. Watch the space…

BAOA Team Building Session

Picture: BAOA staff.

Picture: The Wellness Day would not be complete without some physical activity.

44

The Oversight

1. Contractual Obligations

When parties enter into a contract, each party naturally assumes that the other party will faithfully and satisfactorily perform its obligations pursuant to the terms of a contract. Despite the parties original intentions, a possibility exists that one party may fail to live up to the contractual obligations due to events which are unforeseeable and which disrupt the completion of the parties undertakings. The occurrence of changed circumstances may have various detrimental effects on a contact, ranging from full impossibility to perform, to the situation where performance remains possible but either becomes excessively onerous or ceases to be of any use to the contracting party.

The measures implemented to contain COVID-19 are likely to have a profound impact on commercial agreements. Parties may experience challenges in fulfilling their obligations due to shortage of staff, movement restrictions, shortage of supplies and materials, amongst others. A party whose ability to perform obligations under a commercial agreement is negatively impacted by regulations and lockdown may look to trigger a force majeure clause in the agreement to avoid being in breach of a contract.

What is a force majeure?

The term force majeure derives from French and literally means, “greater force” or in other words, irresistible compulsion or coercion. According to the British dictionary of law, the phrase is used particularly, in commercial contracts to describe events possibly affecting the contract and that are completely outside the parties’ control. Such events are normally listed in full in the contract to ensure their enforceability; they may include acts of God, fires, failure of suppliers or subcontractors to supply their supplier under the agreement and strikes and other labour disputes that interfere with the supplier’s performance of an agreement.

An express clause would normally excuse both delay and total failure to perform the agreement.

In circumstances such as these, it is possible for a party to seek release from the obligation to perform. However, this depends on the specific provisions of the contracts. A party to a contract may invoke a force majeure clause, which is currently the subject of intense debate amongst legal practitioners worldwide regarding Covid-19. The presence of the clause is not sufficient as parties are required to prove how the event has prevented them or is likely to prevent them from fulfilling their obligations. For example, there are entities that closed down due to economic hardships brought about by the lockdown Regulations. These entities may have to rely on invoking a force majeure for failure to perform their contracts.

2. Employment Law

Absence from work

The forms of leave recognised by the Employment Act [CAP 47:01] are, annual leave and sick leave. However, many employers have additional forms of leave such as compassionate, study, maternity and other forms of ‘special leave’. Employers should exercise a degree of caution in dealing with employee absence during this time because it is a complex issue and the circumstances are not as straightforward as they may appear. These uncertain times require a careful balancing exercise of the needs of the business operations as well as those of the employees. For example, where an employee has been advised to self-isolate or quarantine, it is likely that they would not be in possession of a ‘sick note’ in the usual form. In addressing this, employers should develop policies or guidelines as a preventative and precautionary measure on issues of travel by employees to areas which have been categorised as red zone areas. This polices or guidelines should provide

Dissecting Legal Issues Post Covid- 19

Introduction

World economies have been brought to their knees following the disruptions brought about by COVID – 19, which will be felt for quite some time. This article seeks to unpack legal issues that entities should consider on areas regarding employment law and contractual obligations in order to reduce legal risk in these uncertain times.

By: Thapelo Otukile

45

The Oversight

Dissecting Legal Issues Post Covid- 19

that in the event that an employee engages in a private travel, he or she would be expected to self-quarantine for a couple of days using his or her annual leave days and in the event an employee has no sufficient leave days they will have to take unpaid leave. A distinction should also be made for employees who are requested to self-quarantine after an official trip. An employer should in this case grant an employee a sick leave.

Employer’s Responsibility to Provide Work

In terms of section 16 of the Employment Act, “Every employer shall, unless the employee has broken his contract of employment or the contract of employment becomes, without default on the part of the employer, impossible of performance, provide his employee with work in accordance with the contract of employment during the period for which a contract is binding.

Where a business is closed down because of the economic hardships brought about by COVID- 19, then it is impossible to fulfil the requirements of Section 16 of the Employment Act. In such circumstances, employers, should consider advising employees that they will not be expected to come to work or provide a service as there is no business until the situation normalises and the employees can resume work. The employer can also consider retaining a certain number of employees who will be working for a reduced number of days, for example, 15 days in a month and paying them half salaries. This will have an effect of striking a balance between the interests of both the employer and employee. It is important that throughout the period of disruption, both parties are constantly in communication so that they are aware of the problems and agree on mutually appropriate interventions under the circumstances.


46

The Oversight

Corporate Governance

Legislation is one of the most important instruments, which the state uses in organising the society and protecting citizens. It determines, amongst others, the rights and responsibilities of individuals and authorities to whom the legislation applies. Legislation may also be an option chosen to present a policy in a powerful way or to create a situation that can only be further changed or brought to an end by legislation.

Corporate governance is a set of rules and practices by which a governing board is supposed to ensure accountability, fairness and transparency in an organisation’s relationship with its stakeholders. Botswana has no legally enforceable code of corporate governance to address gaps in the existing governance structures.

History has shown that good corporate governance is the cornerstone of sound economies in the world. Botswana has not been immune from corporate collapse due to weak governance structures and little can be done to take action towards those charged with governance.

It is important to note that, as an example, most entities are guided by their founding statutes which to some extent attempt to address issues of corporate governance. The overall compliance with founding statutes is good, however, the biggest challenge is that, most founding statutes fall far short of the best international practices. Consequently, there is need to advocate for policy change to align these statutes with the best practices.

A legislative route of a code of corporate governance will give effect to the enforceability of breaches of best practices before the courts of law. This will help to improve performance of most boards with an understanding that action can be taken against them for below par performance.

THE NEED FOR PROMULGATION OF BOTSWANA CODE OF CORPORATE GOVERNANCE INTO LEGISLATION

There are five sources of law in Botswana namely: constitution, customary law, common law, legislation, and case law. This article will concentrate on legislation as a source of law and demonstrate the need to legislate Botswana Code of Corporate Governance.

By: Thapelo Otukile

47

The Oversight

BAOA Promotions And New Appointments

Ms. Ephifania Nkanga was promoted from the position of Principal Reviewer to Chief Reviewer in the Technical Department in January 2020 following her acting appointment in the position for a couple of months. The Chief Reviewer is a new position created to assist Director Technical in executing the mandate of the Technical Department by providing direction to the Principal Reviewers and overseeing audit practice and engagement reviews, standards setting, corporate governance reviews and financial statements monitoring activities of Public Interest Entities (PIEs).

In preparation for the Chief Reviewer position, Ms Nkanga was developed and/or exposed in a number of areas such as financial statements analysis; operational and regulatory compliance; internal controls review and implementation; financial instruments and consolidation for financial reporting monitoring; communication; and people management. She was also attached to the Independent Regulatory Board for Auditors (IRBA) in South Africa in 2017 to gain valuable experience.

Mr. Thapelo Otukile was also promoted to the position of Board Secretary and Legal Manager in January 2020 following his acting appointment in the position for a couple of months. His appointment follows the former Board Secretary’s departure from the Authority in February 2018.

The Authority believes in empowering its staff, hence the appointment and progression of Mr. Otukile, who joined the Authority in 2016 as an Intern in the Legal Section. His rise through the ranks was due to his ability to learn, hard work and dedication.

Mr Oupa Gaopalelwe Gaofise joined the Authority on 3rd January 2020 as Public Relations Officer responsible for enhancing the image of the Authority through the implementation of strategies that are geared towards communicating the Authority’s mandate as well as disseminating current information to the Authority’s stakeholders, the media and the general public.

Mr. Gaofise joins the Authority from another parastatal and brings vast experience in his line of duty.

Ms. Boago Dipogiso also joined the Authority under the Finance and Administration

Department as a Cleaner in August 2019.

The Botswana Accountancy Oversight Authority has made several promotions and new appointments in 2019 and early 2020:

48

The Oversight

New Changes In The Board

The above movements led to four new members joining the Board namely:

She was appointed the Chairperson of the Board effective 1st October 2019 following the retirement of Mr Michael Lesolle as the Chairperson of the Board. Lynette was also re-appointed for a second and last term as an expert.

Appointment of the new Chairperson

Retired Members

Ms. Lynette Armstrong

The Board has made a number of changes relating to members resigning and new members coming in. The latest movement is that of Mr Oaitse Ramasedi leaving after joining the Board at the inception of the Authority. Messrs Michael Lesolle and Mendel Nlanda also left at the end of September 2019 after serving the two permissible terms of four years each.

MR. OAITSE RAMASEDI

MR. GOBONA TOBEDZA

MR. MICHAEL LESOLLE

MS. SAPELO BANTSI

MR. MENDEL N. NLANDA

MR. SEGOLO LEKAU MR. SRIRAM GADE

New Appointments

NOT ON PICTURE

49

The Oversight

The Botswana Accountancy Oversight Authority (BAOA) won the second prize Award under the Parastatals – Regulator Category at the Botswana Consumer Fair held from the 26th August to 1st September 2019, under the Theme “Its more than just Shopping”. The Trophy and Certificate were presented to the Authority at the Botswana Consumer Fair Awards Dinner attended by over 500 Exhibitors on Thursday, 29th August 2019.

The Judges were impressed by the Authority’s overall appearance of the stall, quality of advertisement and articulation of its mandate and services provided by the Authority, and general administration during the Fair.

The award wouldn’t have been possible without the continued teamwork, integrity, professionalism and agility, which are pillars of the Authority’s success.

BAOA 2019 Botswana Consumer Fair

Picture: The immaculate BAOA stall was a favourite for many fair attendants.


BAOA EXCELS AT THE 2019 BOTSWANA CONSUMER FAIR

50

The Oversight

BAOA Staff Appreciation Party

Praise and recognition are essential to an outstanding workplace. People want to be respected and valued by others for their contribution. Everyone feels the need to be recognised as an individual or member of a group and to feel a sense of achievement for work well done or even for a valiant effort. Everyone wants a ‘pat on the back’ to make them feel good.

December 6th, 2019 was the day the Authority held an event to recognised its employees for the good work done in the year 2019. The event started with the CEO Mr Duncan

Majinda giving an overview of the Authority’s performance and appreciating significant contributions from a number of employees. He indicated that overall, the organisation performed exceptionally well and hence was not an easy task for Managers in the two departments of the organisation to come up with best performers.

The set up and ambiance of the event made the employees relax and reflect on the road travelled as a team so far. It was a happy day, that brought everyone together in a relaxed and social mode.


WHAT REALLY MATTERS IN THE WORKPLACE IS HELPING EMPLOYEES FEEL APPRECIATED

51

The Oversight

The CEO got the chance to recognise and reward the following for their outstanding competence, work delivery and improvement to their work:

• Technical Department Best Performers: Boitumelo Rabatshabeng, Neo Shirly Kwape and Patience Habana (not in picture).

• Finance and Administration Department Best Performers: Dorcas Tjizoo, Thulaganyo Molemi and Blessed Seretse

• The Overall Best Performer: Ms Boitumelo Rabatshabeng. • Best Team Performance Award: Lesego Pheto receiving the award for the Corporate Governance team which she shared with Mpho B. Rabakane (not in picture)

The event ended on a happy note as employees congratulated and wished each other well for the next year.

BAOA Staff Appreciation Party

• 2nd Position Best Team Performance Award: Patrick A. Jansen receiving the award for the Organisational Strategy Team, sharing it with *Thapelo Otukile and *Boitumelo V. Raditladi (*not in picture)

52

The Oversight

Section 24 of the Financial Reporting Act, 2010 (the Act) states that notwithstanding anything contained in the Companies Act, or any other law, a person shall not hold any appointment, or offer any services for remuneration, as a Certified Auditor of Public Interest Entity (PIE), unless he or she is registered by the Authority as a Certified Auditor of PIE under this Act. Section 25 of the Act states that “An audit firm shall not practise or provide audit services to a public interest entity, unless such firm is registered with the Authority’’.

Pursuant to the foregoing, the following Certified Auditors and Audit Firms of Public Interest Entities (PIEs) were registered with the Authority as of 31st December 2019:

CERTIFIED FIRM REGISTRATION NUMBER CERTIFIED AUDITOR REGISTRATION NUMBER

Pricewaterhouse Coopers

FAP 001 Butler PhirieRudi BinedellAnton Sheyan EdirisingheSiddihalu Kosala WijesenaLalithkumar MahesanRian V. Schalkwyk

CAP 001CAP 003 CAP 004 CAP 0025CAP 0031CAP 0034

Deloitte & Touche FAP 002 Massimo MarinelliFrederik Christian ElsPragnaben NaikCecilia Veeta RamatlapengKyuchukova-Troanska EvgeniyaMagritha Juanita Wootherspoon

CAP 005 CAP 006 CAP 007 CAP 008 CAP 0026CAP 0032

Ernst & Young FAP 003 Bakani NdwapiThomas Nyasha ChitamboFrancois Roos

CAP 0010 CAP 0011CAP 0013

KPMG FAP 004 Anthony Gerard DevlinGosego Motsamai

CAP 0012 CAP 0035

Grant Thornton FAP 005 Dinesh Radhakrihna MallanAswin VaidyanathanMadhavan VenkatacharySunny Kurian Mulakulam

CAP 0015CAP 0016 CAP 0017 CAP 0034

IAMS FAP 006 Kandiah Rajadurai SriDaranDayani SriDaran

CAP 0018CAP 0019

Mazars FAP 007 Madhu Menon KalathilShashikumar VelambathRajagopal ChandhuvarathDevaprasaad ArakkalDevika Rayirath

CAP 0020CAP 0022CAP 0021CAP 0036CAP 0037

RSM Botswana FAP 008 Gurusubrahmaniyan GurumoorthiProsper Vavariro Muonde

CAP 0023CAP 0024

Goel & Associates FAP 009

Sanjay GoelShekhar Goel

CAP 0028 CAP 0027

BDO FAP 0010 Christopher John BrayDonovan Van Der Vyver

CAP 0030 CAP 0029

Public Interest Entities (PIEs)

53

The Oversight

LISTED ON BOTSWANA STOCK EXCHANGE EXCLUDING LISTED BANKS

NAME OF ENTITY REGISTRATION NUMBER

1 Engen Botswana Limited BSE 001

2 Letlole La Rona Limited BSE 002

3 Imara Holdings Limited BSE 003

4 Afinitas Limited BSE 004

5 Botswana Insurance Holdings Limited BSE 005

6 Choppies Enterprises Limited BSE 006

7 Botswana Telecommunications Limited BSE 007

8 Chobe Holdings Limited BSE 008

9 Cresta Marakanelo Limited BSE 009

10 Furnmart Limited BSE 0010

11 G4S (Botswana) Limited BSE 0011

12 Letshego Holdings Limited BSE 0012

13 New African Properties Limited BSE 0013

14 Sechaba Holdings Limited BSE 0014

15 Turnstar Holdings Limited BSE 0015

16 RDC Properties Limited BSE 0017

17 Sefalana Holding Limited BSE 0018

18 The Far Property Company Limited BSE 0019

19 CA Sales & Distribution Limited BSE 0020

20 A-Cap Resources Limited BSE 0021

21 Lucara Diamond Corp. BSE 0022

22 PrimeTime Property Holdings BSE 0023

23 Minergy Limited BSE 0024

24 Botswana Diamonds Plc Limited BSE 0025

25 Anglo American Plc BSE 0026

26 Shumba Energy BSE 0027

27 Seedco International Limited BSE 0028

ENTITIES SUPERVISED BY BANK OF BOTSWANA


1 Capital Bank Limited BoB 001

2 Bank of India BoB 002

3 Bank SBI Botswana Limited BoB 003

4 Bank of Baroda BoB 004

5 First National Bank of Botswana BoB 005

6 Bank Gaborone Limited BoB 006

7 Rennies Foreign Exchange ProprietaryLimited

BoB 007

8 African Banking Corporation ofBotswana Limited

BoB 008

9 Barclays Bank of Botswana Limited BoB 009

10 Stanbic Bank Botswana Limited BoB 0010

11 Standard Chartered Bank BoB 0011

12 UAE Exchange BoB 0012

13 Gorogang Bureau de Change BoB 0013

14 Tshilong Bureau de Change BoB 0014

15 TLR Money Link Bureau de Change BoB 0015

16 Sunny Bureau de Change BoB 0016

17 Silver Bureau de Change BoB 0017

18 Proxy Bureau de Change BoB 0018

19 Ozair Bureau de Change BoB 0019

20 Macheng Bureau de Change BoB 0020

21 Boitekanelo Bureau de Change BoB 0021

22 Sherwood Bureau de change BoB 0022

23 Garona Foreign Exchange Bureau deChange

BoB 0023

24 Mochudi Bureau de Change BoB 0024

25 Master Bureau de Change BoB 0025

26 Limpopo Bureau de change Bob 0026

27 Border Forex BoB 0027

28 Andy & Esi Bureau de change BoB 0028

29 Open Door Investment Bureau deChange

BoB 0029

30 Monty Cristo Bureau de Change BoB 0030

31 Beni Fame Bureau de Change BoB 0031

32 Toluca Bureau de Change BoB 0032

33 Fundex Bureau de Change BoB 0033

34 Thari Bureau de Change BoB 0034

35 Galaxy Bureau de Change BoB 0035

Public Interest Entities (PIEs) Registered with the Botswana Accountancy Oversight Authority (BAOA) as at 31st December 2019



54

The Oversight

ENTITIES SUPERVISED BY THE NON-BANK FINANCIAL REGULATORY AUTHORITY


1 Botswana Insurance CompanyLimited

NBF 001

2 Motswedi Securities (Pty) Ltd NBF 002

3 First Reinsurance Company NBF 003

4 Zurich Insurance Company Botswana NBF 004

5 Afritec Proprietary (Pty) Ltd NBF 005

6 Aon Risk (Properties)Limited NBF 006

7 Metropolitan Life (Pty) Ltd NBF 007

8 Dynamic Insurance Brokers NBF 008

9 Stanlib Investment Management (Pty) NBF 009

10 Regent Life Botswana Limited NBF 0010

11 Botswana Stock Exchange NBF 0011

12 Norsad Finance Limited NBF 0012

13 Bona Life Insurance NBF 0013

14 Alexander Forbes Botswana GroupHoldings Ltd

NBF 0014

15 Kalahari Insurance Brokers NBF 0015

16 Kebonang Holdings (Pty) Ltd NBF 0016

17 AON Botswana (Pty) Ltd NBF 0017

18 Phoenix of Botswana Assurance Co. Pty

NBF 0018

19 GetBucks (Pty) Ltd NBF 0019

20 Kgori Capital (Pty) Ltd NBF 0020

21 Liberty Life Botswana NBF 0021

22 First Sun Alliance (Pty) Ltd NBF 0022

23 Penrich Insurance Brokers NBF 0023

24 Bank Gaborone Insurance Agency NBF 0024

25 FMr.E Property and Casualty (Pty) Ltd NBF 0025

26 Investec Asset ManagementBotswana

NBF 0026

27 Botswana Public Officers PensionFund

NBF 0027

28 Sesiro Insurance (Pty) Ltd NBF 0028

29 Marsh Botswana (Pty) Ltd NBF 0029

30 Hollard Life Botswana NBF 0030

31 Norsad Finance Limited NBF 0031

32 Hollard Insurance (Pty) Ltd NBF 0032

33 Bayport Financial Services NBF 0033

34 Old Mutual Short-Term Insurance(Botswana) Limited

NBF 0034

35 Old Mutual Life Insurance Company(Botswana) (Pty) Ltd

NBF 0035

36 Continental Reinsurance CompanyLimited

NBF 0036

37 Alpha Direct Insurance Company NBF 0037

38 Botswana Housing Corporation StaffPension Fund

NBF 0038

39 Botswana Ash Staff Pension Fund NBF 0039

40 Alexander Forbes Individual MemberPension Fund

NBF 0040

41 African Alliance Botswana SecuritiesLimited

NBF 0041



42 Alexander Forbes Financial ServicesBotswana

NBF 0042

43 Alexander Forbes Asset Consultants(Pty)

NBF 0043

44 Botswana Life Insurance Limited NBF 0044

45 Botswana Insurance FundManagement

NBF 0045

46 Legal Guard NBF 0046

47 Botswana Insurance FundManagement Unit Trusts

NBF 0047

48 Allan Gray Botswana NBF 0048

49 StockBrokers Botswana Limited NBF 0049

50 Investec Fund Managers Botswana NBF 0050

51 Barclays Bank Staff Pension Fund NBF 0051

52 First National Bank Pension Fund NBF 0052

53 Alexander Forbes Retired Fund NBF 0053

54 Water Utilities Staff Pension Fund NBF 0054

55 Kgalagadi Breweries Limited PensionFund

NBF 0055

56 BURS Pension Fund NBF 0056

57 BBS Pension Fund NBF 0057

58 Debswana Staff Pension Fund NBF 0058

59 Stanbic Bank Botswana NBF 0059

62 Civil Aviation Authority Botswana StaffPension Fund

NBF 0060

61 Ipro (Botswana) (Pty) Ltd NBF 0061

62 Africa Fifty-Three Provident Fund NBF 0062

63 Botswana TelecommunicationsLimited Staff Pension Fund

NBF 0063

65 Botswana Examinations CouncilPension Fund

NBF 0064

65 G4S Limited Pension Fund NBF 0065

66 Local Enterprise Authority PensionFund

NBF 0066

67 BPOMAS NBF 0067

68 PULA Medical Aid NBF 0068

69 Ernst & Young Pension Fund NBF 0069

70 National Development Bank StaffPension Fund

NBF 0070

71 BIHL Defined Contribution RetirementFund

NBF 0071

72 Bank of Botswana DC Staff PensionFund

NBF 0072

73 BUIST Staff Pension Fund NBF 0073

74 Engen Botswana Retirement Fund NBF 0074

75 Deloitte & Touche Pension Fund NBF 0075

76 Botswana Telecommunications StaffPension Fund

NBF 0076

77 Botswana Power Corporation StaffPension Fund

NBF 0077

78 Mascom Wireless Staff Pension Fund NBF 0078

79 Total Pension Fund NBF 0079

80 Apex Retirement Fund NBF 0080



55

The Oversight




81 Puma Energy Pension Fund NBF 0081

82 Fleming Asset ManagementBotswana

NBF 0082

83 Bomaid/Southview Group StaffPension Fund

NBF 0083

84 Free Standing Additional VoluntaryContribution

NBF 0084

85 UB Pension Fund NBF 0085

86 Standard Chartered Bank PensionFund

NBF 0086

87 BMC Pension Fund NBF 0087

88 Sentlhaga Pension Fund NBF 0088

89 Millennium Retirement Fund NBF 0089

90 Sefalana Group Staff Pension Fund NBF 0090

91 Botswana Insurance CompanyRetirement Fund

NBF 0091

92 Motor Vehicle Accident Retirement Fund

NBF 0092

93 Botswana Railways Staff PensionFund

NBF 0093

94 Maru-a-pula School Staff PensionFund

NBF 0094

95 Deferred Pensioners Pension Fund NBF 0095

96 Foreign Service NationalsRetirement Fund

NBF 0096

97 Majwe Minning Provident Fund NBF 0097

98 Vivo Energy Pension Fund NBF 0098

99 Botswana Agricultural MarkertingBoard Pension

NBF 0099

100 Botswana Post Staff Pension Fund NBF 00100

101 BOBS Staff Pension Fund NBF 00101

102 CEDA Staff Pension Fund NBF 00102

103 Metropolitan Pension Fund NBF 00103

104 Metropolitan Provident Fund NBF 00104

105 Orange Staff Pension Fund NBF 00105

106 Botsogo Health Plan NBF 00106

107 Barclays Life Botswana NBF 00107

108 Air Botswana Pension Fund NBF 00108

109 BDC Contributory Staff PensionFund

NBF 00109

110 Apostolic Faith Mission PensionFund

NBF 00110

111 BSB Staff Pension Fund NBF 00111

112 Glenrand M.I.B Pension Fund NBF 00112

113 Hollard Insurance BotswanaPension Fund

NBF 00113

114 Botswana TelecommunicationAuthority Staff Fund

NBF 00114

115 Aon Botswana Preservation Fund NBF 00115

116 Botswana Vaccine InstitutePension Fund

NBF 00116



117 IDM Pension Fund NBF 00117

118 NAFTEC Pension Fund NBF 00118

119 BCL Staff Pension Fund NBF 00119

120 BOMAID NBF 00120

121 BOCODOL Staff Pension Fund NBF 00121

122 Botswana Savings Bank Staff PensionFund

NBF 00122

123 Glenrand Orphans Fund NBF 00123

124 Aon Botswana Defined ContributionFund

NBF 00124

125 Stanlib Botswana Managed Prudential Fund

NBF 00125

126 Stanlib Botswana Income Fund NBF 00126

127 Stanlib Botswana Equity Fund NBF 00127

128 Stanlib Botswana Money Market NBF 00128

129 African Alliance BotswanaManagement Company

NBF 00129

ENTITIES DETERMINED BY THE MINISTER


1 Woolworths (Botswana) Pty Ltd MIN 001

2 Motovac (Pty) Ltd MIN 002

3 Murupule Coal Mine Limited MIN 003

4 Radical Investments (Pty) Ltd MIN 004

5 Motor Centre MIN 005

6 Diamond Trading Company Botswana MIN 006

7 Global Holdings Botswana MIN 007

8 CitySkapes MIN 008

9 Allied Investments MIN 009

10 Bolux Group MIN 0010

11 Trans Africa MIN 0011

12 Kromberg& Schubert Botswana MIN 0012

13 Mupane Gold Mining MIN 0014

14 Overseas Development Enterprises MIN 0015

15 DeBeers Global Sightholder Sales MIN 0016

16 Vivo Energy Botswana MIN 0017

17 CA Sales and Distribution MIN 0018

18 Lenmed Health Bokamoso PrivateHospital

MIN 0019

19 Mascom Wireless MIN 0020

20 Naledi Motors MIN 0021

21 Consolidated Group Contractors Sal MIN 0022

22 Boteti Mining MIN 0023

23 Botswana Ash MIN 0024

24 Kgalagadi Breweries MIN 0025

25 FSG Limited MIN 0026

26 Puma Energy MIN 0027

27 Debswana Limited Company MIN 0028

28 Healthcare Management Services MIN 0029


56

The Oversight

ENTITIES DETERMINED BY THE MINISTER


21 Consolidated Group Contractors Sal MIN 0022

22 Boteti Mining MIN 0023

23 Botswana Ash MIN 0024

24 Kgalagadi Breweries MIN 0025

25 FSG Limited MIN 0026

26 Puma Energy MIN 0027

27 Debswana Limited Company MIN 0028

28 Healthcare Management Services MIN 0029

29 Orange Botswana (Proprietary) Limited MIN 0030

30 Pula Sales (Proprietary) Limited MIN 0031

31 Clover Botswana (Proprietary) Limited MIN 0032

32 Majwe Mining Joint Venture MIN 0033

33 J Haskins & Sons (Pty) Ltd MIN 0034

34 Barloworld (Pty) Ltd MIN 0035

35 Universal Builders (Pty) Ltd MIN 0036

36 Bokomo (Pty) Ltd MIN 0037

37 Retail Holdings Botswana (Pty) Ltd MIN 0038

38 M Suresh Botswana (Proprietary) Limited MIN 0039

39 Master Farmer Feed (Proprietary) Limited MIN 0040

40 Khoemacau Proprietary Limited MIN 0041

41 Unik Construction Engineering ProprietaryLimited

MIN 0042

42 Unitrans Botswana (Proprietary) Limited MIN 0043

43 Diacore Botswana ( Proprietary) Limited MIN 0044

44 Komatsu Botswana (Proprietary) Limited MIN 0045

45 Cash Bazaar Holdings ( Proprietary Limited MIN 0046

46 Barloworld Equipment BotswanaProprietary Limited

MIN 0047

47 Senn Foods Proprietary Limited MIN 0048

48 KGK Diamonds Botswana MIN 0049

49 Deci Investments MIN 0050

50 Safdico Botswana Proprietary Limited MIN 0051

51 Feune Proprietary Limited MIN 0052

52 Amigear Ventures Proprietary Limited MIN 0053

53 Ba Isago University Proprietary Limited MIN 0054

54 Coca- Cola Beverages BotswanaProprietary Limited

MIN 0055

55 SDDS (Botswana) Proprietary Limited MIN 0056

56 Wilderness Holdings Limited MIN 0057

57 Transport Holdings Proprietary Limited MIN 0058

ENTITIES REQUIRED TO FILE FINANCIAL STATEMENTS AND REPORTS WITH A GOVERNMENT DEPARTMENT OR AUTHORITY

1 Citizen Entrepreneurial DevelopmentAgency

PAR 001

2 Botswana Bureau of Standards PAR 002

3 Botswana National Sports Council PAR 003

4 Botswana Vaccine Institute PAR 004

5 Botswana Postal Services Limited PAR 005

6 Gambling Authority PAR 006

7 University of Botswana PAR 007

8 Local Enterprise Authority PAR 008

9 Botswana Communications RegulatoryAuthority

PAR 009

10 Botswana Oil Limited PAR 0010

ENTITIES REQUIRED TO FILE FINANCIAL STATEMENTS AND REPORTS WITH A GOVERNMENT DEPARTMENT OR AUTHORITY


11 Botswana Savings Bank PAR 0011

12 Institute of Development Management PAR 0012

13 Botswana Building Society PAR 0013

14 Botswana Meat Commission PAR 0014

15 Botswana Housing Corporation PAR 0015

16 Motor Vehicle Accident Fund PAR 0016

17 Competition Authority PAR 0017

18 Botswana Investment & Trade Centre PAR 0018

19 Public Procurement & Asset Disposal Board PAR 0019

20 Botswana Institute for Development PolicyAnalysis

PAR 0020

21 Companies and Intellectual PropertyAuthority PAR 0021

22 Debt Participation Capital Funding Limited PAR 0022

23 Botswana International University of Science and Technology

PAR 0023

24 Civil Aviation Authority of Botswana PAR 0024

25 Forest Conservation Botswana PAR 0025

26 Botswana Railways PAR 0026

27 Air Botswana PAR 0027

28 National Food Technology Research Centre PAR 0028

29 Botswana Fibre Networks PAR 0029

30 Bank of Botswana PAR 0030

31 Botswana Privatisation Asset Holdings PAR 0031

32 National Development Bank PAR 0032

33 Botswana National Productivity Centre PAR 0033

34 BOCODOL PAR 0034

35 Botswana Qualifications Authority PAR 0035

36 SPEDU PAR 0036

37 Water Utilities Corporation PAR 0037

38 Minerals Development Company Botswana PAR 0038

39 Botswana Agricultural Marketing Board PAR 0039

40 Botswana Power Corporation PAR 0040

41 Engineers Registration Board PAR 0041

42 Quantity Surveyors Registration Council PAR 0042

43 Botswana Examinations Council PAR 0043

44 Okavango Diamond Company PAR 0044

45 Legal Aid Botswana PAR 0045

46 Botswana Development Corporation PAR 0046

47 Construction Industry Trust Fund PAR 0047

48 Botswana Tourism Organisation PAR 0048

49 Human Resource Development Council PAR 0049

50 Botswana Accountancy College PAR 0050

51 Botswana University of Agriculture and Natural

Resources

PAR 0051

52 Public Enterprises Evaluation and Privatisation

Agency

PAR 0052

53 Architects Registration Council PAR 0053

54 Botswana Unified Revenue Service PAR 0054

55 Statistics Botswana PAR 0055

56 Botswana Innovation Hub PAR 0056

57 Botswana Energy Regulatory Authority PAR 0057



57

The Oversight

58

The Oversight

59

The Oversight

PLOT 54357, VARSHA HOUSE, CBD, 10th FLOORPRIVATE BAG 0056, GABORONE, BOTSWANA

TEL: +267 3919735 FAX: +267 3919737www.baoa.org.org.bw

COVID-19 IMPACT ON AUDIT AND FINANCIAL REPORTING NEWSL… · BOTSWANA ACCOUNTANCY OVERSIGHT AUTHORITY Newsletter ISSUE #3: August 2020 COVID-19 IMPACT ON AUDIT AND FINANCIAL REPORTING

Documents