It’s the official countdown to October 2, when the 2017/2018 national budget will be presented.
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Beyond the numbers
Having been in the accounting and audit practice for over 40 years, Bob Gopee and Associates— named after founder and consulting partner Bob Gopee—has witnessed many changes in the profession since it began operations in 1975.
The firm, which recently appointed a new associate and partner, operates in an industry that, over the last 20 years, has seen a rise in financial malfeasance with the likes of companies such as Enron, Tyco and Worldcom taking centre stage.
On the local front, the role of auditors was extensively questioned at the Colman Commission of Inquiry into the collapse of the CL Financial empire and its financial subsidiaries, insurance companies Clico and British American and securities firm CMMB.
Also in the last two decades, greater regulation and the enactment of major anti-money laundering and terrorism financing legislation have sought to ensure a more transparent financial environment for both companies and accounting firms to operate.
Speaking to the Business Guardian from his Chaguanas office–one of three across the country—Gopee noted that the accounting profession has undergone significant transformation since he began operating in the field.
“The profession has evolved in many ways. Firstly, in terms of accounting standards which through the passage of time, have become deeper and wider. Accountability has been on the increase in the world and the profession has had to evolve in harmony with the need for greater levels of transparency and accountability.”
Gopee added that even how records are kept today is in stark contrast to what obtained over 40 years ago.
“The type of accounts that were done 40 years ago are totally different from those that are done today. The types of files that need to be kept both by clients and the accounting firm now are way more copious, descriptive and analytic than those required when I started in the field. The scope of the profession has expanded dramatically.”
Noting the expansion of the profession, Gopee pointed out many more individuals have chosen to making accountancy their career choice today.
“When I went into accounting people were questioning me as to why I was entering this profession. The traditional fields of law and medicine were where most individuals were advised to build a career back when I started. Since then, however, more and more people have become involved in the profession and this has also been bolstered by the fact that many more local institutions today offer training in accountancy.”
Along with the growth of the profession has come the inevitable need to keep it ethically upright. By its very nature, access to, and treatment of, sensitive information is woven into the job of auditing and accountancy.
Managing partner Steve Ramlakhan added that because of major scandals in the profession, protecting the public’s interest has become a top priority.
He said: “With some of the issues that have faced the profession in the not too distant past, due consideration for the best interest of the public has become very important in the field. So part of the push towards greater transparency and accountability is to ensure that the public interest is being safeguarded.”
Ramlakhan added that with every accounting scandal comes a tightening up of the accounting and audit practice.
“The profession has grown stricter and more regulated. We have to adhere to very strict standards in preparing accounts and auditing accounts. We are also required to continue our professional development on a yearly basis in order to keep our practicing certificate.
“Additionally, we’re also now subjected to external monitoring reviews where we have our local and global association the ACCA—Association of Certified Chartered Accountants—who send monitors to look at the quality of your work, the quality of your audit files, the quality of your practice and the quality of your people,” he said.
A major aspect of accounting and the audit process, in particular, involves looking for any “red flags” that would arouse suspicion in the way businesses are being run. Recent financial scandals that have taken place—both locally and internationally—have put a greater spotlight on the need for accountants to be even more vigilant in carrying out their duties.
Questioned about some of the red flags that accountants look for in the audit process, Ramlakhan noted that each circumstance needed to be assessed on it own merit.
He said: “It’s important to understand the nature of the business and type of industry within which it operates. With that as a foundation, when reviewing financial documents, auditors may tend to look for things that are anomalous or out of the ordinary when compared to industry norms. We do an analytical review which would explore the reason for any changes that would have had a big impact on the business.”
Ramlakhan added that it was the auditor’s responsibility to focus on specific areas of the business that could lead to fraudulent activities taking place.
“It’s also important, depending on the company or industry, to focus on areas where collusion or mismanagement could occur, what we call high-risk areas. In T&T, for example, many businesses have owners who are managers of the business as well. This creates the possibility that certain controls could be ignored, so it’s important to understand the implications of owners being managers and what that means for the proper operation of the business,” Ramlakhan said.
Gopee pointed out that movement of cash in an organisation was another area that auditors tend to carefully examine.
“It’s also very important for us as auditors to look at the high incidence of cash movement in an organisation as opposed to banking transactions. One has to be very careful when that is happening because in recent years there has been a great emphasis on combatting money laundering. So this is one of the areas that we are obliged to look at. We have to ask: where is the money coming from and where is it going to? We even have training within our firm about treating with money laundering,” Gopee said.
In the last budget announcement, changes were made to various aspects of the local tax regime.
The addition of the new tax on high-income businesses and individuals, as well as the new online tax could have an impact on both local companies and audit firms.
Asked about his thoughts on changes to the taxation regime, Ramlakhan said the possibility always exists for companies and individuals to become more efficient in their tax planning.
“Individuals and companies have perfectly legal ways of structuring their income for tax purposes to be more efficient. So a likely consequence of the additional taxes will involve these entities looking at how they can become effective at tax planning.”
Given the current challenges of tax administration in T&T, adding new taxes into a less than optimal system raises with a number of questions.
Probed on the current state of local tax administration, Ramlakhan noted that a streamlined taxation system tends to foster greater levels of compliance.
“In the last 20 years or the government has tried to simplify taxation in the country with the hope that there would be more compliance and, to an extent, that has happened. The biggest challenge, however, remains staffing and manpower resources of the agencies entrusted with tax collection and administration.
“Even record-keeping at these organisations is a challenge for professionals in the accounting industry. So, if some of these inefficiencies are ironed out, it would make both the roles of the tax payer and accountants much easier,” added Ramlakhan.
We have to ask: where is the money coming from and where is it going to? We even have training within our firm about treating with money laundering.