Board Digest 2023

The SAICA Board met on 6 June 2023 to discuss the three resolutions tabled by the Eastern Regional Council President at the Annual General Meeting on 25 May 2023. Below are the details of the resolutions and an update on how the Board is addressing them.

Resolution One
Conduct a revised strategic input process by engaging in a minimum of 120 one-on-one interviews and an additional ten focus groups of disengaged members. These engagements should be conducted independently, and the findings should be incorporated into the development of a new and improved strategy for the organisation (through due process). Detailed information regarding this request has already been submitted through the relevant Council structures.

The current SAICA strategy (2020 - 2023) was approved by the SAICA Board in November 2020. SAICA is now preparing for the formulation and adoption of a new strategy for the next three years (2024 - 2026). Following the feedback on the 2020 - 2023 SAICA strategy formulation, the 2024 – 2026 SAICA strategy formulation, which is underway, is being done through extensive consultation.

Actions related to this resolution should be considered in the context of earlier consultations with Council members in the first quarter of 2023. At the time, inputs on the strategy formulation were received from the Southern Region and Central Region, with the Eastern Region requesting amendments to the strategic process. In addition, all SAICA members were invited (via bulk email) to complete a strategy survey in an effort to gain their input and feedback. During the CEO roadshows in the first quarter, the CEO also invited members to participate in the strategy survey. Additional inputs were received from 22 of the other SAICA stakeholder groups, with over 400 total submissions received. These inputs to the strategy development process will be considered by the Board at the strategy development session.

The Council Task Team (Task Team) met with management on 15 May 2023. Following the special Board meeting held on 9 March 2023, the Board met with the Task Team on 23 March 2023, and requested a facilitator to engage with the disengaged members as part of its consultations. It was agreed that a questionnaire would be circulated to the disengaged members with the intention of identifying additional input.

As a general background, it should be noted that each year the Member Engagement division selects a subset of disengaged members to engage with. The selection is based on several factors and is influenced by the prevailing environment of the profession. For the purpose of these engagements, a disengaged member was defined as a member who had not attended a SAICA event or had not made any contact with SAICA (except for paying their annual fee and completing the CPD declaration) for a period of at least three years.

Regarding the engagement with disengaged members and to ensure a comprehensive consultation process, the Board has requested for the following actions to be taken:

• An independent facilitator will be appointed to attend to nine focus group discussions with the purpose of developing a new and improved strategy for SAICA going forward.
• The Eastern Regional Council President will facilitate a focus group for the Eastern Region.
• The Board has requested the Digital Transformation and Governance Committee (DTGC) to investigate data management processes to assist the Board in identifying the disengaged membership base of SAICA.
• SAICA will send out a cover letter and a questionnaire to those members identified by their constituencies, requesting them to complete the questionnaire. Currently, fewer than 120 names were provided by Council constituencies. Additional members will be identified through the SAICA data processes to increase the number of targeted members to a minimum of 120 members.

The inputs received from these members through the questionnaires and from the focus group discussions will be analysed as part of the input during the strategy development.

Resolution Two
Review the existing risk management framework of SAICA to enhance member service delivery and reduce red tape and bureaucracy. This request has been submitted to the Board for careful consideration and implementation.

The Enterprise Risk Management (ERM) Policy and Framework sets the tone for the governance and management of enterprise risk management within the SAICA Group in alignment with its core values and in the pursuance of the SAICA Group’s strategic objectives.

The ERM Policy and Framework is intended to enable SAICA to achieve its strategic objectives through the enhancement of SAICA’s ERM function to a level where it is well directed and controlled and where most functions are designed correctly and are in place.

The SAICA Delegation of Authority (DOA) sets out the general principles governing the delegation of the Board’s powers and authority as well as a schedule of delegation to the Subcommittees of the Board and to Executive Management. The DOA was last reviewed and approved by the SAICA Board in April 2023, after considering inputs from staff across the Institute. SAICA Management has scheduled roadshows to socialise the DOA across the organisation, and this should give staff more clarity around their mandates.

SAICA’s approved risk appetite and tolerance framework contains the following principles:

• SAICA has zero tolerance for non-adherence to laws, regulations, policies, and procedures.
• SAICA has zero tolerance for ineffective controls.
• SAICA has zero tolerance for the incidence of misconduct by employees.

The Board believes that SAICA should maintain a zero tolerance for the items above for the following reasons:

• Allowing flexibility around non-adherence to laws and regulations will open the organisation to reputational risk and penalties.
• Internal controls exist to help safeguard an organisation and further its objectives. Internal controls function to minimise risks and protect assets, ensure accuracy of records, promote operational efficiency, and encourage adherence to policies, rules, regulations, and laws.
• Internal controls need to be designed in a way that ensures compliance with applicable laws and regulations and ensures the effectiveness and efficiency of operations.
• Accepting a level of employee misconduct will be against SAICA’s own principles of integrity; objectivity; professional competence and due care; confidentiality; and professional behaviour.

In execution of this resolution, the Board will ensure the following:

• A review by management of the specific (and any other) operational processes and policies that have already been identified to potentially hinder service delivery and create bureaucracy, with the aim of simplifying these processes while adhering to good risk management practices. The procurement and contracting process is currently under review and feedback on improvements will be provided to the SAICA Board at its November 2023 meeting.
• The Enterprise Risk Management Policy and Framework is currently being reviewed by the Audit and Risk Committee (AudCo) for recommendation to the Board in November 2023. Whilst we do not believe any material changes are required to the policy in addressing this resolution, the AudCo will ensure that the policy is clear that internal controls and risk management must be aimed at both ensuring compliance with applicable laws and regulations and enabling the effectiveness and efficiency of operations, in alignment with SAICA core values.

Resolution Three
That the Board, in line with the ongoing review of its role by the Council in the context of the new model initiated three years ago, recommends changes and enhancements, as the Broader Council is currently doing, to create an improved, collectively member-driven organisation. These changes should focus on improving strategy, implementation, and levels of service delivery for members.

In this regard, we refer to the work done by the Governance Review Task Team (GRTT). At the Annual General Meeting held on 26 June 2018, the Chairman of SAICA announced that the Board would set up a process to look at the governance structure of SAICA and to involve members in the process.

In a letter to members sent out on 31 August 2018, the Chairman of SAICA announced that a GRTT had been formed to assess the appropriateness of the current SAICA governance structures and to make recommendations on how they can be improved to deal with issues more effectively and timeously.

At the time, the following guiding principles were used:

• Member representation;
• Inclusivity;
• Professional leadership and direction;
• Public interest and trust;
• Continuity;
• Effective execution; and
• Accountability and control.

After a review of the SAICA Constitution and By-laws, the GRTT made substantial proposed changes to them. In addition, the GRTT drafted charters for both the Board and the Council. All revisions were made considering the principles mentioned above and to align with corporate governance best practice, including King IV. The proposed Constitutional changes were approved at the AGM on 26 June 2019 and subsequently implemented.

We have now had the benefit of living with the new governance structure as constituted for a period of four years and the Board is of the view that it is time to evaluate the results of the current governance structure. The specific areas for consideration will include:

• Review of fit for purpose governance model;
• The impact on improving strategy;
• Implementation and execution of strategy; and
• Levels of service delivery for our members.

This project is extensive and requires an independent third party, but the board is dedicated to finishing it promptly. In execution of this resolution, the Board will take the following steps:

• An independent third party will be appointed to review the current governance structure of SAICA against the “guiding principles” as defined by the GRTT.
• The review will include the Board, Council, and Management ExCo as key parts of the governance structure.
• The outcome of the review should be recommendations for changes and enhancements, to create an improved, collectively member-driven organisation.

The Board is committed to fully supporting the guiding principles of enhancement and improvements that will result in better service delivery to our members. The actions taken will therefore remain under Board oversight until fully executed. In line with the resolution adopted, the Board has responded to the resolution within 60 days as required at the AGM and will communicate the outcomes of these actions during the course of the year as we track feedback from management and service providers that have been tasked with this work.

Regards

Vincent Motholo
Chairman: SAICA Board

The SAICA Board met on 25 May, shortly after the Annual General Meeting (AGM), to deal with the following matters:

1. Appointments of the newly elected SAICA Board members
2. The Annual election of the SAICA Board Chairman
3. The Annual election of the Lead Independent Board Member
4. Reflection on the SAICA AGM
5. The resolution tabled by the Eastern Regional Council President

• Appointments of the new SAICA Board members, elected at the AGM

Board member rotation is a requirement stipulated in the SAICA Constitution Par 6.2.9 and Adv Johan du Toit, who served on the Board since October 2019, retired by rotation at the meeting. We express our gratitude for his contribution to SAICA.

Ms Yasmin Forbes and Ms Alice le Roux availed themselves for re-election and were both re-elected. We welcome them back for a further three-year term on the Board.

Ms Thandi Thankge was also elected at the AGM as a new member of the Board, and we look forward to her contribution.

Ms Thankge is a seasoned business leader and Chartered Director SA [CD(SA)], with a successful track record of more than 26 years of driving change and transformation in various organisations. Her strength lies in strategy, corporate governance, culture change, B-BBEE, leadership, people management, and coaching, amongst others. Ms Thankge’s complete CV can be viewed on the website.

• The annual election of the Board Chairman

The Chairman of the SAICA Board is elected annually at the Board meeting that immediately follows the AGM, as stipulated in Par 6.4.1 of the Constitution. The Board unanimously agreed to re-appoint me as the Chairman of the Board.

The Board Chairman is responsible for the leadership of the Board and ensures that it discharges its governance role and responsibilities.

3. The annual election of the Lead Independent Board Member

The Lead Independent Board Member is appointed annually at the Board meeting that follows the AGM, as stipulated in Par 6.5 of the Constitution. The Board unanimously agreed to re-appoint Ms Yasmin Forbes as the Lead Independent Board Member.

• Reflection on the SAICA AGM

The following resolutions were passed at the AGM:

• Resolution 1: The appointment of external auditors

This resolution was passed and we confirm the appointment of Mazars as the external auditors for the ensuing year.

• Resolutions 2 – 4: The appointment of a CA(SA) Candidate to the Board

Resolution 4 for the appointment of Ms. Alice Le Roux received the most votes and she was re-appointed to the Board.

• Resolutions 5 – 7: The appointment of two non-CA candidates to the Board

Resolutions 6 and 7 were passed and Ms. Yasmin Forbes and Ms. Thandi Thankge were appointed to the Board.

• Resolution 8: The approval of the Board fees

Resolution 8 proposed an annual increase of the Board fees of 2,3% and was approved.

• Resolution 9: The support for the Remuneration Policy and Report

This resolution requires a special non-binding vote on the Remuneration Policy and Remuneration Report to pass with 75% of member support. This was not achieved, and the Constitution now requires engagement with members to understand the reasons for the lack of support. Further communication in this regard will follow.

The Board also reflected on other matters raised by members during the AGM, which, among other things, included:

• Delays in Ushintsho and the cost thereof.
• Ongoing IT and website problems.
• Performance measurement for Board members and senior executives.
• The increase in trainees’ unethical behaviour during exams.

All matters raised by the members and associates during the AGM will be attended to.

• The resolution tabled by the Eastern Regional Council President

During the AGM, the Eastern Regional Council President, while appreciating the exceptional efforts of the staff, management and Board, raised some concerns that require the Board’s immediate attention. For this reason, it was proposed that members at the AGM should adopt the following resolution:

That the Board implements the following actions within 60 days following the AGM:

• Conduct a revised strategic input process by engaging in a minimum of 120 one-on-one interviews and an additional ten focus groups of disengaged members. These engagements should be conducted independently, and the findings should be incorporated into the development of a new and improved strategy for the organisation (through due process). Detailed information regarding this request has already been submitted through the relevant Council structures.
• Review the existing risk management framework of SAICA to enhance member service delivery and reduce red tape and bureaucracy. This request has been submitted to the Board for careful consideration and implementation.
• That the Board, in line with the ongoing review of its role by the Council in the context of the new model initiated three years ago, recommends changes and enhancements, as the Broader Council is currently doing, to create an improved, collectively member-driven organisation. These changes should focus on improving strategy, implementation, and levels of service delivery for members.

The Board considered the proposed actions and accepted them as a resolution of the Board. Members and associates will be informed of the implementation progress through communication with the National Council.

The Board thanks all members who attended the AGM and shared their comments and input.

Kind regards

Vincent Mohau Motholo
Chairman: SAICA Board

The SAICA Board met for several meetings to deal with the following matters:

1. Board Approvals
2. Resolutions adopted by the Board
3. CEO Succession and Board Succession

1. Board Approvals
   The Board discussed and approved the following documents and/or matters, which will be presented to SAICA members for approval at the Annual General Meeting (AGM), which will be held on 25 May 2023:

• The SAICA Group and Institute’s 2022 Annual Financial Statements and the SAICA Annual Integrated Report (IR), as recommended by the Audit and Risk Committee (AUDCO). These items will be for noting at the AGM.
• The Annual Board Fee, as recommended by HR RemCo.
• The External Auditors, as recommended by AUDCO. The appointment of Mazars with its partner Majoli will be considered by SAICA members at the AGM.
• Proposed candidates for appointment to the Board of Directors following the expected Board rotation at the AGM on 25 May 2023.
  • Given that one-third of Board members, excluding the ex officio members, must retire at each AGM, Ms. Yasmin Forbes, Ms. Alice le Roux, and Mr. Johan du Toit are due to retire by rotation.
    The Board proposed the following candidates for the two non-CA positions: Mr. John Burke, Ms. Yasmin Forbes, and Ms. Clarah Thandi Thankge.
    The Board proposed the following candidates for the one CA(SA) position: Ms. Tiffany-Ann Boesch, Ms. Harriet Heymans, and Ms. Alice le Roux.
    Members will vote on these Board appointments at the AGM on 25 May. Voting guidelines and registration information for the AGM are available on the SAICA website.

In addition, the following matters were also approved:

• Recognising performance is facilitated through the implementation of a performance management system, enabled through the signing of performance contracts that are cascaded down from the SAICA balanced scorecard each year.
• Employees’ salary increases percentages for the 2022 performance year as recommended by the Human Resources and Remuneration Committee (HR REMCO).
• Employee increases were approved at 6,2% for on-target performance, in accordance with the Remuneration and Reward Policy provisions, with the adjusted annual Market Movement Factor (MMF) or as dictated by the March 2023 benchmarking exercise which was conducted by an independent remuneration specialist.
• The Short-Term Incentive (STI) for the performance year 2022 recommended by HR REMCO.
• SAICA reports on the remuneration of the Executive Directors in line with Principle 14 of the King IV Report on Corporate Governance, the details of which were included in the 2022 Annual Integrated Report. The remuneration details are available on page 160 of the Report.
• The renewal of the Director and Officers’ Insurance cover of R100 million for the period from April 2023 to April 2024, as proposed by AIG South Africa Limited. The insurance covers potential defence costs and damages incurred in a director’s personal capacity for breach of duty and wrongful acts committed in their capacity as a fiduciary to their companies.
• The Nominations and Governance Committee’s (NomGov) Terms of Reference that will enable them to approve appointments to the Prescribed Committees.
• The minor amendments to the SAICA Board Delegation of Authority (DOA).
• The appointment of members of the Initial Professional Development Committee (IPD) and the appointment of members of the CA Professional Development Committee.

Resolutions adopted by the Board

The following resolutions were adopted:

• Amend the By-laws to expand the powers of the Designated Discipline Officer to deal with the backlog of minor transgressions and once-off offenders by issuing a reprimand to those members.
• All members who committed multiple offences or more serious offences will be subjected to the full disciplinary process.
• Expand the powers of the Professional Conduct Committee (PCC) to review the concluded cases regarding minor and once-off offences, as appropriate.
• Conclude the current High Court cases.
• SAICA Code of Professional Conduct amendments (SAICA Code) and Quality Management-related Conforming Amendments.
• Changes to the Board Charter as per Appendix 1 to the SAICA By-laws
• The appointment of members to the Ethics Committee.

CEO Succession and Board Succession

The Board deliberated on the succession process for the current CEO, given that Mr. Freeman Nomvalo’s fixed-term contract will end on 31 January 2024. The process to appoint Mr Nomvalo’s successor is underway.

The Board further discussed the succession plans to be implemented following the AGM on 25 May 2023 as well as the subsequent Board rotations that will follow in 2024.

The Board extends its appreciation to Council, SAICA management, staff, various other stakeholders and members and associates who continue to promote the integrity and resilience of our profession. We look forward and we are excited to engage with members and associates at the upcoming AGM.

Regards

Vincent Motholo
Chairman: SAICA Board