Accounting and the pandemic: What will we carry over to 2021?
Last year was undoubtedly one for the record books. The national statistics agency of South Africa, Stats SA published a report in September 2020 where it described a steep slump in the Gross Domestic Product (GDP) as a result of the coronavirus. Our economy suffered significant contraction during April, May and June when we operated under strict lockdown restrictions. This meant that the GDP fell by over 16% between the first and second quarters for an annualised growth rate of -51%. But what could the pandemic mean for the accounting industry and business in general as we begin another year?
The pandemic and the accounting industry
American magazine, Accounting Today featured an article on the impact of the coronavirus in November 2020. The author points out that the accounting industry was profoundly affected by the pandemic. Offices closed and accountants began working from home and had to adjust to new ways of working. Some of the key ways the US accounting industry was affected were:
There was an increase in fraud.
Less in-office communication and in-person training which will have long-term effects on new hires.
Many accounting companies had to cut their budgets for consulting work which led to lay-offs for more junior positions.
Technology adoption became a necessity.
Accounting in the local context
So how relevant are these points for accounting in South Africa? According to the biennial PWC Global Economic Crime and Fraud Survey, there was a decline in the percentage of SA organisations that experienced economic crime in 2020. But unfortunately, the rate of economic crime continues to remain significantly higher than the global average. Interestingly, the level of involvement of senior management as the main perpetrator escalated from 20% in 2018 to 34% in 2020. In addition:
The local accounting sector has had to deal with adopting remote-work models and these are set to stay in place for the foreseeable future.
The Accounting Today article referred to above goes on to say that after cutting their budgets for consulting work, accounting firms had to lay off part of their workforce (usually junior and administrative positions). Unfortunately, there are growing fears that the same might happen in South Africa.
Accountants and other professionals dealing with the broader effects of the coronavirus in the way we conduct business saw an unprecedented adoption of new technologies. For many companies, this meant fast-tracking digital transformation that was already in the works or getting on board with new methods faster than planned. To keep up with competitors, it’s becoming clear that new technologies must be introduced and staff must become proficient in using it.
Rae & Associates offers a selection of accounting software and consulting solutions for business. We also have comprehensive training to ensure you are always up to date with the latest in the industry. To find out how best to run and benefit from your software, please feel free to contact us or book a training session.
