Page 65 - The Corporate Report Pack

Note from the Editor-in-Chief
In this edition we have articles on tax, dispute resolution, the extinction of fauna and ora, risk, fraud and the suggestion of changing the audit regimen in South Africa.
In his article on governance and tax, Prof. Matthew Lester discusses the dangers of an aggressive tax strategy and the growing issue of the interrelationship between corporate reputation and tax planning. While no director can be expected to know in detail the provisions of the Companies and Taxation Acts, the board has to treat the South African Revenue Service (SARS) as a substantial stakeholder and implement measures to make sure that all taxes are paid properly and timeously. In addition, the board must now develop a tax policy that will not result in a diminution of the value of a company’s intangible assets.
Advocate Michael Kuper has written an article about South Africa getting ready for international arbitration. He writes about the formation of the China–Africa Joint Arbitration Centre. He also refers to the determination of the BRICS countries to establish an arbitral mechanism of their own to avoid the expense of arbitrations in the Court of Arbitration of the International Chamber of Commerce in Paris, the London Court of International Arbitration and the Permanent Court of Arbitration in e Hague. South Africa can, with the Arbitration Foundation of Southern Africa, make a worthwhile contribution to establish a shared arbitral mechanism between the BRICS countries.
e question of the cost of fraud to companies is a matter for much discussion in the business world. Craig G Bristow has pointed out that the most signi cant frauds are perpetrated by middle to senior management. He points out that all stakeholders in a company need to recognise their respective roles and responsibilities in the identi cation and mitigation of fraud risks. He poses the question as to whether companies realise that they should have a fraud risk strategy.
In the management of risk there is also opportunity so that an organisation must not only endeavour to avoid loss or harm but must focus on the optimisation of its strategic objectives. Dr Gert Cruywagen points out that as a result
of the methodologies and techniques at the disposal of an experienced risk o cer, he or she may be able to assist in the process to identify opportunities. Our world is currently experiencing a sixth period of mass species extinction. e way in which business is conducted is one of the causes of habitat loss and an indirect cause of climate change. is has created an extinction crisis, which is a risk, especially in the food distribution business. Consequently, extinction accounting, as pointed out by Prof. Jill Atkins, is growing in importance.
South Africa is recognised as having if not the best, then among the best quality of auditors in the world. e profession of auditing is a public interest one. at recognition connotes an acceptance of the independence of our auditors. Notwithstanding, the Independent Regulatory Board for Auditors has suggested that there should be a mandatory audit rm rotation (MAFR) every ten years. Michael Harber has researched the question as to whether it is in the interests of companies and the profession to create a regulation enforcing MAFR every ten years. He concludes that participants in South Africa are strongly opposed to MAFR and stresses that there are many negative consequences. e suggestion of a lack of independence, with an auditor becoming a lapdog a er ten years, might be perception but it is not reality. Why does the tenth year make that year di erent from other years? e article once again establishes the old adage: ‘If it ain’t broke, don’t x it.’
In an interesting article written by a UK law rm, collaborative participation by disputants to resolve their disputes is introduced along with other dispute resolution mechanisms such as litigation, arbitration, mediation, negotiation and reconciliation. It is a concept that has been used in family law disputes but Attorney Michael Judin suggests it might also be useful in corporate disputes.
It will be seen from the above that once again there is much for the business person to learn from this edition of e Corporate Report.
Mervyn E King SC Editor-in-Chief
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