Francois Coetzee
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The impact of the independent review on SME access to bank finance: the case of South Africa
Francois Coetzee , Pieter W. Buys doi: http://dx.doi.org/10.21511/bbs.12(1-1).2017.06Banks and Bank Systems Volume 12, 2017 Issue #1 (cont.) pp. 135-142
Views: 1794 Downloads: 611 TO CITE АНОТАЦІЯIt is accepted that SMEs are major contributors to global employment and GDP. Similarly, SMEs’ reliance on bank finance to maintain financial and operational sustainability is also globally accepted. In 2008, the Company’s Act of South Africa was amended to scrap the statutory audit requirement for qualifying entities, with the aim of alleviating the administrative burden of SMEs and increase their sustainability potential. As sound as this strategy may have been, a grey area arose in that banks may still insist on audited financial statements. This study investigates the question as to whether South African banks still consider audited financial statements as key in evaluating SME bank finance applications. This was done by analyzing the major banks’ requirements per their policies and follow-up discussions with loan officers. Contrary to expectations, the historic focus per audited financial statements was considered of much less importance than progressive future-oriented management statements and reports.
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SME perceptions of the independent review and accounting skills on bank financing: South African perspective
Francois Coetzee , Pieter W. Buys doi: http://dx.doi.org/10.21511/bbs.12(2).2017.05Banks and Bank Systems Volume 12, 2017 Issue #2 pp. 51-59
Views: 1122 Downloads: 317 TO CITE АНОТАЦІЯAccess to bank financing is regularly rated as one of the biggest obstacles to SME sustainability. With the introduction of the independent review as an alternative to the statutory audit, banks may have inevitably lost their risk assessment reassurance that audits provided. Previous research found that banks have adjusted to this situation by no longer insisting on audited financial statements. The research undertaken in this study aims to, firstly, investigate SME owner/managers’ perceptions about what banks require when assessing bank loan applications; and, secondly, to gauge SME owner/manager’s attitudes towards the value they perceive accounting may contribute to their sustainability. It was found from an SME perspective, that although an independent review is the current way to go, many SME owner/managers consider their own accounting skills, as the language of business, to be lacking. This could potentially have repercussions in inadvertently promoting further asymmetric financial information, and thereby limiting successes in obtaining finance.
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