Faculty of Accounting and Informatics

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Fraud mitigation practices and profitability of insurance companies in South Africa
(2024-03-01) Msomi, Thabiso Sthembiso
The objective of this study was to evaluate how measures taken to prevent fraud impact the profitability of insurance companies operating in South Africa. The study adopted a descriptive research approach and surveyed a sample of 70 licensed insurance companies in the country. Primary sources of data were obtained by engaging claims managers in each of the firms, and descriptive and inferential statistics were used to analyse the data. The results of the study revealed that fraud mitigation measures significantly affect the profitability of insurance companies in South Africa. The implementation of fraud prevention, detection, and response measures had a positive impact on the profitability of these firms. Based on the findings, the study recommends that the Insurance Regulatory Authority establish regulations that mandate all insurance providers to collect and report statistics on fraud. Insurance firms should provide their employees with comprehensive training on fraud management and implement strict penalties and disciplinary measures for employees involved in fraudulent activities, as they can undermine the effectiveness of the fraud mitigation process.
Debtors’ management practices and resilience of small and medium enterprises in South Africa
(International Journal of Social Science Research and Review, 2024-01-19) Msomi, Thabiso Sthembiso; Matemane, Reon; Zungu, Sphesihle Charles; Campbell, Thomas
Aim: This research aimed to assess the relationship between debtors’ management practices and the resilience of small and medium-sized enterprises in South Africa. Methods: Employing a quantitative research design, the study employed purposive sampling to select a cohort of 110 SME owners operating in Durban, South Africa. 94% response rate was achieved, yielding 103 valid responses. Results: The results of the analysis unveiled a statistically significant positive correlation between effective debt management and the resilience of SMEs. This empirical evidence signifies that proficient debtors' management plays a pivotal role in enhancing the resilience of SMEs operating in South Africa. Contribution: This study contributes to the growing body of knowledge by affirming the positive influence of debtors' management on the resilience of SMEs in South Africa. Drawing on the findings of this study, government agencies and industry associations should collaborate to develop supportive initiatives and policies that aid SMEs in optimizing their debt management strategies.
Factors influencing accounting research output in South Africa's universities of technology
(Informa UK Limited, 2022-12-31) Mbambo, Mzwandile; Olarewaju, Odunayo; Msomi, Thabiso Sthembiso
This study examines factors influencing accounting research output in universities of technology (UoTs) in South Africa by employing descriptive statistics. The study applied a quantitative research method and primary data was used to compile information. The data was collected by using a 4 Likert scale closed-ended questionnaire. The questionnaire was administered to one hundred accounting academics across the six UoTs in South Africa. Descriptive and inferential statistics such as multivariate regression was used to analyse the data. The findings show that research funding (t = 3.125, p < 0.002, β = 0.277) and research policies (t = 4.740, p < 0.000, β = 0.453) positively and significantly affect research output while the enabling environment was negative and insignificant (t = −0.613, p > 0.5, β = −0.055). Based on the inverse effect of the enabling environment on accounting research output, it was recommended that the environment influencing research activities needs to be strengthened to promote research culture among accounting academics in UoTs. More so, more institutional support for research is needed such as allocating research grants/funds to academic staff and managing workload to give room to research activities.
The effect of interest rates on credit access for small and medium-sized enterprises : a South African perspective
(LLC CPC Business Perspectives, 2023-11-15) Msomi, Thabiso Sthembiso
This study investigates the effect of interest rates on credit access for small and medium-sized enterprises (SMEs) in South Africa. The study employs a quantitative research design, using data collected from 200 SMEs in South Africa. The data was analyzed using descriptive statistics, Pearson’s correlation coefficient analysis, and multiple regression analysis. An inverse relationship between interest rate and credit accessibility was found using the Pearson correlation coefficient (r = –.199, p < 0.05). The results show that interest rates have a significant negative effect on credit access for SMEs in South Africa. Moreover, the study finds that SMEs experience considerable obstacles in obtaining affordable credit, and that interest rates play a crucial role in this. The study recommends that policymakers in South Africa should consider reducing interest rates and relaxing collateral requirements to improve credit access in SMEs. Furthermore, the study suggests that SMEs should focus on building a good credit history to improve their creditworthiness and increase their chances of accessing credit. Overall, the findings of this study contribute to the existing literature on the effect of interest rates on credit access for SMEs and provide insights for policymakers and SME owners in South Africa.
Do underwriting profit factors affect general insurance firms’ profitability in South Africa?
(LLC CPC Business Perspectives, 2023-12-08) Msomi, Thabiso Sthembiso
This research paper examines the correlation between underwriting profit factors and the overall profitability of publicly traded general insurance companies operating in South Africa. The study analyzed a sample of 36 insurers, considering their quantifiable markets and accessible financial data from 2008 to 2019. Employing signal correlation analysis, the investigation explored the associations between various financial indicators and Return on Assets (ROA). The results revealed negative correlations between ROA and the logarithms of total investment (TI), shareholder funds (SF), and underwriting profits (UWP), with correlation coefficients of –0.4500, –0.3365, and –0.4050, respectively. These findings indicate that as TI, SF, and UWP increase, there is a tendency for ROA to decrease for general insurance companies in South Africa. Furthermore, a positive relationship was observed between the earning-asset ratio and ROA. This suggests that as the earning-asset ratio rises, the ROA of general insurance firms in South Africa tends to improve, indicating a potentially favorable impact on profitability. The significant findings of this study emphasize the importance of prioritizing effective risk management practices within insurance firms. By implementing these measures, such as minimizing the likelihood of claims and ensuring accurate reflection of assumed risks in premium charges, insurance companies can maintain positive underwriting profit. This, in turn, has the potential to enhance their overall profitability.
Evaluation of operational efficiency and financial health of non-life insurance companies in South Africa
(2023) Ige-Gbadeyan, Omonike Ope; Swanepoel, Matthys Johannes
For some time, operational efficiency has been a great challenge confronting insurance companies; the pressure of low investment returns, pressure to change to the digital age to be relevant to modern technology, and lack of performance to standard and strategic vision are the primary challenges to future transformation efforts. This study examined the operational efficiency and financial health of nonlife insurance in South Africa. Since Operational efficiency is the primary medium to measure financial health, there is a need to identify and discuss the microeconomics and macroeconomics variables and understand the financial health of non-life insurance companies. A descriptive research design was adopted to achieve the objective of this study. In this study, panel data from 2008- 2019 was used. This panel data gives more informative data as it consists of both the cross-sectional information, which captures individual inconsistency, and the time-series information, which captures active modification. 2008 was chosen because insurance industries were distressed due to the 2008. This study used secondary data from S&P Capitall Q and Refinitiv Eikon, well-known databases with readily available data. They provide data reliability, in-depth financial information on companies, equities, fixed income, industry reports, SEC filings, interest rates, commodities, and screening for stocks and mutual funds. The study employed Profitability TLA as a function of financial health and other variables like the company's size, leverage ratio, premium growth rate, liquidity, inflation rate, and Gross domestic product (GDP) growth rate using a panel data regression approach. The result shows that of all the predictors, only LY and LV have a significant (positive) effect on the dependent variable financial health (TLA). The correlation analysis results show the relationships between some of the observed parameters. In particular, the result reveals that liquidity, size of the company, leverage, profit After Tax, operational efficiency, and Return on Asset all have a significant positive correlation with financial health. At the same time, Total Assets correlate negatively with TLA. The study contribute insight into the operational efficiency of non-life insurance companies and show profitability as an efficiency index. The study recommends improving premium growth. Insurance management should focus on reviewing their product prices since some common factors can affect insurance premiums, like gender, age, smoking status, lifestyle, occupation, and income, to improve the premium growth of non-life insurance companies, this study will also be helpful to monitoring authorities in articulating comprehensive and practical strategies to ensure financial development and steadiness of the non-life insurance In the Republic of South Africa.
Factors contributing to the successful development and use of mobile digital libraries : a systematic literature review
(Emerald, 2023-03-21) Khomo, Musawenkosi Phumelela; Naicker, Nalindren; Chisita, Collence Takaingenhamo; Rajkoomar, Mogiveny
The purpose of this paper is to review the literature on factors that contribute to the successful development and use of the mobile digital library (DL). This aim will be achieved by reviewing selected journal articles on mobile DLs' successful development and use. This paper argues that the concept of DLs is evolving because of the dynamic nature of knowledge and technological developments in the infosphere. Design/methodology/approach A systematic literature search of journal article factors that contribute to the successful development and use of the mobile DL was accomplished by searching the following databases: Emerald insight, Science directory and Google Scholar. The systematic review was conducted following the preferred reporting items for systematic reviews and meta-analyses guidelines. This study applied Rogers's (1965) Diffusion of innovation theory to unpack the attributes of innovation to unpack contextual factors shaping African conceptions of mobile libraries (m-libraries). The studies reviewed were published from 2016 to 2021. This paper is based on a systematic literature review. This paper uses publicly available literature on the theme of DLs concerning m-libraries. Among the search terms used for the study were: “digital libraries”, “Africa and digital libraries”, “electronic libraries”, “information communication technologies”, “access to information” and “mobile digital libraries”. Findings Reviewed literature indicates that myriad factors can contribute positively or negatively to the successful development and use of the mobile DL. These factors include the degree of staff awareness and understanding of the potential of mobile technologies in enhancing the provision of library services, the availability of relevant digital content, library staff and users’ level of digital and information literacy competencies to navigate digital platforms, user friendliness of DL platforms, material and financial support to access m-libraries, power supply and access to internet connectivity. Practical implications The results from this study will generate knowledge and insight into the factors that affect the development and optimal use of mobile DLs to enhance and widen access to scholarly databases irrespective of time and space. This study will make recommendations that will enable South African policymakers to make informed decisions relating to the factors affecting the development and usage of mobile DLs for enhanced learning, teaching and education. Originality/value Given the growing number of scholarly publications on mobile DLs, this study seeks to discover how such technologies can help enhance learning, teaching and research in higher education. This study’s findings will provide a scientific basis for policymakers and researchers with evidence-based knowledge that raises the value of mobile DLs. It was discovered that if the identified factors are handled well, users can easily access tools, such as databases, electronic journals and online reference tools, and this could improve the quality of teaching and learning.
The impact of standard cost as a cost control tool in the automobile industry in Durban, KwaZulu-Natal, South Africa
(2022-05-13) Aberdeen, Anneen Irene; Olarewaju, Odunayo Magret
Standard cost variance analysis is a recognized expenditure control technique that has been used as part of firm’s accounting function over the years. Nevertheless, there have been wide debates about its functionality in the current era. The research problem was framed around the relevance, functionality and viability of standard cost. The objectives focused on the relevance and effectiveness of standard cost as budget control tool in the automobile industry in Durban, Kwazulu-Natal, South Africa. The research questions tapered towards the critical factors affecting the relevance and effectiveness of standard cost analysis as well as its contribution to cost management and this profitability of automotive firms in Durban, South Africa, in 2021. While, the study found mixed opinions on applicability of standard cost to extant automotive firms in some regions of the global economy, there is an inclination towards its effectiveness in some automobile firms Durban, Kwazulu-Natal, South Africa. Content analysis method was employed in the study considering its suitability for social science work and also the qualitative nature of the data collected. Cost management was found to be a source of profitability and thus competitive advantage for a number of the automotive firms surveyed. For instance, managing cost by diversifying supplier base served as a robust source of cost management, through which considerable information regarding domestic macroeconomic and international automotive market condition were gleaned. Standard cost variance analysis was described by some respondents as being relevant for the automotive sector in the geographic scope of the research, under differing conditions. As for instance, being more unsuitable for variable cost over foxed cost functions, in addition to mixed responses to strategies employed in standard cost technique adoption. Furthermore, some firms indicated that they combined balanced scorecard with standard cost method, while others did not use standard cost with any additional management tool. A few firms stated the viability of this tool for periodic forecasting which improves cost management, while others operating certain business models including retail and warranty-base firms indicated its unsuitability. Customer budgets and quality specification was found as effective in cost management. Other firms stated that operating without standard cost would culminate in bankruptcy. External considerations such as fluctuating macroeconomic outcomes of exchange rates and high shipping costs affected the viability of standard cost analysis. The structure, composition and nature of variable and fixed costs in the total cost function of automotive firms in Durban, Kwazulu-Natal, South Africa should be factored as key managerial accounting practice tools for maintaining expenditure within budget limits, towards the objective of profit maximization. These can as well enhance the sustenance of economies of scale. In addition, technology management principles can be incorporated curtailing the variable cost component, while advanced statistical methods can be employed to cushion the radical effect of variable cost which are less stable than fixed cost. This will help ease the challenges associated with variable cost budgeting. Further research on the feasibility of standard cost variance analysis should be undertaken within a wide spectrum of industries, with the objective of shedding more light on the effect of this cost control mechanism.
Management of electronic records in the South African public sector
(African Journals Online (AJOL), 2022) Matlala, Mpubane Emanuel; Maphoto, Asania Reneilwe
Many public sector organisations are struggling to properly manage their electronic records. The effective management of such records and their accessibility is crucial for the functioning of the public sector and provides citizens with evidence of that functioning. Recently, numerous public sector organisations have adopted newly developed technological tools to manage records, while some departments are still in the process of gradually introducing these. Electronic records are created through various information systems in government organisations but for them to be of full advantage in the realm of governance, they need to be carefully managed. Public sector organisations are positioning themselves to do just that by applying innovative mechanisms to deal with their records. An electronic records management system is expected to provide an integrated, efficient management of the records produced and stored in contemporary organisations. However, it is not a silver bullet to fix all issues, and proper management of electronic records continues to be a challenge due to a lack of sufficient skills, relevant policies, procedures, and standards, as well as a lack of knowledge in South Africa on how to utilise modern technologies to deal with the storage of public records. The present study aimed to identify challenges related to the management of electronic records in the South African public sector and to suggest strategies for resolving them. The study was based on a qualitative approach and applied the content analysis of relevant literature to identify gaps and suggest solutions. The study established that the government departments under investigation still lacked the requisite tools such as policies, standards, guidelines, adequate technological infrastructure, and that there was also a lack of sufficient funding and skills and competencies to effectively deal with electronic records. Hence, the study recommends more collaborative efforts to urgently address shortcomings to curb the continuous loss of invaluable electronic records that could ensure accountability, transparency, informed decision-making, and improved service delivery.
Factors that impact the capital budgeting planning and practices of small business enterprises within the eThekwini Springfield Industrial Park
(2020-09-30) Nunden, Naresh Roshan; Sentoo, Naresh
This study focused on the factors impacting the capital budgeting planning and practices of small business enterprises (SMEs) within the eThekwini-Springfield Industrial Park in Durban, KwaZulu-Natal, South Africa. SMEs contribute an integral part to the gross domestic product (GDP) of South Africa, as well as beyond its borders. Studies have recognised the huge contribution of SMEs to reducing unemployment and boosting the economy whilst the formal sector shrinks. However, studies have also emphasised the failure rate of SMEs. The complexity of South Africa's economy poses challenges to SMEs in terms of the adoption of Capital Budgeting Processes. Therefore, this study contributes to their capital budgeting planning and practices by focusing on firstly, staff participation and secondly, the influence of owners/managers. Based on a 108 SME sample, the study argued that the planning and practices of capital budgeting represent the most significant aid to the survival of these SMEs. However, minimal studies have investigated the capital budgeting area in SMEs. The study used a quantitative research design, whilst a survey questionnaire was the primary data collection instrument applied. A purposive sampling method was adopted. The Partial Least Squares (PLS) and Structural Equation Modelling 5.0 (SEM) software were utilised to determine the statistical results. The findings revealed that both staff participation and management skills, as well as financial skills, played a critical role in the factors that impact the capital budgeting planning and practices of small business enterprises (SMEs). Factors in relation to staff participation included the following: budget participation, communication, clarification of duties, stake and motivation in the process, as well as technical and computer literacy skills. The study also recognised the managers’/owners’ lack of business knowledge, financial skills, financial considerations, government incentives and networking abilities. The study ended by making recommendations for assisting the survival and growth of SMEs.

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