Private Retirement Facilities In The Mangaung Area: A Corporate Governance Perspective

Abstract

Limited housing for the elderly in South Africa indicates that all opportunities must be studied both by government and private stakeholders. People move into retirement facilities at a younger age, and this puts further burden on the demand for safe and affordable facilities. Sectional title and life right retirement facilities play an essential role in addressing the housing problem for the elderly. Private retirement facilities often face challenges regarding financial difficulties, mismanagement and not delivering on promised facilities and services. Sound governance is crucial for retirement facilities, for lessening the risk of financial scandals and contributing to the efficiency and effectiveness of the facility. The main aim of this study was to provide an in-depth understanding of problems and challenges experienced by the role players concerning management, accounting, auditing and corporate governance of the selected retirement facilities in Bloemfontein in the Mangaung district. Furthermore, to develop recommendations for the various role players in the private retirement facility industry. The literature review covered four main areas, namely legal aspects relating to management, accounting and financial reporting aspects, auditing and assurance aspects as well as the applicability of King IV corporate governance on sectional title and life right retirement facilities. The literature review provided the approach for the empirical study by way of interviewing a sample of knowledgeable role players in each selected facility. A qualitative research approach was followed, using a case study design and a thematic content analysis design to evaluate the semi-structured interviews of the selected participants. The findings of the empirical study revealed unclear, unnecessary and confusing legal aspects that contribute to further financial burden on the facilities. Various practical problems were discovered concerning management, accounting and auditing aspects. The management of most facilities were unaware of the King IV Code and the applicability of the corporate governance principles and practices on the industry; the concern that was raised regarding the application of corporate governance principles was cost versus value creation. Various recommendations are made that may add value to the retirement industry. The findings can also be valuable for further research.