Solidarity’s financial guild concerned about appointment of auditing watchdog
Monday | 07 September | 2020By Reon Janse van Rensburg
The Independent Regulatory Board for Auditors (Irba) serves as a watchdog that investigates auditing scandals and failures in corporate South Africa. It is an organisation that needs to act fiercely in the war against fraudulent activities and effective in its duty to apprehend companies that turn a blind eye to the law.
According to Daily Maverick, South Africa is experiencing an increase in cases where auditors such as Deloitte SA and KPMG are turning a blind eye to companies that manipulate their financials, as seen in the collapse of African Bank, Steinhoff, VBS Mutual Bank and Tongaat Hulett.
On Monday, 1 June 2020, Jenitha John took up the position of Irba CEO. This appointment, however, can be described as controversial, especially in light of her previous role as head of the audit committee at Tongaat Hullett, which had to restate financial statements that resulted in major wealth destruction for shareholders.
A report by PwC pointed to several unscrupulous practices, including recognising revenue in earlier reporting periods than it should have been, and expenses being inappropriately capitalised to assets.
According to Daily Maverick, Jenitha John faces an ethical dilemma as she needs to investigate lapses in the broader audit profession despite the fact that she presided over one of SA’s biggest accounting scandals (Tongaat Hulett). An even more awkward scenario is that John must oversee Irba’s investigation into auditing affairs of Tongaat Hulett and mainly its external auditor, Deloitte SA. Deloitte has been Tongaat’s auditors for more than 15 years.
On paper John has built an impressive career but Solidarity’s Guild for Financial Professions is concerned about the “reputational baggage” that she brings with her and how this will impact the audit profession, and more specifically, how Irba will be in a position to hold companies accountable for wrongdoings if the seriousness of similar allegations are not first acknowledged and brought to light in its own corridors.
Finance Minister Tito Mboweni has tasked Irba with immediate issues such as electing the chairperson and deputy chairperson of the board (in terms of section 14 of the Auditing Profession Act, No. 26 of 2005), reviewing the process of appointing the current CEO, and ensuring a better working relationship between Irba, the Ministry of Finance and the National Treasury to restore the ethical values of the accounting and auditing profession.
Sources:
https://accountingweekly.com/tito-meets-with-irba-over-recent-appointments/
https://global.theiia.org/news/Pages/IIA-Announces-2020-21-Global-Chair-Board.aspx
Foto krediet: Scott Graham | Unsplash