Has the relationship between the IRBA and auditors improved?

If anything, it has worsened publicly. A group of auditors from a region of South Africa brought a matter against IRBA, asking to reverse the decision that made Mandatory Audit Firm Rotation Rule compulsory for public companies.

The Supreme Court of Appeal dismissed compulsory MAFRR. IRBA has responded by stating that if independence rules are applied, in the spirit that it was intended, then MAFRR will still be a reality. IRBA has not indicated at time of writing as to whether it would take the matter further i.e., to the Constitutional Court.

Given the number of scandals in South Africa, I support MAFRR. The group bringing the action is not an official group of the member body SAICA even though they are members of SAICA.

The impact of this judgment in the short term is expected to be relatively minimal, given that many public interest entities would have already taken steps to comply with the MAFRR in advance of 1 April 2023.

Is auditing still seen as self-regulated or has the Mandatory Audit Firm Rotation Act improved that?

For many years now auditing’s seen as a very regulated profession. IRBA Acts independently of members and its leadership Board has more non auditors than auditors.

Are auditors still leaving the industry in high numbers?

From the IRBA news, provided to members, there doesn’t appear to be any significant increase in the numbers leaving the industry. The challenge for the profession is the high average age of registered auditors (RA) which could have an impact in the near future.

Have there been any significant regulatory developments in South Africa over the last 12 months?

There has been nothing new other that the court decision rescinding MAFRR referred to above.

How would you describe the health of the accounting industry in South Africa in terms of customer demand, fee pressure, and staff recruitment and retention?

The health of the profession remains good. Fee pressure continues to be a struggle and staff recruitment has become more challenging given that we are employing young millennials and older Gen Z staff. The requirements for retention have changed because of this. Retention has become far more difficult.

Are there any services areas where demand has grown over the last 12 months?

The demand for tax services is increasing and the tax authority is becoming more efficient. Previously, they were efficient but there was a period in which they slipped up and seem now to be regaining their authority.

Has there been any significant consolidation or merger activity in the accounting profession?

Noting to note in the past 12 months.

What are your expectations for the next 12 months - are there any potentially significant developments in the pipeline?

Firms are likely to continue the trajectory of moving towards complete automation including increased use of Artificial intelligence. With it, comes a risk associated with cybercrime and the concomitant controls that need to be put in place.

For the full IAB South Africa Country Report, please click here.