South Africa Country Report
Business OpportunitiesJuly 20, 2021 - Accensis Chartered Accountants (SA) and Registered Auditors
This article is PrimeGlobal South African member firm Accensis' contribution to International Accounting Bulletin South Africa survey, published in IAB's June newsletter. Please read the full article below and reach out to Suresh Naidoo, Director, regarding any questions in relation to doing business in South Africa.
Is there a sense that South Africa is making progress on tackling corporate and audit failure?
The Independent Regulatory Board for Auditors has said that its focus going forward will be on audit quality, sustainability and relevance of the regulator and the profession - is there confidence that the IRBA can achieve these objectives?
IRBA has had some major setbacks. The previous Board appointed a CEO that was seen as compromised by the profession and the public at large This was a result of her being the Chair of the audit committee of Tongaat at the time of a major accounting scandal. The new Board continued with the appointment and the Minister of Finance had to intervene and remove the entire Board. The Board was replaced by an interim committee and oversaw the exit of the CEO. Currently there is an acting CEO in place until a permanent appointment is made. Until such time as stability is restored, there will be a lack of confidence. IRBA has some other really strong and capable executives who will be able to keep the confidence.
Do audit firms feel that the regulator takes notice of their concerns when suggesting reforms to the industry?
The processes employed by IRBA ensures that all members have input to make comment. Prior to the pandemic, in addition to the written input members were invited to roadshows to give input. Members views are considered however the regulator must still maintain its independence and consider what is in the public’s interest and not only the members.
Will the Auditing Profession Amendment bill be a positive development for the audit profession in South Africa?
As the amendments are new, we have not as yet seen it at work. On an examination of the Amendments, I believe they have far reaching consequences in strengthening the regulator and making auditors more accountable. It is a move in the right direction.
How much progress have JSE-listed firms made on mandatory audit firm rotation?
The latest (March 2021) stats indicate that 43% of the JSE have implemented Mandatory Firm Rotation (MRF). MFR is also compulsory for non-listed public companies. There are no available stats for this. The moves on the JSE indicates are very positive and indicates a wide acceptance of MFR. Some other large local subsidiaries of internationally listed companies e.g., Unilever have rotated auditors following the lead of the international parent company.
Have there been many examples of larger firms being appointed jointly with small and/or black-owned firms to boost the skills development of smaller audit firms in South Africa?
When IRBA promote MFR, one of its positive spins was allowing black firms the opportunity to rotate onto jobs previously not available to these firms particularly listed entities. Unfortunately, this has not happened as the decision makers in the JSE listed entity remain largely white and conservative. On the plus side Grant Thornton is now a predominately a black firm and should make in roads into this market. Time will reveal if this is the case. At this stage the Big 4 have held on to most of the work albeit some with musical chairs between them.
Accensis Chartered Accountants (SA) and Registered Auditors
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