Last week, the Supreme Court of Appeal overturned the rule implemented by the Independent Regulatory Board for Auditors (Irba) in 2017 compelling companies to swap auditors every 10 years. The court said Irba didn’t have that authority.
Back in 2017, audit firms railed against the change, arguing they were sufficiently “independent” of their clients.
Last week’s judgment, however, came out in a different world — one in which Deloitte paid R1.3bn in “compensation” to Steinhoff without admitting liability for R106bn in “accounting irregularities” and R260m to Tongaat on the same basis, EY had to deal with the fallout of Wirecard, KPMG was snagged by theft at VBS Mutual Bank and PwC was lambasted for its work at SAA.
In other words, auditor “independence” wasn’t as robust as auditors had argued in 2017, so you’d imagine measures to bolster this would be welcomed.
Thankfully, many companies have embraced the practice of regularly changing auditors. As KPMG tells the FM: “Most clients we are speaking to have indicated that audit firm rotation has become a reality in many jurisdictions … and many of their key investors and stakeholders expect the same.”
In other words, embracing better governance is a commendable position — whatever the courts say.
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