Are accountants, auditors and other financial service professionals caught up in instances of state capture just a ‘few bad apples’ or an example of systemic failures in the various financial services professions?

 The failure is not so much in the professions but the financial reporting ecosystem. It is not only the auditors and accountants that contribute to the systemic failure but all the role-players, including management, boards, audit committees and internal auditors. 

 The root cause is that these other role-players are not regulated – only auditors are. That means there are consequences when auditors are found wanting (their audit license could be revoked), but there are no similar consequences for others. 

 South Africa needs a comprehensive system of oversight where everyone is held accountable for misconduct with the required consequences.

What has your impression been of how the accounting and auditing profession has reacted to the Zondo Commissions’ reports? Is the industry taking them seriously enough and implementing changes that could see reduced complicity in future corruption?

 As in the past (financial crisis, Enron, Worldcom), the profession, standard-setters and regulators will have a knee-jerk reaction. For example, the introduction of the Sarbanes-Oxley Act almost 20 years ago.

 However, they soon fall back into their old ways as they have short memories. So there will again be an initial reaction, but unless the recommendations from the Zondo Commission are followed up, implemented and actioned, I don’t believe anything will change. 

Something more is required to change behaviours – which is more difficult than introducing new rules or regulations.  

As a former IRBA CEO, I’m sure you’ve noted that Imre Nagy wants to work closely with stakeholders upstream of auditors in the accounting space to address gaps. Do you think there should be an increased focus on improving the quality of accountants and perhaps regulating the profession?    

During my term, we pushed for the regulation of accountants in addition to the regulation of auditors (comprehensive regulation). We made proposals to the minister of finance at the time to introduce enabling legislation to achieve this, suggesting that the IRBA becomes a comprehensive regulator for auditors and accountants. 

At the same time, we were also concerned with the proliferation of the various accountancy bodies and encouraged them to amalgamate so that there are fewer than the current 11 bodies. This would have facilitated the mobility of all accountants between various bodies and more consistency in qualifications and competencies. 

I believe that Imre will continue to have this vision, but his success in implementing will largely depend on the political will of the higher powers.