Home Accounting and Auditing IRBA Board provides clarity on the appointment of new CEO

IRBA Board provides clarity on the appointment of new CEO

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In response to the SA Institute of Business Accountants’ (and others’) seeking clarity on the process followed in the appointment of a new CEO at the Independent Regulatory Board for Auditors (IRBA), we have been sent a detailed reply outlining the selection process of Ms Jenitha John as the new CEO from 1 June 2020.

In the interests of providing a right of reply to IRBA, we are presenting a summary of its rather lengthy response below. Saiba’s original concerns were expressed here.

SA Institute of Business Accountants (Saiba) CEO Nicolaas van Wyk says it remains Saiba’s view that given the IRBA’s critical role as a stabilising force within the SA economy, it should be an exemplar of transparency and governance, and set an example for everyone in the profession.

Here is a précised summary of the responses sent to Saiba by IRBA relating to the appointment of Ms John.

The selection process

IRBA was assisted in the selection process by recruitment agency Options. A rigorous search and recruitment process was followed, and potential candidates were headhunted after advertising through various media. A shortlist of 10 candidates was derived from this search, of which four were internal IRBA candidates. Interviews were conducted and the final selection by the IRBA board was decided after reviewing the qualifications, competency and experience of the candidates. IRBA says the selection of Ms John was not based on recommendations by anyone, nor was Options involved in this process, but was made following fair and comprehensive assessments matched against selection criteria.

Factors considered in the selection process

IRBA says it investigated the circumstances surrounding Ms John’s tenure at Tongaat and the reporting of financial irregularities there, and believes its robust investigations process and governance framework protects it from interference from any single individual. These processes are “bolstered by two Statutory Committees with independent experts would not involve the CEO who has in any event no role in any decision or recommendation making. The matter of (the IRBA investigation into) Tongaat Hulett will not be conducted in any manner that is different to this robust and independent process.”

How potential conflicts of interest were addressed

Replying to concerns that Ms John will be CEO of IRBA at a time when it is required to investigate Tongaat, posing a potential conflict of interest, IRBA says the matter of Ms John’s tenure at Tongaat was extensively interrogated and on the basis of information presented and other publicly available reports (such as the PwC report), it found no evidence of guilt or wrongdoing on Ms John’s part. The PwC report found improper conduct on the part of executives at Tongaat, but made no mention of non-executives.

“In keeping with the principle ‘innocent until proven guilty’, the Board would not justify a negative assessment of a candidate who matched all selection and suitability criteria,” says IRBA.

There is also concern that Gavin Kruger, in charge of audits at Tongaat at the relevant times, would have reported to Ms Johns. IRBA says the accusations against Mr Kruger do not translate into an indictment against Ms Johns, who in any event would have no role to play in IRBA’s investigations into either Mr Kruger or Tongaat. Should any new information arise as a result of these investigations implicating Ms Johns, the IRBA board will take whatever action it deems necessary and in line with its ethical and legislative obligations.

No potential for tainted IRBA inquiry into Tongaat

Another concern raised by the media is that Gavin Kruger may decline to make any disclosures to IRBA on the grounds that he may have shared confidential and potentially incriminating evidence with Ms John. IRBA replies its quasi-judicial processes are robust and independent, and there is currently no evidence that Mr Kruger shared incriminating evidence with Ms John.

IRBA has advocated Mandatory Rotation of Audit Firms, yet Deloitte served as auditor for Tongaat for 80 years. IRBA says this would not be a personal decision of Ms Johns’ while serving at Tongaat.

IRBA also checked and found that no investigations are underway by the SA Institute of Chartered Accountants into either Tongaat or Ms Johns.

Rebuilding trust

IRBA says it is bound by statute and the Constitution and believes in the rule of law and natural justice. “It is a trite principle of our laws that candidates cannot be adversely judged based on unproven public statements or questions that have no direct evidence implicating those candidates in any wrongdoing.”

IRBA says the issue of public trust in the body featured prominently in its selection process, particularly after its campaign to rebuild trust (in light of corporate scandals involving auditors). “It is a trite principle in our laws that candidates cannot be adversely judged based on unproven public statements or questions that have no direct evidence implicating those candidates in any wrongdoing.”

The Board says it will not hesitate to take appropriate action where evidence of wrongdoing comes to the fore in relation to Ms John, or any IRBA employee.