The SA Institute of Business Accountants (Saiba) has today called for greater clarity on the appointment of Jenitha John as the new CEO of the Independent Regulatory Board for Auditors (IRBA). She is due to assume the appointment on 1 June 2020.
The Saiba statement references a similar call by the Organisation Undoing Tax Abuse (Outa), which issued a statement dated 22 May 2020 in which it raised concerns about the pending appointment of Ms Jenitha John as CEO of IRBA.
Outa says it has written to finance minister Tito Mboweni, requesting an investigation into her appointment and the apparent haste with which it is being carried out.
Outa’s concerns relate to:
• Ms John’s appointment on the Tongaat Hulett Board during the time that the financial reporting of irregularities at Tongaat took place. During this period, she was the chairperson of the Audit and Compliance Committee at Tongaat Hulett.
• A PwC Report on the Tongaat Hulett financial reporting irregularities indicating that Ms John will be investigated as chairperson of the audit committee responsible for oversight of the company’s financial reporting at the time of the findings.
Saiba’s CEO Nicolaas van Wyk says the IRBA mandate is to protect the public interest by setting the standards related to ethics and audit engagements. “The bases of these standards are trust and transparency. Without a strong audit profession, investors are unable to make economic decisions as they will not be able to rely on the reported performance and balance sheets of large and listed companies. This will inhibit new capital investments, hinder growth and employment and ultimately negatively affect tax collection.”
Saiba adds that the audit profession has been the subject of a number of scandals in recent years, notably Steinhoff, State capture, Eskom, VBS Mutual Bank and others. Auditor-General Kimi Makwetu in 2019 called for trust in the professions to be restored to help SA attract much-needed foreign investment.
Internationally, the profession is subject to heightened government scrutiny with calls to break up the Big Four accounting firms due to their disproportionate involvement in most corporate scandals. “In South Africa, the market structure of the profession prohibits the emergence of new black audit firms into a market overwhelmingly dominated by the Big Four,” says Van Wyk.
“Given the critical function performed by the IRBA and the significant impact the body has on the economic well-being of the South African population, it is important that the IRBA itself is beyond scrutiny.
“We therefore call on the IRBA Board to publicise the nominations process followed in the appointment of the new CEO, and make public the basis and reasons for appointment, including how the various candidates were scrutinised, and potential risks assessed.
“The environment within which the IRBA operates involves a number of stakeholders, including the JSE, Banking Association of SA, audit firms, accounting firms, government, international regulators and professional associations.
“It is our view that these stakeholders will find it very difficult to work with the IRBA if there is a cloud of suspicion hanging over the appointment process. It is therefore in the public interest and to maintain good order in the financial system for the Board to act transparently and take South Africans into their trust.”
The Southern African Institute for Business Accountants (Saiba) is a professional body representing more than 8,000 accountants providing accounting, tax and management support to the Southern African business community and taxpayers. We are the custodians of accounting designations issued to bookkeepers, accountants and chief financial officers. We are a registered professional body in terms of the National Qualifications Framework Act (No. 67 of 2008) and the Companies Act, 71 of 2008.
“We believe in an open access model to the accounting profession. We therefore oppose any form of oppression or exclusion from resources, statutory recognition, or access to jobs,” according to the Saiba statement.