In a statement released this week, Minister of Finance Tito Mboweni recently met with newly appointed members of the the Independent Regulatory Board for Auditors (Irba) and South African Special Risks Insurance Association (SARSIA), to wish “them well in their roles as they strive to work together in a unified manner for the benefit of the country.”
Moses Ngoasheng and Priscilla Mokonyane were recently appointed as chair and deputy chair of Irba.
Janitha John has also recently taken up the position of Irba CEO, a controversial appointment in light of her previous role as head of the audit committee at Tongaat Hullett, which had to restate financial statements, resulting in massive wealth destruction for shareholders.
A report by PwC pointed to several undesirable practices, including recognising revenue in earlier reporting periods than it should have been, and expenses being inappropriately capitalised to assets.
“There were a number of governance failures pursuant to which internal policies, guidelines, and frameworks were not followed, creating an environment in which senior executives could initiate or participate in the financial reporting misstatements,” says the PwC report.
Daily Maverick reports that the ethical dilemma that John faces is how can she, as Irba CEO, “investigate lapses in the broader audit profession when she presided over one of SA’s biggest accounting scandals (Tongaat Hulett). More awkward is that John has to oversee Irba’s investigation into auditing affairs of Tongaat Hulett, mainly its external auditor, Deloitte SA. Deloitte has been Tongaat’s auditors for more than 15 years.”
A statement from the Ministry of Finance issued this week says the Minister has tasked Irba with immediate issues, namely:
- Electing the Chairperson and Deputy Chairperson of the Board (according to section 14 of the Auditing Profession Act, Act 26 of 2005)
- Reviewing the process of appointing the current CEO
- The need for a better working relationship between Irba, Ministry of Finance and National Treasury to restore the ethical values of the accounting and auditing profession.