South Africa’s Independent Regulatory Board for Auditors (IRBA) has refocussed its strategy with the aim of enhancing audit quality and to address gaps in the audit profession and the broader financial reporting ecosystem.
The South African audit profession has faced a number of challenges in recent years following several high-profile corporate and audit failures. IRBA addressed its new strategy in a letter to the National Treasury, in which it highlighted that, despite the challenges of recent years, there is broad consensus that auditors remain a key stakeholder in protecting the interests of the investing public and are an important contributor in attracting ‘much needed’ investments into the country.
Last month, Jenitha John resigned as CEO and Imre Nagy was appointed as acting CEO along with a caretaker board.
Nagy said: “We have just completed a review of our five-year strategy, which has been approved by the Caretaker Board and submitted to National Treasury in February. It takes into account Covid-19 and the corporate and audit failures which have continued to plague corporate South Africa. Our focus will be on audit quality, sustainability and relevance of the regulator and the profession, as well as comprehensive stakeholder engagement with the view to promote broader reforms.
“We cannot rebuild trust in financial reporting and regain confidence in the financial markets, until we have improved audit quality and taken significant steps to transform and innovate the financial reporting environment, the audit profession and the audit regulator.
“Consequently, where reform is within our mandate, we aim to apply further strategic measures to improve confidence in audits and the profession, and we will commence this process by seeking some quick wins together with stakeholders, especially around improved audit quality, transparency and communication. Where gaps exist in the broader reporting environment that negatively impact audit quality, we will offer recommendations for improvements or policy changes, whether this may be with the support of our immediate stakeholders or with the assistance of National Treasury and Parliament.”
Nagy continued: “The IRBA is fully committed to returning to its restoring confidence projects and taking stock of what we have achieved since early 2018 and what more still needs to be achieved. Some significant projects that are well advanced are Mandatory Audit Firm Rotation (MAFR), Audit Quality Indicators (AQI) and the imminent promulgation of the Auditing Profession Amendment (APAA) bill which will give the IRBA strengthened powers of investigation, simplify disciplinary processes, increase sanctions and ensure we have a Board that is independent of the profession.
“We aim to launch a robust Restoring Confidence 2.0 initiative, underpinned by our refocussed 5-year strategy and budget, within the next few months.”