The World Bank recommended South Africa should pass legislation to create a regulator of the accounting profession and its organisations, which are currently self regulated in its second Report on the Observance of Standards and Codes – Accounting and Auditing (ROSC A&A).
The newly created body would be responsible for defining and categorising the education and training requirements of accountants, accrediting, registering, monitoring and sanctioning the professional accountancy organisations, creating awareness of the qualifications of all accredited professional accountancy organisations and supporting the various professional accountancy organisations.
It called for the requirements in the current Auditing Profession Act to be incorporated into the proposed legislation.
The report suggested UK Financial Reporting Council (FRC) as a possible source of inspiration for such a move, which is in line with what Independent Regulatory Board for Auditors (IRBA) chief executive Bernard Agulhas told The Accountant in August.
The ROSC A&A also recommended IRBA’s resources and capacity should be expanded, its funding model should be stabilised and that it’s inspection methodology and the independence of its inspection investigation committees should be strengthened in line with international good practise.
In order to improve independence and rigor, the ROSC A&A also called on the IRBA disciplinary committee’s maximum monetary penalty to be increased and for practising auditors to be banned from the committee.
It is expected that the South African government will now decide whether it extends the regulation of auditors to the greater South African profession formed by approximately 50,000 professionals from various accounting bodies.
Currently only 4,500 IRBA registered auditors are subject to regulatory oversight.
Additionally, the report was positive on the state of accounting in South Africa, and it said reforms implemented in the past decade had strengthened financial reporting, and that professional accountancy organisations had continued to contribute to improved accountants.
It also noted that, while the number of auditors in the country has remained similar for the past decade, the gender and racial representation of professional accountants has improved.
UK FRC could inspire South Africa’s accounting regulation
Independent Regulatory Board for Auditors