Home Media Releases 11 November 2009

11 November 2009

Number of irregularities reported to IRBA rises.

 

Media release from the Independent Regulatory Board for Auditors

 

11 November 2009

 

Bad news for white collar crime - number of irregularities reported to IRBA rises

 

According to figures just released by the Independent Regulatory Board for Auditors (IRBA), auditors notified them of  857 Reportable Irregularities in the period 1 April 2009 to date, with 4 months still to go in this financial year. This is fast approaching  the number notified in the previous financial year April 2008 to March 2009 (1130).

 

The Auditing Profession Act of 2006 requires auditors registered with the IRBA to report irregularities which meet the definition of a reportable irregularity to the IRBA. The previous Act referred to RIs as ‘material irregularities’.

 

Bernard Agulhas, CEO of the IRBA says, “We believe the rise in RIs is indicative of the fact that auditors have become  increasingly  aware of the consequences of not reporting, but could also be the result of an increase in white collar crime.  This is good news as far as reporting is concerned, as RIs form part of larger initiatives to eradicate commercial crime and other unlawful activities and to encourage a culture of compliance in the country. Hopefully it’s bad news for white collar criminals.”

 

Agulhas said, “One of our recurring queries from auditors is whether or not they may notify clients if they find an RI. The guidance issued by the IRBA is clear on this: first the auditor must consider whether it constitutes a potential RI or not. If it is a potential RI, then they may discuss it with the management of the client before sending a first report to the IRBA. The auditor then has 30 days in which to confirm to the IRBA whether or not it was in fact an RI. If it then turns out not to be an RI, we close the file. If it does turn out to be an RI, we report the matter to the relevant regulator. It would be useful if the other regulators provided regular feedback to the IRBA on the actions they had taken when we report an RI to them, and the IRBA continues to encourage regulators to monitor and report progress with any investigations they may institute as a result of RIs reported to them.”

 

The IRBA issued a guide to assist auditors to have more clarity regarding important matters such as who has the responsibility to report, when an irregularity is reportable, the process which should be followed, interpretations of what constitutes management and the impact on the audit report.

 

“A registered auditor who does not apply the guidance in this guide should be prepared to explain any deviation from such guidance and how the objective of the Auditing Profession Act has been otherwise achieved,” Agulhas said.

 

ENDS

 

Prepared by: FD South Africa, Dani Cohen, 021 487 9000 / 082 897 0443

 

On behalf of: The Independent Regulatory Board for Auditors (IRBA)

 

Further Information: Bernard Agulhas, CEO, IRBA 087 940 8797