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Issue 35 | July-September 2016



I wish to welcome Robert Zwane to the management team of the

IRBA, in his new role of Director Education and Transformation.

Robert has been with the IRBA for the past few years and has

been instrumental in driving the Audit Development Programme,

which is the IRBA’s response to the dynamic environment in

which auditors operate. He is also a key role player in driving the

IRBA’s transformation in the profession through his engagement

with students, who represent our pipeline and the future of the

profession. He is already a known figure in the International

Federation of Accountants (IFAC) community in his position as

technical advisor to the South African member on the International

Accounting Education Standards Board (IAESB) of IFAC, and

we look forward to his further contribution to maintain auditor

competencies in support of high audit quality.

The key strategic activity from our Four Pillar Strategy that the

IRBA has been working on this year has been the project to

strengthen auditor independence.

The independence of auditors from their clients and the

independence of the regulator are strategic priorities. With so

many state entities and regulators under potential threat of state

or regulatory capture, we have been alert to such threats and

diligently continue to maintain our own independence, while

considering measures to strengthen auditor independence which,

in turn, must ensure reliable reporting.

You would be aware that the Board took a decision to implement

Mandatory Audit Firm Rotation at its July 2016 meeting, and this

was communicated to the Minister of Finance.

Commenting on the implementation, IRBA Chairman Rene Kenosi

says: “Investors and the public are demanding more information

and transparency and have become more aware of their rights,

which need to be protected. The work of the International

Integrated Reporting Council (IIRC) and others is advancing a

‘new normal’ among investors and the public that requires of

companies and auditors increased transparency, honesty and

reporting that is more accessible than ever before.

“Furthermore, the tolerance for corruption is decreasing, while the

demands for accountability and responsibility are on the rise.

“These developments,

inter alia,

have increased demands on

auditors to be more independent and have led to increasing

sanctions worldwide against those who do not report irregular

activities. They have also led international role players, including

the European Union, to implement more robust measures with

the aim of enhancing the independence of auditors; and for

respective audit regulators to increase efforts to avoid regulatory


It therefore became crucial for the IRBA to implement measures

that would ensure the independence of auditors and it is in

the context of ensuring that the IRBA addresses the impact of

global developments, and contributes meaningfully to these

conversations, that this initiative commenced.

Without the required independence, investors cannot have the

assurance that the opinion expressed by the auditor is appropriate

in order for them to take economic decisions; and while the IRBA

must respond to stakeholder inputs, it ultimately has a statutory

obligation to protect the investing public.

On the international front, in a positive development for audit firms

and their global clients with shares listed on the Johannesburg

Stock Exchange, the IRBA has received confirmation that its

application for recognition as an equivalent competent authority

(ECA) under the European Union (EU) legislation – which came

into effect on 17 June 2016 – has been approved.

This recognition of adequacy means that the IRBA meets the

EU Commission’s standards for public oversight of statutory

auditors and audit firms and that its quality assurance reviews

and investigations are sufficiently comprehensive to meet the

standards of the Commission when it comes to the exchange of


Importantly, this means that during a process of review and

inspection, where portions of the audit were conducted in this

country, firms would not be subject to additional inspections of

their working papers by member state statutory oversight bodies,

where the IRBA has successfully concluded an agreement with

that oversight authority. By reaching a reliance on each other’s

oversight systems, the transfers of audit working papers or

other documents held by statutory auditors of audit firms and of

inspection or investigation reports would not be necessary, but

become the exception rather than the rule.

The adequacy assessment deals withmatters such as cooperation

in practice, obstacles to cooperation and exchange of information,

which now also includes inspections findings, where applicable.

The other regulatory bodies recognised in the decision include

those of Brazil, Dubai, Guernsey, Indonesia, Isle of Man, Jersey,

Malaysia, South Korea, Taiwan and Thailand.

We also welcome the news that South Africa has been ranked

yet again as the world’s number one for auditing and reporting

standards, making it the seventh consecutive year that the

country holds this position. On this achievement, Ms Kenosi says:

“South Africa relies very much on external capital and one of the

important components of creating an environment where foreign

direct investment (FDI) can occur is a well-regulated and reliable

capital market. This results in a reputable audit profession, which

provides potential investors and capital providers with reliable and

credible financial information on which investment decisions can

be made.” Equally, public confidence in any profession depends

on the quality and robustness of the oversight.