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IRBA CEO Addresses Zimbabwe Accountants

Conference (ZAC2018) on Ethics

Regulators and institutes across the region need to employ

consolidated efforts to restore the reputation of the profession,

said IRBA CEO Bernard Agulhas while addressing delegates at the

annual Zimbabwe Accountants Conference (ZAC2018) hosted by

the Public Accountants and Auditors Board (Zimbabwe) in Harare.

Recent scandals involving accountants and auditors have

negatively affected the reputation of what has until now been a

trusted profession, and current woes are pointing to a corrupted

system that is failing in the protection of the public. Zimbabwe,

much like South Africa, is faced with a number of scandals involving

the auditing profession.

“Audit and accountancy practices have to walk a tight rope between

profitability and professionalism. Part of the problemmay well be that

in the pursuit of commercialism the risk of compromising professional

and ethical principles has increased. Too much attention on the

bottom line and weak corporate ethics have left audit firms faced

with bad press, loss of faith in the profession, destroyed reputations

and public images, and disempowered stakeholders. The impact

on investors and the public has been significant, and for countries

that are seeking foreign direct investment, a recommitment to

sound corporate ethics is absolutely essential,” said the CEO.

Regulators must insist on higher ethical and behavioural standards,

must push for more transparency and ensure that conflicting

interests, independence and the dangers of unconscious bias are

addressed, he said. “It’s not only about technical compete

ncy and

improvement – there must be a change in auditor behaviour.”

The CEO also emphasised the importance of the “tone at the top”,

a concept that has long existed in the auditing standards, but

which the leadership in corporations and firms appear to have long


Standard-setting Reform on Greater Independence

and Enhanced Public Interest Focus Welcomed

The IRBA has welcomed the publication of the feedback from The

Monitoring Group’s initial consultation process into strengthening

the governance and oversight of the international audit-related

standard-setting boards in the public interest. The IRBA is in

support of reforms that will see the global standard-setting boards

increase their independence from the profession, become more

representative of the ultimate beneficiaries of high audit quality and

boost the public interest focus in the work of standard setters.

Published on the 11th of June, the paper outlines the feedback

received from 179 respondents representing audit firms, the

International Federation of Accountants (IFAC) and its member

bodies, national standard setters, public authorities (including

regulators), academia, users, investors and the international

standard-setting boards themselves. In general, given the increasing

focus on independence and the public interest role of auditors, the

Monitoring Group has indicated that there is sufficient broad support

for reform for it to embark on the next step. It will now develop

a White Paper around global standard-setting reforms, which will

include proposed solutions, funding and transitional arrangements

for a consultation process by the end of this year.

The appetite for reform reflected in the preliminary stakeholder

consultation results is encouraging. While there is resistance and

some opposition to some areas proposed in the consultation

paper, these do not detract from or discount the importance of

independence and public interest. Concerns seem to revolve more

around practical implementation issues.

“We are not saying that current international auditing standards

are not relevant or appropriate. However, it is our view that reform

in pursuit of stronger public interest is key in efforts to restore

confidence in the profession. In the setting of global auditing

standards, we believe that it is increasingly important that the

interests and expectations of the ultimate beneficiaries of high-

quality audit services must be considered,” said the CEO.

“We must aim to strike the right balance between the needs of

the users of financial information and the due process, including


ss, in responding to those needs.”

During the process, stakeholders (investors in particular) raised the

concern that developing auditing standards in the public interest

will be challenging without the sufficient representation of investors,

asset managers and analysts in the standard-setting process. The

current standard-setting boards are seen, whether real or perceived,

to be dominated by the profession itself.

Just as audit regulators worldwide have sought to increase their

own independence from the profession, limiting the influence of

auditors in the oversight of auditing should be the next logical step

to secure the independence of standard setters. The independence

of the rule-makers needs to be secured to ensure that the resulting

auditing standards respond sufficiently to the stakeholders and

users’ expectations and are able to enhance audit quality in the

public interest. This, in turn, will secure confidence and trust in

standards, audits and financial information.

Issue 42 | April - June 2018