IRBA investigation into Steinhoff auditors will recommence once restated financials are released

Johannesburg, Tuesday, March 19, 2019 – The Independent Regulatory Board for Auditors reports that its investigation into the auditors of Steinhoff will rely on the publication of Steinhoff’s restated financials and noted with concern the allegations contained in the PwC forensic investigation report regarding the nature and extent of the corporate fraud allegedly perpetrated by a small of group of executives and related parties, potential accounting irregularities and potential non-compliance with laws and regulations.

The IRBA investigates whether auditors complied with international auditing standards, e.g. audit work on related parties, and the IRBA Code of Ethics, for example, the exercise of professional scepticism by the auditor.

Says Bernard Agulhas, CEO of the IRBA: “For clarity, our investigation is not into the company or the directors implicated in the allegations in the PwC report. Our investigation, which commenced in December 2017, is into Deloitte South Africa who had signed off on the group consolidated financial statements up to 2015. We have received the audit files for 2014, 2015 and 2016. Being able to conclude our investigation into the audits is reliant on the publication of the restated figures for the 2015 and 2016 financial years.”

However, the IRBA will be requesting the full report and annexures where these relate to the audit of Steinhoff and to accounting irregularities. It will identify the areas of the report which it wishes to pursue for further investigation, bearing in mind that certain of the allegations may pertain to off-shore acquisitions and transactions, which may have been audited by a foreign audit firm over which IRBA does not have jurisdiction.

Says Agulhas: “We are pleased with Steinhoff’s commitment to work with regulators and trust that we will be provided with access to the PwC report.”

Agulhas highlighted some of the initiatives which the IRBA is undertaking to strengthen oversight, equip audit committees and close gaps in enforcement. These include:

• Comprehensive Regulation over other role players in the financial reporting chain
• Strengthening of audit committees through Audit Quality Indicators and Transparency Reporting
• Strengthening independence and professional scepticism through Mandatory Audit Firm Rotation
• Engaging with the JSE Ltd on regulation around secondary listings
• Concluding Memoranda of Understanding and adequacy assessments with the United States regulator and European Union, which includes sharing of information
• Amendments to the Auditing Profession Act to close gaps in enforcement, and
• Continued engagement with National Treasury to provide the IRBA with more capacity and funding.

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More about the IRBA:

The IRBA is a public protection statutory body established to protect the financial interests of the public by ensuring registered auditors and their firms deliver services of the highest quality. It upholds audit firm independence to ensure that audit quality is such that it enhances the accuracy and credibility of financial performance reporting. In this way, the IRBA has an important role to play in building the reputation of South Africa as an investment market for both local and global investors and driving economic growth for the country.

The IRBA also registers suitably qualified accountants as auditors, who must adhere to the highest ethics standards, and promotes the auditing profession through the effective regulation of assurance conducted in accordance with internationally recognised standards and processes.