ON THE MONEY
STUART THEOBALD: Audit rotation is more than just swings and roundabouts
TEMPERS are flaring over the introduction of compulsory audit firm rotation. The idea is that companies will have to switch audit firms regularly, probably every 10 years. The Independent Regulatory Board for Auditors (IRBA) has taken the decision to implement the new rule; it is now working on just how to do it. But the large audit firms and some big JSE-listed companies are trying their best to have the decision rolled back. Inevitably, when people work together for a long time, relationships develop. The ability of an auditor to maintain a truly independent stance is compromised. I can’t see that there can be any way to protect against this other than audit rotation. It has been implemented in several other countries. Audit firms have taken one small step locally, which is to rotate the lead partner on the audit every five years. However, there is not a single example of the rotation of the partner resulting in problems coming to light. The rotation of audit firms, however, does ...
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