Audit regulator sinks its teeth into its biggest case, Deloitte's Abil audit
Public disciplinary hearings into Deloitte’s audit of African Bank Investments Limited (Abil) began on Monday, in what is the biggest case the Independent Regulatory Board for Auditors (IRBA) has handled since its formation in 2006.
The hearings come at a time when audit firms are subject to intense public scrutiny over their role in endorsing the financial statements of companies subsequently implicated in unlawful or unethical practices.
The audit regulator, which was formed out of the Public Accountants and Auditors Board, is investigating KPMG for its audit work on Gupta-family companies and the South African Revenue Service.
IRBA is also reviewing Deloitte’s audit files on Steinhoff for 2014 to 2016.
Its investigation into Deloitte’s audit of Abil — which ceased to exist after its banking arm, African Bank, collapsed under a mountain of bad debt in August 2014 — dates back more than three years to December 2014.
With 150 investigations under way, the board [does] not 'have the luxury to drag out every case'Bernard Agulhas
It culminated in Monday’s disciplinary hearing, the first hearing open to the public in recent years.
The entire day was spent on arguments that centred on disagreements between IRBA and Deloitte over the dates on which later hearings into the matter are to take place.
This left IRBA no time to bring its charges, numbering 10, against Deloitte.
Counsel for Deloitte, advocate Michael van der Nest, said the regulatory body’s "high-handed" approach in setting down dates for hearings in June and July, at a time when a number of Deloitte’s witnesses and senior counsel were not available, was unreasonable.
The six-member independent disciplinary committee, chaired by advocate Alan Dodson, upheld this submission.
While the committee paid heed to public calls for swifter regulatory action, it decided it would be procedurally unfair for hearings to proceed when key Deloitte representatives would be unavailable.
IRBA was disappointed with the postponement, said CEO Bernard Agulhas. With 150 investigations under way, the board did not "have the luxury to drag out every case", he said.
"We will never deliver on our mandate if every case is postponed. In the current environment, there is so much interest in the audit and accounting profession. It is important to show the public that we’re taking steps to address the issues."
The Myburgh commission, set up by the Reserve Bank to investigate the reasons behind African Bank’s collapse and headed by John Myburgh SC, made no adverse findings against Deloitte.
The IRBA hearings, for which 27 days have been set aside in 2018, will resume on Friday.