Irba raises alarm over skills flight after Treasury’s austerity move

The Independent Regulatory Board for Auditors (Irba) has warned that a moratorium on executive remuneration changes and bonuses enforced by the Treasury as part of government-wide cost-cutting measures is putting the entity at risk of losing key personnel while the watchdog ramps up its regulatory role in the key industry.

The regulator said in its annual report that its shoestring budget amid its expanding role is becoming a challenge.

“A moratorium on executive remuneration and bonuses imposed by National Treasury, could see Irba facing the risk of losing senior executive staff who are key in the effective execution of its regulatory functions, if not resolved,” the entity said.

“It remains of critical importance for Irba to attract and retain competent professional and administrative employees by offering competitive market-related salaries, bringing remuneration levels in line with the industry benchmark and aligning baseline costs for positions at the same grade, while remaining committed to managing employee costs in a responsible and fair manner.”

The moratorium requires any proposals for changes to the remuneration of Irba’s executive management be approved by the minister of finance before they can be implemented.

Irba CEO Imre Nagy told Business Day that the moratorium, which has been in place since 2019, will remain in place for the 2023/24 financial year in support of the Treasury’s efforts to contain costs.

“Irba is complying with the guides on general cost containment on expenditure issued by the National Treasury. Some examples include limiting new headcount, limiting training expenditure and cutting team building expenditure,” Nagy said.

“Furthermore, in budgeting for the next financial year, Irba is allowing for only a 4.8% inflationary increase on operating costs. While we expect ongoing financial and resource constraints in the coming years, we are committed to innovate and adapt to ensure that we continue to strengthen the profession and our role in it.”

Finance minister Enoch Godongwana said in the annual report that the changes in the country’s fiscal position and the increased risks outlined in the budget speech earlier in 2023 have become a reality.

“Despite the resource constraints faced by Irba during this period, as well as limitations and mounting demands on the government to do more to make a difference in the lives of our people, Irba has managed to fulfil its mandate and achieved its performance targets,” Godongwana.

“The results of this hard work are starting to show, as evidenced by the improved speed at which errant auditors are being held to account and the commendable work on developing future auditors.”

Irba said it is looking at alternative models to supplement the funding it receives from a government grant, prescribed fees and levies from registered auditors and firms. The watchdog has embarked on a priority project to conduct a business analysis and formulate proposals for a revised funding model.

khumalok@businesslive.co.za