STANDING COMMITTEE ON FINANCE
Push to transform auditing sector
Chairman of the standing committee on finance Yunus Carrim says transforming the auditing profession is non-negotiable
Transforming the auditing profession is non-negotiable and has to be placed more robustly on the agenda, says chairman of the standing committee on finance Yunus Carrim.
The issue emerged as a key one during public hearings on the decision by the Independent Regulatory Board for Auditors (IRBA ) to introduce mandatory audit firm rotation. This decision has been criticised for not being well thought out or researched.
Criticisms came from the Reserve Bank, Ernst & Young Africa CEO Ajen Sita and PricewaterhouseCoopers (PwC) CEO Dion Shango.
"We are telling you, you have to move faster," Carrim said to industry representatives.
IRBA has also raised its concerns over the slow pace of transformation, with CEO Bernard Agulhas insisting transformation has to move beyond numbers and begin to empower black accountants and black-owned auditing firms.
This included providing them with equal opportunities to access the audit market.
His views were supported by Association for the Advancement of Black Accountants of Southern Africa president Gugu Ncube, who said mandatory audit firm rotation could provide an opportunity to achieve transformation, though on its own would not do so.
Most critics disagreed, saying rotation will continue to take place among Deloitte, KPMG, PwC and Ernst & Young. SizweNtsalubaGobodo CEO Victor Sekese, also the interim chairman of interest group the Black Chartered Accountants Practitioners, supported mandatory rotation as a way of black firms getting access to private sector audits, levelling the playing field and lessening the concentration of the market.
A major challenge, he noted, was the demand by banks and financial institutions that their clients be audited by one of the big four firms.
Sita, also chairman of the Thuthuka Education Upliftment Fund, suggested measures to accelerate transformation, including reviewing the current model that required chartered accountants to train for 12-15 years before becoming partners. He also suggested reviewing the ownership models of audit firms to create space for new entrants; provide support for small-and medium-sized black firms; and encourage the private sector and listed companies to make greater use of black companies.
Agulhas said in the past the lack of progression of young black professionals to the highest level in audit firms was explained by the assumption that many young black accountants complete their traineeship and leave auditing for more lucrative roles in the government, the corporate sector or to explore entrepreneurial opportunities. This, he said, was cited as a challenge for the sector in its transformation initiatives.
"The harsh reality is that of the 4,283 registered auditors in South Africa, 74.8% are white and only 10.5% are black African. More focus should be given to long-term career prospects, including equity partnerships and senior management and executive responsibility. "