INDEPENDENCE AND REPORTING STANDARDS
Forum’s arguments against audit rotation do not stand up to scrutiny
The high cost and loss of institutional knowledge are not the threats the chief financial officers’ organisation imagines, writes Simon Mantell
The proposal by the Independent Regulatory Board for Auditors (IRBA) for mandatory audit firm rotation for listed entities has attracted significant criticism from the CFO Forum, which represents the chief financial officers of major JSE-listed and state-owned companies. Mandatory audit firm rotation comes at a time when issues of audit independence, the maintenance of audit and reporting standards and transformation represent key touch points for the profession. Audit independence is carefully enshrined in all laws governing the profession and remains the bedrock of the profession’s reputation — it is a nonnegotiable if the report of the auditor is to remain relevant for all users of financial statements. Before considering some of the concerns raised by the CFO Forum, attention must be drawn to a number of issues that are unique to the audit profession, including the requirement that the profession must schizophrenically serve numerous "masters" — all users of financial statements...
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