Sixty forensic auditors have been working full-time since early 2018 to untangle the implications of the Steinhoff accounting scandal, which spans 700 individual entities and 30 jurisdictions. They might – just might – finish by the end of the year.
That tells you everything you need to know about the environment in which auditors are working, believes John Ford, Associate Professor at the Gordon Institute of Business Science. And this, in turn, offers insights into the profession’s sudden fall from grace. “You’re looking at 60 man-years of forensic auditors [in the Steinhoff probe], so how does a regular auditor even begin to assess what’s going on?” he asks.
Yes, the auditing profession in SA is certainly under fire, but that’s indicative of a broader, global malaise.
In April this year, Auditor-General Kimi Makwetu declared: “Theoverall credibility of the auditing and accounting profession in SA is in the gutter. We need to look at the bigger picture and what it’s doing to all of us, as auditors and accountants.” The likes of the SA Institute of Chartered Accountants (SAICA) and the Independent Regulatory Board for Auditors (IRBA) have certainly done that, owning up to the deficits in the profession and acting to restore trust in it.
In 2017 the IRBA submitted amendments to the Auditing Profession Act of 2005, seeking to strengthen possible sanctions and increase its investigative powers. The next step is submission to Cabinet.
The SAICA is setting up a compliance unit “as an additional resource to the investigation and disciplinary team”, says Willi Coates, Senior Executive: Brand at the institute. “To ensure transparency and rebuild public trust in the profession, we’ve also amended our by-laws to permit the issuing of public statements by our CEO regarding the institution of any complaint, investigation or action against a member once a draft charge sheet or a charge sheet has been issued to that member, or once such complaint, investigation or action is – in the opinion of the CEO – in the public interest.”
These changes haven’t been without criticism. In June this year, Chantyl Mulder – the SAICA’s Executive Director: Nation-Building – noted during an interview with CNBC Africa that the body had been reproached for taking too long to respond to challenges in the sector. “We don’t react to criticism in the media,” she added. “As a professional organisation, the SAICA appreciates and takes time to evaluate input and criticism from its members and stakeholders. We then deliberate and decide what needs to be done on a professional basis.”
Similarly, queries to individual auditors and accountants working in the sector were met with responses such as: “All our media statements are dealt with by a specific team, so I can’t comment.” Despite attempts to stage-manage responses in the midst of widespread criticism, the sector as a whole has seemingly turned its attention inward, berating itself for its shortcomings and seeking to respond. The SAICA has done so by promoting conversations and pushing education and training.
But will this really solve the problem? Ford thinks not.
