Irba extends probe into Deloitte’s role

The Independent Regulatory Board for Auditors (Irba) has extended its investigation into the role of Deloitte in the auditing of Steinhoff’s financial statements back by two years to 2012.

The investigation will now extend from 2012 to 2016, the period during which Steinhoff had its primary listing in SA.

The probe is likely to take about three years and will depend crucially on the outcome of the PricewaterhouseCoopers (PwC) investigation of allegations of accounting irregularities by the global retailer. This investigation is expected to be finalised only by the end of 2018.

Irba, PwC, the JSE, the Companies and Intellectual Property Commission and the Hawks appeared on Wednesday before four parliamentary committees — finance, public accounts, trade and industry and public service and administration — for a hearing on the Steinhoff debacle.

The decision to extend the probe into Deloitte was based on information received, Irba director of standards Imran Vanker told MPs.

Irba will evaluate the conduct of Deloitte against Irba’s auditing standards and ethics.

Vanker said the audit evidence in the audit file would be examined with a fine toothcomb and measured against what was expected of an audit.

Irba would also evaluate whether Deloitte had responded appropriately to the risks identified within the Steinhoff group.

For example, Irba will, among other things, look at whether Deloitte dealt with off balance items in a manner consistent with accounting standards; whether its valuations were fair; and whether its business model was interrogated for appropriate risks.

JSE CEO Nicky Newton King told MPs the JSE was looking into whether it needed to strengthen regulatory requirements of listed companies in the light of the Steinhoff affair. The moment was appropriate, she

said, to examine whether refinements were needed, particularly with regard to corporate governance.

This could range from a requirement for companies to consider, without prescription, strengthening the diversity of their boards of directors to the role of boards in oversight.

In this regard, the JSE could perhaps give guidance on the types of questions boards should ask of management to ensure robust oversight.

Also under the spotlight could be the role of pension fund trustees and big shareholders, and whether the JSE should be a lot more prescriptive about shareholders having a right to appoint board members rather than being dependent on a slate of board members as proposed by the board itself. “These are the kind of refinements we are considering internally and talking to stakeholders about,” Newton-King said.

The Financial Services Board (FSB) is investigating four cases in relation to alleged irregularities committed by Steinhoff, the leader of the investigation team of the FSB’s directorate of market abuse Alex Pascoe said. These related to alleged insider trading and allegations of making false statements.

The heads of the four committees felt the regulators could have done more, especially the FSB.

“We recognise that investigations of the sort into Steinhoff are complex, difficult, elusive and take considerable time to complete.

“While there has been some progress by the regulatory bodies in their investigations of the Steinhoff matter since our first meeting in January, we feel more should and can be done more expeditiously, especially by the Financial Services Board,” they said.

THE JSE COULD PERHAPS GIVE GUIDANCE ON THE QUESTIONS THAT BOARDS SHOULD ASK OF MANAGEMENT TO ENSURE OVERSIGHT