‘Blame greed’
The rot in the auditing and accounting profession was laid bare during a recent round table discussion between regulators, industry bodies and Corruption Watch.
The root cause of the problems was attributed to “pure greed and corruption”.
Firms including KPMG, Hogan Lovells McKinsey have been embroiled in “state capture” scandals, revealing shortcomings in the local regulatory and oversight models.
The South African Institute of Business Accountants (Saiba) organised the round table to explore the state of the profession, what led to the current crises and likely outcomes.
Corruption Watch’s David Lewis said it cannot be attributed to a few errant auditors and accountants.
“When a firm has to fire eight members of its executive team to clean up, you do not have a bad apple problem. You have a bad barrel problem. The corruption landscape for the past decade has been dominated by … hoodlums or criminals who hitched up with criminals in government ... reaping public resources.”
Lewis said when proceeds of that scale have to be hidden, you need the help of auditing firms, managing consultants and even lawyers. “The reform focus is now directed at these principle facilitators of grand scale corruption.”
The auditing profession’s watchdog – the Independent Regulating Board for Auditors (Irba) – believes auditors are not sufficiently independent and are driven by lust for money. “Professionalism has been taken over by commercialism. Partners at the firms are measured on the revenue they generate and the clients they attract to the firm,” said Irba’s Bernard Agulhas.
Instead of being watchdogs, auditors and accountants now have “suits as sharp, their headquarters as opulent and their salaries as large” as businesses.
Agulhas called for a mandatory audit firm rotation to address concerns around independence.