Amendments to listing on JSE ‘will bring clarity’
Confusion exists among auditors who say the independent regulatory board hampers transformation
Opportunity for public comment on amendments to the JSE’s listings requirements – including sections on auditor accreditation – closed on Friday. The changes should address confusion among auditors who believe the Independent Regulatory Board of Auditors (Irba) is blocking the accreditation of new audit partners and hampering transformation in the process, Irba CEO Bernard Agulhas said on Sunday.
Public comments on amendments to the JSE’s listings requirements — including sections on auditor accreditation — closed on Friday.
The amendments should clear up confusion among auditors who say the Independent Regulatory Board of Auditors (Irba) is blocking the accreditation of new audit partners and hampering transformation, Irba CEO Bernard Agulhas said on Sunday.
The board is fighting an uphill battle to implement mandatory audit-firm rotation that it says would tackle auditor independence, which has been watered down due to the same auditing firms serving the same clients for decades. It would also give smaller black-owned firms an opportunity to audit JSE-listed companies. The board has been accused of delaying accreditation for audit partners to sign off on JSE-listed companies’ financial statements.
As few as nine black audit partners were signing off on 350 JSE-listed company financial statements, with 255 white auditors getting the lion’s share of the work.
Agulhas has expressed dissatisfaction with this, and said there should be more black audit partners, as half of the partners at the big four auditing firms — PwC, KPMG, EY and Deloitte — are black.
Agulhas recently told Parliament the big four dominated the auditing industry, accounting for 96% of the audits conducted at listed companies.
Yunus Carrim, chairman of the standing committee on finance, plans to hold public hearings on the issue in 2017.
But the Irba stopped its involvement in accrediting audit partners for auditing JSE-listed firms in June 2016.
“The audit firms apply to the JSE to have their individual partners accredited,” said Agulhas.
“The JSE will then use their criteria, which includes the Irba inspection result after we inspect an auditor, to accredit the auditor.
“The JSE is in the process of changing their accreditation requirements and exposed their new process for comment,” Agulhas said.
The JSE is proposing amendments to its listings requirements to place less reliance on the Irba’s inspection reports.
This comes after the regulator experienced a high number of requests from auditors seeking accreditation from the JSE that was worsened by the bourse’s introduction of a new accreditation model for debt issuers and the mandatory rotation of audit partners.
“The Irba continues to face challenges in responding to the increasing number of requests from auditors to be inspected for the purposes of our accreditation system,” the JSE said on releasing its proposed amendments in November.
The Irba’s inspections department said in June 2016 it would no longer conduct inspections specifically for accreditation purposes.
The JSE has proposed that audit firms seeking accreditation for the first time should obtain a certificate from the Irba. Firms seeking continued eligibility only need to provide Irba reports of inspections conducted in the normal course of the regulator’s duties to the JSE.
A partner seeking accreditation only needs to provide an internal monitoring inspection conducted by their firm while the partner is executing their duties, and needs to have a spotless record with the Irba dating back at least 30 months before the application.
AS FEW AS NINE BLACK AUDIT PARTNERS WERE SIGNING OFF ON 350 JSE-LISTED COMPANY FINANCIAL STATEMENTS