New bill proposes more powers for auditing sector

Amendments to the law governing the auditing profession could give the regulator powers enjoyed by select law-enforcement agencies.

The bill which the National Treasury introduced to parliament had striking changes compared with the one published in August 2018. It is proposed to give the Independent Regulatory Board for Auditors (Irba) the power to enter and search premises when investigating auditors for improper conduct.

In the first draft it was proposed only to give the Irba powers to subpoena any person with information required to complete an investigation. This, the Treasury said, was due to auditing firms not co-operating when the Irba investigates auditors. The new proposed amendment followed public consultation which started in 2018.

Irba chief executive Bernard Agulhas said the regulator experienced difficulties in gathering the evidence, audit files and correspondence it required for its investigations. “This led to the investigations being lengthy due to unnecessary delays,” he said.

Agulhas said it was the National Treasury that proposed giving the Irba power to search and seize evidence.

In the 2017-2018 financial year, the Irba initiated 112 new investigations and only 60 cases were finalised. High-profile cases investigated by the regulator include two Deloitte partners who were in charge of African Bank audits before its 2014 collapse. They still face disciplinary hearings.

The Irba also finalised the investigation and disciplinary hearing of a former KPMG partner who was responsible for the audits of Linkway Trading last year. It is now investigating another KPMG partner who was the lead auditor for VBS Mutual Bank.

“The proposed amendments will go a long way in rebuilding the public trust. The amendments come at a critical time when attempts to regain confidence from the public and investors, and the prevention of further losses of hard-earned savings can no longer be compromised,” said Agulhas.

The proposed changes will go a long way in rebuilding the public trust