HIGH STAKES AS IRBA ‘RE­VIEWS’ CEO HIRE

Financial Mail - - EDITORIALS -

If you were in any doubt about how crit­i­cal the au­dit­ing in­dus­try is, the FM’S cover story on page 22 de­tails how the pro­fes­sion was in­stru­men­tal in so much of the cor­rup­tion that has robbed SA’S cit­i­zens of their wealth. SAA is just one ex­am­ple. De­spite flaws iden­ti­fied by pre­vi­ous au­di­tor Deloitte, PWC and Nkonki took over as au­di­tors in 2012 and re­ported that ev­ery­thing was in tip-top shape. It was only in 2017, when the au­di­tor-gen­eral took over SAA’S au­dit, that it picked up that PWC and Nkonki had some­how missed eight ma­jor mis­state­ments over the pre­vi­ous years.

So who do peo­ple com­plain to in cases like this? Irba — the In­de­pen­dent Reg­u­la­tory Board for Au­di­tors. In the case of SAA, Irba found that PWC had “failed to dis­close non­com­pli­ance with leg­is­la­tion” and hit it with a R200,000 fine.

How­ever, Irba it­self — the fi­nal port of call for those who’ve been stiffed by au­di­tors — finds it­self at a crit­i­cal junc­ture. Bernard Agul­has, who had been CEO for 12 years and led the (seem­ingly in­ter­minable) case against Deloitte for its han­dling of the African Bank au­dit, left this week af­ter his con­tract wasn’t re­newed.

Jenitha John was picked as Irba’s new CEO from a list of 267 can­di­dates, and has been in the role for a month. How­ever, John’s bag­gage is that for nine years un­til last May, she headed the au­dit com­mit­tee of sugar com­pany Ton­gaat Hulett which over­saw one of SA’S worst-ever ac­count­ing scan­dals, where ev­ery­thing from the value of the sug­ar­cane in the fields, to its ex­penses, turned out to be wrong.

This is why the Or­gan­i­sa­tion Un­do­ing Tax Abuse (Outa) lob­bied fi­nance min­is­ter Tito Mboweni last month to “re­view” John’s ap­point­ment, ar­gu­ing that it was “highly in­ap­pro­pri­ate”. The only prob­lem: the Irba board which ap­pointed her had fin­ished its term on May 9.

Fi­nally, Mboweni last week ap­pointed a new Irba board, whose first or­der of busi­ness will now be to “re­view” John’s ap­point­ment.

The new ap­pointees in­clude for­mer JSE pres­i­dent Roy An­der­sen, for­mer MMI Hold­ings fi­nance di­rec­tor Pre­ston Speck­mann, ex-brait ex­ec­u­tive Jes­mane Boggen­poel, for­mer au­di­tor-gen­eral Shauket Fakie, SA Re­serve Bank econ­o­mist Nom­bulelo Gu­mata, Wits ac­count­ing school head Nirupa Pa­dia and Icasa coun­cil­lor Them­beka Se­mane. How­ever, Mboweni also reap­pointed three mem­bers of the for­mer Irba board that had ap­pointed John: lawyer Iqbal Mo­tala, Madoda Pet­ros and Mar­tie Janse van Rens­burg.

Agul­has told the FM this week that he hoped the new board’s re­view of John’s ap­point­ment would be “in­de­pen­dent, in that the di­rec­tors who were part of the orig­i­nal de­ci­sion to ap­point her won’t par­tic­i­pate in the re­view”. He said the board should also “look at all the facts rel­e­vant to this is­sue, and not just what’s given to them”.

Sen­si­bly, Irba’s old-new di­rec­tors are well aware of this im­per­a­tive.

Mo­tala says that hav­ing been part of the orig­i­nal de­ci­sion, he’ll ob­vi­ously re­cuse him­self from de­ci­sions around the re­view. “There’s no ques­tion about that,” he told the FM.

John told the FM she has of­fered her un­con­di­tional sup­port to the new board. “[I] will re­spect what­ever ap­proach and out­come they reach in re­la­tion to my ap­point­ment,” she said.

It’s just as well that Irba’s new board mem­bers are well-equipped, since the stakes couldn’t be higher. As Outa puts it, Irba has a ma­jor role to play in “ad­dress­ing the grow­ing con­cerns of fi­nan­cial re­port­ing ir­reg­u­lar­i­ties in SA”. For ev­ery­one who’s been a vic­tim of poor au­dit­ing in SA — from the in­vestors in Stein­hoff and Ton­gaat, to the pub­lic whose taxes went to sup­port SAA — this de­ci­sion mat­ters.

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