The Independent Regulatory Board for Auditors (IRBA) is not captured and has been making efforts to ensure independence, says CEO Bernard Agulhas.
IRBA briefed the Standing Committee on Finance on Tuesday on its 2017/18 annual report. During a questioning session by members of Parliament, Agulhas spoke on the importance of the watchdog maintaining its independence.
"The independence of auditors is critical to the IRBA - in the same way the independence of the IRBA is critical for any confidence in what we do.
"If there are perceptions of the public that we are not independent, it will certainly impact the credibility of this organisation," he said.
Agulhas added that the IRBA had gone to some lengths to strengthen its independence and to demonstrate their independence to the public.
Following the fallout at KPMG last year, the watchdog has embarked on multiple probes into auditors, including Gupta-linked Nkonki. Deloitte, auditors of global retailer Steinhoff, are also being probed as part of a massive investigation.
"We can’t be captured by this profession," Agulhas said. "The word ‘capture’ is unfortunately a very serious word."
Agulhas said that part of the steps taken to strengthen IRBA’s independence included the introduction of mandatory audit firm rotations, which will come into effect in 2023. The profession tried to stop the implementation of the rule, but Agulhas said it was in the best interest of the public to introduce it.
"Despite the profession fighting against what the IRBA was doing to strengthen independence, the IRBA went ahead.
"Everything we do is to protect the public and not the profession."
Agulhas added that the implementation of mandatory audit firm rotation was already on track. Ahead of the law coming into effect, listed companies have started appointing new auditors.
Encouragingly, more shareholders (40%) are voting against the appointment of the same auditors at companies, versus the past where 1% of shareholders would vote against the reappointment of auditors. There is a clear change in shareholder behaviour, who are aware of their responsibilities and acting on it, he explained.
The mandatory rotation is the "strongest" measure taken to strengthen the independence of auditors, he emphasised.
When asked why KPMG has not yet been closed down, Agulhas explained that there was still an ongoing process which needed to be followed. "I understand the frustration of the public that we should have done something about KPMG by now, but we are governed by process and legislation." Deviating from legislation will lead to IRBA losing its credibility, he explained.
"It is important to stick to the process."
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER