The Independent Regulatory Board for Auditors (Irba) will stop hiding the names of auditors and auditing companies found guilty of contravening its professional standards, code of conduct and the law.
From July, the body, which regulates 4 000 local auditors, will start naming and shaming some of the auditors its finds guilty of contraventions.
Auditors are key to providing assurance to investors in public and private companies, as well as numerous nonprofit entities, that the financial statements of organisations are a true and accurate reflection of the state of affairs.
In doing their work, auditors touch the lives of millions of people who rely on them to flag any issues that might effect their investments.
This comes at a time when major auditing companies such as KPMG, Deloitte and PwC are being scrutinised over alleged controversial auditing practices.
However, Irba won’t name and shame all guilty auditors.
The body will publish the findings as well as the names of auditors and firms involved in any contraventions related to “public interest entity matters”.
Irba spokesperson Lorraine van Schalkwyk said that, in terms of the split between “public interest” cases and “non-public interest” disputes or complaints, about 75% of complaints and matters were considered to be not in the public interest.
Irba defines public interest entities as listed entities or firms that have a large number and wide range of stakeholders, such as companies that hold assets in a fiduciary capacity or financial institutions such as banks, insurance companies and pension funds.
However, Irba will make exceptions regarding non-public interest matters and will publish the findings and names of auditors and firms involved in contraventions in which the auditor is a repeat offender and the findings lead to disciplinary hearings.
In December, Irba announced that it would, “with immediate effect”, start naming and shaming guilty auditors.
“The Auditing Profession Act allows the publication of specific findings and names to be at the discretion of the disciplinary committee,” Irba CEO Bernard Agulhas said in December.
Earlier this month, Irba released its quarterly newsletter (January to March), but auditors that were found guilty of contraventions were not named.
Van Schalkwyk said the reason for this was that the newsletter “reports on matters dealt with by the investigating committee at the end of 2017, where the findings recommended to the disciplinary advisory committee were consent orders”.
“It details matters finalised and sanctions handed down before implementation of the changes to the sanction process.”
When the next Irba quarterly newsletter is published in July, guilty auditors in the defined categories, as well as the auditing firms that were involved in the misdeeds, would be named, Van Schalkwyk said.
The latest newsletter contained six matters that resulted in fines totalling R680 000. However, the payment of fines amounting to R180 000 of that total was postponed until the guilty party reregistered with Irba. Another R245 000 of the total was suspended for three years.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER