The Independent Regulatory Board for Auditors (IRBA) said it aims to enhance audit quality and strengthen audit firm’s independence from their clients. Now companies and their audit firms would be required to make plans to adopt the changes.
IRBA said it would begin a process to implement mandatory audit firm rotation, which would promote transformation in the profession, as well as strengthening auditors’ independence.
The decision from the statutory body that protects the financial interests of the public came after an extensive year-long international research and industry consultation on enhancing audit firm independence.
The IRBA further said that mandatory rotation would enhance audit quality, thereby improving public and investor protection, as well increasing access to the audit market and promoting transformation in the profession.
In South Africa only nine of the 353 audit partners who signed off on financial statements of listed companies were black African, and more than 90% were audited by a few firms.
The IRBA has been recognised by the World Economic Forum (WEF) as the top independent audit regulator worldwide for six consecutive years for the strength of its audit controls and standards.
Investor protection is facilitated when financial statements are reliable, credible and trustworthy. A crucial component of creating the necessary confidence in financial statements, and consequently the financial markets, is the knowledge that the auditors are independent when they report to the shareholders.