EY has endorsed the government’s recent initiative to clean up the audit profession in South Africa, following Finance Minister Tito Mboweni’s announcement that an independent panel is to be set up to review practices in the sector.
The review is expected to follow the template set by other countries including the UK, Australia and the Netherlands, all of whom have taken similar steps in recent years to restore balance to auditing. The moves follow a growing trust deficit in the global auditing sector as a whole, brought about by a series of malpractice investigations.
South Africa has been among the worst hit when it comes to financial fraud, with some of the most high profile accounting and advisory firms coming under fire in recent years. KPMG’s involvement in the Gupta scandal is one example, as is rival Deloitte’s involvement in the auditing scandal at Steinhoff International.
As the dust settles from a turbulent few years, the government and the business environment alike in South Africa have been engaged in consolidated efforts to reform auditing as a profession. The Independent Regulatory Board for Auditors, for instance, has already been taking steps to improve key areas of auditing, one of which is the establishment of Audit Quality Indicators to map risk across organisations.
The latest independent panel is another step in this direction, one that has been endorsed vocally by Big Four accounting and advisory firm EY. “We continue to support any efforts to further enhance audit quality and restore trust in our profession,” said CEO of EY South Africa Ajen Sita.
“It is crucial for the continued attractiveness of capital markets that there is trust in our financial reporting ecosystem. EY is committed to playing its full part in ensuring that the profession continues to best serve business, investors and other public interest stakeholder needs,” he added.
Assurance Leader at EY South Africa Stephen Ntsoane explained how the move mirrors steps being taken across the globe. “Globally we have seen several reviews of auditing practices – most recently India where the Ministry of Corporate Affairs (MCA) proposed extensive reforms to address issues around auditor independence, accountability and market concentration.”
The audit sector in South Africa, meanwhile, has been engaged in its own reformation efforts, exemplified by a new list of priorities and practices released by KPMG early last year, designed to identify and minimise risk.