25% of JSE-listed entities have rotated audit firms ahead of 2023 MAFR deadline

JOHANNESBURG – At least 25 percent of companies listed on the Johannesburg Stock Exchange (JSE) had rotated audit firms by the end of April 2020, according to the latest statistics released by the Independent Regulatory Board for Auditors (IRBA).

IRBA said in a statement that of those who have rotated in that time, 47 percent cited the early adoption of Mandatory Audit Firm Rotation (MAFR), which was promulgated in 2017, as the reason for the rotation. 

IRBA mandated audit firm rotation in 2017 following audit failures resulting from a lack of independence and lengthy tenures of audit firms with the same clients, in some instances exceeding 100 years.

“The risk with long tenure, whether real or perceived, is that the relationship between the client and the firm becomes ‘cosy’, which could compromise auditor independence and the appropriateness of the auditor’s opinion on clients’ financial statements,” stated IRBA.

IRBA chief executive Bernard Agulhas said on the matter of open access to next tier firms and black-owned firms, audits had rotated to a number of firms outside the big four, and there has been some partnering between big four and black-owned firms.