In 2019 Finance Minister Tito Mboweni thanked the board of directors and the management of the Independent Regulatory Board for Auditors (Irba) “for their commitment to rebuilding the trust in the profession and for steering this organisation in the right direction over the years”.
In his message to Irba, contained in its 2019 annual report, Mboweni stressed the importance of the auditors’ role, describing them as “a key stakeholder in protecting the interests of the investing public and a link in attracting much needed investments in the country”.
The Organisation Undoing Tax Abuse (Outa) appears to have taken the minister’s comments seriously and last week urged him to investigate the pending appointment of former long-serving Tongaat director Jenitha John as CEO of Irba.
“Appointing a CEO implicated in irregularities will not only be highly inappropriate, but will also cause significant reputational damage to Irba, a body that has a substantive role to play in addressing the growing concerns of financial reporting irregularities in South Africa over the past few years,” said Outa’s CEO Wayne Duvenage in his letter.
He added: “Irba needs impeccable, untarnished leadership and John’s hasty appointment will do it no favours.”
On Sunday it emerged that the DA had also sent a letter to the minister questioning the appointment of John and pointing out she is not a qualified and registered auditor.
“There is surely no good argument to appoint someone without suitable qualifications and whose professional career is seemingly mired in controversy, the very sort of controversy that the Irba is mandated to prevent,” said DA MP Alf Lees.
Mboweni, whose department is responsible for Irba, said in the Irba 2019 annual report, which is the latest available on its website, that policy uncertainty and a decay in government’s relationship with the private sector had reduced South Africa’s global competitiveness.
The drop, said Mboweni, could be attributed to “corporate scandals, auditing firm failures, widespread corruption in both the public and private sectors, and the perceived erosion of government’s commitment to macroeconomic stability.”
He praised Irba for its role in restoring confidence in the auditing profession, which he said would take a few years as well as great courage and commitment from all stakeholders.
As Outa sees it, all of that could be put at risk by John’s appointment.
Read: Tongaat Hulett: Developments division under scrutiny
“Ms John has been on the Tongaat Hulett board since 2007, which covers the bulk of the period when the well-publicised financial reporting of irregularities at Tongaat took place.
“During this period she was the chairperson of the audit and compliance committee at Tongaat Hulett,” said Duvenage.
He also raised concerns about a conflict of interest created by John’s appointment: “As we believe Irba should be investigating the auditors of Tongaat Hulett for the financial reporting irregularities, a matter in which she is directly implicated.”
On Friday Irba’s outgoing CEO Bernard Aghulas told Moneyweb that the organisation’s mandate requires its leadership to be independent, fair, ethical and to act with integrity at all times so as to secure the respect and confidence, not only from those whom it regulates but also from the public, investors and the international community, in order to maintain Irba’s and South Africa’s international stature and good reputation.
Read: Tongaat plunges over 60%, after suspension lifted
He added: “It is therefore important that the leadership of Irba is not only of the requisite calibre but also displays commitment to public interest and a conviction to always act fairly in addressing the needs of investors while creating an environment in which auditors can deliver high quality audits.”
One disenchanted accountant told Moneyweb it was difficult to imagine that Irba was struggling to find candidates for the position given the attractive remuneration that comes with it. In 2019 Aghulas was paid a basic salary of R3.6million.
Read: It may be time to liberate auditors from the accounting profession
It has also emerged that there is currently no functioning board at Irba as the minister has not issued reappointment letters for the four members who could serve another term, nor has he issued any letters for new appointments.