Steinhoff, Tongaat Hulett auditors investigated

In an interview with Business Report, Nagy said there were cases of management fraud and corruption in the Johannesburg Stock Exchange-listed entities, notably Steinhoff and Tongaat Hulett.

Nagy said the Steinhoff case was complicated and investigation is still ongoing.

The embattled Steinhoff was involved in a financial scandal involving that some of its management had manipulated the company’s balance sheet, while Tongaat Hulett’s executives were charged with backdating sale agreements between March 2015 and September 2018.

In April 2021, president Cyril Ramaphosa signed the Auditing Profession Amendment Act into law.

“This gives the IRBA significantly more powers of investigation and streamlines our disciplinary process, as well as makes provision for search and seizure powers,” the president said at the time.

Nagy said auditors were not the primary decision-makers at companies and not the only line of defence.

“We are therefore looking at all role-players in the financial ecosystem who must ensure integrity and trust in the system,” he said.

Nagy said the IRBA can only regulate and investigate registered auditors, and its mandate was limited to about 3 650 registered auditors.

“We don’t have the mandate to regulate accountants like CA(SA), who are in many instances running big companies. Where those individuals outside of our regulation are accused of improper conduct, we will support the relevant authorities where we can, as we see the benefit to reducing the risk of further corporate failures,” he said.

Nagy said there were significant upcoming changes in the regulation of auditors.

“Notably, the International Standards on Quality Management will be effective from December.

“These make additional provision for audit firms and audit engagement partners to take additional quality management steps to improve firm and engagement quality,” he said.

He said the IRBA was one of the first regulators worldwide to adopt these standards in February this year, and promoted early adoption.

“Many audit firms have made significant inroads to revising their quality management systems well ahead of the effective date by which they must all comply,” Nagy said. – IOL News

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