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GENERAL NEWS
IRBA CEO Addresses Zimbabwe Accountants
Conference (ZAC2018) on Ethics
Regulators and institutes across the region need to employ
consolidated efforts to restore the reputation of the profession,
said IRBA CEO Bernard Agulhas while addressing delegates at the
annual Zimbabwe Accountants Conference (ZAC2018) hosted by
the Public Accountants and Auditors Board (Zimbabwe) in Harare.
Recent scandals involving accountants and auditors have
negatively affected the reputation of what has until now been a
trusted profession, and current woes are pointing to a corrupted
system that is failing in the protection of the public. Zimbabwe,
much like South Africa, is faced with a number of scandals involving
the auditing profession.
“Audit and accountancy practices have to walk a tight rope between
profitability and professionalism. Part of the problemmay well be that
in the pursuit of commercialism the risk of compromising professional
and ethical principles has increased. Too much attention on the
bottom line and weak corporate ethics have left audit firms faced
with bad press, loss of faith in the profession, destroyed reputations
and public images, and disempowered stakeholders. The impact
on investors and the public has been significant, and for countries
that are seeking foreign direct investment, a recommitment to
sound corporate ethics is absolutely essential,” said the CEO.
Regulators must insist on higher ethical and behavioural standards,
must push for more transparency and ensure that conflicting
interests, independence and the dangers of unconscious bias are
addressed, he said. “It’s not only about technical compete
ncy andimprovement – there must be a change in auditor behaviour.”
The CEO also emphasised the importance of the “tone at the top”,
a concept that has long existed in the auditing standards, but
which the leadership in corporations and firms appear to have long
forgotten.
Standard-setting Reform on Greater Independence
and Enhanced Public Interest Focus Welcomed
The IRBA has welcomed the publication of the feedback from The
Monitoring Group’s initial consultation process into strengthening
the governance and oversight of the international audit-related
standard-setting boards in the public interest. The IRBA is in
support of reforms that will see the global standard-setting boards
increase their independence from the profession, become more
representative of the ultimate beneficiaries of high audit quality and
boost the public interest focus in the work of standard setters.
Published on the 11th of June, the paper outlines the feedback
received from 179 respondents representing audit firms, the
International Federation of Accountants (IFAC) and its member
bodies, national standard setters, public authorities (including
regulators), academia, users, investors and the international
standard-setting boards themselves. In general, given the increasing
focus on independence and the public interest role of auditors, the
Monitoring Group has indicated that there is sufficient broad support
for reform for it to embark on the next step. It will now develop
a White Paper around global standard-setting reforms, which will
include proposed solutions, funding and transitional arrangements
for a consultation process by the end of this year.
The appetite for reform reflected in the preliminary stakeholder
consultation results is encouraging. While there is resistance and
some opposition to some areas proposed in the consultation
paper, these do not detract from or discount the importance of
independence and public interest. Concerns seem to revolve more
around practical implementation issues.
“We are not saying that current international auditing standards
are not relevant or appropriate. However, it is our view that reform
in pursuit of stronger public interest is key in efforts to restore
confidence in the profession. In the setting of global auditing
standards, we believe that it is increasingly important that the
interests and expectations of the ultimate beneficiaries of high-
quality audit services must be considered,” said the CEO.
“We must aim to strike the right balance between the needs of
the users of financial information and the due process, including
timeliness, in responding to those needs.”
During the process, stakeholders (investors in particular) raised the
concern that developing auditing standards in the public interest
will be challenging without the sufficient representation of investors,
asset managers and analysts in the standard-setting process. The
current standard-setting boards are seen, whether real or perceived,
to be dominated by the profession itself.
Just as audit regulators worldwide have sought to increase their
own independence from the profession, limiting the influence of
auditors in the oversight of auditing should be the next logical step
to secure the independence of standard setters. The independence
of the rule-makers needs to be secured to ensure that the resulting
auditing standards respond sufficiently to the stakeholders and
users’ expectations and are able to enhance audit quality in the
public interest. This, in turn, will secure confidence and trust in
standards, audits and financial information.
Issue 42 | April - June 2018
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