IRBA Newsletter Issue 50

Issue 50 | April - June 2020 2 CEO’S PERSPECTIVE BUILDING A COLLABORATIVE CULTURE TO RESTORE CONFIDENCE IN THE PROFESSION “After climbing a great hill, one only finds that there are many more hills to climb.” – Nelson Mandela I arrived at the IRBA on the 1st of June 2020, an interesting month that was filled with many revelations. It was a month that allowed me to analyse human behaviour. This landscape of behaviours ranged from those with characteristics that cause destruction to those that lack the ability to share and those with human maturity and the capacity to engage and learn. Through it all, I was still able to see the true essence of humankind shine through some cracks within the organisation. Above all, the time allowed me to delve deeper into key areas of the business, albeit with limited access, and to discern imperatives for the IRBA. I have been engaging with internal and external stakeholders on working together to rebuild this profession and respond to the expectations of the public that we serve and protect. This collective dialogue will be the enabler to reconstruct the IRBA’s strategy and, more importantly, recreate projects that will truly enable the elevation of the confidence needed in the audit industry. The two months into the discovery phase have been illuminating and initial assessments have revealed the following key areas that are receiving attention: - Strategic Plan Review o To review the five-year Strategy and the Annual Performance Plan against the backdrop of the pandemic, the current uncertainties and new realities. This will include an analysis of whether the IRBA is “fit for purpose”, taking into consideration our financial capability, human capital capacity as well as the enhancement of the risk and opportunity management process. o To reimagine the Restoring Confidence Projects. We need to reflect upon and refresh these projects, particularly in the face of the current dynamics and the opportunity to leverage similar projects that are underway, e.g. those under the South African Auditing Profession Trust Initiative. - Operational Enhancements o Have initiated a review of “as-is” processes to chart the way forward for digital transformation. Manual interventions are debilitating and will be automated to improve the IRBA’s agility and response on key matters. o Exploit the power of intelligent data in the following areas to act as a catalyst to decision-making:  Reportable irregularities;  Extraction of inspection themes, for example, which standards are mostly impacted and what themes emerge on quality;  Registry demographics, resignations and new joiners;  Conversion rate of chartered accountants (CAs) into registered auditors (RAs); and  Mandatory Audit Firm Rotation statistics. o Undertake a critical assessment on the criticism around inspections, investigations and disciplinary actions pertaining to backlogs, transparency, lengthy turnaround times, capacity constraints (both financial and human capital), huge legal costs, paltry fines and other aspects. Root causes of these will be addressed with expediency. o Conduct a benchmark analyses against other regulatory bodies, both locally and globally, to design new operational efficiencies across all departments. o Review the adeptness at selecting policies/ regulatory tools/pragmatic standards that encourage accountability by harnessing industry input. - Effective and efficient resource management o Focus on strategic human resource imperatives to analyse our talent, performance, remuneration and reward philosophy so as to drive productivity measures. Major initiatives will include leveraging stakeholder resources and embracing innovation and transformation through technology in our strategic intent. This will be used to remediate process deficiencies and ensure that we remain efficient and sustainable in how we do business. - Agile response and turnaround time of processes o A number of our stakeholders have raised concerns about the duration of some of our processes, especially with regard to inspections and investigations. While a case can take up to 10 years to be resolved, in the meantime many lives are impacted and we lose out on the lessons that come with the merits of the case. Therefore, one of my key projects will be to look at various models the regulator can apply in working with the profession to speedily and effectively do our investigations, without compromising the IRBA’s integrity, and still be able to impose reasonable fines on those found to have erred. We need to do things differently and become a more proactive regulator. - Transformation of the profession o The number of RAs has been declining steadily over the past few years and this is a cause for concern. We lose more auditors than we are registering at any given time. Certainly, more effort is needed to make the profession appealing and attractive. More