Johannesburg, Thursday, September 27, 2017 - The Independent Regulatory Board for Auditors (IRBA) has responded to the release of the World Economic Forum’s Competitiveness Report 2017-2018 expressing its regret, but indicating that it fully expected not to retain the number one ranking for auditing standards, a ranking it enjoyed for the past 7 years.
Says Bernard Agulhas, CEO of the IRBA: “We are disappointed but we expected this result. What this means is that the IRBA and other regulators must work together to correct the situation, with the support of everyone, so that we can re-establish stability in our capital and financial markets. Confidence in financial markets is dependent on perceptions of how safe it is to do business in a country, and such perceptions are influenced by levels of corruption, crime, downgrades and strength of financial institutions.
“This drop in confidence indicates that South Africa is no longer seen as a good investment. As confidence drops, investment drops and our markets suffer the consequence. Given that our financial markets and institutional ranking slipped in a number of areas including strength of securities exchange, efficacy of corporate boards, protection of minority shareholders’ interests, decline in strength of investor protection and ethical behaviour of firms, the result is predictable.
“The IRBA’s role is public protection and it does so through regulation. Given our own interest in audit quality and independence, the IRBA has been working on audit reforms for some time.
“What is particularly satisfying is that citizens and shareholders are now also reacting to corruption and irregular activity, and that awareness and shareholder activism have been heightened in the past few months. Public outcries on recent issues in the market are merely symptomatic of deeper root causes which our country must address.
“Our institutional pillars must be continuously strengthened, and as the importance of governance, transparency and ‘doing the right thing’ is again foremost on citizens’ minds, we can all work together to regain confidence in our markets, stimulate investment and reclaim our world class rankings,” concludes Agulhas.
More about the IRBA:
The IRBA is a public protection statutory body established to protect the financial interests of the public by ensuring registered auditors and their firms deliver services of the highest quality. It upholds audit firm independence to ensure that audit quality is such that it enhances the accuracy and credibility of financial performance reporting. In this way, the IRBA has an important role to play in building the reputation of South Africa as an investment market for both local and global investors and driving economic growth for the country.
As an internationally recognised regulator of the auditing profession and other assurance services relevant to the South African environment, it has been recognised by the World Economic Forum as the top independent audit regulator worldwide for seven consecutive years for the strength of its audit controls and standards. The IRBA also registers suitably qualified accountants as auditors, who must adhere to the highest ethics standards, and promotes the auditing profession through the effective regulation of assurance conducted in accordance with internationally recognised standards and processes.