IRBA confirms investigation into conduct of Steinhoff auditors

Johannesburg, Friday, December 15, 2017 - The Independent Regulatory Board for Auditors (IRBA) confirmed today that it had initiated an investigation into Deloitte South Africa following the share price collapse of Steinhoff International DV and allegations of accounting irregularities.

Says Bernard Agulhas, CEO of the IRBA: “The IRBA will commence its investigation into the conduct of the auditors of Steinhoff International Holdings (Pty) Ltd for the audits of financial years ended 2014 – 2016. This entity is audited by Deloitte South Africa, who has confirmed that it will fully cooperate with the IRBA during the investigation.

“The investigation will follow due process and the timing will depend on information which will come to our attention once we have established the nature of the alleged irregularities and have had further discussions with the relevant parties, including the audit regulators in Germany, where the company has its primary listing, and the Netherlands. These discussions, including matters relating to jurisdictional responsibilities, commenced in the previous week.”

Agulhas continues that, while cooperation with international regulators will be important, it will be even more important that local regulators coordinate their efforts in their support to government to provide the public with the assurance needed to secure the required trust that their investments are safe.

“The South African markets have always been resilient and responsive to disruption in the financial markets, partly because of the strength of its financial institutions, and also because of the South African public’s increasing awareness and renewed focus on ‘doing the right thing’, ethics and the importance of good governance”, he says.

However, while the IRBA has always cautioned that more attention needs to be given to auditor independence, it now urges authorities and bodies to give equal attention to the independence of governance structures. Irrespective of how competent auditors and those charged with governance are, any cosy relationships must necessarily impair, or at the least be perceived to impair, the exercise of good judgment and healthy professional scepticism. This applies to long and close relationships between auditors, company CFOs, and audit committees.

“While the auditing profession still mostly delivers high quality services, it is also time for regulators to act decisively, cohesively and firmly against those who engage in any misconduct or wrongful behaviour. This is the only way that the public can have the confidence that any assurances they receive are sufficiently reliable to protect their hard-earned investment,” concludes Agulhas.

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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.

IRBA is an internationally recognised regulator of the auditing profession and other assurance services relevant to the South African environment. 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.