COSATU to Present Submission on Auditing Profession Amendment Bill

October 13, 2020

The Congress of South African Trade Unions (COSATU) will present its submission on the Auditing Profession Amendment Bill to Parliament’s Standing Committee on Finance at 09h00 tomorrow-Wednesday 14 October 2020.The Auditing Profession Amendment Bill will be a critical tool in the fight against state capture and corruption.

Auditors have a legal duty to ensure good governance in both the public and private sectors. It has been extensively shown at the many Commissions of Enquiry that auditors sometimes facilitate corruption, especially at a state level

Workers are now paying the price for the collapse of key SOEs and municipalities. This leads to the disintegration of badly needed public services, and in many cases lost wages and retrenchments.

The Auditing Profession Amendment Bill includes many progressive provisions, including:

· Prohibiting practicing auditors from serving on the IRBA to avoid conflicts of interest;

· Capacitating IRBA to conduct search and seizures of auditors as needed; and

· Empowering IRBA to institute disciplinary procedures and impose sanctions, including deregistering offending auditors.

COSATU is however worried that the Bill does not go far enough. In fact, in some instances, it inexplicably treats suspect auditors with kid gloves. Key amendments needed to strengthen the Bill include:

· Deleting the provision reducing the minimum number of required IRBA meetings annually from 4 to 2.

o This in the context of cleaning up the state and economy is reckless at best.

· Deleting the limitation of when IRBA may conduct search and seizure operations to only normal office hours.

o Criminals do not need diplomacy. Search and seizures must be undertaken whenever needed and not limited to office hours.

· Inserting a new clause formalising IRBA’s rule requiring the mandatory rotation of auditors.

o This must be elevated to a legal obligation not merely an informal rule that can easily be deleted if dubious elements return to power. This is extremely dangerous and deeply worrying.

o The 10-year rotation period for the mandatory rotation of auditors must be reduced to 5 years.

§ 10 years is too long given the extent of corruption and incestuous relationships between auditors and those they are paid to audit.

The government must be bold in dealing with corruption and the inexcusable failures of auditing firms to uphold their legal duties. The timidity which Treasury has shown at times will not enable us to clean up the state. Parliament needs to address the glaring gaps in the Bill.

COSATU supports the speedy passage of this progressive Bill, but on condition that it is significantly strengthened.