COSATU to present its submission on Auditing Profession Amendment Bill tomorrow in parliament

February 9, 2021

The Congress of South African Trade Unions (COSATU) will present its submission on the Auditing Profession Amendment Bill to Parliament’s Select Committee on Finance at 09h00, Tuesday 09 February 2021 on a virtual platform.

The Auditing Profession Amendment Bill will be a critical tool in the fight against the state and corporate capture and corruption. Auditors have a legal and fiduciary duty to ensure good governance in both the public and private sectors. It has been extensively shown at the many Commissions of Enquiry into state capture, that numerous auditors were not only complicit but in fact in many cases helped to facilitate the industrial looting of the state and private sector companies.

Workers are now paying the price in the collapse of key SOEs and municipalities, the disintegration of badly needed public services, and in many cases lost wages and retrenchments. Workers in the private sector have not emerged unscathed as supposedly clean listed companies were fleeced, and here too workers lost wages and jobs. Workers’ hard-earned pensions too were pickpocketed when they were invested in such companies.

The Auditing Profession Amendment Bill includes many progressive provisions, such as:

· Prohibiting practicing auditors from serving on the Independent Regulatory Board of Auditors (IRBA) and its investigating and disciplinary to avoid conflicts of interest.

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

o Despite noise from some dubious voices in the auditing fraternity these must be defended and retained. Criminals do not need diplomacy. IRBA must be fully capacitated to undertake search and seizures whenever needed.

· 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 two instances. 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 proposed reduction in statutory required board meetings in the context of cleaning up the state and economy is reckless at best.

· 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.

§ There have been worrying governance noises recently at IRBA. This is extremely dangerous and deeply worrying.

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

§ 10 years is too long given the extent of corruption and incestuous relationships between many 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 the legal duties. The timidity the state has shown at times in dealing with corrupt elements will not enable us to clean up the state. Parliament needs to address these concerning gaps in the Bill.

COSATU supports the speedy passage of this progressive Bill and that it be significantly strengthened.