IRBA identifies lines of inquiry but requires restated financials for Steinhoff

Johannesburg, Sunday, February 25, 2018 - The Independent Regulatory Board for Auditors (IRBA) wrote to the Chairman of the Standing Committee on Finance (SCoF), Yunus Carrim, on Friday afternoon last week to update the committee on the status of the Steinhoff/Deloitte matter, with Bernard Agulhas, CEO of the IRBA, indicating that despite constraints on the speed with which the regulator can deal with complex investigations such as this, it will continue to prioritise high public interest cases.

Says Mr Agulhas: “Since we attended the hearing into the Steinhoff matter in January 2018, we can confirm that we have commenced reviewing the Deloitte audit files of Steinhoff for the years 2014, 2015 and 2016. Following the widely-reported allegations of accounting irregularities, the auditors did respond by raising a Reportable Irregularity (RI). The auditor has since confirmed that the RI is continuing, the resolution of which is pending the conclusion of the internal investigation by PwC.

“While the recent ruling in the Dutch court which ordered Steinhoff to amend its 2016 accounts has confirmed some elements which we will review, the Steinhoff case is a multifaceted one which will require significant investigation. Nevertheless, our initial review of the audit files has identified some lines of further investigation which we are pursuing.”

At the time of the audits for 2014 and 2015, the local Steinhoff entity was the listed holding company with its primary listing on the Johannesburg Stock Exchange. In 2016, the primary listing moved to the Netherlands; therefore, the audit files for 2016 pertain to Steinhoff Africa’s local subsidiaries.

As pointed out by Agulhas in Parliament on 31 January 2018, the IRBA has approximately 150 open investigations at any given time, which means that it has to carefully balance its limited resources to prioritise high public interest investigations.

Says Agulhas: “Before the investigation will be concluded, we will need the restated annual financial statements and the PwC Internal Review Report, which we are waiting for.”

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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.

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.