MAFR of listed entities approaches completion

South Africa’s Independent Regulatory Board for Auditors (IRBA) issued the latest statistics on mandatory audit firm rotations (MAFR), following through with its rule that audit firm tenure may not exceed 10 years after 1 April 2023, the effective date that was approved in June 2017.

The use of this 5-year lead time into the effective date of the rule has facilitated early adopters to complete their audit firm rotations ahead of time. At this point, only 74 listed public interest entities (PIEs) across 5 South African stock exchanges are still to rotate audit firms to comply with the April 2023 deadline.

IRBA CEO, Ime Nagy, said: “This represents less than one-third of listed PIEs on the five exchanges in South Africa at 27.51% and of this, 68 entities on the largest stock exchange, the Johannesburg Stock Exchange (JSE), must still rotate audit firms.”

Additionally, the IRBA has completed a study of PIEs which are also subject to provisions of MAFR. These included licensed insurers, pension funds, and medical schemes that meet the definition of a PIE as outlined by the IRBA Code of Professional Conduct. This study concluded that of the 404 entities identified as PIEs to which MAFR applies, a total of 170 are due for audit firm rotation, while 52% are already in compliance with tenure below the 10-year limitation.

Nagy further added: “We have engaged with the audit firms and have had assurances that they are aware of the effective date and on track to rotate off audits for which they will no longer be eligible, come 1 April 2023. We will continue to engage proactively with key stakeholders and do our part as the audit regulator to help ensure that the number of contraventions will be negligible come the rule’s effective date.”

South Africa now joins several jurisdictions with audit firm tenure limitations, which require either rotation or mandatory audit tendering, with the maximum tenure allowed ranging from anywhere between 5 to 20 years.

For more on IRBA

FRA establishes first Asia Pacific office

The Forensic Risk Alliance (FRA), specialising in forensic accounting, data analytics and eDiscovery consultancy has announced that it has established its first Asia Pacific office in Seoul, South Korea (FRA Korea), in collaboration with local partners. The launch of FRA Korea comes as the forensics and advisory market in the country has grown considerably over the past two decades, largely driven by increasing enforcement efforts by the Korean government.

This shift in approach can be attributed to the election of a new president, Suk-yeol Yoon, with a strong anti-corruption stance, increasing exposure of Korean corporations to US regulatory standards and a growing demand for alternatives to the Big Four in the forensic space.

The firm’s decision to establish a physical presence in Korea comes just months after it opened an office in Dubai, part of its long-term international expansion and diversification strategy.

At the helm of FRA Korea will be managing partner Ui-sung Kim, while partner Hea-sil Chang will take a lead on establishing the new office and delivering client service excellence. Young-gak “Ken” Yun will provide strategic direction in his capacity as senior advisor.

FRA Korea’s incoming managing partner, Ui-sung Kim, was previously founder and CEO of software company Magicsoft Inc. Prior to this, he worked at KPMG Korea for 14 years in the capacity of chief information officer and partner in charge of the tax technology team. Partner Hea-sil Chang joins FRA Korea after 6 years at the Korean Supreme Prosecutor’s Office (SPO), where she served as head of accounting analysis in the Anti-Corruption Coordination & External Affairs Division. Senior advisor Young-gak “Ken” Yun has a background in investment and accounting spanning 20 years, having founded Samjong Corporation, which came to be a member firm of KPMG in Korea.

Deloitte names first female chair of Global Board of Directors

Sharon Thorne has been named the designated incoming chair of the Deloitte Global Board of Directors, effective June 2019.

Thorne will be the first woman to take up this position at Deloitte.

She is currently deputy CEO and managing partner, Global & Strategy, of Deloitte North West Europe, where she has been responsible for the global dimension of Deloitte North West Europe’s strategy. She has over 30 years’ experience in audit.

She has significant governance experience, including nine years spent on the Deloitte Global Board, six years on the Deloitte UK Board, four years as chair of Deloitte CIS Holdings Ltd, and six years on the Board of the Confederation of British Industry.

She has also acted as the executive sponsor for the Deloitte UK LGBT+ network since 2010.

Thorne said: “As Global chair, my focus will be on evolving our governance model in support of our global strategic ambitions, and positioning the Board to stay ahead of the complex challenges presented by the Fourth Industrial Revolution.”

Thorne will succeed David Cruickshank, who has completed his four-year term before which he served as chair of the Deloitte UK Board for eight years.

FRC presents Annual Review

The Financial Reporting Council (FRC) has reiterated the need for high-quality disclosures from companies during periods of economic uncertainty. To support more informed decision-making, companies must ensure that investors and other stakeholders receive reliable information about a company’s financial performance and prospects.

The FRC’s Annual Review of Corporate Reporting 2021/22, performed 252 reviews of companies’ accounts and, while the overall quality of corporate reporting within the FTSE 350 had been maintained, 27 companies were required to restate aspects of their accounts.

The FRC was disappointed to find errors in cash flow statements, an area where both companies and their auditors must improve. The review also identified scope for improvement in reporting on financial instruments and deferred tax assets.

In times of economic uncertainty companies must clearly identify their principal risks, ensure these are reflected in their business strategy and disclosed in their annual report and accounts. To support better disclosures, the review includes examples of key matters companies must consider during uncertain times such as the need to disclose significant judgements in relation to going concern assessments.

FRC executive director of supervision, Sarah Rapson, said: “During periods of economic and geopolitical uncertainty it is vital that companies not only comply with relevant reporting requirements but deliver high-quality information for investors and other stakeholders. While these are challenging economic times, companies need to be agile, continually assess evolving risks and ensure these are clearly explained in their annual reports. As an improvement regulator, the FRC will be closely monitoring companies cash flow statements and other areas of reporting where we expect to see further improvements.”

The FRC will also be hosting a webinar on November 2 to discuss the key findings from this year’s annual review.

For more on the FRC.

Joseph Owolabi appointed global president of ACCA

The Association of Chartered Certified Accountants (ACCA) has appointed Joseph Owolabi as its new president. Owolabi grew up and studied in Nigeria, has lived and worked in Africa, North America, the UK, and Australia. He became an ACCA member in 2011 and has served on ACCA’s International Assembly 2014-2015 and has been a Global Council member since 2015.

On his appointment, Owolabi said: “If you had told me as a child growing up that I would one day be the first African leading the largest, truly global accounting body, I would not have believed you. ACCA is an inclusive open and global community for members, future members and partners. Wherever in the world I have found myself, ACCA has given me a home and a family. I am passionate about connecting our community and inspiring the accountants of tomorrow. Great things happen when we collaborate across jurisdictions and national divides. The challenges of today and the complexities of tomorrow will demand continuous learning, courage, sound judgment and a resolve to stay ahead of the curve. The accountancy profession has a key role to play in creating a better world.”

Owolabi founded ​Rubicola, which operates in Australia, Africa and North America advising clients on risk, non-financial reporting and sustainable business strategies. His previous experience includes roles at Deloitte, EY and PwC.

As well as his FCCA qualification, Owolabi has completed an executive leadership program at Harvard Business School and an environmental, sustainability leadership program at The Wharton School.

AICPA & CIMA launch ESG certificate

AICPA & CIMA, which together form the Association of International Certified Professional Accountants (the Association), have launched a new certificate that provides foundational knowledge on topics related to environmental, social and governance (ESG) reporting, advisory, and assurance.

The Fundamentals of ESG Certificate is available globally and is appropriate for accounting and finance professionals looking to obtain a baseline knowledge of ESG topics. The 9-hour course offers a grounding in the fundamental concepts of and latest developments within the ESG field. Upon completion, certificate holders can display a digital badge in their online profiles.

The Fundamentals of ESG Certificate programme will provide course takers with the ability to:

  • Identify the key aspects in each area of Environment, Social and Governance
  • Recognise the expectations of investors and the impact on business
  • Assess the responsibility of businesses for key ESG issues
  • Recognise the business case for implementing sustainable practices
  • Identify the role of the accounting and auditing profession in sustainability
  • Recognise the current sustainability reporting frameworks and reporting requirements

CEO of management accounting at the Association Andrew Harding said: “The global business community is on the verge of momentous change in how companies address sustainability issues and interest in ESG is reaching a tipping point.

“This will fuel demand for accounting and finance professionals equipped with the necessary skills to advise business leaders on the ESG opportunities and risks this presents to their organisations. The new ESG certificate programme will help develop the skills of accountants and management accountants to serve the public interest and instil trust and integrity within the ESG field.”