The Independent Regulatory Board for Auditors (Irba) says it plans to complete its investigations into the auditing of the companies linked to the fugitive Gupta family by the end of this year, buoyed by additional investigators at its disposal.
This is as the watchdog reported a 30% decrease in its investigations backlog from the 2021 financial year to date.
The entity said its investigations department had covered a lot of ground in cutting down the backlog of matters that occurred in the 2018 to 2021 financial years.
It said the backlog was due to more investigations being initiated in this period than what could be finalised and was in excess of 230 open matters at its peak.
Irba said to deal with the backlog, its board approved the appointment of additional investigators, and the department now has a full staff complement of nine investigators.
Irba CEO Imre Nagy said this has resulted in a 30% reduction of the backlog and the department is working tirelessly to clear the remaining backlog.
“With a full staff complement, the department was able to achieve or exceed the target of completed investigations for the past two financial years. Furthermore, despite the challenges, we were able to prioritise and complete investigations into audits of high-profile entities in the 2018 to 2023 financial years,” said Nagy.
“Of the 20 state capture matters opened against registered auditors, we have completed 15 matters. From these outstanding matters, three matters have been referred for disciplinary hearings.”
One matter related to the Gupta entities will go for a disciplinary hearing in March, Irba said. Irba has already struck the auditor responsible for auditing Gupta-linked company Linkway Trading from its register.
Other high-profile investigations that Irba is involved in include the auditing of the defunct VBS Mutual Bank.
Irba told Business Day that it expects to complete its probe into the auditing of the bank by March 2025.
Terry Motau’s 148-page report — “VBS Mutual Bank — The Great Bank Heist”, released in October 2018 — blew the lid off the looting that characterised the bank, from which nearly R2bn was siphoned in less than five years.
One of the auditors involved in looking at VBS’s books has already found Dumisani Tshuma guilty of misconduct for failing to disclose his interest in VBS.
Tshuma and fellow erstwhile KPMG auditor Sipho Malaba failed to disclose loans held with VBS.
“Malaba had obtained very substantial facilities from VBS which cannot be regarded as arm’s length borrowings and were not declared to KPMG. He gave an unqualified audit opinion in circumstances where he knew the financial statements were misstated. He also gave a regulatory audit opinion which he knew to be false,” said the Motau report.
Finance minister Enoch Godongwana this week announced proposed amendments to fines that can be imposed on individual auditors and auditing firms, which it first gazetted in June.
Godongwana now proposes that a maximum fine of R10m per charge can be imposed on an individual registered auditor found guilty of misconduct. He also proposes that a maximum fine of R25m per charge may be imposed on a firm of auditors that is charged and found guilty after a disciplinary hearing or if the firm admits guilt to the charge.
Nagy welcomed the amendments.
“I reiterate that these prescribed maximum fines are a maximum limit and not fixed. The Irba will in all cases apply proportionality and scalability when sanctioning in matters of improper conduct, as we have always done. There are varying degrees of improper conduct and not every matter is sanctioned by way of maximum fines,” said Nagy.
“The Irba also has nonmonetary sanctions at its disposable for improper conduct, which although it remains improper conduct does not have massive public impact. These nonmonetary sanctions are generally remedial in nature, encouraging continual professional development.”
Khumalok@businesslive.co.za
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