IRBA announces Mandatory Audit Firm Rotation

The Independent Regulatory Board for Auditors (IRBA) announced at the Nkonki 6th Annual Audit Committee for Listed Companies held on Monday, 29 August at the Johannesburg Stock Exchange, that it will begin a process to implement Mandatory Audit Firm Rotation (MAFR) for audit firms to strengthen their independence from their clients. The Board’s decision to pursue MAFR is also aligned to its objective to enhance audit quality, which ultimately contributes to public and investor protection. The decision follows a year-long process of extensive research and industry consultation both locally and abroad on how best to enhance audit firm independence. Its decision does not exclude the possible inclusion of additional measures such as mandatory audit tendering or joint audits, as a combination with firm rotation, in certain circumstances.

The IRBA intends to further consult on implementation of the new requirements, as the Board plans to engage with business around the associated steps and milestones to be accomplished. In reality, says the Board, both companies and their audit firms will also need to make plans to adopt the change into their procurement and operational planning. While the primary objective of MAFR is to strengthen auditor independence, the Board also confirmed that MAFR will increase access to the audit market as well as promote transformation in the profession.

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