The Independent Regulatory Board for Auditors (IRBA) has proceeded with its aim of introducing Mandatory Audit Firm Rotation (MAFR), which will apply only to listed companies and public interest entities (institutions such as banks and insurers) and is intended to “enhance auditor independence and protect public interest”.
Recently the head of the IRBA and the Finance Minister announced that this would commence on 1 April 2023.
There has been a backlash to this by prominent bodies such as the King Committee, the Institute of Directors and the Chief Financial Officers Forum (Finance Directors of JSE listed companies). The opposition centers around the cost of the move to MAFR, estimated at R10 billion in the first ten years and whether the intended purpose of MAFR will in fact be achieved. A number of countries who previously introduced mandatory rotation have in the meantime scrapped this for the same reasons.
MAFR, say those opposed to it, will effectively dilute shareholder rights and will lead to less investment in South Africa, as it will deter companies from listing on the JSE.
These bodies have appealed to Treasury to reconsider the matter. These are strong words and we will update you as this unfolds.