Africa-Press – South-Africa. The Independent Regulatory Board for Auditors (IRBA) says the recent court ruling that it should set aside some of its fees threatens its financial stability. The auditing industry watchdog told the Select Committee on Finance on Tuesday that it may have to knock on Treasury’s door if the courts don’t reverse that decision.
In April, the North Gauteng High Court in Pretoria ruled that some new fees that the IRBA launched in 2019 were illegal and invalid.
Big blow for auditing watchdog: Court rules some of its fees are unlawful
IRBA’s director of legal services, Rebecca Motsepe, said this affected “all significant fees” charged by the regulator, and it “threatens [its] financial stability”.
“Following legal advice as well as engagement with our senior counsel, the board took the decision to take the matter on appeal for a number of reasons. Having studied the judgment we noted that there were significant errors made by the judge in relation to some of these fees,” said Motsepe.
She said the regulator filed its appeal application on 6 May and is now waiting to hear if the court will grant it the leave to appeal. If it doesn’t, IRBA is contemplating petitioning the Supreme Court of Appeal (SCA).
“But on the side also, the board has written to the National Treasury to initiate some engagement on what happens if the court doesn’t find in favour of the IRBA,” said Motsepe.
More litigation headaches
While it is this court challenge by the East Rand Member District of Chartered Accountants that has IRBA worried about its financial affairs, it’s not the only litigation that group has thrown the regulator’s way.
It is also challenging the Mandatory Audit Firm Rotation (MARF) rules.
IRBA gazetted MARF in 2017 and gave auditing firms up to 1 April next year to comply.
While a quarter of JSE-listed companies had already rotated their auditors in 2020, three years ahead of the deadline, this has not stopped the East Rand Member District of Chartered Accountants from challenging it. The group still wants MARF to be reviewed and set aside.
It looked like it had lost when the high court ruled in favour of the IRBA in December 2021. But Motsepe said the accountants’ group has now petitioned the SCA. In April, the Bloemfontein court referred the matter for a hearing in three months.
“The application [was] to review the mandatory audit firm rotation on the basis that the IRBA was not authorised to introduce the rule,” said Motsepe. “That matter is ongoing, and we are still opposing it. But as it stands, it does not affect the implementation of MAFR,” she added.
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