Letters to the Editor

Dear Sir,

I read your editorial, Called to account (July 10), with interest. The auditing profession shares the concern many people have with regard to the number of high-profile company failures and the misstatements of reported financial information by some firms, especially in the US.

While I agree with many of the comments made in the editorial, there are some that I feel need a response :

• The auditing profession in SA is not self-regulating. It is regulated by the Public Accountants' and Auditors' Board.

There are 16 board members, of whom nine are registered auditors (one appointed by the finance minister); four are senior people from the public sector, including the auditor-general and commissioner for inland revenue; two are academics; and one is the Financial Services Board CEO.

This composition is governed by the Public Accountants' & Auditors' Act. If the perceived influence of registered auditors must be reduced, this can easily be done by amending the draft Accountancy Profession Bill.

• The code of professional Conduct of the board addresses conflicts of interest and auditors' independence. This code is in the process of being re-examined in the light of current developments and changes to the code of ethics of the International Federation of Accountants.

• Under the Companies Act and the code of professional conduct, auditors may not sit on the boards of firms they audit nor may they take part in any way in the management of those firms.

The Public Accountants' and Auditors Board accepts the need for a review of the draft law and welcomes the minister's undertaking to engage with role players. The SA Institute of Chartered Accountant and the board are setting up a team in this regard.

I feel it is important great care be taken in considering statutory or regulatory changes to avoid any adverse unintended consequences that could harm our capital market system.

The board and the auditing profession are committed to playing a constrictive role in addressing the situation.

With acknowledgements to Jean Le May and Business Day.