As a Schedule 3A public entity, the IRBA supports the State’s policy outcomes; and its five-year Strategic Plan demonstrates how it contributes to selected outcomes. The IRBA Strategic Plan is also aligned to the National Development Plan (NDP), and the IRBA has an important role to play on the road to government’s desired destination.

The IRBA continues to support the national initiative in respect of transformation in relation to its employment policies as well as its procurement policies; and it also takes advantage of opportunities to appoint and procure the services of women and people with disabilities.

The strategy addresses the IRBA’s mandate with reference to two programmes:

Programme 1: Regulation of Auditors – Legislative Mandate

Our Changing Legislative Context

The independent regulation of auditing was implemented based on recommendations from the 2003 World Bank Report on the Observance of Standards and Codes for Accounting and Auditing (ROSC), as adopted by the Minister of Finance. Subsequently, the APA was promulgated in 2006. The IRBA then became the successor body to the Public Accountants’ and Auditors’ Board. Further amendments to the Act were made in 2015, following recommendations from the 2013 World Bank ROSC report to the Minister.

A further round of amendments commenced in 2017, in response to corporate and audit failures that had occurred or were emerging, including:

Programme 2: Institutional Responsibility

The IRBA acknowledges its institutional responsibility to also focus on identifying and addressing current challenges in the auditing profession. As a responsible and responsive regulator, our strategy has been revised to respond to challenges in the market, as outlined below.

The New Institutional Responsibility Strategic Areas

Arising out of the situational analysis, the three strategic focus areas are:

The sustainability of the IRBA is dependent on its financial and human capitals to execute on its mandate. The increased volume of complaints and disciplinary matters, however, has placed a severe strain on both capitals.

Going forward, the IRBA will be focusing on redefining business processes, harnessing the efficiencies to be gained from technology and looking at alternative funding models to ensure its sustainability.

Stimulating economic growth requires confidence in the capital markets and in attracting increased foreign direct investment. Likewise, rebuilding confidence locally will unlock private-sector investment. Improving investor sentiment is key to how the IRBA can contribute to one of the core elements of the NDP, which is “strong, sustained and inclusive economic growth to sharply reduce unemployment, poverty and inequality”.

Improving audit quality is also a critical success factor in rebuilding confidence; and the IRBA is committed to engaging with the profession, locally and internationally, to identify and rectify issues of poor audit quality.

In addition, the IRBA is committed to performing a gap analysis of the auditing profession and implementing measures to address significant gaps.

By restoring investor confidence in auditing and audit quality, and rebuilding trust in the financial statements of public interest entities, it is possible for the IRBA to play its role in supporting government’s efforts to promote an economic recovery, in line with national and public interest.

Some discussion on our stakeholder engagement is covered in Part C of this document. In addition to that, the following are key focus areas:

Our Regulatory Philosophy

Participation in global regulatory meetings of IFIAR, of which South Africa is one of the 55 member countries, and in the African Forum of Independent Audit and Accounting Regulators (AFIAAR), of which South Africa is a founding member and one of the 11 member countries, is key to benchmarking the IRBA against international developments and best practice in audit regulation.

Consequently, the IRBA subscribes to the following IFIAR Core Principles in developing its regulatory philosophy:

The Structure of Audit Oversight

The Operations of Audit Oversight

Audit Inspection Principles

Regulating the Financial Reporting Chain

The ROSC2 highlighted the need for broader regulatory oversight over the financial reporting chain. As such, comprehensive regulation continues to form part of the IRBA’s broader stakeholder engagement strategy; and the IRBA has assisted National Treasury by formulating a proposal for ways in which this could be implemented.

The IRBA is also committed to performing a gap analysis, in the broader financial reporting and governance ecosystem, of factors that adversely affect audit quality; and then to make recommendations to relevant stakeholders and decision-makers.

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2 There are a significant number of people working as accountants who are not members of any of the recognized professional accountancy organizations—this situation can cause reputational risk to the accountancy profession (paragraph 3.29). There is a need for a comprehensive arrangement to supervise and regulate PAOs to ensure that all PAOs serve public interest, a move that would also contribute to enlisting all accountants to be members of PAOs (2013 World Bank Report on the Observance of Standards and Codes for Accounting and Auditing, http://documents.worldbank.org/curated/en/ 661381468302454182/pdf/824940ROSC0P130official0use0only090.pdf.)