CATEGORIES
- (4) Negotiating Tax Debt and Payment Arrangements with SARS
- (2)Account / Profile
- (551)Accounting
- (2)Accounting and Finance
- (29)Audit
- (156)Auditing and Assurance
- (1)Business
- (1)Business Management
- (3)Business Rescue
- (102)CIPC
- (7)Compliance
- (18)Ethics and Professionalism
- (46)Financial Reporting
- (1)Government Funding Applications
- (4)Guides
- (1)Individuals Tax
- (28)Law
- (37)Legal and Compliance
- (2)Management
- (13)Miscellaneous
- (29)Money Laundering
- (1)Personal & Professional Development
- (2)Practice Management
- (2)Professional Ethics
- (3)Public Sector
- (145)Regulatory Compliance and Legislation
- (41)SARS Issues
- (29)Sustainability Reporting
- (42)Tax
- (1)Tax Update
- (9)Technology
- (1)Wills, Estates & Trusts
- Show All
The Mandatory Audit Firm Rotation (MAFR) set aside by the Supreme Court of Appeal
- 02 June 2023
- Auditing and Assurance
- South African Accounting Academy
The rule, promulgated in 2017, obliged listed and public interest companies to appoint a new audit firm after a tenure of 10 years.
IRBA issued the MAFR Rule prescribing that auditors of public interest entities (PIEs) must comply with mandatory audit firm rotation (MAFR) with effect from 1 April 2023.
The Supreme Court of Appeal (SCA) published its judgment on 31 May 2023, following an appeal by the East Rand Member District of Chartered Accountants. The voluntary association petitioned the SCA after the Pretoria High Court dismissed its application for a review with the aim of setting aside the rule.
IRBA has indicated in a media release that the Set aside of MAFR poses little risk to investors since the majority of public interest entity auditors have already rotated. By early November 2022, IRBA had identified that 404 entities as PIEs to which MAFR applies, and that 170 were due for audit firm rotation, with 52% already in compliance.
The Independent Regulatory Board for Auditors (IRBA) has indicated that the setting aside of the Mandatory Audit Firm Rotation rule (MAFR) by the Supreme Court of Appeal poses minimal risks to investors on a shortterm basis as the majority of listed entities (91%) and public interest entities have already rotated audit firms thereby minimising the risk of independence threats as a result of long tenure. The benefit of these rotations will be in effect for at least the next five to ten years.
In safeguarding an auditor’s independence, IRBA still believes that MAFR is the appropriate mechanism that strengthens auditor independence. The court’s judgement against the IRBA in this matter was on a technical legal basis and did not bring into question the value and/or effectiveness of MAFR. Therefore, IRBA stands by the principle of strengthening independence through regular rotation of firms.
Read more in an article on the court ruling at https://www.moneyweb.co.za/news/south-africa/no-more-mandatory-rotation-of-audit-firms-in-sa/
Click here to access the IRBA Media Release:
Relevance to Auditors, Independent Reviewers & Accountants:
- Adherence with our Code of Conduct and relevant rules is crucial in the performance of our duties as auditors.
- Auditors, Independent Reviewers and Accountants should be aware of the latest publications and guidance issued by regulators, such as the IRBA and relevant court rulings that affect the rules made by IRBA.
- The Rules set by IRBA are applicable to all registered auditors. A contravention of, or failure to comply with, any requirements in the 2023 IRBA Code may be regarded as improper conduct within the ambit of Section 21 of the Auditing Profession Act, No. 26 of 2005, as amended (APA) or the IRBA Rules Regarding Improper Conduct.
Relevance to Your clients:
- MAFR obliged listed and public interest companies to appoint a new audit firm after a tenure of 10 years
To stay current with all the latest changes and updates subscribe to our Monthly Compliance and Legislative Update series for R 250.00 per month. This gives you access to a monthly 2-hour webinar and monthly newsletter:
https://accountingacademy.co.za/profession/monthly-legislation-update
Get all your CPD online. SA Accounting Academy (SAAA) offers Subscription Plans, Live Webinars, Webinars On-Demand, Access to Experts, Courses, Articles and more:
https://cpd.accountingacademy.co.za.