The world is changing fast and to keep up you need local knowledge with global context.
Onlookers have raised their eyebrows at recent appointments at the Institute of Internal Auditors of South Africa and the Independent Regulatory Board of Auditors. A whistleblower has joined the dots, exposing the baggage of top brass for all to see. South Africa is working to remove the rot from its state-owned enterprises and expose suspect dealings in the private sector, at the behest of President Cyril Ramaphosa. Scandals have been exposed at SAA, Tongaat Hulett and Steinhoff, to name a few. Meanwhile regulatory bodies, which are supposed to monitor the integrity of business dealings have seen fit to hire individuals with chequered pasts into their C Suites. – Melani Nathan
Corruption in auditing: Disease spread by rotten auditors moving into leadership
By Melani Nathan
Devoshum Moodley is a whistleblower who has reported irregularities in a previous organisation, which she would rather not name because the case is currently underway in the courts. Leading law firm Webber-Wentzel has taken on her case pro bono and is optimistic she will win.
Moodley is a seasoned internal auditor and has been a member of the Institute of Internal Auditors of SA (II ASA), for 13 years. She says that the country’s internal auditing profession is being damaged by a lack of transparency and a series of failures to investigate irregularities. Moodley says she has complained about her disillusionment on an auditors’ online forum, pointing out weaknesses in the system.
“When I questioned the appointment of a chartered accountant as the CEO of the Independent Regulatory Board of Auditors on an internal auditors forum, many people came back to me, saying that they are leaving the profession because II ASA has not helped them when they were victimised within their organisations.”
Moodley points out that the credibility of the internal auditing profession is being diluted because chartered accountants are being appointed in positions that are meant to be filled by internal auditors. She says they have a different skill set and are meant to be governed by a different authority, the SA Institute of Chartered Accountants.
She cites the example of Julius Mojapelo, who was appointed head of II ASA in June. He is a chartered accountant and was a senior executive at SAICA. “This raises questions, why is an accountant at the head of II ASA?” Moodley said.
Mojapelo is also linked to Nkonki, the auditing firm involved in SAA accounting irregularities – giving the troubled airline which has sucked up billions of taxpayers’ funds the all-clear when it shouldn’t have.
Julius worked for Nkonki from January 2009 until December 2014. PwC and Nkonki were the joint SAA external auditors for five years – from 2012 to 2016 – and were paid a combined R69.7m over the period, according to figures provided by the Zondo Commission of Inquiry into State Capture.
Makwetu described the South African accounting profession as being ‘in the gutter’ when he removed Nkonki from public sector audit services.
Moodley says: “There’s an old boys’ club. Certain people are picked and moved around this small industry, causing havoc as they go”.
Another case in point is Jenitha John. John has been appointed as CEO of Independent Regulatory Board of Auditors (IRBA). John was chair of the audit committee at Tongaat Hulett for nine years, until May 2019.
During this time there were massive financial irregularities in the property and sugar company. The irregularities were investigated by PwC but John was never taken to task by IRBA. John insists that there is no conflict of interest in her appointment.
Others strongly disagree. OUTA, Solidarity and the Democratic Alliance all publicly voiced their concerns about her appointment as CEO of an institution which failed to investigate the Tongaat scandal.
Devoshum Moodley gave II ASA 30 days to disband the governing body and put in place a transformational plan before its annual general meeting. She plans to advance her case to SAQA, the South African Qualifications Authority. SAQA sets the standards for professions and oversees the establishment of regulatory bodies of those professions.
“Professionals are unaware that SAQA is an ombudsman for the institutions. I want professionals to know that they have further recourse beyond these regulatory bodies”, says Moodley.
“I do not want the 35th AGM of II ASA to proceed on Thursday [19 November]. I want them to disband the governing body and have a transformational plan in place before they can have an AGM”. Moodley has written an open letter to II ASA and IRBA, detailing her concerns and objecting to the commencement of the AGM.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.