Uptake of audit firm rotation by JSE-listed entities gains traction
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AT June 2020, 25 percent of JSE-listed entities had rotated audit firms, driven by early adoption of compliance to the Mandatory Audit Firm Rotation (MAFR), according to the Independent Regulatory Board for Auditors (Irba).
It said this has now almost doubled to 48 percent of entities having rotated - or issued notice of intent to rotate - at least once as at end August 2021. A total of 17 entities had rotated more than once.
Of all rotations, 46 percent of these cite MAFR compliance since June 2017 as the main reason for rotating auditors. MAFR and compliance to the rule remains the leading reason for changing external audit firms, with the next most cited reason being a tender process at 12 percent. Terminations either by mutual agreement or from the entity comes in at 11 percent, while resignation of auditors accounts for 10 percent. Audit firm mergers among mid-tier firms accounts for 11 percent.
Imre Nagy, the acting chief executive of Irba, said: “It is clear from our analysis that the horse has bolted on MAFR. The Irba expects the pace of rotations to continue to pick up significantly in 2022 in order to meet the April 1, 2023 deadline.”