On Tuesday, 1 December 2020, EY published its 2020 Transparency Report, a key priority of the annual business calendar. In 2017, EY was the first audit firm in South Africa to publish a Transparency Report with the express purpose of sharing insight into the organisation’s rigour around its leadership and management practices with a core focus on the audit practice.
In the Report’s introduction, Ajen Sita, EY Africa CEO says, “Much has been said and continues to be said regarding trust and integrity within professional services and the audit profession and certainly, there is no shortage of those with a critical view. What we don't have enough of is the right people in the room talking about what we are going to do and what we need to do to move forward. The Finance Minister’s recent statement calling for an independent panel to investigate some of the challenges expressed about the audit profession is one that we welcome as a necessary step forward in this conversation.”
Sita is a vocal advocate for the transformation of the audit industry and is clear in stating that collusive management-led financial fraud is deplorable and combatting it begins with a corporate governance and regulatory framework that deters fraud from occurring in the first place. The audit profession must and will play its role in eliminating fraud, but it is management, Boards and the Regulators that govern company conduct are all parts of the lines of defense.
“Moreover, the profession and the audit product must evolve to recognise its role in the context of fraud prevention and detection and that’s not a straightforward exercise.”
Sita is emphatic in his view regarding the required independence needed to restore trust in the important work that they (auditors) do. He explains, “It is a fair and reasonable expectation that auditors are independent and should not have any conflict of interest with their audit clients. Therefore, I believe we should decisively restrict the provision of consulting services to audit clients. This would, once and for all, deal with the question of conflicts of interest.”
For Sita, his executive and the broader EY South Africa organisation, it all comes down to leadership.
“2021 will be the year for decisive actions that restores trust in the profession. Those actions, as I see it, pivot around leadership and the way leadership instils a culture of accountability from the board right through to trainees; and how the industry effectively addresses the challenges regarding independence, concentration and its role in fraud detection.”
“As leaders, we set the strategy, the expectations of what is right and wrong, and create the environment for all our people to really embrace a set of working methods, protocols, and standards of professionalism and integrity in what we do. EY leaders go to great lengths to communicate, engage, educate and hold ourselves, our employees and our broader supplier and client network to account in order to achieve this,” Sita explains
Watch a short conversation here with Lindie Engelbrecht, EY Africa Regulatory and Public Policy Leader where Sita summarises the key challenges to the industry.
Download the full report here
Notes to Editors
About EY
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