– draws on information from Open Secrets’ investigations and publicly available information to illustrate the crisis faced by the auditing industry and how this affects the public. Each of the next four instalments in theAuditors are supposed to provide an essential check on abuse in both the private and public sectors. When an auditor signs off on financial statements, it provides assurance to the public that the numbers match up and that they are a fair reflection of financial reality.
At Tongaat Hulett, senior executives including the CEO of 15 years, Peter Staude, are accused of making numerous incorrect and probably fraudulent misrepresentations in the financial statements. The alleged fraud ranged from misstating the value of assets; incorrectly listing expenses as assets; declaring income from the sale of land that had not yet been sold, and then, failing to declare it when some of those deals fell through.
In 2018, Deloitte accepted the need for an investigation by the Independent Regulatory Board for Auditors , but said that they remained “confident in their conduct” at Steinhoff. Deloitte defends itself on the basis that they flagged concerns about the 2017 accounts. Yet, this was only after a criminal investigation related to possible fraud had commenced in Germany.
Deloitte was Steinhoff’s auditor for two decades. It was Tongaat’s auditor for more than 15 years as well. This kind of entrenched relationship inherently undermines the independence that an auditor is supposed to exercise. Deloitte’s long-running work for these firms means they should have had an even greater insight into the company and how it operated. The only upside to this is that it should have made it easier to identify patterns of strange transactions in both cases. This did not happen.
The IRBA is also now subject to a gross conflict of interest in terms of its investigation into Deloitte’s work at Tongaat. The IRBA’s outgoing board appointed Jenitha John as the new CEO in April 2020. John was the non-executive director who headed Tongaat’s audit committee for nine years up to May 2019, precisely the period when Tongaat’s accounts were a fiction and investors were lied to. The conflicts of interest are serious.
Responding to questions by journalists from amaBhungane, Deloitte Consulting’s managing director for Africa, Thiru Pillay, said:
Source: News Formal (newsformal.com)
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