new ethics code for auditors
21 May 2007

A new code of ethics for auditors would strengthen reporting requirements and increase investor confidence, said Kariem Hoosain, CEO of the Independent Regulatory Board for Auditors (Irba), yesterday.

Hoosain said the new code would be “values and principle-based” with additional guidance to ensure enforceability as opposed to being “rules-based”, which might provide opportunities for loopholes.  "In light of recent audit failures, both globally and locally, Irba, as regulator of the profession, had been given responsibility for issuing ethical standards."

“We have observed through our inspection process that auditors are focused on appropriately documenting audit issues in compliance with audit standards.  “However, the documentation of independence and ethical considerations on audits requires a similar level of focus, and has a lot of room for improvement."

A new committee for auditor ethics is to be established by Irba, under the chairmanship of Edward Kieswetter, chief operations officer at the South African Revenue Service (SARS).

Hoosain said there had always been a code of ethics for the auditing profession.

“While the current Public Accountants and Auditors Board code of professional conduct remains in force and applies to breaches alleging unethical conduct on the part of auditors, a key mandate for the committee is to develop a new code of ethics and conduct for auditors”.

Hoosain said the committee had proposed issuing guidance on network firms later this year to address the independence requirements for auditors.

Bernard Agulhas, Irba director of auditing standards and ethics, said the committee also intended, with education authorities, to ensure that universities offered more extensive subjects on auditor ethics.

Sanchia Temkin , www.businessday.com