The Standard Bank of South Africa Limited (SBSA) has made a significant announcement regarding its future auditing arrangements. The bank’s Boards and Audit Committees, cognizant of both global best practices and local regulatory requirements, revealed their intention to change auditors, subject to shareholder approval. This move not only aligns with international corporate governance standards but also underscores SBSA’s commitment to maintaining financial transparency and accountability.
Navigating the Change
The decision to change auditors comes after a period of careful evaluation and consideration. PricewaterhouseCoopers Incorporated (PwC), SBSA’s current joint auditor, will see its tenure conclude upon the completion of the group’s and SBSA’s financial year in 2025. This move is rooted in the principle of auditor rotation, a practice endorsed by global regulatory bodies and financial experts alike.
SBSA’s decision to initiate the auditor rotation prior to its 2026 financial year is in line with the guidelines set forth by the Independent Regulatory Board for Auditors (IRBA). Despite a recent ruling by the Supreme Court of Appeal on 31 May 2023, which set aside the Mandatory Audit Firm Rotation (MAFR) requirement issued by IRBA on 2 June 2017, SBSA remains committed to upholding the spirit of auditor rotation, consistent with international best practices.
The Case for Auditor Rotation
The concept of auditor rotation is rooted in the pursuit of transparency, independence, and accountability within the realm of financial reporting. By periodically changing auditing firms, companies can mitigate the risk of familiarity and enhance the objectivity of the auditing process. This practice is particularly pertinent in the banking sector, where the accurate and unbiased reporting of financial data is paramount.
Moreover, auditor rotation contributes to healthy competition among auditing firms, driving them to continuously enhance their skills and expertise to remain competitive. This, in turn, bolsters the overall quality of audit services provided to financial institutions.
Deloitte & Touche to Step In
SBSA’s search for a new joint auditor was conducted through a thorough and comprehensive tender process. After meticulous evaluation, Deloitte & Touche (Deloitte) emerged as the prospective joint auditor. The decision to appoint Deloitte is rooted in its robust track record, deep industry knowledge, and commitment to upholding the highest standards of financial integrity.
The appointment of Deloitte as a joint auditor, along with the designated audit partner, is subject to the approval of the South African Prudential Authority. This approval process aligns with the regulatory framework outlined in section 61 of the Banks Act No. 94 of 1990, as amended.
Regulatory Compliance and Shareholder Involvement
To adhere to the regulatory framework set by the South African regulatory authorities, the recommendation to appoint Deloitte as a joint auditor for the 2026 financial year will be presented to the ordinary shareholders for approval. This step is in accordance with section 90 of the South African Companies Act No. 71 of 2008, as well as paragraph 7.3(e)(iv) of the JSE Debt Listings Requirements.
The involvement of shareholders in this decision underscores SBSA’s commitment to transparency and its respect for the voices of those invested in the institution’s success. It also provides shareholders with the opportunity to participate in the shaping of SBSA’s financial governance structure.
Charting a Transparent Path Forward
SBSA’s decision to change auditors is not merely a routine transition; it’s a strategic move that exemplifies the bank’s commitment to maintaining the highest standards of financial transparency, accountability, and independence. By proactively adhering to global best practices and local regulatory requirements, SBSA is positioning itself as a beacon of integrity in the South African financial landscape.
The journey towards this transition has been marked by meticulous evaluation, comprehensive due diligence, and a resolute focus on the bank’s stakeholders – from shareholders to regulators to the wider public. With the pending shareholder approval and regulatory sanction, SBSA is poised to welcome Deloitte as a joint auditor for the financial year ending 31 December 2026, embarking on a new phase of financial stewardship while upholding the values that define the institution.
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