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Deloitte SA CEO Lwazi Bam says he wants the verdict to be published sooner because the races have been destroyed. Photo: Elvira Wood
- The Independent Regulatory Board of Auditors (IRBA) on Thursday released its disciplinary committee’s decision on charges brought against Deloitte auditors from the former African Bank.
- The auditors have been acquitted of the most serious charge of dishonesty and collusion with former African Bank CEO Leon Kirkinis.
- While one of the partners has effectively been cleared of any wrongdoing, the other was found guilty of five counts related to auditing standards.
The jury is out. The disciplinary committee that deliberated on the charges brought against two Deloitte auditors for their work at the former African Bank says they are not guilty of dishonesty, misconduct or lack of independence: the three most convicting charges against them.
Daniël Crowther, the auditor who assisted African Bank audit partner Mgcinisihlalo Jordan in 2013, has been effectively acquitted of any wrongdoing, almost two years since he was charged with dishonesty and misconduct, a charge that led to his early retirement because he couldn’t do any audit work while looming over him.
The Independent Regulatory Board of Auditors (IRBA) brought 10 charges against Jordan in 2018 and one against Crowther: that of dishonestly suppressing audit evidence to the effect that they allegedly advised Gustav Raubenheimer, who was the chief credit officer of the former African Bank, not to talk about your concerns.
But the IRBA disciplinary committee found “serious contradictions and improbabilities” with this charge and concluded that the couple was not guilty. Jordan was found guilty of five of the 10 charges he faced. The guilty verdicts related primarily to technicalities such as miscalculation of the impairment provision that the bank was supposed to override, failing to properly document audit work, and incorrectly issuing an unqualified audit opinion, among other things.
The fact that its auditors have been acquitted of dishonesty, not applying professional skepticism, or overlooking management bias will be a welcome relief to Deloitte, whose reputation was at stake, as a guilty verdict on these issues could have put a focus of attention on your organizational culture. But this ruling, while it found Jordan guilty of some charges, will likely boost Deloitte’s confidence when it faces IRBA again over the firm’s audit work at Steinhoff.
The audit watchdog announced in 2017 that it had launched an investigation into Deloitte for its work at Steinhoff, but had to wait for the retail giant’s updated financial statements to proceed.
It’s a shame the races were destroyed
“For Deloitte it is not even about claiming them. We are a company that takes this issue of integrity, honesty and ethics very seriously. It is something that we realize and we offer ourselves. Our position is that if a partner he’s been dishonest, he’s been involved in some collusive behavior with a client, we immediately part ways with them, “said Lwazi Bam, CEO of Deloitte.
So when the firm was faced with the suggestion that the two partners were dishonest, Bam said Deloitte was deeply disturbed and immediately conducted its own examination. But his own investigation yielded too much evidence that pointed against the possibility of dishonesty on the part of Jordan or Crowther, Bam said.
“We are relieved that they were not found guilty of that. But it is sad that the lives of the two partners involved have been significantly affected. Danie, as the investigation has not been able to audit. His career was effectively destroyed by something that in the end he was not found guilty, “Bam said.
Jordan, on the other hand, took on other roles in the group, but neither did the audit work.
But lessons have been learned
While the two Deloitte partners have been cleared of the most serious charges, it remains unchanged that the disciplinary committee found some shortcomings in some of Jordan’s work.
Bam said that for him, those guilty verdicts speak to the complexity of the issues at hand – auditing standards, incorrect interest rate, incorrect income recognition were just some of the issues the disciplinary hearing was slow to deal with. months to stop. But those remain concerns that Deloitte will have to look at very closely so that history does not repeat itself.
“What we will have to understand is why we were wrong. What did we miss, how could we have done better? That is the value of both IRBA inspections and a panel like this. We have already addressed it. But we will study the ruling in detail to see if there are things that still need to be fixed, “said Bam.
However, with disciplinary hearings that took place intermittently between March 2018 and June 2020, Bam felt that the process could have been sped up to ensure that these errors were pointed out and rectified much sooner.
For now, however, the process is not over until the disciplinary committee announces its sanction for Jordan. The sentencing hearing will be held from Saturday morning through Monday afternoon.
