Mandatory Rotation of Auditors

Over the past few years the audit industry has been under significant scrutiny where the independence of auditors has been questioned.

In response to this and to further drive auditor independence, the Independent Regulatory Board for Auditors (IRBA) issued a rule prescribing that auditors of public interest entities (PIEs) in South Africa must comply with mandatory audit firm rotation (MAFR) with effect from 1 April 2023.

So what is a PIE?

PIEs are:

1. All listed entities; and
2. Any entity defined by regulation or legislation as a public interest entity or for which the audit is required by regulation or legislation to be conducted in compliance with the same independence requirements that apply to the audit of listed entities. Such regulation may be promulgated by any relevant regulator, including an audit regulator such as the Board.

In general, entities, as classified under point b above, has a large number and wide range of stakeholders and are therefore more likely to be considered PIEs, for example, banks, insurers, collective investment schemes, pension fund administrators etc.

What do the new rules entail?

In the past, after a period of five years, it was mandatory for the audit partners to rotate, but the same audit firm could be used. Going forward, additionally to the partner rotation, all PIEs must rotate their audit firms as well (including network firms) after a period of ten consecutive financial years, after which that firm will only be eligible for reappointment after at least five consecutive financial years.

The new rules come into effect on 1 April 2023. For example, if you have a February yearend and your auditors have performed the audit since the 2013 financial year, you would need to rotate your audit firm for the 2024 financial year.

What is the impact of MAFR?

For PIEs, this means that every ten years a new audit firm with new audit teams that has to get to know the business and internal workings. This could result in increased audit fees.

The process is widely contested in the market, with many firms stating that the impact of this new rule has not yet been fully assessed and will not increase independence and enhance audit quality, whereas the JSE responded by being one of the first entities to rotate their auditors to support the motion.

What you need to do

If your company is a PIE, it is time to start planning when would be best to rotate your auditors, which would give you sufficient time to obtain quotes from other firms.

You are also most welcome to contact our audit department to discuss any questions you may have in this regard.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)




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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.


Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.


Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.


Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.