Transnet leadership disaster sparks call for broader regulation of accountants
Recommendations were made against board members for years, with little to no effect.
A Transnet locomotive. Picture: Facebook
Transnet’s announcement that it has given eight of its senior executives cautionary suspension notices for failing to implement a number of past internal audit and forensic reports has prompted the Independent Regulatory Board for Auditors (IRBA) to call for the broader accounting profession to be regulated.
IRBA CEO Bernard Agulhas said the prevalence of failures to implement audit reports was damaging to the profession. This was because the public and users of information did not clearly understand the differences between advisory work and subsequent recommendations versus the public interest service of independent external audit and opinions on financial statements.
He said the regulator agreed with the 2013 World Bank’s recommendations in the Report on Observance of Standards and Codes that the broader accounting profession in South Africa should be regulated, not just the 4,500 registered auditors.
“This will bring company directors, board members and audit committees under regulation, which will provide the opportunity for recourse when failures or negligence occurs.”
Transnet spokesperson Molatwane Likhethe said the company’s decision was taken after it found reports done over a number of years had been piling up without any follow-up actions.
Transnet acting CEO Tau Morwe said the letters were issued to senior executives ranging from general managers and executive managers who were implicated in reports dating as far back as 2011.
“Recommendations emanating from the reports were not followed up by management. We have been receiving anonymous complaints from employees about some of the allegations in the reports.”
The senior executives were given 48 hours to explain why they should not be suspended. Last month, Transnet board chairperson Popo Molefe described the organisation as a nightmare, in reference to the level of looting of public funds.
He flagged the reluctance of senior managers to release key financial information.
“We literally had to go into the server to find information in our investigations. Management did not give directors the correct information and the board could not make the right decisions.”