THE SOUTH African Institute of Chartered Accountants (Saica) is conducting an investigation into the Deloitte auditors who worked on the accounts of Steinhoff, Saica chief executive Freeman Nomvalo said.
He said in response to questions from Business Report that although Saica did not have jurisdiction over firms, it could investigate and discipline individual Saica members.
Steinhoff is dealing with numerous legal claims in South Africa, Germany and the Netherlands after its share price tanked in December 2017 and substantial accounting irregularities were subsequently uncovered.
As Steinhoff’s former auditor that signed off its accounts at the time, Deloitte agreed earlier in February to pay up to R1.3 billion in compensation to Steinhoff claimants. Deloitte said the payment did not represent an admission of liability for losses incurred by Steinhoff and its stakeholders as a result of the accounting irregularities.
In the 2017 audit, Deloitte had uncovered accounting irregularities and had refused to sign off the accounts. Deloitte pushed Steinhoff to conduct the independent investigation that uncovered fraud by Steinhoff‘s former management. Deloitte’s “global settlement” was aimed at addressing the litigation arising from the management fraud.
In the Netherlands, according to Bloomberg, former Deloitte partner Patrick Seinstra in April faced disciplinary charges from the Dutch Authority for the Financial Markets for improper audit processes at Steinhoff prior to 2017.
Deloitte said in response to BR’s questions that Steinhoff was a multijurisdictional matter, but from a South African perspective, they had only one shareholder class action, which the accounting firm had successfully defended.
“Most other litigation against Deloitte is suspended pending the possible settlement announced by Steinhoff. The Independent Regulatory Board for Auditors (Irba) is busy investigating our audit of Steinhoff, and we are co-operating with that investigation,” Deloitte said. Steinhoff declined to comment. Nomvalo said allegations of misconduct in audit-related matters in South Africa were investigated by Irba, which is the regulator for auditors.
Once Irba has concluded disciplinary investigations against registered auditors, and where these auditors are members of Saica, the professional conduct committee of Saica will consider the findings of Irba and determine whether this finding affects the Saica member’s ability to retain his or her membership of Saica.
Nomvalo said Saica did not want to comment further on the investigation, because it may obstruct the administration of justice.
“Saica’s disciplinary process follows… fair processes and therefore these matters take time,” he said.
Earlier this year, Saica concluded an investigation into former Steinhoff chief executive Markus Jooste, and subsequently charged him for various breaches of non-compliance or suspected non-compliance with the laws and codes of the profession.
Deloitte’s R1.3bn compensation to claimants was separate from the R16bn offer that had been made by Steinhoff itself to settle claims against it.
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