CAPE TOWN - Multinational professional services company, Deloitte said it has confidence in the embattled retail holdings company, Steinhoff as the global retailer’s auditor.
The statement comes after Deloitte previously remained mum about the various probes into their audit opinions of their financial statements. Deloitte now says that the probes were appropriate, given the alleged accounting irregularities at Steinhoff.
Deloitte first raised a series of questions about Steinhoff’s 2017 financial statements before deciding that these should be answered by an independent investigation.
“Raising these questions prior to finalising the audit is an example of a good audit process, and we believe that we have done the right thing by raising our questions,” said the CEO of Deloitte Africa, Lwazi Bam.
Bam’s comment the first from the auditing firm, he says that investigations by the IRBA and AFM are to be expected.
“Deloitte is fully cooperating with the IRBA and the AFM and will continue to fulfil its ethical, legal and regulatory obligations. We remain committed to delivering on our professional responsibilities and acting in full compliance with regulatory and professional standards”.
“At this stage it is unclear when the 2017 audited consolidated financial statements will be completed”, said Bam.
This however depends on the successful completion of the PricewaterhouseCoopers (PwC) investigation into the matter.
Bam also denied parity between Deloitte and what emerged at Steinhoff and KPMG.
“When you have an incident like this, it is unfortunate, it is difficult, not just for Deloitte but for the country, we understand that it has a huge impact. There’s a vested interest and concern from the country’s perspective. But in terms of Deloitte’s commitment to quality, ethics and commitment to always acting with integrity, I am not concerned," he said.
Just last month, Deloitte was investigated by The Dutch Authority for the Financial Markets (AFM) over the alleged accounting irregularities that led to the share price of South African multinational retailer Steinhoff collapsing.
This comes after Steinhoff said it was not able to publish its 2017 financial statements, leading to over 85% of Steinhoff’s market value being wiped out since December.
"It's a red flag, this is something very serious," in December said Peter Brooke, portfolio manager at Old Mutual Investment Group - a top 20 shareholder in Steinhoff. It also raised wider questions about South African corporate governance and would have a negative impact on the country's assets.
A spokeswoman for Deloitte Accountants B.V, which signed off Steinhoff's 2016 results, declined immediate comment last month.
Steinhoff, has been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany since 2015.
Reuters reported in November last year that Steinhoff did not tell investors about almost $1 billion in transactions with a related company, despite laws that some experts say require it to do so.
Bam acknowledged that the auditing profession is under much scrutiny and needs to have a “much broader discussion” around the nature of audit, the role of the auditor, the role of management and importance of good governance.
“As a profession, we are continuously looking at how to improve the way in which we audit so that we remain relevant to the changing times, to a world where things are becoming more complex, and things are becoming more cross border and yet you still have to deal with the sovereignty of the various governments," he said.
- BUSINESS REPORT ONLINE