AICPA Advises SA Don’t Rotate Firms

State Board Report

February 2017

Mandatory audit firm rotation (MAFR) should not be adopted in South Africa, Barry C. Melancon, Chief Executive Officer of the Association of International Certified Professional Accountants, wrote to Bernard Agulhas, Chief Executive Officer of South Africa’s Independent Regulatory Board for Auditors (IRBA), on January 17. Writing in response to a consultation paper issued by IRBA on October 25, Mr. Melancon stated: “The Association strongly opposes MAFR and further believes that it may have a negative impact on audit quality, increase market concentration to a more limited number of auditing firms and will hinder, rather than promote, transformation of the profession.”

The Association, which is a combination of the American Institute of CPAs and the Chartered Institute of Management Accountants, was launched on January 1, 2017 with Andrew Miskin, FCMA, CGMA, named as its first chair. Mr. Miskin previously served as president of the Chartered Institute of Management Accountants. Tim Christen, past chairman of the AICPA, is the Association’s initial vice chair. The chair will rotate between the AICPA and CIMA on a 12-month basis.

In response to exposure drafts from the Public Company Accounting Oversight Board and others, NASBA has continued to take a similar position regarding MAFR. However, NASBA President and CEO Ken L. Bishop notes that conversations with IRBA leadership are ongoing and, “NASBA will not try to persuade the IRBA in any public forum.”