ICAZ on high alert as global audit firms fail quality tests

In the past months, audit firms, including Grant Thornton, BDO, Forvis Mazars, Ernst & Young and PwC, failed to pass quality audit tests in the UK, coupled with some facing sanctions in the United States, raising concerns the contagion could spread to countries such as Zimbabwe.
THE Institute of Chartered Accountants (ICAZ) says recent reports of multinational audit firms that failed audit quality tests or being sanctioned could have ripple effects in Zimbabwe as it may lead to increased scrutiny of audit practices.

In the past months, audit firms, including Grant Thornton, BDO, Forvis Mazars, Ernst & Young and PwC, failed to pass quality audit tests in the UK, coupled with some facing sanctions in the United States, raising concerns the contagion could spread to countries such as Zimbabwe.

ICAZ chief executive officer William Mandisodza said there will be increased monitoring by the institute and the Public Accountants and Auditors Board (PAAB) as the situation may influence the perception of these firms among Zimbabwean stakeholders.

“Due to the existence of some of these brands locally, the shortcomings of these multinational firms in other jurisdictions could have ripple effects in Zimbabwe as it may lead to increased scrutiny of audit practices within our borders, prompting local regulatory bodies to implement stricter oversight measures,” Mandisodza said.

“There could be concerns whether these firms are maintaining the same standards in Zimbabwe as they are expected to uphold internationally. This situation may influence the perception of these firms among Zimbabwean stakeholders. Therefore, there will be increased monitoring by ourselves and our regulator the Public Accountants and Auditors Board. Also important is the distinction of network from the practitioners.”

Mandisodza said as much as networks share some resources, there is distinction between the network and the practitioners. Individual practitioners will be different from those in another country.

He added that there were local partners with local expertise and knowledge and they benefit from global tools and knowledge alone and exercise their independent professional expertise.

“Additionally, a failure in investigations in the UK does not mean failure of the whole firm. Regulators review samples of files, therefore, as a country we have not had these types of major concerns largely due to the existence of quality assurance, investigation procedures and disciplinary procedures within public accountancy organisations such as ICAZ and the PAAB which act as deterrents,” Mandisodza said.

He said local firms continue to be held against the highest possible standard to safeguard the public’s interest and there was no prejudice to the continued engagement of these auditors within Zimbabwe, since there are no recent records of them failing quality assessments or facing serious sanctions in the market.

“If audits are of a substandard quality, this could result in financial inaccuracies, undetected fraud or other material issues that might severely affect the audited entities and the public at large who are the users of financial information. This is why we, together with PAAB, monitor our registered firms. In Zimbabwe, we have no concerns with the reliability of audits.

“This is largely due to our adherence to global standards, in particular what we call the statement of membership obligation number 1, on quality assurance which is supported by investigation and disciplinary procedures where there are failings. PAAB provides regulation and oversight while ICAZ focuses on the investigation and discipline,” the executive said.

Mandisodza however, acknowledged the gravity of these developments adding that ICAZ would continue monitoring the audit profession to protect the integrity and reliability of financial reporting in Zimbabwe.-newsda