Internal auditors' independence at risk

The Institute of Internal Auditors surveyed auditors who work within companies and government to get a perception of how honest and ethically run state and private companies are.

The results are contained in the 5th Corporate Governance Index. More than 281 chief audit executives responded to the anonymous survey. In 2015‚ 60% of internal auditors surveyed believed ethics was an important part of their organisation‚ but this is now down to 53%.

The index warns the "downward trend does not bode well for South Africa‚ as a decline in ethics would ultimately have a ripple effect into the economy‚ with the poor suffering the most likely collateral damage." In the wake of the KPMG scandal‚ in which certain auditors missed red flags that pointed to the Guptas' money laundering‚ the index further revealed a decreasing number of internal auditors who feel they can do their jobs with independence.

Only 44% of internal auditors in government believed they could do an audit "without undue influence or interference" in comparison to 75% last year.

The perception was almost as low in large privately-held companies‚ with only 47% of internal auditors believing they had complete independence. The perception of independence of auditors working for local municipalities was only 46%‚ down from 82% last year.

Only 46% of auditors at state-owned companies said their work was done independently‚ as opposed to 74% saying this last year.

Claudelle von Eck‚ CEO of the Institute of Internal Auditors of SA‚ said these findings were "startling" and "worrying". Von Eck also said both the Gupta leaks and the KPMG affair have created the perception that the private sector is corrupt.

However‚ the index shows the public sector still fared worse in terms of corruption and interference in auditors' jobs. Deputy Public Protector Kevin Malunga‚ speaking at the launch of the report in Edenvale‚ Johannesburg‚ said that national soccer team Bafana Bafana's frequent poor performance was an indicator of "bad corporate governance".

"It is not about the resources you have access to; good governance is conduct related. Even coach Stuart Baxter said a month ago the players are partying too much." He said ethics and good corporate governance were important. The index quotes a separate survey‚ the Anti-intimidation and Ethical Practices Forum‚ released in September‚ which found only 5% of South Africans surveyed "strongly believed" doing the right thing was more important than financial success. 

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