On 2nd June 2017, the CEO of the Independent Regulatory Board for Auditors, Bernard Agulhas, published the rule on Mandatory Audit Firm Rotation (MAFR) for auditors of all public interest entities, as defined in section 290.25 to 290.26 of the amended IRBA Code of Professional Conduct for Registered Auditors.
The key elements are as detailed below:
An audit firm, including a network firm as defined in the IRBA Code of Professional Conduct for Registered Auditors, shall not serve as the appointed auditor of a public interest entity for more than 10 consecutive financial years
Thereafter, the audit firm will only be eligible for reappointment as the auditor after the expiry of at least five financial years
The requirement is effective for financial years commencing on or after 1 April 2023. Therefore, if the audit firm has served as the appointed auditor of a public interest entity for 10 or more consecutive financial years before the financial year commencing on or after 1 April 2023, the audit firm shall not accept re-appointment and will be required to rotate
When the auditor determines that an audit client becomes a public interest entity, the length of time the audit firm has served the audit client as the auditor before the client becomes a public interest entity shall be included in determining the timing of audit firm rotation
If, at the effective date, the public interest entity has appointed joint auditors and both have had audit tenure of 10 years or more, then only one audit firm is required to rotate at the effective date and the remaining audit firm will be granted an additional two years before rotation is required
This provision will only be applicable at the effective date