Something continues to smell at Oceana after an ext…

Less than a month after Oceana’s annual general meeting was held on May 5, the company’s external auditors, PwC, resigned last Friday effective immediately.

A PwC spokesperson said Daily Maverick“After completing our client acceptance and retention assessments, we have determined that we cannot continue as an Oceana Group auditor. Unfortunately, for client confidentiality reasons, we are unable to provide further details.

Although management may have felt they had succeeded in concealing fish transactions Within the company, the resignation of PwC will not fail to raise eyebrows more than one. The company was appointed as external auditor in November 2020, shortly after Chief Financial Officer Hajra Karrim joined the company.

New brooms are cleaning up and all indications are that Karrim played a key role in appointing PwC as auditors, taking business away from Deloitte, which had been Oceana’s auditors since 1942. Although one of the Big Four firms of audit of SA, Deloitte was on the sidelines of several dubious cases over the past eight years.

The reason given for the change of auditors in November 2020 was that management had decided to early adopt a mandatory rotation of audit firms. The South African Institute of Chartered Accountants has advised companies (including related companies) that require an audit that the appointed auditor must be replaced after serving as their auditor for five consecutive financial years.

On the day of the annual general meeting, the board publicly acknowledged that there was a “strained” relationship with PwC, in a Stock Exchange News Service announcement to shareholders. On the same day, nearly 62% of shareholders voted to renew PwC.

According to International Standards on Auditing, if an auditor becomes aware of a fact that existed at the date of the auditor’s report and which, if known at that date, would have affected or changed the report, the auditor has a clear line of conduct. First, to determine whether the audited reports need to be revised, second, to raise the issue with management, and third, to take “appropriate action in the circumstances.”

The million dollar question is: what was revealed between March 22, when PwC approved Oceana’s annual financial statements for the year to the end of September 2021, and May 27, when PwC felt it had no choice but to quit?

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In an article on the American Accounting Association website, Dr. Aloke Ghosh states that generally within three years of an auditor resigning, companies are more likely to:

  1. Being involved in class actions;
  2. Have internal control issues; and
  3. Being delisted from a national stock exchange.

Oceana’s statement to shareholders Monday said PwC resigned “due to their assessment of significant doubt as to the existence of objective and transparent communication between PwC and the board of directors, which they believe , constitutes a significant attack on their independence”.

This came after the publication of the company’s 2021 annual financial results three months late on March 9, 2022. However, it is now revealed that PwC has still not completed its audit of the group’s US subsidiary, Daybrook.

President Mustaq Brey. (Photo: Gallo Images / Financial Courier / Hetty Zantman)

Chairman Mustaq Brey said the board had already begun the process of identifying a new auditor and discussions with one of the Big Four audit firms were at an advanced stage. One wonders if management plans to return to Deloitte, which seems to have turned a blind eye to somewhat questionable transactions.

While Brey says the right things – “The changes to our external audit relationship allow Oceana to move forward with a renewed commitment to strong governance and transparency…” – the board appears to release just enough information to meet reporting requirements and to keep shareholders quiet, while failing to provide full explanations.

Shareholders are still in the dark regarding CFO Karrim’s temporary suspension, the reasons for her suspension or any time for a disciplinary hearing.

Oceana maintains that PwC’s resignation will not affect the company’s interim results release, scheduled for June 3. DM/BM

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Shirlene J. Manley