Something continues to smell at Oceana after auditor PwC quits and it ain’t the fish

Less than a month after Oceana had its annual general meeting on 5 May, the company’s external auditors, PwC, resigned last Friday with immediate effect.  

A spokesperson from PwC told Daily Maverick: “After performing our client acceptance and continuance assessments, we determined that we are unable to continue as auditor of the Oceana Group. We are regrettably, for reasons of client confidentiality, unable to provide further details.”  

While management may have felt that they were successful in covering up fishy dealings at the company, PwC’s resignation is bound to raise more than a few eyebrows. The company was appointed as the external auditor in November 2020, shortly after chief financial officer Hajra Karrim joined the company. 

New brooms sweep clean and all indications are that Karrim was key in appointing PwC as auditors, taking business away from Deloitte, who had been Oceana’s auditors since 1942. Although one of the big four auditing firms in SA, Deloitte has been on the sidelines of several questionable 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 mandatory audit firm rotation. The South African Institute of Chartered Accountants has advised those companies (including close corporations) that require an audit that the designated auditor must be rotated 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, almost 62% of shareholders voted for PwC to be reappointed.  

Under international auditing standards, if an auditor becomes aware of a fact that existed at the date of the auditor’s report that would, if known at that date, have affected or changed the report, the auditor has a clear line of action. First, to consider whether the audited reports need to be revised, second to raise the matter with management, and third, to take “action appropriate under the circumstances”.  

The million-dollar question is: What came to light between 22 March, when PwC signed off on Oceana’s annual financial statements for the year to end-September 2021, and 27 May, when PwC felt it had no choice but to resign?  

https://www.dailymaverick.co.za/article/2022-05-30-raid-cato-crest-says-monitor-as-anc-councillor-charged-with-murder/

In an article on the American Accounting Association website, Dr Aloke Ghosh states that typically within a three-year period following an auditor’s resignation, companies are more likely to:

1. Be involved in class-action lawsuits;


2. Have internal control problems; and


3. Be delisted from a national stock exchange.

Chairperson Mustaq Brey. (Photo: Gallo Images / Financial Mail / Hetty Zantman)