McDonalds SA CFO Zaf Mohamed said the root of the problem is a drop in the quality of graduates produced by universities in recent years. “Compared to 25 years ago, the skills level has dropped significantly, and it scares me. We don’t only see that in the industry or the people we interact with, but also in people we are recruiting. Universities are not producing quality graduates.
“Yes, there were governance issues at Steinhoff, but the skills set of people who were auditing the company was also a problem. They were not suitably qualified to pick up what was obviously fraud.”
But Mohamed said there is undue pressure on external auditors, while those responsible for internal controls are often let off the hook.
“As CFO of McDonalds, what I produce has to be of high quality. I can’t hope that the external auditors will pick things up on my behalf. Then I must be fired. We can’t only hold audit partners responsible.”
Nel said overreliance on the audit report is problematic because auditors are held accountable even when management ignores internal auditors’ recommendations and masks things from external partners through collusion.