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Changing auditors is not something most CFOs do often, but when the moment arrives, the decision can have far-reaching implications for governance, stakeholder confidence and the effectiveness of the audit process.

In this episode of Ghost Stories, The Finance Ghost is joined by Yolandie Ferreira, Head of Africa for Forvis Mazars Africa, to explore what companies should consider when appointing a new auditor and why the process is about much more than compliance.

From audit quality and industry expertise to AI, auditor independence and sustainability assurance, the discussion unpacks the factors that separate a routine audit from a truly valuable audit relationship. Whether you’re preparing for an auditor transition or simply want a better understanding of how modern auditing creates trust and accountability, this episode offers practical insights from the front lines of the profession.

In this episode:

• Why companies change auditors and how CFOs should approach the transition
• Common misconceptions about auditing, fraud detection and audit quality
• The role of industry expertise, geographic reach and auditor relationships
• How AI is changing audit processes while leaving human judgment at the centre
• Why sustainability assurance is becoming increasingly important for businesses and stakeholders

Transcript:

The Finance Ghost: Welcome to this episode of the Ghost Stories podcast. I’ve got the team from Forvis Mazars back in the mix here and someone we haven’t spoken to before, which is always very exciting: Yolandie Ferreira.  

She is a partner at Forvis Mazars and, more importantly, certainly for the purposes of this podcast, she is also the Head of Audit Africa. 

It’s going to be a very interesting discussion because what we will be talking about on this podcast is that your auditor is actually a strategic business choice, it’s not just a compliance exercise. It’s the source of confidence in your business for your stakeholders. It’s about more than just signing off the numbers – it’s actually a trusted advisor that you are bringing into your business.  

And I must say, as the team pointed out to me when we were deciding what to cover in this podcast, it’s possible to go your whole career actually, as a CFO, without really having to go through a change in auditor. It can just depend on lucky timing.  

So, sometimes you come across these things. Maybe you’re not sure exactly what to think about when choosing an auditor or changing an auditor. If that sounds like something that will resonate with you, then stick with us because there’s going to be lots to learn.  

Yolandie, thank you so much for joining me on the show. I’m very excited, personally, to learn from you because I’m not that jacked up on the world of audit, actually. 

Yolandie Ferreira: Thank you. It’s great to be here. I hope that I can enlighten you and your listeners today to certainly understand that auditors are not all grey – and not always men, either. So, there’s a lot of value that can be added to businesses and, as you said, strategically, through the right choice of an auditor. 

The Finance Ghost: Yeah, absolutely. It’s very cool to chat to you today. 

Let’s talk about the decision to change auditors, because as I said, it’s not something that every CFO goes through.  

I remember from my corporate finance days, you’d have the same thing on large corporate restructures, or M&A. Not every CFO has dealt with this and then suddenly they find themselves in charge of a project which is actually almost fundamental to the business and which, if you get it wrong, can actually be an existential issue. And I guess, choosing your auditor can be right up there in that regard.  

So, perhaps you can kick us off by just understanding the decision to actually change auditors, what the drivers of that would be, and then what the typical timing of that decision would be, as well. 

Yolandie Ferreira: Absolutely. It’s one of the most common misconceptions that companies only change auditors either when something has gone wrong or when regulation requires them to.  

For a long time in South Africa, regulation didn’t actually require companies to change auditors, but that changed with the new firm rotation requirements. That’s been in place for a number of years, so most CFOs at large corporates have probably gone through one change in auditors.  

But CFOs also don’t always stay in that position. As you say, it’s very possible that a CFO goes into a position, has been there for a couple of years, and then all of a sudden has to change auditors.  

The thing that I see go wrong most often is that the CFO or audit committee is not focusing holistically on the process, but rather has an idea in their mind of what the auditor should be looking at right at this moment – so, either because there has been a problem in the company, or because there’s a preconceived idea that the auditor is only going to look at the past and issue an audit opinion and then move on and we’ll see them next year. 

So, the timing is very important, because you want to have enough time between when you appoint a new auditor and when they need to issue their first report for the auditor to really gain a good understanding of the business. The audit report – and the auditor – are only going to be as good as their understanding of the business and the challenges that the business faces. 

Anyone can probably sign off a set of financial statements and issue an audit report (well, I guess, any auditor could do that), but really adding value through that audit report is something different. That’s not something that any auditor with any standard experience would be able to provide to a company. 

The Finance Ghost: Let’s start to dig into some of those concepts, because I think that’s where it’s difficult for someone who hasn’t worked closely with an audit team at that level to understand. 

And certainly, for outside stakeholders, they see an audit report and they incorrectly assume (even though it generally says it), “Oh, this is audited by a big brand audit firm. Hence, it must be completely free of misstatements, fraud…you know, take your pick.” It’s like, “This is the silver bullet. We’ve caught everything.”  

That’s not really how this works in practice, as we know, and there is additional value that you bring to it through sector expertise and that kind of thing. So, perhaps just deal with some of those misconceptions for us, and then also just walk us through the value of knowing a sector, for example, or maybe of being an auditor who understands listed versus unlisted companies and multinationals and those sorts of concepts. 

Yolandie Ferreira: Yes, I think probably the biggest misconception out there – well, there’s two. One is that fraud can never happen if the auditor has issued an audit opinion. Well, fraudsters are quite a bit cleverer than most auditors and finance practitioners or experts, because fraud is normally all around collaboration, or doing things which are not in the ordinary course of business – quite undercover. Quite difficult for an auditor or a CFO to just pick up. Otherwise, there wouldn’t be large frauds because it would be easy to pick up.  

So, I think one of the big misconceptions is that having an audit opinion from a large audit firm means that there’s nothing wrong in that company. And I think the reason for that is the very nature of audit. Auditors don’t look at every single transaction. Auditors don’t express explicit assurance that everything is right. And that’s a difficult thing to understand, particularly when something has gone wrong.  

I think while everything goes right, everyone understands that. But when something’s gone wrong, then all of a sudden people will say, “Why did the auditor not see this? Why did the auditor not prevent this?” 

And yet, when we talk about auditors, people will often say, “Auditors don’t bring value because they only look at the history.” But how, then, would they spot that something could go wrong potentially, if they’re only looking at the history? 

So, that’s where you really need to, as CFOs and audit committees, carefully consider a couple of things when appointing new auditors. 

Industry expertise is always going to be close to the top of that list, if not at the top of the list. The auditor needs to understand the unique risks and the complexities in the sector that you operate in.  

It’s very different auditing a mining company to auditing a financial institution, or a retailer, or having technology and being in a business that is completely driven by technology, and bringing in an auditor that completely wants to substantively audit everything without the use of technology. 

So, it’s clear, when you’re in a specialised sector, that you probably need an auditor with industry expertise. When it becomes less clear is when audit committees say, “Yes, but we’re not necessarily in a specialised sector – we manufacture.” Well, manufacturing is also a specialised sector. 

But when you’re listed, that is a specialised understanding that is required of being listed versus being owner-managed versus being a large privately held business. All of these bring a different complexity that your auditor needs to understand if they’re going to add value. 

All auditors audit under the same standards, so if we do our jobs properly (which we all try to do), then we will all issue the same audit report under the same standard. But where that becomes tricky is to understand the unique risks, the complexity of whether that’s the business model, the sector, the market that you operate in. And that really is something that audit committees and CFOs need to think about: whether the auditor has the relevant experience and expertise. 

Quality is sometimes, you would think, easier to measure. But we only need to look at the different reports issued by the regulators across the world to understand that sometimes it’s very difficult to understand what a regulator is saying, and sometimes they come out quite clearly listing quality failures.  

But how does an audit committee then apply that to their auditor? Just because a quality failure may be listed doesn’t mean that incorrect audit opinions have been issued. So, there are a lot of things which have to be taken into account, around quality and reputation, to make sure that the audit opinion carries weight because the stakeholders trust the quality standards behind it. 

And for that reason, audit quality must always be a primary consideration, but it’s not always a black and white consideration. It’s something that audit committees need to get comfortable with, with the auditor, to really understand how the auditor is going to ensure quality on the opinion that they’re issuing. 

Another thing I think that can be quite fundamental for a business is geographic reach. If the business is only operating in one location, it’s probably not that relevant. But many organisations these days operate in multiple jurisdictions – whether that’s within an African region, or globally; in South Africa, it may be just multiple locations within one country – and it’s always better to have an auditor who can deliver seamlessly across those different geographic locations. 

If you ask my personal opinion, the people and the service model are integral to this process. Relationship really matters. Yes, the auditor must be independent, but boards should understand clearly who’s going to actually perform the work. 

How accessible will the senior audit partner who’s signing off on that opinion be to the management and the audit committee, and how will the team collaborate with management and the audit committee? 

It’s very difficult if management is only dealing with a manager, for instance, at an audit firm, versus when they have direct access to the audit partner who is actually going to be signing off on the opinion. So, that’s definitely something I think that any CFO or audit committee needs to make sure that they will have access to the audit partner who will be signing off on the opinion. 

And then these days, you always hear from either the CFO or the audit committee, “How much AI are you going to use in the audit opinion or in performing the audit work?” 

So, the profession is changing rapidly and all the firms are making use of data analytics, automation and AI to deliver more efficient audits, and often to identify insights that traditional processes may miss, purely because of the volume of data that auditors have access to and which they need to analyse.  

But I think, going back to my previous point, the relationships matter. Who are you going to pick up the phone to speak to when there’s a blockage and a deadline may be in question, or when something has gone wrong and you need to understand what the impact is or how it needs to be rectified? 

You can probably ask AI that, and you may get an opinion, but if you don’t have a relationship with an actual person, it’s very difficult to actually resolve those issues as they arise. 

So, for me, those would be the five top things that audit committees and boards need to consider. 

The Finance Ghost: Thanks. That’s such a good helicopter view of many of the factors which people need to think about, for sure. I’m so glad you brought up AI – which does not stand for ‘audit intelligence’, of course. It’s ‘artificial intelligence’, and the amount of intelligence is extremely debatable, for anyone who has been using any of these models.  

Sometimes they are amazing, sometimes they are awful. The thing that always scares me is that they are a black box. It’s quite difficult to audit exactly what’s happened, ironically.  

I have always wondered about where you can and can’t use AI in an effective audit process in the modern world, so I’d love to get those insights from you, and I think anyone listening to this will find that interesting as well. 

Yolandie Ferreira: Absolutely. It’s undoubtedly been one of the most exciting developments in our profession. But I must tell you, I probably don’t go through any week where someone doesn’t tell me that auditors will be replaced by AI. And that is something that I do not believe.  

I mean, historically, auditors have spent probably most of their time gathering, organising and analysing information, and AI and automation is helping a lot with that. It gives us insights much more quickly, and it therefore allows experienced auditors to spend most of their time focusing on actual risk assessment, applying their judgment and scepticism, and then communicating with clients.  

So, we’re seeing a lot of improvements in the analysis of documents, data interrogation and (speaking to the fraud point we raised earlier) helping us with identifying unusual transactions or patterns that may warrant further attention that, when you were in the past just testing 50 items, you may never have seen those unusual patterns. So, that is all adding to the value of an audit.  

But one point is extremely important, and that is that AI is not – and cannot – replace auditor judgment. Audit remains fundamentally centred around professional scepticism, ethics and governance, and human judgment.  

It’s one thing to give me an answer that is technically correct, but the auditor needs to think about everything that they’ve gathered, all the information that has come to them, and really apply that professional scepticism and human judgment to make sure that we process information effectively and that we draw conclusions from there which are supported by the evidence we have gathered.  

My view is that the future auditor won’t be replaced by AI at all. We will simply be enabled by AI. So, probably better auditor intelligence, rather than just AI, as such. 

The Finance Ghost: Yeah, I tend to agree with that. I see it in my work, as well. It’s only as good as the prompt you give it…  

Yolandie Ferreira: Exactly. 

The Finance Ghost: …It’s only as good as the stuff you train it on. And whenever there’s a judgment call or you need to be able to bring together a variety of different sources and life experiences and conversations, that’s where it falls over.  

Which makes sense, right? I mean, it’s just a predictive model based on the inputs that it’s seen. So, all of that makes absolute sense.  

Perhaps we can now move on to some practical examples of the sort of value add that auditors do bring. Because people hear this (and you’ve raised it as well), but it’s always so good if there are some real-world examples that you’ve perhaps got at hand where – as an auditor, as an audit partner, or that you’re aware of – actual value has been added beyond just, “Hey, you are now compliant, ticking the box.”  

What can you give us there to help us understand that better? 

Yolandie Ferreira: I think that balance is kind of at the heart of the audit profession. Because yes, we have to be independent, and we have to maintain that independence and objectivity almost at all costs. But we also need to make sure that that professional scepticism and objectivity that we bring remains a concept that we apply to add value.  

So, because we see different businesses, we see different controls and implementation of whether it is a control-system way of thinking. When we’re then working with clients, that is the value that we can bring. Our experience, the way that we’ve challenged and our objective view.  

So, a good auditor should be collaborative but never compromise their independence, which is difficult. But that is why we are audit professionals. 

In practice, it means asking the difficult questions which, often, management haven’t thought about because they are focused on delivering on a particular goal.  

So, it is being that challenge and saying, “Have you thought about this?” Challenging those assumptions. Making sure that you do have the evidence. And we’ve seen it when sometimes – not always on the audit – but on the audit where we look at systems and controls, for instance, challenging management to really say, “This is the control you have in place, but are you actually still reaching your control objective?” 

Particularly when things change so quickly in the world of technology. It may have been a perfect control process five years ago, but is it really still working? 

And sometimes you see, when you hear about fraud or you’ve picked up a fraud situation at another client and you go to your client and you say, “You know this control? This is the way someone could get around that control,” or “This is a pattern that you may miss.” 

The classic example (which we do still see) is that you can really, currently – specifically with technology – take away segregation of duties almost completely. And if you don’t bring controls in to compensate for the fact that one person can now do what five other people may have been involved in the process of before, then you could have an outcome where your control is actually failing because you’ve automated or you’ve brought in AI or a different system to get to a much more efficient way of doing things, but at a higher risk. 

Other examples would be things like when we’re working not on an audit maybe, but to help a client review a prospectus to go into a listing or the launch of a new project. Again, it’s the experience and the objectivity of challenging the assumptions that are built into valuations, for instance. Challenging the assumptions of how perceptive a market would be to a new project. 

So, I think it’s those types of things that you don’t always think about as adding value into an audit opinion, but just raising it as part of the overall audit process brings value to management, particularly where the relationship is strong enough that the mutual trust and respect is there between management and the auditors for the role that each party plays. 

The Finance Ghost: Yeah, brilliant. And you’ve raised that whole working relationship with management. That’s come up a few times, actually. That is obviously something which is very important. 

Of course, it’s something you also have to manage, because the whole idea is that auditors are not supposed to be too close to management – because otherwise all the familiarity issues start to come through. 

So again, maybe for people outside the profession (and even for those in it, frankly) and for the CFOs out there, how do you personally practically manage independence and professional scepticism while still having that relationship with management which creates a good, efficient way to do audits? 

Yolandie Ferreira: It is a balancing act. It’s not getting too close to your client, but building a close enough relationship that you can have that really honest conversation and really challenge what your client is thinking or presenting you with as evidence.  

And, I guess, a mutual respect. Just building your relationship based on that mutual respect. Because we are there, both of us, to do a job. And, in the auditor’s case, you have a team below you that also, as a team, holds each other accountable, and challenges what each other is thinking, and brings the different professional scepticisms and different ways of thinking to the forefront.  

But for me, the most important thing is that that relationship with your client is not a personal, we’re-friends-around-the-braai-type relationship. It is very much a professional relationship built on respect for what each of us brings to the party. 

And we know that auditors need to be independent. So, as an auditor, you need to guard that line because that is what gives you that objectivity and what allows you to add value. 

The Finance Ghost: I love it. You’re taking us through such a great view of auditing and how the profession actually works out there. And, last question. Another thing that’s come up in recent years, I think, is sustainability assurance. Really interesting space.  

So, I generally see this play out when I’m looking from an investment perspective and I see companies raising sustainability-linked financing and that has metrics attached to it.  

I can’t remember which group it was, but it doesn’t matter, there was a hospital group and they raised sustainability-linked financing, and one of the metrics was the number of people who they help from a health perspective, which blew my mind.  

I’m like, “That is what you do. You are a hospital.” That has to be the best negotiated funding deal in the world. It’s like, “Our core business is to make people better. Let’s link that to our loans somehow.” So, some very clever person ran a smart negotiation with the banks there.  

There’s a bigger underlying issue there, which is lots of greenwashing. ESG can sometimes be very good. It can also be very dicey. So, this all rolls up into sustainability assurance and actually just doing the right thing in that space.  

Are you seeing more of these engagements coming up in practice? Is it a growth area that’s quite interesting to talk about? 

Yolandie Ferreira: Absolutely. We’re seeing it more and more that all stakeholders want confidence not only in financial information, but also in non-financial information. 

And the biggest challenge is that it can’t just be a warm and fuzzy story, because that’s generally where the greenwashing comes out. It has to be something which can be proven. 

Whether organisations are reporting on climate risk, emissions, diversity, how many people’s lives they make better, there has to be – just like with financial information – a level of support which can be given for the information that they want to publish. Because for stakeholders to have confidence in it, you need to be able to say, “This is what I say, this is why I say this, and someone has verified that I’m not just making up nice stories.” 

We’re seeing this mature rapidly globally. Just like with financial information, stakeholders want assurance that the information is reliable, consistent and, as I said, supported by evidence. 

What makes it so interesting is that it’s sometimes very different to the financial reporting areas which we’re so used to having strategic implications for businesses. So, as auditors, we really need to think outside of the box.  

But if you think about it, we’re used to placing reliance on experts. It’s part of what we learn to do, because we’re used to not being the expert in every single thing that we could come across from a financial information perspective. So, it’s just a different type of expert that you have to go find and really think about how you can find evidence to support what companies are wanting to report on.  

So, I really believe that sustainability assurance will continue to become even more mainstream and that the broader assurance landscape will incorporate that into ultimately being part of just one level of assurance, not being spoken about even as “financial versus non-financial assurance”. 

The Finance Ghost: Brilliant. Yolandie, thank you so much. You’ve given us lots to think about here. I’ll make sure that people can easily reach you via LinkedIn through some links here in the show notes. They can go and find you on the Forvis Mazars website as well.  

To the CFOs out there, if you are perhaps thinking about a change in auditors or you just want to learn more about the offering at Forvis Mazars in South Africa, then please do check it out. Reach out to Yolandie.  

And yeah, it’s an interesting space. It’s ever-changing. It’s very important to the fabric of our economy, so thank you for doing what you do, Yolandie, and enjoy navigating this changing world, because there’s lots going on, and I’m sure there will be plenty for us to talk about in subsequent episodes. 

Yolandie Ferreira: Thank you, Ghost. And if I can leave with one takeaway, it’s that a great audit doesn’t just verify the past. It actually helps build confidence in the future. 

The Finance Ghost: Absolutely. I love that. 

Yolandie Ferreira: Thank you. 

The Finance Ghost: Ciao.