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Key Audit Partners and Transitional Provisions
Johannesburg / 05 December 2011
Key audit partners
The IRBA Code of Professional Conduct for Registered Auditors (the Code) introduces the concept of a "key audit partner" that is defined as: "the engagement partner, the individual responsible for the engagement quality control review, and other audit partners, if any, on the engagement team who make key decisions or judgments on significant matters with respect to the audit of the financial statements on which the firm will express an opinion." Paragraphs 290.151 – 290.155 of the Code recognise the significance of the threats that might arise and require the rotation, after seven years, of both the engagement partner, and key audit partners for audit clients that are public interest entities. Firms are advised to identify those other partners who are key audit partners to such clients, to whom the Code's requirements will apply from the effective date below.
Transitional provisions in the Code
Certain provisions of the Code have an effective date later than that of 1 January 2011, namely:
Engagement partner rotation in terms of the Companies Act, 2008
In addition to the auditor rotation requirements of the Code, Section 92 of the Companies Act, 2008 provides for a shorter rotation period of five years for the individual auditor (i.e. the engagement partner). There is no additional Companies Act requirement for other key audit partners. The requirements are as follows:
CIPC has advised that the determination of the five years, for purposes of this section commences from 1 May 2011, i.e. the date on which the Companies Act, 2008 became effective.
Sandy van Esch
About the IRBA
The objective of the IRBA is to endeavour to protect the financial interests of the South African public and international investors in South Africa through the effective and appropriate regulation of audits conducted by registered auditors, in accordance with internationally recognised standards and processes.