29 June 2010

The Independent Regulatory Board for Auditors (IRBA) approved the release of the Rules Regarding Improper Conduct and the Code of Professional Conduct for Registered Auditors, which becomes effective on 1 January 2011.

The Rules and Code contribute to the protection of members of the public who rely on the services of registered auditors, by creating a framework which will support registered auditors to make the right decisions when facing ethical dilemmas which they may

encounter during the performance of their services.

Edward Kieswetter, chairman of the Committee for Auditor Ethics (CFAE) the committee at the IRBA responsible for preparing the Rules and Code, says that “The goal is to help create an ethical, value-driven financial sector that encourages investment and confidence and promotes sound practices by developing and maintaining ethical standards which are internationally comparable.”

“The CFAE recognises that trust, integrity and independence are the underlying core values in the relationship between the auditors and their clients, and other stakeholders, and the Code and Rules seek to enhance such trustworthiness.”

The CFAE determined the following as guiding principles for the revision of the existing code:

Raising awareness of ethical behaviour
Promoting ethical behaviour and discouraging unethical behaviour
Facilitating social integration
Providing guidance on ethical decision-making

Sandy van Esch, Director: Standards at the IRBA says that “It was necessary to revise the existing Code and Rules to move with the ever changing environment in which the auditor delivers audit services. Given the current economic environment, it is even more critical to ensure that the auditing profession can provide the necessary assurance and comfort to their clients and the public that their reports are reliable and trustworthy.”

The new code is based on the code issued by the International Federation of Accountants (IFAC) - van Esch says “South Africa is a global player, and therefore it must stay in line with international developments so that foreign investors clearly understand the framework in which audit services are delivered. However, the CFAE was careful to adapt the IFAC Code where necessary to accommodate the SA environment.”

Bernard Agulhas, CEO of IRBA says that “The IRBA had to issue a code that would encourage registered auditors to maintain high ethical standards, while also providing a sufficient basis to discipline non compliance”.

The IRBA investigates complaints of unethical behaviour by auditors, from the public, and monitors compliance with the code through inspections of firms and individual auditors.

“The auditing profession is one of the few professions where the quality of service, adherence to a code of ethics, and maintenance of technical standards are strictly regulated” says Agulhas. “This is critical if SA wants to attract investment and promote a vibrant economy”.