STANDARDS c o n t .
Listings Requirements relating to the provision by the
reporting accountant of a review conclusion on the assets
and/or liabilities acquired by the applicant issuer in terms
of the transaction as reflected in the adjustment column of
the pro forma statement of financial position contained in a
circular and the related illustrative reporting accountant's
The JSE Limited is running a concurrent public consultation
process for the proposed revisions to the JSE Limited Listings
It is expected that the Guide will be issued early in 2016.
Proposed South African Auditing Practice Statement
(SAAPS) 3 (Revised 2015),
The CFAS approved the release of the proposed SAAPS 3
, in August 2015 for
exposure for public comment by 19 October 2015.
The proposed SAAPS 3 (Revised 2015) provides guidance to
registered auditors on the layout and wording of assurance
reports, in accordance with the requirements of the ISAs and
the International Standards on Review Engagements (ISREs)
and in compliance with South African jurisdictional
requirements, mainly the Companies Act, 2008 (Act No.71 of
2008) and the Public Audit Act, 2004 (Act No.25 of 2004).
The proposed SAAPS 3 (Revised 2015):
Contains conforming amendments arising from the revised
Auditor Reporting Standards;
Provides assistance to auditors on how key audit matters
are addressed in the auditor's report, in accordance with
the new ISA 701, Communicating Key Audit Matters in the
Independent Auditor's Report; and
Provides practical assistance to auditors when reporting in
terms of ISA 720 (Revised), The Auditor's Responsibilities
Relating toOther Information.
These ISAs are effective for audits of financial statements for
periods ending on or after 15 December 2016.
It is expected that SAAPS 3 (Revised 2015) will be issued
early in 2016.
The Broad-Based Black Economic Empowerment
Amendment Act's (the B-BBEEAmendment Act) focus on
The Department of Trade and Industry's (DTI) amendments to
the Broad-Based Black Economic Empowerment Act (the
B-BBEE Act), No.53 of 2003, indicate a stringent stance on
transformation through B-BBEE legislation.
Among the amendments to note is the clarity on fronting
indicators as well as the responsibilities and the
consequences where these indicators are positively identified.
The IRBA has identified the reporting of fronting practices by
auditors to the Broad-Based Black Economic Empowerment
Commission (the Commission) as a high risk area. Auditors do
not always assess the risk of fronting practices or design
appropriate procedures to address the risk and their
responsibilities to report fronting practices to the Commission.
The definition of “fronting practice” in terms of the B-BBEE
Amendment Act, No.46 of 2013, in Section 1(e) is wide and
…a transaction, arrangement or other act or conduct
that directly or indirectly undermines or frustrates the
achievement of the objectives of thisAct or the implementation
of any of the provisions of this Act
”. A further non-exhaustive
list of practices is provided in terms of the definition of “fronting
practice” and it includes the following:
Black persons who are appointed to an enterprise are
discouraged or inhibited from substantially participating in
the core activities of that enterprise;
Economic benefits received as a result of the broad-based
black economic empowerment status of an enterprise do
not flow to black people in the ratio specified in the relevant
Conclusion of a legal relationship with a black person for
the purpose of that enterprise achieving a certain level of
broad-based black economic empowerment compliance
without granting that black person the economic benefits
that would reasonably be expected to be associated with
the status or position held by that black person;
Conclusion of an agreement with another enterprise in
order to achieve or enhance broad-based black economic
empowerment status in circumstances in which
Issue 32 October - December 2015