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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),

Illustrative Reports

The CFAS approved the release of the proposed SAAPS 3

(Revised 2015),

Illustrative Reports

, 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.

B-BBEE VerificationAssurance

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

includes “

…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

legal documentation;


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