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Issue 35 | July-September 2016
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Investigating Committee
The Investigating Committee met once during this period and
referred 23 matters to the Disciplinary Advisory Committee with
recommendations.
Disciplinary Advisory Committee
The Disciplinary Advisory Committee met twice during this period
and concluded on 27 matters.
Decisions not to charge
Five matters in terms of Disciplinary Rule 3.5.1.1
–
the respondent
was not guilty of improper conduct.
Two matters in terms of Disciplinary Rule 3.5.1.5 – in all the
circumstances it was not appropriate to charge the respondents
with improper conduct.
Decisions to charge and matters finalised by consent order
Twenty matters were finalised by consent order.
Matter 1 –
The respondent failed to carry out sufficient audit work in
assessing the company’s ability to continue as a going concern. As
a result, the respondent failed to identify the existence of a material
uncertainty regarding the company’s ability to continue as a going
concern. The respondent also failed to modify the audit report for
the non-disclosure of this material uncertainty in the annual financial
statements. In addition, the respondent failed to report a reportable
irregularity to the IRBA in relation to the client’s failure to prepare
annual financial statements for the three subsequent financial years.
The respondent was sentenced to a fine of R80,000, of which
R40,000 has been suspended for three years on condition that the
respondent is not found guilty of unprofessional conduct committed
during the period of suspension, an order of R5,000 contribution
towards costs and publication in general terms.
Matter 2 –
The respondent committed multiple transgressions
spanning five financial years, which included failure to adequately
respond to a potential fraud risk that was brought to the
respondent’s attention; failure to report a reportable irregularity to
the IRBA in respect of a dividend declaration of the company that
placed the company into a net liability position; failure to carry out
sufficient audit procedures in relation to the company’s ability to
continue as a going concern; failure to modify the audit report in
relation to inadequate disclosure of a material uncertainty regarding
the company’s ability to continue as a going concern; and failure
to modify the audit report in relation to materially misstated asset
balances resulting from the company utilising plant and equipment
with zero carrying values over multiple financial years.
The respondent was sentenced to a fine of R100,000, of which
R50,000 has been suspended for three years on condition that the
respondent is not found guilty of unprofessional conduct committed
during the period of suspension, an order of R5,000 contribution
towards costs and publication in general terms.
Matter 3 –
The matter arose from a referral by the Inspections
Department. The respondent failed to obtain sufficient appropriate
audit evidence relating to the selected engagement as there were
numerous instances of noncompliance with International Standards
on Auditing. In addition, the respondent did not modify the audit
report in respect of a number of deficiencies in the annual financial
statements.
The respondent was sentenced to a fine of R60,000, of which
R25,000 has been suspended for three years on condition that the
respondent is not found guilty of unprofessional conduct committed
during the period of suspension, no costs order and publication in
general terms.
Matter 4 –
The respondent held a direct financial interest in an
audit client, which amounted to a breach of the independence
and objectivity requirements as set out in the Code of Conduct.
In addition, the respondent failed to report a reportable irregularity
to the IRBA in respect of the annual financial statements that the
respondent recalled from SARS.
The respondent was sentenced to a fine of R100,000, of which
R25,000 has been suspended for three years on condition that the
respondent is not found guilty of unprofessional conduct committed
during the period of suspension, an order of R5,000 contribution
towards costs and publication in general terms.
Matter 5 –
The matter arose from a referral by the Inspections
Department. The respondent failed to obtain sufficient appropriate
audit evidence relating to the selected engagement as there were
numerous instances of noncompliance with International Standards
on Auditing.
The respondent was sentenced to a fine of R50,000, an order of
R5,000 contribution towards costs and publication in general terms.
Matter 6
– The respondent prepared and issued a Broad-Based
Black Economic Empowerment (B-BBEE) score and status level on
behalf of a client and a related B-BBEE certificate. The respondent
committed multiple transgressions in relation to the certificate and
issued a B-BBEE status and level that incorrectly treated the client
entity as a start-up enterprise.
The respondent was sentenced to a fine of R20,000, of which
R10,000 has been suspended for three years on condition that the
respondent is not found guilty of unprofessional conduct committed
during the period of suspension, no costs order and publication in
general terms.
Matter 7 –
The matter arose from a referral by the Inspections
Department. The respondent failed to obtain sufficient appropriate
audit evidence relating to the selected engagement as there were
numerous instances of noncompliance with International Standards
on Auditing.
The respondent was sentenced to a fine of R100,000, with
payment of the full amount being suspended until such time that
the respondent re-registers with the IRBA and publication in general
terms.
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